What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-01 compared with 2024-05-02 · 155 added, 84 removed, 243 unchanged (50% of the section changed)

10 unchanged sentences

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.

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Food and Drug Administration.

We work across over 20 disease states at various stages of development.

We worked across over 20 disease states 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.

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We have incurred significant operating losses since our inception.

For the three months ended March 31, 2024 and 2023, we incurred net losses of $36.2 million and $142.7 million, respectively.

For the six months ended June 30, 2024 and 2023, we incurred net losses of $111.7 million and $303.4 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.

On April 30, 2024, the Company completed a $200.0 million private financing with external investors of TheRas, Inc., doing business as BridgeBio Oncology Therapeutics (BBOT), to accelerate the development of its oncology portfolio.

While we have undertaken activities in preparation for commercial launch readiness for our late-stage programs and a restructuring initiative to drive operational change in business processes, efficiencies and cost savings, we expect to continue to incur significant operating and net losses for at least the next several years.

In addition, we have very limited experience with commercialization, and we may not be able to generate significant revenues from product sales, if any, even if any of our product candidates are approved for commercial sale.

Further, we may not realize the anticipated efficiencies and

other benefits of our past and any future restructuring initiatives.

Additionally, failure to secure FDA approval for acoramidis will result in our inability to receive a $500.0 million milestone payment pursuant to the Funding Agreement, which would significantly harm our business, prospects, financial condition and results of operations.

In June 2024, BridgeBio Europe B.V.

(“BridgeBio B.V.”) entered into a commercial supply agreement with Bayer (“Bayer Supply Agreement”) with an initial 30-month term ending in December 2026, for which BridgeBio B.V.

will manufacture and supply to Bayer the commercial product ordered by Bayer solely for the use in the commercialization in the Licensed Territory under the Bayer Agreement.

Under the Bayer Supply Agreement, Bayer shall pay to BridgeBio B.V.

a commercial product per unit price equal to the applicable fully burdened manufacturing cost per unit of product, which shall include the cost of the API used to manufacture the product and the packaging price.

As of June 30, 2024 there have been no commercial product supply sales to Bayer.

On April 30, 2024, TheRas, Inc., doing business as BridgeBio Oncology Therapeutics (BBOT), a majority-owned subsidiary of the Company, completed a $200.0 million private equity financing with external investors to accelerate the development of its oncology portfolio.

As part of the private equity financing transaction, BBOT’s Certificate of Incorporation and Investors’ Rights Agreement were amended and restated to reflect a change in BBOT’s governance structure and composition of the board of directors, which was determined to be a VIE reconsideration event.

Based on the VIE reconsideration assessment, BBOT was deemed a VIE.

As a result of the change in the governance structure and composition of the board of directors, BridgeBio is no longer the primary beneficiary of BBOT, as it no longer has the power over key decisions that significantly impact BBOT’s economic performance.

Accordingly, BridgeBio deconsolidated BBOT on April 30, 2024.

During the three months ended June 30, 2024, we recognized a $126.3 million net gain from deconsolidation of a subsidiary which is presented on the condensed consolidated statements of operations for the three and six months ended June 30, 2024.

Upon the deconsolidation of BBOT, BridgeBio accounted for its retained investments in BBOT, for which it has significant influence through its ownership interest, using the equity method of accounting.

BBOT was also deemed a related party.

For the period May 1, 2024 through June 30, 2024, we recognized a net loss from equity method investment of $7.9 million.

As of June 30, 2024, the aggregate carrying amount of our equity method investment in BBOT is $117.0 million and is presented as “Investment in nonconsolidated entity” on our condensed consolidated balance sheets.

On March 1, 2024, certain subsidiaries of the Company, including Eidos Therapeutics, Inc., BridgeBio International GmbH and BridgeBio Europe B.V.

(collectively “the Seller Parties”), entered into an exclusive license agreement (the “Bayer Agreement”) with Bayer Consumer Care AG, a wholly-owned subsidiary of Bayer AG (“Bayer”), to develop and commercialize acoramidis as a treatment for transthyretin amyloidosis in the European Union and all member states of the European Patent Organization (the “Licensed Territory”).

Under the terms of the Bayer Agreement, the Seller Parties granted Bayer an exclusive license, effective upon the date that certain antitrust clearances have been obtained, to certain of the Seller Parties’ intellectual property rights to develop, manufacture and commercialize acoramidis (“AG10”) in the Licensed Territory.

In consideration for the license grant, the Seller Parties are entitled to receive an upfront payment of $135.0 million and will be eligible to receive up to $175.0 million in regulatory and sales milestone payments through 2026, and additional payments up to $450.0 million subject to the achievement of certain sales milestones.

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In exchange, QED will receive an upfront payment of $100.0 million and will be eligible to receive royalties up to the mid-twenties percent on sales of infigratinib in Japan, with the potential to receive up to $81.4 million in development and sales-based milestone payments.

On January 17, 2024, the Company and each of the guarantors entered into a Financing Agreement, which was amended on February 12, 2024 (the “Financing Agreement”), with the lenders party thereto (the “Lenders”) and Blue Owl Capital Corporation, as administrative agent for the Lenders (the “Administrative Agent”).

Pursuant to the terms and conditions of the Financing Agreement, the Lenders have agreed to extend a senior secured credit facility to the Company in an aggregate principal amount of up to $750.0 million comprised of (i) an initial term loan in an aggregate principal amount of $450.0 million (the “Initial Term Loan”) and (ii) one or more incremental term loans in an aggregate amount not to exceed $300.0 million (collectively, the “Incremental Term Loan,” and together with the Initial Term Loan, collectively, the “Term Loans”), subject to the satisfaction of certain terms and conditions set forth in the Financing Agreement.

On January 17, 2024, the Company and each of the guarantors entered into a Financing Agreement, which was amended on February 12, 2024 (the “Financing Agreement”) and June 20, 2024 (the Financing Agreement, as amended by the Second Amendment, the “Amended Financing Agreement”), with the lenders party thereto (the “Lenders”) and Blue Owl Capital Corporation, as administrative agent for the Lenders (the “Administrative Agent”).

Pursuant to the terms and conditions of the Amended Financing Agreement, the Lenders have agreed to extend a senior secured credit facility to the Company in an aggregate principal amount of up to $750.0 million comprised of (i) an initial term loan in an aggregate principal amount of $450.0 million (the “Initial Term Loan”) and (ii) one or more incremental term loans in an aggregate amount not to exceed $300.0 million (collectively, the “Incremental Term Loan,” and together with the Initial Term Loan, collectively, the “Term Loans”), subject to the satisfaction of certain terms and conditions set forth in the Amended Financing Agreement.

The Initial Term Loan was funded on January 17, 2024.

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In return, we granted the Purchasers the right to receive payments (the “Royalty Interest Payments”) equal to 5% of the global net sales of acoramidis (“Net Sales”), which under certain conditions may adjust to a maximum rate of 10% in 2027.

Each Royalty Interest Payment will become payable to the Purchasers on a quarterly basis after the Funding Date.

Each Royalty Interest Payment will become

payable to the Purchasers on a quarterly basis after the Funding Date.

In addition, the Seller Parties granted the collateral agent, for the benefit of the Purchasers, a security interest in specific assets related to acoramidis.

The Funding Agreement will terminate upon customary events, and also in the event the Funding Date does not occur on or prior to May 15, 2025 (in which case either party may terminate the Funding Agreement at no charge and without premium or penalty).

As of March 31, 2024, the Company has not received proceeds under the Funding Agreement.

As of June 30, 2024, the Company has not received proceeds under the Funding Agreement.

Refer to “Liquidity and Capital Resources” section for additional details regarding this agreement.

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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.

During the three months ended March 31, 2024 and 2023, our restructuring, impairment and related charges amounted to $3.4 million and $3.4 million, respectively, which consisted primarily of winding down costs, exit and other related costs, impairments and write-offs of long-lived assets, and severance and employee-related costs.

During the six months ended June 30, 2024 and 2023, our restructuring, impairment and related charges amounted to $6.3 million and $6.9 million, respectively, which consisted primarily of winding down costs, exit and other related costs, impairments and write-offs of long-lived assets, and severance and employee-related costs.

Results of Operations

The following table summarizes the results of our operations for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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Restructuring, impairment and related charges

Income (loss) from operations

Loss from operations

Interest income

Interest expense

Gain on deconsolidation of a subsidiary

Loss on extinguishment of debt

Net loss from equity method investment

Other income (expense), net

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Net loss attributable to common stockholders of BridgeBio

March 31, 2024

June 30, 2024

December 31, 2023

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Cash, Cash Equivalents, Marketable Securities, Restricted Cash and Investments in Equity Securities

As of March 31, 2024, we had cash, cash equivalents and marketable securities of $519.7 million and restricted cash of $0.1 million, compared to cash, cash equivalents and marketable securities of $375.9 million, restricted cash of $16.7 million and investments in equity securities of $58.9 million as of December 31, 2023.

Restricted cash as of December 31, 2023 primarily represents funds in a controlled account that was established in connection with the Loan and Security Agreement that is described in Note 9.

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $447.8 million and restricted cash of $139.4 million, compared to cash, cash equivalents and marketable securities of $375.9 million, restricted cash of $16.7 million and investments in equity securities of $58.9 million as of December 31, 2023.

Under the terms of the Amended Financing Agreement, the Company is required to deposit 75% of proceeds, net of certain permitted costs, received from certain asset sale transactions into an escrow account to be controlled by the Administrative Agent.

During the three months ended June 30, 2024, we received $235.0 million in aggregate from Bayer and Kyowa Kirin, and deposited net proceeds of $159.3 million into the escrow accounts, which was classified as “restricted cash” on the condensed consolidated balance sheet as of June 30, 2024.

Furthermore, under the terms of Amended Financing Agreement, between June 20, 2024 and through the earlier of the FDA approval date and November 30, 2024, the Company is able to request a release of funds in an aggregate amount not to exceed 50% of the original net cash proceeds received from asset sale transactions.

As of June 30, 2024, $20.0 million was released from the escrow accounts and classified as cash on the condensed consolidated balance sheet, with a remaining balance of $139.3 million in the escrow accounts classified as restricted cash.

Refer to Note 9 and Note 11 for further details regarding the Amended Financing Agreement, the Bayer Agreement and KKC Agreement.

Restricted cash as of December 31, 2023 primarily represents funds in a controlled account that was established in connection with the Loan and Security Agreement (“Amended Loan Agreement”) that is described in Note 9.

The use of such non-interest-bearing cash was restricted per the terms of the underlying amended loan agreement and was to be used solely for certain research and development expenses directly attributable to the performance of obligations associated with the Navire-BMS License Agreement, which is further described in Note 11.

Upon the termination of the Loan and Security Agreement and full repayment of the term loan in January 2024 (refer to Note 9 for details), the non-interest-bearing cash was no longer restricted and was reclassified to “Cash and cash equivalents” on the condensed consolidated balance sheets as of March 31, 2024.

Upon the termination of the Amended Loan Agreement and full repayment of the term loan in January 2024 (refer to Note 9 for details), the non-interest-bearing cash was no longer restricted.

The following table summarizes our revenue for the following periods:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Revenue for the three months ended March 31, 2024 consists mainly of $201.2 million from the recognition of the upfront license fee and services revenue under the Bayer Agreement and the KKC Agreement.

Revenue for the three months ended June 30, 2024 consists mainly of the recognition of services revenue under the Bayer Agreement and the KKC Agreement.

Revenue for the three months ended June 30, 2023 was primarily related to the recognition of services revenue under the Navire-BMS License Agreement.

Revenue for the six months ended June 30, 2024 consists mainly of $202.9 million from the recognition of the upfront license fee and services revenue under the Bayer Agreement and the KKC Agreement.

An additional $9.9 million of revenue was attributable to the remaining services revenue in connection with the Navire-BMS License Agreement as a result of the termination of the agreement.

Revenue for the three months ended March 31, 2023 was primarily related to the recognition of services revenue under the Navire-BMS License Agreement.

Revenue for the six months ended June 30, 2023 was primarily related to the recognition of services revenue under the Navire-BMS License Agreement.

The level of revenue, including license and service 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, the level of effort incurred for research and development contracted services, and the impact of entering into new licensing and collaboration agreements, if any.

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The following table summarizes our research and development expenses for the following periods:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Research and development

Research and development expenses increased by $48.1 million for the three months ended March 31, 2024, compared to the same period in 2023.

This change was primarily due to an increase in external costs of $21.7 million and personnel costs of $16.5 million to support the advancement of research and development for our key programs, an increase in licensing fees of $8.9 million, and an increase in stock-based compensation of $1.0 million.

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, purchase of active pharmaceutical ingredients, or APIs, in connection with our preclinical, contract manufacturing and clinical development activities and are tracked on a program-by-program basis.

Research and development expenses increased by $7.2 million for the three months ended June 30, 2024, compared to the same period in 2023.

This change was primarily due to an increase in personnel costs of $11.9 million and external costs of $2.4 million to support the advancement of research and development for our key programs, an increase in licensing fees of $1.3 million, which was offset by a decrease in stock-based compensation of $8.3 million.

Research and development expenses increased by $55.3 million for the six months ended June 30, 2024, compared to the same period in 2023.

This change was primarily due to an increase in personnel costs of $28.4 million and external costs of $24.1 million to support the advancement of research and development for our key programs, an increase in licensing fees of $10.1 million, which was offset by a decrease in stock-based compensation of $7.3 million.

Research and development costs consist primarily of external costs, such as fees paid to consultants, contractors, contract manufacturing organizations (“CMOs”), and contract research organizations, or CROs, purchase of active pharmaceutical ingredients, or APIs, in connection with our preclinical, contract manufacturing 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.

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The following table summarizes our research and development expenses by program incurred for the following periods:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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The following table summarizes our selling, general and administrative expenses for the following periods:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Selling, general and administrative

Selling, general and administrative expenses increased by $34.7 million for the three months ended March 31, 2024, compared to the same period in 2023, mainly due to nonrecurring deal-related expenses of $14.0 million, an increase in personnel related expense of $7.8 million and external costs of $7.3 million to support commercialization readiness efforts, and an increase in stock based compensation expense of $4.4 million.

Selling, general and administrative expenses increased by $23.4 million for the three months ended June 30, 2024, compared to the same period in 2023, mainly due to an increase in external costs of $10.9 million and personnel related expense of $10.0 million to support commercialization readiness efforts, and an increase in stock-based compensation expense of $2.5 million.

Selling, general and administrative expenses increased by $58.1 million for the six months ended June 30, 2024, compared to the same period in 2023, mainly due to an increase in external costs of $19.5 million and personnel related expense of $17.7 million to support commercialization readiness efforts, nonrecurring deal-related expenses of $14.0 million, and an increase in stock-based compensation expense of $6.9 million.

Restructuring, Impairment and Related Charges

The following table summarizes our restructuring, impairment and related charges during the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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The following table summarizes our interest income during the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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Interest income consists of interest income earned on our cash equivalents and marketable securities.

The amount of interest income during the three months ended March 31, 2024 as compared to the same period in 2023 was generally consistent.

The amount of interest income during the three and six months ended June 30, 2024 as compared to the same period in 2023 was generally consistent.

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.

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The following table summarizes our interest expense during the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Interest expense

Interest expense consists primarily of interest expense incurred under our 2029 Notes issued in January 2021, our 2027 Notes issued in March 2020, our term loan under the Financing Agreement, dated January 17, 2024 and amended on February 12, 2024, and our term loan under the Loan and Security Agreement dated November 17, 2021, as amended.

Our outstanding term loan principal balance under our Loan and Security Agreement was fully repaid on January 17, 2024 upon receiving proceeds from the Financing Agreement plus additional cash from our operations, for which we were extended a senior secured credit facility of $450.0 million in an aggregate principal amount for the Initial Term Loan, which is subject to variable interest rates (refer to the Liquidity and Capital Resources section below and Notes 9 for details regarding the term Loan and the Financing Agreement).

As a result of the variable interest rates under our Financing Agreement we expect our interest expense will continue to fluctuate in the future.

Interest expense consists primarily of interest expense incurred under our 2029 Notes issued in January 2021, our 2027 Notes issued in March 2020, our term loan under the Amended Financing Agreement and our term loan under the Amended Loan Agreement.

Our outstanding term loan principal balance under our Amended Loan Agreement was fully repaid on January 17, 2024 upon receiving proceeds from the Financing Agreement plus additional cash from our operations, for which we were extended a senior secured credit facility of $450.0 million in an aggregate principal amount for the Initial Term Loan, which is subject to variable interest rates (refer to the Liquidity and Capital Resources section below and Notes 9 for details regarding the Term Loan and the Amended Financing Agreement).

As a result of the variable interest rates under our Amended Financing Agreement we expect our interest expense will continue to fluctuate in the future.

Gain on Deconsolidation of a Subsidiary

The following table summarizes our gain on deconsolidation of a subsidiary during the periods indicated:

Three Months Ended June 30,

Six Months Ended June 30,

Gain on deconsolidation of a subsidiary

On April 30, 2024, BBOT, a majority-owned subsidiary of the Company, completed a $200.0 million private equity financing with external investors.

As a result of the private equity financing transaction, BridgeBio deconsolidated BBOT on April 30, 2024 and recognized a net gain from deconsolidation of $126.3 million for the three and six months ended June 30, 2024.

Refer to Note 6 for further details regarding the BBOT private equity financing transaction.

Loss on Extinguishment of Debt

The following table summarizes our loss on extinguishment of debt during the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Loss on extinguishment of debt

On January 17, 2024, upon receiving proceeds from the Financing Agreement, we fully repaid the term loan under the Loan and Security Agreement and recognized a loss on extinguishment of debt of $26.6 million in our condensed consolidated statements of operations.

On January 17, 2024, upon receiving proceeds from the Financing Agreement, we fully repaid the term loan under the Amended Loan Agreement and recognized a loss on extinguishment of debt of $26.6 million in our condensed consolidated statements of operations.

Refer to Note 9 to our condensed consolidated financial statements.

Net Loss from Equity Method Investment

The following table summarizes our share in net loss of equity method investment during the periods indicated:

Three Months Ended June 30,

Six Months Ended June 30,

Net loss from equity method investment

Upon the deconsolidation of BBOT, BridgeBio accounted for its retained investment in BBOT using the equity method of accounting.

For the period May 1, 2024 through June 30, 2024, we recorded a net loss from equity method investment of $7.9 million.

Other Income (Expense), Net

The following table summarizes our other income (expense), net during the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Other income (expense), net

Other income (expense), net for the three months ended March 31, 2024 consists mainly of the net realized gain of $8.1 million from our investments in equity securities.

Other income (expense), net for the three months ended March 31, 2023 consists mainly of the $1.2 million loss from the deconsolidation of PellePharm, partially offset by the net realized and unrealized gains from changes in fair value of our equity security investments of $1.0 million.

Other income (expense), net for the three months ended June 30, 2024 consists mainly of a $1.1 million disposition fee incurred under the Amended Financing Agreement in relation to the BBOT private equity financing transaction, partially offset by $0.8 million in other income recognized under the Transition Service Agreement with BBOT.

Other income (expense), net for the three months ended June 30, 2023 consists mainly of the net realized and unrealized gains from changes in fair value of our equity security investments of $1.4 million.

Other income (expense), net for the six months ended June 30, 2024 consists mainly of the net realized gain of $8.1 million from our investments in equity securities.

Other income (expense), net for the six months ended June 30, 2023 consists mainly of the net realized and unrealized gains from changes in fair value of our investments in equity securities of $2.4 million, partially offset by a $1.2 million loss from the deconsolidation of PellePharm.

Net Loss Attributable to Redeemable Convertible Noncontrolling Interests and Noncontrolling Interests

The following table summarizes our net loss attributable to redeemable convertible noncontrolling interests and noncontrolling interests during the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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Liquidity and Capital Resources

We have historically financed our operations primarily through the sale of our equity securities, issuance of convertible notes, debt borrowings, and to a lesser extent, revenue from certain licensing arrangements and sales of certain assets.

As of March 31, 2024, we had cash, cash equivalents and marketable securities of $519.7 million and restricted cash of $0.1 million.

The funds held by our wholly-owned subsidiaries and controlled entities are available for specific entity usage.

As of March 31, 2024, our outstanding debt was $1.7 billion, net of debt discounts and issuance costs and accretion.

We have historically financed our operations primarily through the sale of our equity securities, issuance of convertible notes, debt borrowings, and revenue from certain licensing and collaboration agreements and sales of certain assets.

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $447.8 million and restricted cash of $139.4 million, including funds held by our wholly-owned subsidiaries and controlled entities, which are available only for specific entity usage.

As of June 30, 2024, 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 three months ended March 31, 2024, we incurred net losses of $36.2 million.

We had an accumulated deficit as of March 31, 2024 of $2.6 billion.

While we have undertaken costs related to commercial launch readiness for our late-stage programs and 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.

For the six months ended June 30, 2024, we incurred net losses of $111.7 million.

We had an accumulated deficit as of June 30, 2024 of $2.7 billion.

In particular, to the extent we advance our programs into and through later-stage clinical trials without a partner, we will incur substantial expenses.

Further, we may not realize the anticipated efficiencies and other benefits of our past and any future restructuring initiatives.

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 (refer to Note 9 to our condensed consolidated financial statements), obligations under our real estate leases (refer to Note 13 to our condensed consolidated financial statements) and the remaining liabilities under our restructuring initiative (refer to Note 16 to our condensed consolidated financial statements).

Our short-term and long-term liquidity requirements include contractual payments related to our 2029 Notes, 2027 Notes and term loan (refer to Note 9 to our condensed consolidated financial statements), obligations under our real estate leases (refer to Note 13 to our condensed consolidated financial statements), accounts payable, accrued liabilities and the remaining liabilities under our restructuring initiative (refer to 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 (refer to Note 8 to our condensed consolidated financial statements).

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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, restricted cash, and receivables from licensing and collaboration agreements 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.

We expect our cash and cash equivalents, marketable securities and restricted cash 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 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.

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achievement of certain sales milestones.

In addition, the Seller Parties are entitled to receive royalties according to a tiered structure starting in the low-thirties percent on net sales by Bayer of acoramidis in the Licensed Territory, subject to reduction under certain circumstances as provided in the Bayer Agreement.

Our condensed consolidated balance sheet as of March 31, 2024 includes a receivable from licensing and collaboration agreements balance of $135.0 million related to the upfront license fee.

On February 7, 2024, our subsidiary, QED, and Kyowa Kirin Co., Ltd (“Kyowa Kirin” or “KKC”) entered into a partnership wherein QED granted Kyowa Kirin an exclusive license to develop, manufacture, and commercialize infigratinib for achondroplasia, hypochondroplasia, and other skeletal dysplasias in Japan in accordance with the terms therein (“KKC Agreement”).

Our condensed consolidated balance sheet as of March 31, 2024 includes an unbilled receivable balance of $100.0 million related to the upfront license fee.

We anticipate receiving $235.0 million in aggregate from Bayer and KKC during the three months ended June 30, 2024.

Refer to the “Term Loan, net” section below for details regarding the escrow account deposits required for asset sales transactions under the Financing Agreement.

Furthermore, under the terms of the Amended Financing Agreement, the Company is required to deposit 75% of proceeds, net of certain permitted costs, received from certain asset sale transactions into an escrow account to be controlled by the Administrative Agent.

The Bayer and KKC agreements meet the requirements of asset sale transactions under the terms of the Amended Financing Agreement.

During the three months ended June 30, 2024, we received $235.0 million in aggregate from Bayer and KKC, and deposited net proceeds of $159.3 million into the escrow accounts, which was classified as “restricted cash” on the condensed consolidated balance sheet as of June 30, 2024.

Refer to the “Term Loan, net” section below for details regarding the escrow accounts deposits required for asset sales transactions under the Amended Financing Agreement.

Public offerings

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and Mizuho Securities USA LLC, as representatives of several underwriters (collectively, the “2024 Underwriters”), relating to an underwritten public offering (the “2024 Follow-on offering”) of 8,620,690 shares of the Company’s common stock, $0.001 par value per share, at a public offering price of $29.00 per share.

The Company also granted the 2024

Underwriters a 30-day option to purchase, at the public offering price less underwriting discounts and commissions, up to an additional 1,293,103 shares of Common Stock, which the 2024 Underwriters exercised in full on the closing of the 2024 Follow-on offering.

The Company also granted the 2024 Underwriters a 30-day option to purchase, at the public offering price less underwriting discounts and commissions, up to an additional 1,293,103 shares of Common Stock, which the 2024 Underwriters exercised in full on the closing of the 2024 Follow-on offering.

The Company paid the Underwriters a commission of 3.6% of the aggregate gross proceeds received from all sales of the common stock under the Follow-on Agreement.

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We will pay the ATM Sales Agents a commission of up to 3.0% of the aggregate gross proceeds received from all sales of the common stock under the 2023 ATM Agreement.

During the three months ended March 31, 2024, 1,061,991 shares were issued under the ATM Agreement, for net proceeds of $38.1 million, after deducting sales agent fees and commissions of $0.6 million.

As of March 31, 2024, we are still eligible to sell up to $345.3 million of our common stock pursuant to the ATM Agreement under the 2023 Shelf.

As of March 31, 2024, we have borrowings under the 2029 Notes, the 2027 Notes and the Term Loan under the Financing Agreement, which are discussed below.

During the three and six months ended June 30, 2024, 1,061,991 shares were issued under the ATM Agreement, for net proceeds of $38.1 million, after deducting sales agent fees and commissions of $0.6 million.

As of June 30, 2024, we are still eligible to sell up to $345.3 million of our common stock pursuant to the ATM Agreement under the 2023 Shelf.

As of June 30, 2024, we have borrowings under the 2029 Notes, the 2027 Notes and the Term Loan under the Amended Financing Agreement, which are discussed below.

2029 Notes, net

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The Company may prepay the Term Loans at any time (in whole or in part) or be required to make mandatory prepayments upon the occurrence of certain customary prepayment events.

The mandatory prepayment events include permitted asset sales

transaction (which include any sale, lease, assignment, conveyance, transfer, license or exchange of property) that occur prior to the date the FDA approves a first NDA for acoramidis, which would require the Company to deposit 75% of net proceeds received from such transactions into an escrow account controlled by the Administrative Agent, and the Company may also be subject to a specified disposition fee per transaction for certain asset sale transactions.

The mandatory prepayment events include certain permitted asset sales transactions (which include certain sales, leases, assignments, conveyances, transfers, licenses or exchanges of property) that occur prior to the date the FDA approves a first NDA for acoramidis, which would require the Company to deposit 75% of net cash received from such transactions into an escrow account controlled by the Administrative Agent, and the Company may also be subject to a specified disposition fee per transaction for certain asset sale transactions.

In certain instances and during certain time periods, prepayments will be subject to customary prepayment fees.

The amount of any prepayment fee may vary, but the maximum amount that may be due with any such prepayment would be an amount equal to 3.00% of the Term Loans being prepaid at such time, plus a customary make whole amount.

We have entered into asset sales transactions that occurred during the three months ended March 31, 2024 for the exclusive license agreements with Bayer and Kyowa Kirin for which the Company will deposit 75% of the proceeds, net of certain permitted costs, upon receipt of the upfront payments from Bayer and Kyowa Kirin, into the escrow account.

Refer to Note 11 for further details regarding the exclusive license agreements with Bayer and Kyowa Kirin.

We have entered into asset sales transactions that occurred during the three months ended March 31, 2024 for the exclusive license agreements with Bayer Consumer Care AG and Kyowa Kirin Co., Ltd, for which the Company is required to deposit 75% of the proceeds, net of certain permitted costs, upon receipt of the upfront payments from Bayer Consumer Care AG and Kyowa Kirin Co., Ltd, into the escrow accounts.

During the three months ended June 30, 2024, we received $235.0 million in aggregate from Bayer Consumer Care AG and Kyowa Kirin Co., Ltd, and deposited net proceeds of $159.3 million into the escrow accounts.

Refer to Note 11 for further details regarding the exclusive license agreements with Bayer Consumer Care AG and Kyowa Kirin Co., Ltd.

The completion of the $200.0 million private equity financing with external investors of BBOT.

was considered an asset sale transaction that was subject to a disposition fee under the Financing Agreement.

Accordingly, we paid a disposition fee of $1.1 million to the Administrative Agent during the three months ended June 30, 2024.

Refer to Note 6 for further details regarding the BBOT private equity financing transaction.

The Financing Agreement contains affirmative covenants and negative covenants applicable to the Company and its subsidiaries that are customary for financings of this type.

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Upon the occurrence of an event of default, the Lenders may, among other things, accelerate the Company’s obligations under the Financing Agreement.

On June 20, 2024, the Company and each of the guarantors entered into the Second Amendment to the Financing Agreement.

Under the Amended Financing Agreement, between June 20, 2024 and through the earlier of the FDA approval date and November 30, 2024, the Company is able to request a release of funds in an aggregate amount not to exceed 50% of the original net cash proceeds received from asset sale transactions.

As of June 30, 2024, $20.0 million was released from the escrow accounts and classified as cash, with a remaining balance of $139.3 million in the escrow accounts classified as “restricted cash” on the condensed consolidated balance sheet.

Furthermore, under the Amended Financing Agreement, the minimum qualified cash balance was amended from $70.0 million to $70.0 million plus 40% of any cash released by the Company from the escrow accounts, at all times.

As of June 30, 2024, the minimum unrestricted qualified cash balance was $78.0 million.

The following table summarizes our cash flows during the periods indicated:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

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Net cash provided by financing activities

Net increase in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and

restricted cash

Net Cash Flows Used in Operating Activities

Net cash used in operating activities was $219.5 million for the three months ended March 31, 2024, consisting primarily of our net loss of $36.2 million;

adjusted for non-cash items totaling $41.8 million, which primarily includes $26.6 million in loss on extinguishment of debt from the repayment of the term loan under the Amended Loan Agreement, $17.1 million in stock-based compensation expense, offset by $8.1 million net gain from investment in equity securities;

and $225.2 million in net cash outflow related to changes in operating assets and liabilities.

The $225.2 million net cash outflow related to changes in operating assets and liabilities was attributed mainly to an increase of $233.7 million in receivables from licensing and collaboration agreements primarily related to a $135.0 million receivable from the Bayer Agreement and a $100.0 million receivable from the KKC Agreement, an increase in deferred revenue of $24.0 million primarily related to the Bayer and KKC Agreements, a decrease of $15.0 million in accrued compensation and benefits, a decrease of $5.9 million in accounts payable, and partially offset by an increase of $11.2 million in accrued research and development liabilities, which are primarily due to timing of payments.

Net cash used in operating activities was $144.3 million for the three months ended March 31, 2023, consisting primarily of our net loss of $142.7 million, adjusted for non-cash items totaling $30.2 million of which primarily includes $21.9 million in stock-based compensation expense, $3.3 million in accrued payment-in-kind interest, and $2.3 million in accretion of debt, as well as $31.8 million net cash outflow related to changes in operating assets and liabilities.

The $31.8 million net cash outflow related to changes in operating assets and liabilities was attributed mainly to a decrease of $18.4 million in accrued compensation and benefits mainly due to timing of payments, a decrease of $6.4 million in accrued professional and other liabilities primarily due to timing of payments, an increase of $3.5 million in prepaid expenses and other current assets, and a decrease of $3.8 million in accounts payable due to timing of payments, partially offset by a decrease of $6.3 million from licensing and collaboration agreements receivables primarily due to collections.

Net cash used in operating activities was $144.8 million for the six months ended June 30, 2024, consisting primarily of our net loss of $111.7 million, adjusted for non-cash items totaling $54.4 million, which primarily includes a $126.3 million net gain on the deconsolidation of a subsidiary, $8.1 million net realized gain from investment in equity securities, offset by $38.5 million in stock-based compensation expense, $26.6 million in loss on extinguishment of debt from the repayment of the term loan under the Amended Loan Agreement, net loss from equity method investment of $7.9 million, and $3.7 million in accretion of debt;

and $21.3 million in net cash inflow related to changes in operating assets and liabilities.

The $21.3 million net cash inflow related to changes in operating assets and liabilities was attributed mainly to an increase in deferred revenue of $22.2 million primarily related to the Bayer Agreement and KKC Agreement, an increase of $8.9 million in accounts payable, and an increase of $7.1 million in accrued research and development liabilities, partially offset by a decrease of $8.4 million in accrued compensation and benefits and a decrease in prepaid expenses and other current assets of $6.5 million, which are primarily due to timing of payments.

Net cash used in operating activities was $257.7 million for the six months ended June 30, 2023, consisting primarily of our net loss of $303.4 million, adjusted for non-cash items totaling $64.0 million, which primarily includes $49.1 million in stock-based compensation expense, $6.7 million in accrued payment-in-kind interest, and $4.6 million in accretion of debt, as well as $18.2 million net cash outflow related to changes in operating assets and liabilities.

The $18.2 million net cash outflow related to changes in operating assets and liabilities was attributed mainly to a decrease of $11.3 million in accrued research and development liabilities and a decrease of $11.1 million in accrued compensation and benefits mainly due to timing of payments, a decrease of $4.1 million in accounts payable due to timing of payments, partially offset by a decrease of $8.5 million from licensing and collaboration agreements receivables primarily due to collections.

Net Cash Flows Provided by Investing Activities

Net cash provided by investing activities was $22.8 million for the three months ended March 31, 2024, attributable primarily to $63.2 million in proceeds from the sale of equity securities, $25.7 million in special cash dividends received from equity securities, partially offset by purchases of marketable securities of $44.4 million and purchases of investments in equity securities of $20.3 million.

Net cash provided by investing activities was $12.3 million for the three months ended March 31, 2023, attributable primarily to $18.0 million in maturities of marketable securities, $42.3 million in proceeds from the sale of equity securities, partially offset by purchases of investments in equity securities of $47.5 million.

Net cash provided by investing activities was $25.8 million for the six months ended June 30, 2024, attributable primarily to $63.2 million in proceeds from the sale of equity securities, $55.0 million in proceeds from the maturities of marketable securities, $25.7 million in special cash dividends received from equity securities, partially offset by purchases of marketable securities of $93.8 million and purchases of investments in equity securities of $20.3 million.

Net cash provided by investing activities was $16.4 million for the six months ended June 30, 2023, attributable primarily to $67.1 million in proceeds from the sale of equity securities, $41.6 million in maturities of marketable securities, partially offset by purchases of investment in equity securities of $71.5 million and purchases of marketable securities of $19.8 million.

Net Cash Flows Provided by Financing Activities

Net cash provided by financing activities was $279.5 million for the three months ended March 31, 2024, consisting primarily of $450.0 million in proceeds from the term loan under the Financing Agreement, $315.3 million in net proceeds from the issuance of common stock through public offerings, and partially offset by $473.4 million repayment of the term loan under the Amended Loan Agreement, and $12.3 million in issuance costs and discounts associated with the Financing Agreement.

Net cash provided by financing activities was $150.2 million for the three months ended March 31, 2023, consisting primarily of $143.0 million in net proceeds from the issuance of common stock in the 2023 Follow-on offering.

Net cash provided by financing activities was $273.8 million for the six months ended June 30, 2024, consisting primarily of $450.0 million in proceeds from the term loan under the Financing Agreement, $314.8 million in net proceeds from the issuance of common stock through public offerings, and partially offset by $473.4 million repayment of the term loan under the Amended Loan Agreement, and $16.0 million in issuance costs and discounts associated with the Amended Financing Agreement.

Net cash provided by financing activities was $149.0 million for the six months ended June 30, 2023, consisting primarily of $144.0 million in net proceeds from the issuance of common stock through the Follow-on offering.

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 with United States generally accepted accounting principles.

Our management’s discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with United 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.

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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 ended December 31, 2023, as filed with the SEC, except for certain updates to our accounting policy as discussed in Note 2 in our condensed consolidated financial statements as of and for the three months ended March 31, 2024.

Recent Accounting Pronouncements

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Quantitative and Qualitati ve Disclosures About Market Risk

As of March 31, 2024, we held cash, cash equivalents, marketable securities and restricted cash (current) of $519.8 million.

As of June 30, 2024, we held cash, cash equivalents, marketable securities and restricted cash (current) of $587.2 million.

Our cash equivalents consist of amounts invested in money market funds;

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We do not believe that our cash and cash equivalents have a significant risk of default or illiquidity.

As of March 31, 2024, our 2029 Notes and 2027 Notes had principal balances of $747.5 million and $550.0 million, respectively, which bear fixed interest rates that are not subject to variability as a result to changes in interest rates.

However, as of March 31, 2024, our term loan under the Financing Agreement had a principal balance of $450.0 million, which bears variable interest rates that are subject to variability as a result of changes in interest rates.

The effect of a hypothetical 10% increase in interest rates applicable to the Financing Agreement would increase our interest expense on our term loan by $0.5 million for the three months ended March 31, 2024.

Inflation has increased during the period covered by this Quarterly Report on Form 10-Q, and is expected to continue to increase for the near future.

As of June 30, 2024, our 2029 Notes and 2027 Notes had principal balances of $747.5 million and $550.0 million, respectively, which bear fixed interest rates that are not subject to variability as a result of changes in interest rates.

However, as of June 30, 2024, our term loan under the Amended Financing Agreement had a principal balance of $450.0 million, which bears variable interest rates that are subject to variability as a result of changes in interest rates.

The effect of a hypothetical 10% increase in interest rates applicable to the Amended Financing Agreement would increase our interest expense on our term loan by $0.2 million and $0.7 million for the three and six months ended June 30, 2024, respectively.

Inflation has decreased during the period covered by this Quarterly Report on Form 10-Q, and is expected to continue to decrease for the near future.

Inflationary factors, such as increases in the cost of our raw materials, clinical supplies, interest rates and overhead costs may adversely affect our operating results.

Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect in the near future if inflation rates continue to rise.

We do not believe that inflation has had a material impact on our financial position or results of operations to date.

Significant adverse changes in inflation and prices in the future could result in material losses.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis