BRIDGEBIO PHARMA, INC. You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes thereto for the year endedDecember 31, 2021 included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , as filed with theU.S. Securities and Exchange Commission (the "SEC") onFebruary 25, 2022 . This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In some cases, you can identify these statements by forward-looking words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "should," "estimate," or "continue," and similar expressions or variations. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , as updated by the information, if any, in Part II, Item 1A, "Risk Factors" included in this Quarterly Report on Form 10-Q. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. Except as may be required by law, we assume no obligation to update these forward-looking statements or the reasons that results could differ from these forward-looking statements. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.
Overview
BridgeBio Pharma, Inc. (we or the Company) is a commercial-stage biopharmaceutical company founded to discover, create, test and deliver transformative medicines to treat patients who suffer from genetic diseases and cancers with clear genetic drivers. BridgeBio's pipeline of development programs ranges from early science to advanced clinical trials. BridgeBio was founded in 2015 and its team of experienced drug discoverers, developers and innovators are committed to applying advances in genetic medicine to help patients as quickly as possible. Since inception, BridgeBio has created 15 Investigational New Drug applications, or INDs, and had two products approved by theU.S. Food and Drug Administration . We work across over 20 disease states and have over 15 ongoing clinical trials at various stages of development. Several of our programs target indications that we believe present the potential for our product candidates, if approved, to target portions of market opportunities of at least$1.0 billion in annual sales. We focus on genetic diseases because they exist at the intersection of high unmet patient need and tractable biology. Our approach is to translate research pioneered at academic laboratories and leading medical institutions into products that we hope will ultimately reach patients. We are able to realize this opportunity through a confluence of scientific advances: (i) identification of the genetic underpinnings of disease as more cost-efficient genome and exome sequencing becomes available; (ii) progress in molecular biology; and (iii) the development and maturation of longitudinal data and retrospective studies that enable the linkage of genes to diseases. We believe that this early-stage innovation represents one of the greatest practical sources for new drug creation. Since our inception in 2015, we have focused substantially all of our efforts and financial resources on acquiring and developing product and technology rights, building our intellectual property portfolio and conducting research and development activities for our product candidates within our wholly-owned subsidiaries and controlled entities, including partially-owned subsidiaries and subsidiaries we consolidate based on our deemed majority control of such entities as determined using either the variable interest entity, or VIE model, or the voting interest entity, or VOE model. To support these activities, we and our wholly-owned subsidiary,BridgeBio Services, Inc. , (i) identify and secure new programs, (ii) set up new wholly-owned subsidiaries or controlled entities, (iii) recruit key management team members, (iv) raise and allocate capital across the portfolio and (v) provide certain shared services, including accounting, legal, information technology and human resources, as well as workspaces. We have not generated any significant revenue from product sales. To date, we have funded our operations with proceeds from the sale of our equity securities, issuance of convertible notes, debt borrowings and, to a lesser extent, revenue from licensing arrangements and product sales. We do not anticipate to generate any revenues from product sales for the rest of the fiscal year endingDecember 31, 2022 as the selling activities for our approved products have been transferred or transitioned to our respective partners. Since our inception, we have incurred significant operating losses. For the nine months endedSeptember 30, 2022 and 2021, we incurred net losses of$344.1 million and$434.2 million , respectively. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of our product candidates at our wholly-owned subsidiaries and controlled entities. We expect to continue to incur operating and net losses for at least the next several years. 43 -------------------------------------------------------------------------------- Due to the inherently unpredictable nature of preclinical and clinical development, and given our novel therapeutic approaches and the stage of development of our product candidates, we cannot determine and are unable to estimate with certainty the timelines we will require and the costs we will incur for the development of our product candidates. Clinical and preclinical development timelines and costs, and the potential of development success, can differ materially from expectations due to a variety of factors. For example, in light of the continuing impact of COVID-19 and the focus of healthcare providers and hospitals on the virus and its variants, we have experienced delays in or temporary suspensions of the enrollment of patients in our subsidiaries' ongoing clinical trials. We additionally may experience delays in certain ongoing activities, including commencement of planned clinical trials, non-clinical experiments and IND-enabling good laboratory practice toxicology studies. The duration of delays and their overall impact on our business are currently unknown, and we are continuing to monitor the situation. The continued spread of COVID-19 has resulted in significant governmental measures worldwide. These measures may result in business, supply, and drug product manufacturing disruptions and in reduced operations, any of which could materially affect our business, financial condition and results of operations. Accordingly, we may take further precautionary and preemptive actions as may be required by federal, state or local authorities or that we determine are in the best interests of public health and safety and that of our patient community, employees, partners, suppliers and stockholders. We cannot predict the effects that such actions, the duration of the COVID-19 pandemic, or its continuing impact may have on our business or strategy, including the effects on our ongoing and planned clinical development activities and prospects, or on our financial and operating results. InJanuary 2022 , we committed to a restructuring initiative designed to drive operational changes in our business processes, efficiencies and cost savings to advance our corporate strategy and development programs. The restructuring initiative included, among other components, consolidation and rationalization of our facilities, reprioritization of development programs and the reduction in our workforce. We estimate to incur total charges in the range of approximately$36.1 million to$48.4 million for the fiscal year 2022, consisting primarily of winding down costs, exit and other related costs, impairments and write-offs of long lived assets, and severance and employee-related costs. Our estimate of the range of costs is subject to certain assumptions and actual results may differ from those estimates or assumptions. We may also incur additional costs that are not currently foreseeable as we continue to evaluate our restructuring alternatives to drive operational changes in business processes, efficiencies and cost savings.
On
OnMay 7, 2021 ,Joel Zalvin ("Plaintiff"), a putative stockholder ofBridgeBio Pharma Inc. , filed a Verified Stockholder Derivative Complaint (the "Complaint") in theDelaware Court of Chancery , captioned Zalvin v. Aguiar, et al., C.A. No. 2021-0395-JRS, on behalf of the Company againstEric Aguiar ,Jennifer E. Cook ,Ronald J. Daniels ,Charles Homcy ,Neil Kumar ,Andrew Lo ,James C. Momtazee ,Ali Satvat ,Brenton L. Saunders ,Richard H. Scheller , andRandal W. Scott (collectively, "Defendants") challenging a director compensation policy ("Director Compensation Policy") and certain equity awards from and afterDecember 12, 2019 awarded to directors of the Company ("Awards") adopted by the Company's board of directors ("Board"). The Complaint alleged that (i) the Board did not seek stockholder approval of the Director Compensation Policy; and (ii) the members of the Board breached their fiduciary duties by adopting the Director Compensation Policy and granting themselves compensation for 2019 and 2020 in amounts that were excessive and unfair to the Company. While the Company and the Board deny completely all of the allegations of wrongdoing in the Complaint, onNovember 8, 2021 , the Company filed a Proxy Statement with theSEC , which sought: (i) stockholder ratification of equity awards granted to company directors under the Director Compensation Policy in 2019, 2020 and 2021; and (ii) stockholder approval of the amended and restated Director Compensation Policy. In addition, onDecember 15, 2021 , a duly noticed special meeting of stockholders of BridgeBio was held, and the stockholders approved by the affirmative vote of a majority the proposals set forth in theNovember 8, 2021 Proxy Statement. Plaintiff agreed that as a result of the ratification of the Awards and approval of the amended and restated Director Compensation Policy, the claims set forth in the Complaint have been mooted, and the Company agreed to pay$2,050,000 in fees and expenses to Plaintiff's counsel. OnSeptember 16, 2022 , the Court entered a Stipulation and Order providing that Plaintiff's action will be dismissed with prejudice as to Plaintiff and the case will be closed. The Court has not passed judgment on the amount of fees and expenses. Plaintiff's counsel areDavid A. Jenkins ofSmith Katzenstein & Jenkins LLP , (302) 652-8400 andSteven J. Purcell ofPurcell & Lefkowitz LLP , (212) 840-6300, and Company's counsel isRichard Rollo ofRichards, Layton & Finger, P.A ., (302) 651-7700. For additional information, see the Company's Proxy Statement filed onNovember 8, 2021 . 44 --------------------------------------------------------------------------------
Results of Operations
The following table summarizes the results of our operations for the periods
indicated:
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(in thousands)
License and services revenue $ 338 $ 1,585 $ 74,319 $ 55,084
Product sales - 759 1,459 1,746
Cost of license revenue and products
sold 739 1,454 2,787 1,563
Research and development 92,511 104,305 308,560 328,824
Selling, general and administrative 31,188 46,084 111,327 137,461
Restructuring, impairment and related
charges 5,016 - 36,074 -
Loss from operations (129,116 ) (149,499 ) (382,970 ) (411,018 )
Gain from sale of priority review
voucher, net - - 107,946 -
Net loss (140,193 ) (161,016 ) (344,082 ) (434,172 )
Net loss attributable to common
stockholders of BridgeBio (137,339 ) (155,935 ) (343,592 ) (415,362 )
September 30, December 31,
2022 2021
(in thousands)Cash, cash equivalents and
marketable securities$ 558,315 $ 787,515 Investment in equity securities 33,662 49,148 45
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Cash,
As ofSeptember 30, 2022 , we had cash, cash equivalents and marketable securities of$558.3 million and investment in equity securities of$33.7 million , compared to cash, cash equivalents and marketable securities of$787.5 million and investment in equity securities of$49.1 million as ofDecember 31, 2021 . The decrease in cash, cash equivalents and marketable securities primarily pertain to net cash used in our operating activities of$326.3 million , which includes payments of$47.6 million in debt-related interests and the cash inflow from our receipt of$90.0 million in upfront payment from the Navire-BMS License Agreement. The receipt of the upfront payment from BMS triggered certain mandatory prepayment provisions of our Amended Loan Agreement, which is further described in the succeeding sections, and, as a result, we paid$20.5 million to our lenders during the nine months endedSeptember 30, 2022 . In addition, the decrease in cash, cash equivalents and marketable securities was also partially offset by cash proceeds of:
•
•
We consider our investment in equity securities as a source of our liquidity as we may liquidate these shares to fund current operations, should the need arise. The decrease in investment in equity securities is primarily due to decline in fair market value. Revenue
The following table summarizes our revenue for the following periods:
Three Months Ended September Nine Months Ended
30, September 30,
2022 2021 Change 2022 2021 Change
(in thousands)
Revenue:
License and services revenue $ 338 $ 1,585 $ (1,247 ) $ 74,319 $ 55,084 $ 19,235
Product sales - 759 (759 ) 1,459 1,746 (287 )
Total revenue $ 338 $ 2,344 $ (2,006 ) $ 75,778 $ 56,830 $ 18,948
License and services revenue for the nine months ended September 30, 2022
consists mainly of $73.3 million of license and services revenue from
recognition of upfront license and services revenue under the Navire-BMS License
Agreement. License and services revenue for the three months ended September 30,
2022 and for the three months ended September 30, 2021 was immaterial. License
and services revenue for the nine months ended September 30, 2021 comprised
primarily of the recognition of upfront and launch milestone payments of $44.4
million in connection with the QED-Helsinn License and Collaboration Agreement
and $8.5 million in license revenue in connection with the achievement of a
regulatory milestone under the Navire-LianBio License Agreement.
The level of license and services revenue that we recognize depends in part upon
the estimated recognition period of the upfront payments allocated to continuing
performance obligations, the achievement of milestones and other contingent
events, and entering into new collaboration agreements, if any. We do not
anticipate to generate any revenues from product sales for the rest of the
fiscal year ending December 31, 2022 as the selling activities for our approved
products have been transferred or transitioned to our respective partners (see
Notes 11 and 12 to our condensed consolidated financial statements).
Operating Costs and Expenses
Research and Development Expenses
The following table summarizes our research and development expenses for the
following periods:
Three Months Ended Nine Months Ended September
September 30, 30,
2022 2021 Change 2022 2021 Change
(in thousands)
Research and development $ 92,511 $ 104,305 $ (11,794 ) $ 308,560 $ 328,824 $ (20,264 )
46-------------------------------------------------------------------------------- Research and development expense decreased by$11.8 million for the three months endedSeptember 30, 2022 compared to the same period in 2021, primarily due to a decrease in external costs as a result of reprioritization of our development programs in line with our restructuring initiative. Research and development expenses decreased by$20.3 million for the nine months endedSeptember 30, 2022 primarily due to a decrease in stock-based compensation and our external costs as a result of reprioritization of our development programs in line with our restructuring initiative. Stock-based compensation recorded in research and development expense for the three and nine months endedSeptember 30, 2022 was$6.1 million and$29.0 million , respectively, as compared to$4.8 million and$46.5 million for the same periods in the prior year, which was mainly driven by higher stock-based compensation related to performance-based milestone compensation arrangements for regulatory and development milestones achieved and determined to be probable of achievement as ofSeptember 30, 2021 . Pursuant to the QED-Helsinn License and Collaboration Agreement,Helsinn shared 60% of our research and development costs for infigratinib for certain indications as stipulated under the agreement. Upon the effective date of the Amended QED-Helsinn License and Collaboration Agreement,Helsinn is solely responsible for development costs for infigratinib for certain indications and our incurred costs during the transitional period are fully reimbursable. As discussed in the Overview section in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations,Helsinn notified us onAugust 23, 2022 of their intent to terminate the Amended QED-Helsinn License and Collaboration Agreement. Both parties continue to actively negotiate each party's responsibilities relating to the wind-down period. Following the termination notice, winding down costs are presented as part of "Restructuring, impairment and related charges" on our condensed consolidated statements of operations.
•
For the three and nine months endedSeptember 30, 2022 ,Helsinn's share of the research and development costs under the QED-Helsinn License and Collaboration Agreement amounted to nil and$2.9 million , respectively, which were reflected as a reduction of research and development expenses. The comparative amount was$9.6 million and$28.2 million for the three and nine months endedSeptember 30, 2021 , respectively.
•
In accordance with the Amended QED-Helsinn License and Collaboration Agreement, which became effective onMarch 1, 2022 , we have recognized$5.7 million and$18.5 million as a reduction of research and development expenses for the three and nine months endedSeptember 30, 2022 , respectively, which represents 100% reimbursement of research and development costs incurred during the transitional period. Refer to Note 11 to our condensed consolidated financial statements for more information on the QED-Helsinn License and Collaboration Agreement, the Amended QED-Helsinn License and Collaboration Agreement and the termination of the QED-Helsinn License and Collaboration Agreement. Research and development costs consist primarily of external costs, such as fees paid to consultants, contractors, contract manufacturing organizations, or CMOs, and contract research organizations, or CROs, in connection with our preclinical and clinical development activities and are tracked on a program-by-program basis. License fees and other costs incurred after a product candidate has been designated and that are directly related to the product candidate are included in the specific program expense. License fees and other costs incurred prior to designating a product candidate are included in early-stage research programs.
The following table summarizes our research and development expenses by program incurred for the following periods:
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(in thousands)
Acoramidis (Previously known
as BBP-265 or AG10) (Eidos
Therapeutics, Inc.) $ 25,995 $ 31,538 $ 66,756 $ 71,686
Low-dose Infigratinib for
Achondroplasia (Previously known
as BBP-831) (QED Therapeutics,
Inc.) 6,312 8,450 23,475 32,136
Encaleret (Previously known as
BBP-305) (Calcilytix Therapeutics, Inc.) 6,878 4,113 20,335 9,503 BBP-631 (Adrenas Therapeutics, Inc.) 7,112 6,946 25,679 35,316 BBP-454 (TheRas, Inc.) 9,260 3,823 23,353 10,563 Other development programs 20,587 32,065 93,647 124,247 Other research programs 16,367 17,370 55,315 45,373 Total$ 92,511 $ 104,305$ 308,560 $ 328,824 47
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Selling, General and Administrative Expenses
The following table summarizes our selling, general and administrative expenses
for the following periods:
Three Months Ended Nine Months Ended September
September 30, 30,
2022 2021 Change 2022 2021 Change
(in thousands)
Selling, general and
administrative $ 31,188 $ 46,084 $ (14,896 ) $ 111,327 $ 137,461 $ (26,134 ) Selling, general and administrative expenses decreased by
Under the QED-Helsinn License and Collaboration Agreement, the parties co-commercialized TRUSELTIQ inthe United States and shared profits and losses on a 50:50 basis. Upon the effective date of the Amended QED-Helsinn License and Collaboration Agreement,Helsinn is solely responsible for the commercialization of TRUSELTIQ and our incurred costs during the transitional period are fully reimbursable. As discussed in the Overview section in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations,Helsinn notified us onAugust 23, 2022 of their intent to terminate the Amended QED-Helsinn License and Collaboration Agreement. Both parties continue to actively negotiate each party's responsibilities relating to the wind-down period. Following the termination notice, winding down costs are presented as part of "Restructuring, impairment and related charges" on our condensed consolidated statements of operations.
•
We accounted forHelsinn's share of the commercialization loss of nil and$1.3 million under the QED-Helsinn License and Collaboration Agreement as a reduction of selling, general and administrative expenses for the three and nine months endedSeptember 30, 2022 , respectively. The comparative amount was$2.6 million and$6.8 million for the three and nine months endedSeptember 30, 2021 , respectively.
•
We accounted forHelsinn's share of the commercialization expenses of$0.1 million and$0.5 million under the Amended QED-Helsinn License and Collaboration Agreement as a reduction of selling, general and administrative expenses for the three and nine months endedSeptember 30, 2022 , respectively.
Restructuring, Impairment and Related Charges
Three Months Ended September Nine Months Ended September
30, 30,
2022 2021 Change 2022 2021 Change
(inthousands)
Restructuring, impairment and related charges$ 5,016 $ -$ 5,016 $ 36,074 $ -$ 36,074 As discussed in Note 16 to our condensed consolidated financial statements, inJanuary 2022 , we committed to a restructuring initiative designed to drive operational changes in our business processes, efficiencies and cost savings to advance our corporate strategy and development programs. The restructuring initiative included, among other components, consolidation and rationalization of our facilities, reprioritization of development programs and the reduction in our workforce. We estimate to incur total charges in the range of approximately$36.1 million to$48.4 million for the fiscal year 2022, consisting primarily of winding down costs, exit and other related costs, impairments and write-offs of long lived assets, and severance and employee-related costs. Our estimate of the range of costs is subject to certain assumptions and actual results may differ from those estimates or assumptions. We may also incur additional costs that are not currently foreseeable as we continue to evaluate our restructuring alternatives to drive operational changes in business processes, efficiencies and cost savings. 48 -------------------------------------------------------------------------------- Other Income (Expense), Net Interest Income Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 Change 2022 2021 Change
Interest income$ 2,417 $ 234 $ 2,183 $ 3,450 $ 951 $ 2,499 Interest income consists of interest income earned on our cash equivalents and marketable securities. The change in interest income has been nominal during the periods presented. Generally, increases and decreases in interest income are attributable to changes in the interest-bearing average balances of our cash equivalents and marketable securities and fluctuations in interest rates.
Interest Expense
Three Months Ended Nine Months Ended September
September 30, 30,
2022 2021 Change 2022 2021 Change
Interest expense $ (19,825 ) $ (11,067 ) $ (8,758 ) Interest expense for the three and nine months endedSeptember 30, 2022 consists primarily of interest expense incurred under our 2029 Notes issued inJanuary 2021 , our 2027 Notes issued inMarch 2020 and our term loan with various lenders under the Loan Agreement datedNovember 17, 2021 . Interest expense for the three and nine months endedSeptember 30, 2021 consists primarily of interest expense incurred under our 2029 Notes, our 2027 Notes, our now fully-paid term loan with Hercules Capital, Inc., or Hercules, pursuant to our Loan and Security Agreement, datedJune 19, 2018 , as amended from time to time, and our now fully-paid term loan withSilicon Valley Bank , or SVB, and Hercules pursuant to the Loan and Security Agreement, datedNovember 13, 2019 , or the SVB and Hercules Loan Agreement. The increase of$8.8 million and$28.8 million for the three and nine months endedSeptember 30, 2022 compared to the same periods in 2021 was primarily attributed to an increase in principal amounts of our debt.
Gain From Sale of Priority Review Voucher, net
Nine Months Ended September
Three Months Ended September 30, 30,
2022 2021 Change 2022 2021 Change
Gain from sale of priority
review
voucher, net $ - $ - $ - $ 107,946 $ - $ 107,946
In May 2022 , we announced that we entered into a definitive agreement to sell
our PRV for $110.0 million . We received the PRV in February 2021 under a U.S.
Food and Drug Administration program intended to encourage the development of
treatments for rare pediatric diseases. We were awarded the PRV when our
subsidiary Origin received approval of NULIBRY. The PRV sale was subject to
customary closing conditions and was completed in June 2022 following the
expiration of applicable U.S. antitrust clearance requirements. We received the
gross proceeds of $110.0 million in June 2022 and recognized a net gain of
$107.9 million , net of transaction costs for the nine months ended September 30,
2022 .
Other Income (Expense), net
Nine Months Ended September
Three Months Ended September 30, 30,
2022 2021 Change 2022 2021 Change
Other income (expense), net$ 6,331 $ (684 )$ 7,015 $ (12,060 ) $ 7,539 $ (19,599 ) 49
-------------------------------------------------------------------------------- Other income (expense), net for the three months endedSeptember 30, 2022 consists mainly of net realized and unrealized gains from changes in fair value of our equity security investment of$10.3 million , partially offset by the recognition of$3.5 million in other expense related to a regulatory milestone payable by our subsidiary Origin that was achieved upon EMA approval of NULIBRY. Other income (expense), net for the nine months endedSeptember 30, 2022 consists mainly of net realized and unrealized losses from changes in the fair value of our equity security investment of$13.0 million , loss from disposal of Origin's assets of$6.3 million , and the expense associated with the Origin regulatory milestone of$3.5 million , partially offset by a gain from the recognition of a receivable of$12.5 million fromHelsinn under the Amended QED-Helsinn License and Collaboration Agreement.
Other income (expense), net for the nine months ended
Liquidity and Capital Resources
We have historically financed our operations primarily through the sale of our equity securities, issuance of convertible notes, debt borrowings, revenue from certain licensing arrangements and sale of certain assets. As ofSeptember 30, 2022 , we had cash, cash equivalents and marketable securities of$558.3 million and investment in equity securities of$33.7 million . We consider our investment in equity securities as a source of our liquidity as we may liquidate these securities to fund current operations, should the need arise. The funds held by our wholly-owned subsidiaries and controlled entities are available for specific entity usage. As ofSeptember 30, 2022 , our outstanding debt was$1.7 billion , net of debt discounts and issuance costs and accretion. Since inception, we have incurred significant operating losses. For the years endedDecember 31, 2021 , 2020 and 2019, we incurred net losses of$586.5 million ,$505.5 million and$288.6 million , respectively. For the nine months endedSeptember 30, 2022 , we incurred net losses of$344.1 million . We had an accumulated deficit as ofSeptember 30, 2022 of$1.8 billion . While we have undertaken a restructuring initiative to drive operational change in business processes, efficiencies and cost savings, we expect to continue to incur operating and net losses over the next several years as we continue to fund our drug development and discovery efforts, as well as costs related to commercial launch readiness for our late-stage programs. In particular, to the extent we advance our programs into and through later-stage clinical trials without a partner, we will incur substantial expenses. Our current business plan is also subject to significant uncertainties and risks as a result of, among other factors, our ability to generate product sales sufficient to achieve profitability, which will depend heavily on the successful development and eventual commercialization of product candidates at our consolidated entities as well as our ability to partner in the development of certain clinical programs, as well as the levels of our operating expenses. Our short-term and long-term liquidity requirements include contractual payments related to our 2029 Notes, 2027 Notes and term loan (see Note 10 to our condensed consolidated financial statements), obligations under our real estate leases (see Note 13 to our condensed consolidated financial statements) and the remaining liabilities under our restructuring initiative (see Note 16 to our condensed consolidated financial statements).
We also have performance-based milestone compensation arrangements with certain employees and consultants, whose vesting is contingent upon meeting various regulatory and development milestones, with fixed monetary amounts known at inception that can be settled in the form of cash or equity at our sole election, upon achievement of each contingent milestone (see Note 9 to our condensed consolidated financial statements).
Additionally, we have certain contingent payment obligations under various
license and collaboration agreements in which we are required to make milestone
payments upon successful completion and achievement of certain intellectual
property, clinical, regulatory and sales milestones. We also enter into
agreements in the normal course of business with CROs and other vendors for
clinical trials and with vendors for preclinical studies and other services and
products for operating purposes, which are generally cancelable upon written
notice with potential termination charges.
We expect our cash and cash equivalents, marketable securities and investment in
equity securities will fund our operations for at least the next 12 months from
the date of filing of this Quarterly Report on Form 10-Q based on current
operating plans and financial forecasts. If our current operating plans or
financial forecasts change, including as a result of general market and economic
conditions, inflationary pressures, supply chain issues and the effects of the
ongoing COVID-19 pandemic on our research and development activities, we may
require additional funding sooner in the form of public or private equity
offerings, debt financings or additional collaborations and licensing
arrangements. However, future financing may not be available in amounts or on
terms acceptable to us, if at all.
In addition, we are closely monitoring ongoing developments in connection with
the continuing COVID-19 pandemic and inflationary pressures, which may
negatively impact our financial and operating results. We will continue to
assess our operating costs and expenses and our cash and cash equivalents and,
if circumstances warrant, we will make appropriate adjustments to our operating
plan.
50--------------------------------------------------------------------------------
Sources of Liquidity
Initial public offering and at-the-market share issuances
InDecember 2019 andFebruary 2020 , Eidos, then our controlled subsidiary and a public company, received net proceeds of$23.9 million and$24.1 million , respectively, from its at-the-market issuance of shares. Prior to the effectiveness of the Merger Transactions with Eidos, all cash and cash equivalents held by Eidos were restricted and could be applied solely to fund the operations of Eidos. OnJuly 1, 2019 , we completed the IPO of our common stock. As part of the IPO, we issued and sold 23,575,000 shares of our common stock, which included 3,075,000 shares sold pursuant to the exercise of the underwriters' option to purchase additional shares, at a public offering price of$17.00 per share. We received net proceeds of approximately$366.2 million from the IPO, after deducting underwriters' discounts and commissions of$28.1 million and offering costs of$6.5 million . OnJuly 7, 2020 , we filed a shelf registration statement on Form S-3ASR, or the 2020 Shelf, with theSEC in relation to the registration of common stock, preferred stock, debt securities, warrants and units or any combination thereof. We also simultaneously entered into an Open Market Sale Agreement, or the 2020 Sales Agreement, withJefferies LLC andSVB Leerink LLC , or collectively, the Sales Agents, to provide for the offering, issuance and sale by us of up to an aggregate of$350.0 million of our common stock from time to time in "at-the-market" offerings under the 2020 Shelf and subject to the limitations thereof. We will pay to the applicable Sales Agents cash commissions of up to 3.0% of the gross proceeds of sales of common stock under the 2020 Sales Agreement. We have not issued any shares or received any proceeds from this offering throughSeptember 30, 2022 .
Debt
As of
2029 Notes
InJanuary 2021 , we issued an aggregate principal amount of$747.5 million of our 2029 Notes, pursuant to an Indenture datedJanuary 28, 2021 , or the 2029 Notes Indenture, between us andU.S. Bank National Association , as trustee, or the 2029 Notes Trustee, in a private offering to qualified institutional buyers, or the 2021 Note Offering, pursuant to Rule 144A under the Securities Act. The 2029 Notes accrue interest payable semiannually in arrears onFebruary 1 andAugust 1 of each year, beginning onAugust 1, 2021 , at a rate of 2.25% per year. The 2029 Notes will mature onFebruary 1, 2029 , unless earlier converted, redeemed or repurchased. The 2029 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. We received net proceeds from the 2021 Note Offering of approximately$731.4 million , after deducting the 2029 Notes Initial Purchasers' discount. There were no direct offering expenses borne by us for the 2029 Notes. We used approximately$61.3 million of the net proceeds from the 2021 Note Offering to pay for the cost of the 2021 Capped Call Transactions and approximately$50.0 million to pay for the repurchase of shares of our common stock.
A holder of 2029 Notes may convert all or any portion of its 2029 Notes at its
option at any time prior to the close of business on the business day
immediately preceding
On or afterNovember 1, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its 2029 Notes at any time. We may not redeem the 2029 Notes prior toFebruary 6, 2026 . We may redeem for cash all or any portion of the 2029 Notes, at our option, on a redemption date occurring on or afterFebruary 6, 2026 and on or before the 41st scheduled trading day immediately before the maturity date, under certain circumstances. No sinking fund is provided for the 2029 Notes. If we undergo a fundamental change (as defined in the 2029 Notes Indenture), holders may require us to repurchase for cash all or any portion of their 2029 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2029 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2029 Notes Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the 2029 Notes Trustee or the holders of not less than 25% in aggregate principal amount of the 2029 Notes then outstanding may declare the entire principal amount of all the Notes plus accrued special interest, if any, to be immediately due and payable. The 2029 Notes are our general unsecured obligations and rank senior in right of payment to all of our indebtedness that is expressly subordinated in right of payment to the 2029 Notes; equal in right of payment with all of our liabilities that are not so subordinated, including our 2027 Notes; effectively junior to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.
Refer to Note 10 in our condensed consolidated financial statements for other details, including our future minimum payments under the 2029 Notes.
51
--------------------------------------------------------------------------------2027 Notes
InMarch 2020 , we issued an aggregate principal amount of$550.0 million of our 2027 Notes, pursuant to an Indenture datedMarch 9, 2020 , or the Indenture, betweenBridgeBio andU.S. Bank National Association , as trustee, or the Trustee, in a private offering to qualified institutional buyers, or the 2020 Note Offering, pursuant to Rule 144A under the Securities Act. The 2027 Notes are senior, unsecured obligations of BridgeBio and accrue interest payable semiannually in arrears onMarch 15 andSeptember 15 of each year, beginning onSeptember 15, 2020 , at a rate of 2.50% per year. The 2027 Notes will mature onMarch 15, 2027 , unless earlier converted or repurchased. Upon conversion, the 2027 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. We received net proceeds from the 2020 Note Offering of approximately$537.0 million , after deducting the Initial Purchasers' discount and offering expenses. We used approximately$49.3 million of the net proceeds from the 2020 Note Offering to pay for the cost of the Capped Call Transactions, and approximately$75.0 million to pay for the repurchases of shares of our common stock in connection with the 2020 Note Offering.
A holder of 2027 Notes may convert all or any portion of its 2027 Notes at its
option at any time prior to the close of business on the business day
immediately preceding
On or after
We may not redeem the 2027 Notes prior to the maturity date, and no sinking fund is provided for the 2027 Notes. If we undergo a fundamental change (as defined in the Indenture), holders may require us to repurchase for cash all or any portion of their 2027 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2027 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the 2027 Notes then outstanding may declare the entire principal amount of all the Notes plus accrued special interest, if any, to be immediately due and payable. The 2027 Notes are our general unsecured obligations and rank senior in right of payment to all of our indebtedness that is expressly subordinated in right of payment to the 2027 Notes; equal in right of payment with all of our liabilities that are not so subordinated; effectively junior to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.
Refer to Note 10 in our condensed consolidated financial statements for other details, including our future minimum payments under the 2027 Notes.
Loan and Security Agreement
InNovember 2021 , we entered into the Loan Agreement, by and among (i)U.S. Bank National Association , in its capacity as administrative agent (in such capacity, the Administrative Agent), and collateral agent (in such capacity, the Collateral Agent), (ii) certain lenders, or the Lenders, (iii) BridgeBio, as a borrower, and (iv) certain subsidiaries of BridgeBio, as guarantors, or the Guarantors. InMay 2022 , we entered into the First Amendment to the Loan Agreement, or the First Amendment, as further described below. Pursuant to the terms and conditions of the Loan Agreement as amended by the First Amendment, or the Amended Loan Agreement, the Lenders agreed to extend term loans to us in an aggregate principal amount of up to$750.0 million , comprised of (i) a tranche 1 advance of$450.0 million , or the Tranche 1 Advance, and (ii) a tranche 2 advance of$300.0 million , or the Tranche 2 Advance, or collectively, the Term Loan Advances. The Tranche 1 Advance under the Loan Agreement was funded onNovember 17 , 2021.The Tranche 2 Advance was reduced under the Amended Loan Agreement to$100.0 million . The Tranche 2 Advance, which will remain available for funding untilDecember 31, 2022 , is available at our election subject to certain conditions as specified in the Amended Loan Agreement. As security for our obligations under the Loan Agreement, each of BridgeBio and the Guarantors granted the Collateral Agent, for the benefit of the Lenders, a continuing security interest in substantially all of the assets of BridgeBio and the Guarantors, (including all equity interests owned or hereafter acquired by BridgeBio and the Guarantors), subject to certain customary exceptions. Upon exceeding certain investment and disposition thresholds, additional subsidiaries of BridgeBio will be required to join as guarantors. Any outstanding principal on the Term Loan Advances will accrue interest at a fixed rate equal to 9.0% per annum. 3.00% of such interest can be paid in kind, or PIK, through a certain period. Interest payments are payable quarterly following the funding of a Term Loan Advance. We will be required to make principal payments on the outstanding balance of the Term Loan Advances commencing onJanuary 2, 2025 , or the Term Loan Amortization Date, in nine quarterly installments, plus interest. If we have achieved certain milestone events relating to data from the clinical trial of acoramidis, or the Acoramidis Milestone, on or prior toJanuary 1, 2025 , then the Term Loan Amortization Date will be automatically extended toJanuary 2, 2026 . Any amounts outstanding under the Term Loan Advances are due and payable onNovember 17, 2026 , or the Maturity Date. We may prepay the outstanding principal amount of the Term Loan Advances at any time (in whole, but not in part), plus accrued and unpaid interest and a prepayment premium ranging from 1% to 3% of the principal amount outstanding depending on the timing of payment (plus a customary make-whole amount if prepaid on or prior toNovember 17, 2022 ). 52 -------------------------------------------------------------------------------- At the Lenders' election, we are also required to make mandatory prepayments upon the occurrence of certain prepayment events related to the repurchase or redemption of pledged collateral, entry into certain royalty transactions, disposition of other assets or subsidiaries, entry into licensing and other monetization transactions (all such events "prepayment events"), which could be 50% or 75% of net cash proceeds from such transaction depending on achievement of the Acoramidis Milestone. Subject to the mandatory prepayment requirements for certain prepayment events, the Loan Agreement contains customary affirmative and limited negative covenants which, among other things, limit our ability to (i) incur additional indebtedness, (ii) pay dividends or make certain distributions, (iii) dispose of our assets, grant liens, license or encumber our assets or (iv) fundamentally alter the nature of our business. BridgeBio and the Guarantors have broad ability to license our intellectual property, dispose of other assets and enter into monetization and royalty transactions, subject in each case to the requirement to make a mandatory prepayment described above. The Loan Agreement provides that BridgeBio and Guarantors may, subject to certain limitations, (x) repurchase BridgeBio's equity interest and the equity interest of any of its subsidiaries, (y) enter into any joint ventures or similar investments, and (z) make other investments and acquisitions. Subject to the mandatory prepayment requirement described above, portfolio companies owned by BridgeBio that are not parties to the Loan Agreement are, subject to certain exceptions, not subject to any covenants or limitations under the Loan Agreement. The Loan Agreement also contains customary events of default, including, among other things, our failure to make any principal or interest payments when due, the occurrence of certain bankruptcy or insolvency events or the breach of the covenants under the Loan Agreement. Upon the occurrence of an event of default, the Lenders may, among other things, accelerate our obligations under the Loan Agreement.
We received net proceeds from the Tranche 1 Advance of
In
•
permitted the sale of our existing PRV and, generally, future dispositions of other PRVs;
•
reduced the aggregate amount of the Tranche 2 Advance and modified certain conditions to the availability thereof, as mentioned above;
•
amended the principal payments such that the entire outstanding principal balance of the Term Loan Advances is due and payable at the Maturity Date or upon early termination; and
•
modified the terms and conditions governing when certain entities into which we have made investments will be required to become guarantors under the Amended Loan Agreement.
Refer to Note 10 in our condensed consolidated financial statements for other details, including our future minimum payments under the Amended Loan Agreement.
Cash Flows
The following table summarizes our cash flows during the periods indicated:
Nine Months Ended September 30,
2022 2021 Change
(in thousands)
Net cash used in operating activities $ (326,251 ) $ (364,039 ) $ 37,788
Net cash provided by (used in) investing
activities 435,182 (222,626 ) 657,808
Net cash (used in) provided by financing
activities (19,511 ) 411,065 (430,576 )
Net increase (decrease) in cash, cash
equivalents and restricted cash $ 89,420 $ (175,600 ) $ 265,020
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Net Cash Flows Used in Operating Activities
Net cash used in operating activities was$326.3 million for the nine months endedSeptember 30, 2022 , consisting primarily of our net loss of$344.1 million , adjusted for non-cash items including a$110.0 million gain from sale of our PRV (excluding transaction costs),$69.8 million in stock-based compensation expense,$13.0 million in net loss from certain investments in equity securities,$12.7 million in impairment of long-lived assets,$12.5 million gain from recognition of a receivable fromHelsinn under the Amended QED-Helsinn License and Collaboration Agreement and$6.3 million loss on the sale of assets in connection with the Origin-Sentynl APA, as well as$16.3 million net cash inflow related to changes in operating assets and liabilities. The$16.3 million net cash inflow related to changes in operating assets and liabilities was attributed mainly to an increase of$17.0 million in deferred revenue arising from the Navire-BMS License Agreement, an increase of$3.8 million in other accrued and other long-term liabilities primarily due to build-up of accrued interests on our borrowings and a decrease in other assets of$10.1 million , partially offset by a decrease of$9.1 million in accrued compensation and benefits mainly due to timing of payments. Net cash used in operating activities was$364.0 million for the nine months endedSeptember 30, 2021 , consisting primarily of our net loss of$434.2 million , adjusted for non-cash items including$79.7 million in stock-based compensation expense,$4.3 million in depreciation and amortization,$4.1 million in noncash lease expense,$4.0 million in accretion of debt and$5.6 million of income from the derecognition of the LEO Call Option liability, as well as$25.0 million net cash outflow related to changes in operating assets and liabilities. The$25.0 million net cash outflow related to changes in operating assets and liabilities was attributed mainly to an increase of$8.9 million in other assets, an increase of$7.7 million in receivable from licensing and collaboration agreements, a decrease of$4.5 million in operating lease liabilities, a decrease of$4.4 million in accrued compensation and benefits and an increase of$3.7 million in prepaid expenses and other current assets, partially offset by an increase of$4.7 million in accrued research and development liabilities.
Net Cash Flows Provided by (Used in) Investing Activities
Net cash provided by investing activities was$435.2 million for the nine months endedSeptember 30, 2022 , consisting primarily of$452.8 million in maturities of marketable securities,$110.0 million in proceeds from the sale of our PRV,$10.0 million in proceeds under the Origin-Sentynl APA, and$28.8 million in proceeds from the sale of equity securities, partially offset by purchases of marketable securities of$134.6 million and purchases of investment in equity securities of$26.3 million . Net cash used in investing activities was$222.6 million for the nine months endedSeptember 30, 2021 , consisting primarily of purchases of marketable securities of$575.5 million , acquisition of intangible assets of$35.0 million , purchases of investment in equity securities of$24.0 million and purchases of property and equipment of$10.7 million , partially offset by$305.2 million and$98.9 million in maturities and sale, respectively, of marketable securities,$13.7 million increase in cash and cash equivalents from consolidation of PellePharm and$4.7 million sale of investment in equity securities.
Net Cash Flows (Used in) Provided by Financing Activities
Net cash used in financing activities was
Net cash provided by financing activities was$411.1 million for the nine months endedSeptember 30, 2021 , consisting primarily of net proceeds from the issuance of our 2029 Notes of$731.4 million , from the additional principal borrowing under the Amended Hercules Term Loan of$25.0 million and from stock option exercises of$14.3 million , partially offset by purchase of capped calls of$61.3 million , repurchases of our common stock of$198.5 million and prepayment of the Tranche A loan of$18.1 million . We also used cash of$85.1 million to repurchase the noncontrolling interest of Eidos and pay for related direct transaction costs. 54 --------------------------------------------------------------------------------
Critical Accounting Policies
Our management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance withUnited States generally accepted accounting principles. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as revenues, if any, and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no significant changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in the section titled "Management's Discussion and Analysis of Financial Condition and Operations" included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , as filed with theSEC , except for certain updates to our accounting policy on revenue recognition as discussed in Note 2 in our condensed consolidated financial statements as of and for the three and nine months endedSeptember 30, 2022 .
Recent Accounting Pronouncements
There have been no significant changes in recently adopted or issued accounting pronouncements from those disclosed in the section titled "Financial Statements and Supplementary Data" included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , as filed with theSEC . 55
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