BridgeBio Pharma, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 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 ended December 31, 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 22, 2024. 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 ended December 31, 2023, 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”, the “Company”, or “BridgeBio”) is a new type of biopharmaceutical company founded to discover, create, test and deliver transformative medicines to treat patients who suffer from genetic diseases. 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 18 Investigational New Drug applications, or INDs, and had two products approved by the U.S. Food and Drug Administration (“FDA”). We have 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. 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, administrative, 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, sale of certain assets and, to a lesser extent, upfront and milestone payments from licensing arrangements. We have incurred significant operating losses since our inception. For the nine months ended September 30, 2024 and 2023, we incurred net losses of $276.0 million and $482.9 million, respectively. We continue to evaluate our research and development pipelines and restructure our business to streamline costs and expenses. We also continue to explore business opportunities to partner, divest or delay certain research and development programs to drive operational changes in our business processes, efficiencies and cost savings to advance our corporate strategy and development programs. We expect that these initiatives, including restructuring will reduce our operating expenses. 49 As of November 12, 2024, the issuance date of the condensed consolidated financial statements for the nine months ended September 30, 2024, we concluded that there is substantial doubt about our ability to continue as a going concern for a period of one year from the date that these condensed consolidated financial statements are issued due to our history of recurring losses from operations incurred since inception and our expectation of continuing operating losses for the foreseeable future. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes we will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. We are entitled to receive a $500.0 million milestone payment under our Funding Agreement (described in Note 10 of our condensed consolidated financial statements) upon obtaining the FDA approval of acoramidis. We plan to alleviate substantial doubt by obtaining the $500.0 million milestone payment under our Funding Agreement together with product revenues from the commercial sale of acoramidis, if approved. Although we anticipate receiving FDA approval for acoramidis in late November 2024, we cannot guarantee that we will receive such approval or the resulting milestone payment on a timely basis, or at all, or that we will generate the expected product revenues from the sale of acoramidis, and we may need to raise additional capital to fund our operations. There can be no assurance that any additional financing will be available to us. Failure to obtain FDA approval for acoramidis will result in our inability to receive the $500.0 million milestone payment pursuant to the Funding Agreement, which may significantly harm our business, prospects, financial condition and results of operations. Furthermore, there can be no assurance that in the event we require additional financing, such financing will be available. 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. 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. Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending may have a material adverse effect on our ability to achieve our intended business objectives. Since inception through August 16, 2024, Portal Therapeutics, Inc. and Sub21, Inc. were our majority-owned consolidated subsidiaries. On August 16, 2024, we contributed all of our equity ownership in these entities to GondolaBio, LLC and as a result, Portal Therapeutics, Inc. and Sub21, Inc. were deconsolidated in conjunction with the GondolaBio transaction below. GondolaBio was formed on June 5, 2024 and the Company was the sole member. On August 16, 2024, based on the recommendation of a special committee of independent and disinterested directors of BridgeBio, we entered into a transaction agreement (the “Transaction Agreement”) providing for the formation and funding by certain third party investors of GondolaBio, LLC, a Delaware limited liability company (“GondolaBio”), a legal joint venture entity for the purpose of researching, developing, manufacturing and commercializing pharmaceutical products, including certain assets contributed to GondolaBio by BridgeBio. The investors providing financing to GondolaBio consist of an investor syndicate, including Viking Global Investors LP, Patient Square Capital, Sequoia Capital, Frazier Life Sciences, Cormorant Asset Management, Aisling Capital and an entity owned by Neil Kumar, the Company’s Chief Executive Officer. The investors have committed $300.0 million of tranched financing to GondolaBio, of which $60.0 million had been contributed as of September 30, 2024. We contributed certain assets and our equity in Portal Therapeutics, Inc. and Sub21, Inc. to GondolaBio. Upon completion of the initial contributions, the Company’s equity ownership in GondolaBio was 45.5%, which had a fair value of $50.0 million, and will be subject to reduction as additional tranches of capital contributions are funded. On August 16, 2024, in conjunction with the Transaction Agreement, GondolaBio’s limited liability company agreement was amended and restated to reflect a change in its governance structure and composition of the board of managers, which was determined to be a VIE reconsideration event. Based on the VIE reconsideration assessment, GondolaBio was deemed a VIE. As a result of the change in governance structure and composition of the board of managers, we are no longer the primary beneficiary, as we no longer have the power over key decisions that significantly impact GondolaBio’s economic performance. Accordingly, we deconsolidated GondolaBio, inclusive of Portal Therapeutics, Inc. and Sub21, Inc., on August 16, 2024. On August 16, 2024, we recognized an approximate $52.0 million net gain from deconsolidation of subsidiaries which is presented on the condensed consolidated statements of operations for the nine months ended September 30, 2024. Upon the deconsolidation of GondolaBio, we accounted for our investment in GondolaBio, for which we had significant influence through our ownership interest, using the equity method of accounting as of August 16, 2024. GondolaBio was also deemed a related party. For the period August 16, 2024 through September 30, 2024, we recognized a net loss from equity method investment of $1.4 million. As of September 30, 2024, the aggregate carrying amount of our equity method investment in GondolaBio is $48.6 million and is presented as part of “Investment in nonconsolidated entities” on our condensed consolidated balance sheets. 50 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, we are no longer the primary beneficiary of BBOT, as we no longer have the power over key decisions that significantly impact BBOT’s economic performance. Accordingly, we deconsolidated BBOT on April 30, 2024. On April 30, 2024, we recognized a $126.3 million net gain from deconsolidation of subsidiaries which is presented on the condensed consolidated statements of operations for the nine months ended September 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 September 30, 2024, we recognized a net loss from equity method investment of $13.1 million. As of September 30, 2024, the aggregate carrying amount of our equity method investment in BBOT is $111.8 million and is presented as part of “Investment in nonconsolidated entities” on our condensed consolidated balance sheets. On March 1, 2024, certain subsidiaries of BridgeBio, 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 (previously known as 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 (of which $75.0 million is for a regulatory milestone dependent upon EU Commission Regulatory approval of acoramidis on or before December 31, 2025), and additional payments up to $450.0 million subject to the 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. 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 September 30, 2024, there have been no commercial product supply sales to Bayer. 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”). 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”) 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. Incremental Term Loans are available at the Company’s and the Lenders’ mutual consent from time to time after January 17, 2024. Refer to “Liquidity and Capital Resources” section for additional details regarding this agreement. On January 17, 2024, we and our subsidiaries entered into a Funding Agreement with LSI Financing 1 Designated Activity Company and CPPIB Credit Europe S.à r.l. together, the (“Purchasers”). Pursuant to the Funding Agreement, the Purchasers agreed to pay to the Company $500.0 million (net of certain transaction expenses) upon the first FDA approval of acoramidis, subject to certain conditions relating to the FDA approval and other customary conditions (such date of payment, “Funding Date”). 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. 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 51 terminate the Funding Agreement at no charge and without premium or penalty). As of September 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. 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. In January 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. Upon entering into the Bayer Agreement and termination of the Navire-BMS License Agreement in March 2024 (refer to Note 11 for details regarding these transactions) and our announced decision to cease pursuing development of BBP-631, the Company’s investigational adeno-associated virus 5 gene therapy, for congenital adrenal hyperplasia (“CAH”) in September 2024, we have committed to additional restructuring plans to reprioritize and advance our corporate strategy and development programs. We estimate that we will incur a remaining $6.0 million to $8.0 million in restructuring charges, consisting primarily of winding down costs, exit and other related costs, and severance and employee-related costs. Our estimate of the 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. During the nine months ended September 30, 2024 and 2023, our restructuring, impairment and related charges amounted to $10.9 million and $7.2 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (in thousands) Revenue $ 2,732 $ 4,091 $ 216,020 $ 7,558 Cost of revenue 598 598 1,794 1,848 Research and development 120,444 125,136 376,111 325,485 Selling, general and administrative 68,819 35,777 194,149 103,007 Restructuring, impairment and related charges 4,621 272 10,912 7,172 Loss from operations (191,750 ) (157,692 ) (366,946 ) (429,954 ) Interest income 3,296 3,793 12,566 12,460 Interest expense (23,061 ) (20,306 ) (69,469 ) (61,021 ) Gain on deconsolidation of subsidiaries 52,027 — 178,321 — Loss on extinguishment of debt — — (26,590 ) — Net loss from equity method investments (6,563 ) — (14,488 ) — Other income (expense), net 1,797 (5,283 ) 10,648 (4,408 ) Net loss (164,254 ) (179,488 ) (275,958 ) (482,923 ) Net loss attributable to redeemable convertible noncontrolling interests and noncontrolling interests 2,214 2,489 5,246 7,869 Net loss attributable to common stockholders of BridgeBio (162,040 ) (176,999 ) (270,712 ) (475,054 ) September 30, 2024 December 31, 2023 (in thousands) Cash and cash equivalents $ 266,324 $ 375,935 Restricted cash 139,409 16,653 Investments in equity securities — 58,949 52 Cash, Cash Equivalents, Restricted Cash and Investments in Equity Securities As of September 30, 2024, we had cash and cash equivalents of $266.3 million and restricted cash of $139.4 million, compared to cash and cash equivalents 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. 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 September 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 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. Revenue The following table summarizes our revenue for the following periods: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change (in thousands) Revenue $ 2,732 $ 4,091 $ (1,359 ) $ 216,020 $ 7,558 $ 208,462 Revenue for the three months ended September 30, 2024 consists mainly of the recognition of services revenue under the Bayer Agreement and the KKC Agreement. Revenue for the three months ended September 30, 2023 was primarily related to the recognition of license revenue for the shipment of clinical supplies to our partners pursuant to our executed supply agreements and services revenue under the Navire-BMS License Agreement. Revenue for the nine months ended September 30, 2024 consists mainly of $205.3 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 nine months ended September 30, 2023 was primarily related to the recognition of license revenue for the shipment of clinical supplies to our partners pursuant to our executed supply agreements and 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. Operating Costs and Expenses Research and Development Expenses The following table summarizes our research and development expenses for the following periods: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change (in thousands) Research and development $ 120,444 $ 125,136 $ (4,692 ) $ 376,111 $ 325,485 $ 50,626 53 Research and development expenses increased by $4.7 million for the three months ended September 30, 2024, compared to the same period in 2023. This change was primarily due to a decrease in licensing fees of $10.1 million, a decrease in stock-based compensation of $2.0 million and a decrease in external costs of $1.4 million, mainly due to the deconsolidation of affiliates, which was partially offset by an increase in personnel costs of $8.7 million. Research and development expenses increased by $50.6 million for the nine months ended September 30, 2024, compared to the same period in 2023. This change was primarily due to an increase in personnel costs of $37.1 million and external costs of $22.7 million to support the advancement of research and development for our key programs, which was partially offset by a decrease in stock-based compensation of $9.3 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; internal costs, such as personnel and facility costs, 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, 2024 2023 2024 2023 (in thousands) Acoramidis for ATTR-CM $ 40,306 $ 26,684 $ 116,846 $ 74,233 Infigratinib 29,155 23,816 65,513 47,269 BBP-418 (ribitol) for LGMD2I/R9 9,073 10,712 29,864 26,089 Encaleret for ADH1 12,145 12,666 35,297 33,728 Other development programs 10,700 19,851 59,602 61,596 Other research programs 19,065 31,407 68,989 82,570 Total $ 120,444 $ 125,136 $ 376,111 $ 325,485 Selling, General and Administrative Expenses The following table summarizes our selling, general and administrative expenses for the following periods: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change (in thousands) Selling, general and administrative $ 68,819 $ 35,777 $ 33,042 $ 194,149 $ 103,007 $ 91,142 Selling, general and administrative expenses increased by $33.0 million for the three months ended September 30, 2024, compared to the same period in 2023, mainly due to an increase in personnel related expense of $16.4 million and external costs of $14.7 million, to support our commercialization readiness efforts, which included costs incurred for marketing, advertising and buildup of salesforce, and an increase in stock-based compensation expense of $1.9 million. Selling, general and administrative expenses increased by $91.1 million for the nine months ended September 30, 2024, compared to the same period in 2023, mainly due to an increase in personnel related expense of $34.1 million and external costs of $31.7 million to support our commercialization readiness efforts, which included costs incurred for marketing, advertising and buildup of salesforce, nonrecurring deal-related expenses of $16.5 million, and an increase in stock-based compensation expense of $8.8 million. Restructuring, Impairment and Related Charges The following table summarizes our restructuring, impairment and related charges during the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change (in thousands) Restructuring, impairment and related charges $ 4,621 $ 272 $ 4,349 $ 10,912 $ 7,172 $ 3,740 54 As discussed in Note 16 to our condensed consolidated financial statements, in January 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. Upon entering into the Bayer Agreement and termination of the Navire-BMS License Agreement in March 2024 (refer to Note 11 for details regarding these transactions) and our announced decision to cease pursuing development of BBP-631 for CAH in September 2024, we have committed to additional restructuring plans to reprioritize and advance our corporate strategy and development programs. We estimate that we will incur a remaining $6.0 million to $8.0 million in restructuring charges, consisting primarily of winding down costs, exit and other related costs, and severance and employee-related costs. Our estimate of the 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. Other Income (Expense), Net Interest Income The following table summarizes our interest income during the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change (in thousands) Interest income $ 3,296 $ 3,793 $ (497 ) $ 12,566 $ 12,460 $ 106 Interest income consists of interest income earned on our cash equivalents and marketable securities. The amount of interest income during the three and nine months ended September 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. Interest Expense The following table summarizes our interest expense during the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change (in thousands) Interest expense $ (23,061 ) $ (20,306 ) $ (2,755 ) $ (69,469 ) $ (61,021 ) $ (8,448 ) 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 Subsidiaries The following table summarizes our gain on deconsolidation of subsidiaries during the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change Gain on deconsolidation of subsidiaries $ 52,027 $ — $ 52,027 $ 178,321 $ — $ 178,321 On August 16, 2024, we entered into the Transaction Agreement providing for the formation and funding by certain third party investors of GondolaBio. Under the Transaction Agreement, the investors contributed $60.0 million and we contributed certain assets and our equity in Portal Therapeutics, Inc. and Sub 21, Inc. to GondolaBio. As a result of the private equity financing transaction and contribution, we deconsolidated GondolaBio, inclusive of Portal Therapeutics, Inc. and Sub21, Inc., on August 16, 2024 and 55 recognized a net gain from deconsolidation of approximately $52.0 million during the three and nine months ended September 30, 2024. Refer to Note 6 for further details regarding the GondolaBio private equity financing transaction. On April 30, 2024, BBOT, a majority-owned subsidiary of BridgeBio, 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 during the nine months ended September 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 September 30, Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change (in thousands) Loss on extinguishment of debt $ — $ — $ — $ (26,590 ) $ — $ (26,590 ) 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 Investments The following table summarizes our share in net loss of equity method investments during the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change Net loss from equity method investments $ (6,563 ) $ — $ (6,563 ) $ (14,488 ) $ — $ (14,488 ) Upon the deconsolidation of GondolaBio on August 16, 2024 and BBOT on April 30, 2024, we accounted for our investments in GondolaBio and BBOT using the equity method of accounting. For the three months ended September 30, 2024 we recorded net losses from equity method investments in GondolaBio and BBOT of $1.4 million and $5.2 million, respectively. For the nine months ended September 30, 2024 we recorded net losses from equity method investments in GondolaBio and BBOT of $1.4 million and $13.1 million, respectively. Other Income (Expense), Net The following table summarizes our other income (expense), net during the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change (in thousands) Other income (expense), net $ 1,797 $ (5,283 ) $ 7,080 $ 10,648 $ (4,408 ) $ 15,056 Other income (expense), net for the three months ended September 30, 2024 consists mainly of $1.2 million of other income recognized under the Transition Service Agreements with GondolaBio and BBOT. Other income (expense), net for the three months ended September 30, 2023 consists mainly of the net realized and unrealized losses from changes in fair value of our equity security investments of $5.4 million. Other income (expense), net for the nine months ended September 30, 2024 consists mainly of the net realized gain of $8.1 million from our investments in equity securities, and $2.0 million of other income recognized under the Transition Service Agreements with GondolaBio and BBOT. Other income (expense), net for the nine months ended September 30, 2023 consists mainly of the net realized and unrealized losses from changes in fair value of our investments in equity securities of $3.0 million and 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: 56 Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change (in thousands) Net loss attributable to redeemable convertible noncontrolling interests and noncontrolling interests $ 2,214 $ 2,489 $ (275 ) $ 5,246 $ 7,869 $ (2,623 ) Net loss attributable to redeemable convertible noncontrolling interests and noncontrolling interests in our condensed consolidated statements of operations consists of the portion of the net loss of those consolidated entities that is not allocated to us. Changes in the amount of net loss attributable to noncontrolling interests are directly impacted by changes in the net loss of our consolidated entities and are the result of ownership percentage changes. Refer to Note 5 to our condensed consolidated financial statements. 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 revenue from certain licensing and collaboration agreements and sales of certain assets. As of September 30, 2024, we had cash and cash equivalents of $266.3 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 September 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 nine months ended September 30, 2024 and 2023, we incurred net losses of $276.0 million and $482.9 million, respectively and used cash in operations of $325.4 million and $402.9 million, respectively. 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 over the next several years as we continue to fund our drug development and discovery efforts. In particular, to the extent we advance our programs into and through later-stage clinical trials without a partner, we will incur substantial expenses. 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. 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), 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). 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 continue to evaluate our research and development pipelines and restructure our business to streamline costs and expenses. We also continue to explore business opportunities to partner, divest or delay certain research and development programs to drive operational changes in our business processes, efficiencies and cost savings to advance our corporate strategy and development programs. We expect that these initiatives, including restructuring, will reduce our operating expenses. As of November 12, 2024, the issuance date of the condensed consolidated financial statements for the nine months ended September 30, 2024, we concluded that there is substantial doubt about our ability to continue as a going concern for a period of one year from the date that these condensed consolidated financial statements are issued due to our history of recurring losses from operations incurred since inception and our expectation of continuing operating losses for the foreseeable future. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. 57 Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes we will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. We are entitled to receive a $500.0 million milestone payment under our Funding Agreement (described in Note 10 of our condensed consolidated financial statements) upon obtaining the FDA approval of acoramidis. We plan to alleviate substantial doubt by obtaining the $500.0 million milestone payment under our Funding Agreement together with product revenues from the commercial sale of acoramidis, if approved. Although we anticipate receiving FDA approval for acoramidis in late November 2024, we cannot guarantee that we will receive such approval or the resulting milestone payment on a timely basis, or at all, or that we will generate the expected product revenues from the sale of acoramidis, and we may need to raise additional capital to fund our operations. There can be no assurance that any additional financing will be available to us. Failure to obtain FDA approval for acoramidis will result in our inability to receive the $500.0 million milestone payment pursuant to the Funding Agreement, which may significantly harm our business, prospects, financial condition and results of operations. Furthermore, there can be no assurance that in the event we require additional financing, such financing will be available. In addition, we are closely monitoring macroeconomic events, including inflationary pressures and supply chain issues, 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. Sources of Liquidity Receivables from licensing and collaboration agreements. 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 (previously known as 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 (of which $75.0 million is for a regulatory milestone dependent upon EU Commission Regulatory approval of acoramidis on or before December 31, 2025), and additional payments up to $450.0 million subject to the 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. 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”). 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. 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. 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 In March 2024, we entered into an Underwriting Agreement (the “2024 Follow-on Agreement”) with J.P. Morgan Securities LLC, Cantor Fitzgerald & Co. 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 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. In March 2024, 9,913,793 shares (including the 1,293,103 shares issued upon exercise of the 2024 Underwriters’ option to purchase additional shares) were issued under the 2024 Follow-on Agreement, for net 58 proceeds of $276.6 million, after deducting underwriting fees and commissions of $10.3 million and deferred offering costs of $0.6 million. In May 2023, we filed a shelf registration statement on Form S-3ASR, or the 2023 Shelf, with the SEC in relation to the registration of common stock, preferred stock, debt securities, warrants and units or any combination thereof. We also concurrently entered into the 2023 ATM Agreement, with Goldman Sachs & Co. LLC and SVB Securities LLC or collectively, the ATM Sales Agents, with respect to an “at-the-market” offering program under which we may issue and sell, from time to time at our sole discretion and pursuant to a prospectus supplement, shares of our common stock, par value $0.001 per share, having an aggregate offering price of up to $450.0 million through the ATM Sales Agents. 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 and nine months ended September 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 September 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. Debt As of September 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 In January and February 2021, we issued an aggregate principal amount of $747.5 million of our 2029 Notes, pursuant to an Indenture dated January 28, 2021, or the 2029 Notes Indenture, between us and U.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 on February 1 and August 1 of each year, beginning on August 1, 2021, at a rate of 2.25% per year. The 2029 Notes will mature on February 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 November 1, 2028 only under certain circumstances. On or after November 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 to February 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 after February 6, 2026 and on or before the 41 st 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 9 in our condensed consolidated financial statements for other details, including our future minimum payments under the 2029 Notes. 2027 Notes, net In March 2020, we issued an aggregate principal amount of $550.0 million of our 2027 Notes, pursuant to an Indenture dated March 9, 2020, or the Indenture, between BridgeBio and U.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. 59 The 2027 Notes are senior, unsecured obligations of BridgeBio and accrue interest payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2020, at a rate of 2.50% per year. The 2027 Notes will mature on March 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 December 15, 2026 only under certain circumstances. On or after December 15, 2026 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 2027 Notes at any time. 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 9 in our condensed consolidated financial statements for other details, including our future minimum payments under the 2027 Notes. Term Loan, net On January 17, 2024, we entered into the Financing Agreement with certain of our subsidiaries party thereto as guarantors, the Lenders and the Administrative Agent, which was amended on February 12, 2024. 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 and (ii) one or more Incremental Term Loans in an aggregate amount not to exceed $300.0 million, subject to the satisfaction of certain terms and conditions set forth in the Financing Agreement. The Initial Term Loan was funded on January 17, 2024. Incremental Term Loans are available at the Company’s and the Lenders’ mutual consent from time to time after January 17, 2024. The obligations of the Company under the Financing Agreement are and will be guaranteed by certain of the Company’s existing and future direct and indirect subsidiaries, subject to certain exceptions (such subsidiaries, collectively, the “Guarantors”). As security for the obligations of the Company and the Guarantors, each of the Company and the Guarantors are required to grant to the Administrative Agent, for the benefit of the Lenders and secured parties, a continuing first priority security interest in substantially all of the assets of the Company and the Guarantors (including all equity interests owned or hereafter acquired by the Company and the Guarantors), subject to certain customary exceptions. Any outstanding principal on the Term Loans will initially bear interest at a rate per annum equal to (A) in the case of Term Loans bearing interest based on the base rate defined in the Financing Agreement (and which base rate will not be less than 2.00%), the sum of (i) the base rate plus (ii) 5.75% and (B) in the case of Term Loans bearing interest based on the three-month forward-looking term secured overnight financing rate administered by the Federal Reserve Bank of New York (“Term SOFR”), the sum of (i) three-month Term SOFR (subject to 1.00% per annum floor), plus (ii) 6.75%. Accrued interest is payable quarterly following the funding of the Initial Term Loan on the Closing Date, on any date of prepayment or repayment of the Term Loans and at maturity. 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 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 60 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 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 in May 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. Such covenants, among other items, limit the Company’s and its subsidiaries’ ability to (i) incur additional permitted indebtedness, (ii) pay dividends or make certain distributions, (iii) dispose of its and their assets, grant liens and license or permit other encumbrances on its and their assets, (iv) fundamentally alter the nature of their businesses and (v) enter into certain transactions with affiliates. The Company and the Guarantors are also required to maintain a minimum unrestricted cash balance of $70.0 million at all times. The Company and its subsidiaries are permitted to license their intellectual property, dispose of other assets and enter into monetization and royalty transactions, in each case, subject to satisfaction of certain terms and conditions. The Financing Agreement also includes representations, warranties, indemnities and events of default that are customary for financings of this type, including an event of default relating to a change of control of the Company. 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 September 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 September 30, 2024, the minimum unrestricted qualified cash balance was $78.0 million. Cash Flows The following table summarizes our cash flows during the periods indicated: Nine Months Ended September 30, 2024 2023 Change (in thousands) Net cash used in operating activities $ (325,400 ) $ (402,901 ) $ 77,501 Net cash provided by investing activities 64,018 54,099 9,919 Net cash provided by financing activities 274,526 456,058 (181,532 ) Net increase in cash, cash equivalents and restricted cash $ 13,144 $ 107,256 $ (94,112 ) Net Cash Flows Used in Operating Activities Net cash used in operating activities was $325.4 million for the nine months ended September 30, 2024, consisting primarily of our net loss of $276.0 million, adjusted for non-cash items totaling $68.5 million, which primarily includes a $178.3 million net gain on the deconsolidation of subsidiaries, $8.1 million net realized gain from investment in equity securities, offset by $65.7 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 investments of $14.5 million, and $5.4 million in accretion of debt; and $19.1 million in net cash inflow related to changes in operating assets and liabilities. The $19.1 million net cash inflow related to changes in operating assets and liabilities was attributed mainly to an increase in deferred revenue of $20.6 million primarily related to the Bayer Agreement and KKC Agreement, an increase of $15.5 million in accrued research and development liabilities, and an increase of $5.3 million in accounts payable, partially offset by a decrease in prepaid expenses and other current assets of $17.5 million and a decrease of $5.6 million in accrued compensation and benefits, which are collectively primarily due to timing of payments. 61 Net cash used in operating activities was $402.9 million for the nine months ended September 30, 2023, consisting primarily of our net loss of $482.9 million; adjusted for non-cash items totaling $96.9 million, which primarily includes $71.7 million in stock-based compensation expense, $6.7 million in accrued payment-in-kind interest, and $6.7 million in accretion of debt; and the remaining $16.9 million net cash outflow related to changes in operating assets and liabilities. The $16.9 million net cash outflow related to changes in operating assets and liabilities was attributed mainly to a decrease of $10.5 million in accrued research and development liabilities, a decrease of $4.2 million in accrued compensation and benefits, and a decrease of $3.4 million in accounts payable, which are collectively due to timing of payments; a decrease in deferred revenue of $4.5 million due to revenue recognized; a decrease in operating lease liabilities of $3.7 million; and partially offset by a decrease of $11.9 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 $64.0 million for the nine months ended September 30, 2024, attributable primarily to $95.0 million in proceeds from the maturities of marketable securities, $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 $93.8 million, purchases of investments in equity securities of $20.3 million and $4.8 million in payments made to FMI for intangible assets. Net cash provided by investing activities was $54.1 million for the nine months ended September 30, 2023, attributable primarily to $82.6 million in maturities of marketable securities and $81.0 million in proceeds from the sale of equity securities, partially offset by purchases of investments in equity securities of $78.3 million and purchases of marketable securities of $29.7 million. Net Cash Flows Provided by Financing Activities Net cash provided by financing activities was $274.5 million for the nine months ended September 30, 2024, consisting primarily of $450.0 million in proceeds from the term loan under the Amended Financing Agreement, and $314.7 million in net proceeds from the issuance of common stock through public offerings, which includes $276.6 million in net proceeds through the 2024 Follow-on offering and $38.1 million in net proceeds through the ATM offering. These increases were partially offset by the $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 $456.1 million for the nine months ended September 30, 2023, consisting primarily of $450.3 million in net proceeds from the issuance of common stock, which includes $241.3 million in net proceeds from the Private Placement offering, $144.0 million in net proceeds from the 2023 Follow-on offering, and $65.0 million in net proceeds from the ATM offering. In addition, the increase was also driven by $5.2 million in net proceeds from stock option exercises. Critical Accounting Policies 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. 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 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 nine months ended September 30, 2024. 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 ended December 31, 2023, as filed with the SEC. 62 Item 3. Quantitative and Qualitati ve Disclosures About Market Risk As of September 30, 2024, we held cash, cash equivalents and restricted cash (current) of $405.7 million. Our cash equivalents consist of amounts invested in money market funds; agency discount notes; and high investment grade fixed income securities that are primarily invested in commercial paper, U.S. government securities and treasury bills. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates. We do not believe that our cash and cash equivalents have a significant risk of default or illiquidity. As of September 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 September 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 $0.6 million and $1.3 million for the three and nine months ended September 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. 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.