What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-05 compared with 2020-08-11 · 83 added, 77 removed, 214 unchanged (43% of the section changed)

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We cannot predict the effects that such actions, or the impact of COVID-19 on global business operations and economic conditions, may have on our business or strategy, including the effects on our ongoing and planned clinical development activities and prospects, or on our financial and operating results.

For example, depending on the full impact and prevalence of COVID-19 over time, we currently expect to provide top-line data from Part A of our Phase 3 clinical trial of acoramidis in ATTR-CM in late 2021 or early 2022.

Financial Operations Overview

Cash, Cash Equivalents and Marketable Securities

As of June 30, 2020 we had cash, cash equivalents and marketable securities of $840.9 million.

As of September 30, 2020 we had cash, cash equivalents and marketable securities of $710.7 million.

On March 9, 2020, we issued an aggregate principal amount of $550.0 million of our 2.50% Convertible Senior Notes due 2027, or the 2027 Notes, in a private offering (the “Note Offering”) to qualified institutional buyers.

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We also received net proceeds of $24.1 million from Eidos’ at-the-market issuance of shares in February 2020.

During the six months ended June 30, 2020, we used cash of approximately $171.8 million to support our operations.

During the nine months ended September 30, 2020, we used cash of approximately $303.5 million to support our operations.

License Revenue

License revenue for three and nine months ended September 30, 2020 was $8.1 million arising primarily from the recognition of the upfront payment receivable from LianBio upon execution of the Exclusive License Agreement that focuses on the Phase 1-ready SHP2 inhibitor BBP-398 (“BBP-398”) that is being developed by our controlled entity, Navire Pharma, Inc.

License revenue for three and nine months ended September 30, 2019 was $26.7 million arising primarily from the recognition of the upfront payment received by Eidos upon execution of the Alexion License Agreement.

Operating Expenses

Cost of License Revenue

Cost of license revenue of $2.5 million for the three and nine months ended September 30, 2019 represents sublicensing fees payable under the Stanford License in connection with the Alexion License Agreement.

There were no such amounts during the three and nine months ended September 30, 2020.

Research and Development Expenses

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Research and development

Research and development expense increased by $34.3 million and $57.6 million for the three and six months ended June 30, 2020, respectively, compared to the same periods in 2019 primarily due to increase in external-related costs and in our headcount to support progression in our research and development programs including our increasing research pipeline.

Research and development expense increased by $36.8 million and $94.4 million for the three and nine months ended September 30, 2020, respectively, compared to the same periods in 2019 primarily due to increase in external-related costs and in our headcount to support progression in our research and development programs including our increasing research pipeline.

Research and development costs consist primarily of external costs, such as fees paid to consultants, contractors, contract manufacturing organizations, or CMOs, and contract research organizations, or CROs, in connection with our preclinical and clinical development activities and are tracked on a program-by-program basis.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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Amounts presented above may differ from the financial statements of Eidos due to intercompany income and expenses, which are eliminated in the condensed consolidated financial statements of BridgeBio for all periods presented.

In light of recent developments relating to the COVI D-19 global pandemic, the focus of healthcare providers and hospitals on fighting the virus, and consistent with the U.S.

In light of recent developments relating to the COVID-19 global pandemic, the focus of healthcare providers and hospitals on fighting the virus, and consistent with the U.S.

Food and Drug Administration’s updated industry guidance for conducting clinical trials issued on March 18, 2020, we have experienced delays in or temporary suspension of the enrollment of patients in our subsidiaries’ ongoing clinical trials.

We additionally may experience delays in certain ongoing key program activities, including commencement of planned clinical trials, as well as non-clinical experiments and investigational new drug application-enabling good laboratory practice toxicology studies.

The exact timing of delays and their overall impact on our business are currently unknown, and we are monitoring the COVID-19 outbreak as i t continues to rapidly evolve.

The exact timing of delays and their overall impact on our business are currently unknown, and we are monitoring the COVID-19 outbreak as it continues to rapidly evolve.

We are continuing to actively monitor the situation and may take further precautionary and preemptive actions as may be required by federal, state or local authorities or that we determine are in the best interests of public health and safety and that of our patient community, employees, partners, suppliers and stockholders.

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General and Administrative Expenses

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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General and administrative

General and administrative expenses increased by $21.0 million and $36.3 million for the three and six months ended June 30, 2020 compared to the same periods in 2019 due to increase in headcount to support the growth of our operations and external-related costs incurred as a result of continuing compliance as a public company.

General and administrative expenses increased by $12.5 million and $48.9 million for the three and nine months ended September 30, 2020 compared to the same periods in 2019 due to increase in headcount to support the growth of our operations and external-related costs incurred as a result of continuing compliance as a public company.

Other Income (Expense), Net

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

The changes in interest income for the three and six months ended June 30, 2020 compared to the same periods in 2019 were not significant.

The changes in interest income for the three and nine months ended September 30, 2020 compared to the same periods in 2019 were not significant.

Interest Expense

Interest expense for the three and six months ended June 30, 2020 consists primarily of interest expense incurred under our term loans with Hercules Capital, Inc.

Interest expense for the three and nine months ended September 30, 2020 consists primarily of interest expense incurred under our term loans with Hercules Capital, Inc.

pursuant to our Loan and Security Agreement, dated June 19, 2018, as amended, Eidos’ term loan with Silicon Valley Bank and Hercules pursuant to its Loan and Security Agreement, dated November 13, 2019, or the “SVB and Hercules Loan Agreement”, and our 2027 Notes issued in March 2020.

Interest expense for the same period in 2019 consists primarily of interest expense incurred under our term loans with Hercules.

The increases of $8.8 million and $11.2 million for the three and six months ended June 30, 2020, respectively, compared to the same periods in 2019 was primarily attributed to increase in principal amounts.

The increases of $8.8 million and $20.0 million for the three and nine months ended September 30, 2020, respectively, compared to the same periods in 2019 was primarily attributed to increase in principal amounts.

Loss from an Equity Investment

Loss from an equity investment for the three and six months ended June 30, 2019 pertain to our share of losses from our investment in PellePharm totaling $5.0 million and $9.6 million, respectively.

Loss from an equity investment for the three and nine months ended September 30, 2019 pertain to our share of losses from our investment in PellePharm totaling $6.6 million and $16.1 million, respectively.

We recognize our share of losses from the PellePharm equity method investment as incurred.

After our equity method investment was reduced to zero during the three months ended March 31, 2019, we recognized our percentage of net losses consistent with our preferred stock ownership percentage until the investment was also reduced to zero during the remaining period of 2019.

We have not recognized our share of net losses for the three and six months ended June 30, 2020 as our equity investment balances were reduced to zero as of December 31, 2019.

We have not recognized our share of net losses for the three and nine months ended September 30, 2020 as our equity investment balances were reduced to zero as of December 31, 2019.

Other Income (Expense)

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The LEO Call Option is subject to remeasurement to fair value at each balance sheet date until the LEO Call Option is either exercised or expires.

The LEO Call Option income (expense) of $(1.7) million and $(1.2) million for the three and six months ended June 30, 2020, respectively, and $0.2 million and $(1.3) million for the three and six months ended June 30, 2019, respectively, were due to change in fair value.

Net Loss Attributable to Redeemable Convertible Noncontrolling Interests and No ncontrolling Interests

The LEO Call Option income (expense) of $0.1 million and $(1.1) million for the three and nine months ended September 30, 2020, respectively, and $0.3 million and $(1.0) million for the three and nine months ended September 30, 2019, respectively, were due to change in fair value.

Net Loss Attributable to Redeemable Convertible Noncontrolling Interests and Noncontrolling Interests

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.

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Refer to Note 6 to our condensed consolidated financial statements.

Net loss attributable to redeemable convertible noncontrolling interests and noncontrolling interests was $15.2 million and $27.4 million for the three and six months ended June 30, 2020, respectively, compared to $8.4 million and $16.6 million for the same periods, respectively, in 2019.

Net loss attributable to redeemable convertible noncontrolling interests and noncontrolling interests was $14.3 million and $41.7 million for the three and nine months ended September 30, 2020, respectively, compared to $0.7 million and $17.3 million for the same periods, respectively, in 2019.

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 arrangements.

As of June 30, 2020, we had cash, cash equivalents and marketable securities of $840.9 million or $666.1 million excluding Eidos.

As of September 30, 2020, we had cash, cash equivalents and marketable securities of $710.7 million or $563.4 million excluding Eidos.

The funds held by our wholly-owned subsidiaries and controlled entities are available for specific entity usage, except in limited circumstances.

The cash and cash equivalents of $174.8 million as of June 30, 2020 belonging to Eidos may only be used solely by Eidos.

As of June 30, 2020, our outstanding debt was $466.6 million, net of debt discounts and issuance costs and accretion or $450.0 million excluding Eidos’ debt.

The cash and cash equivalents of $147.3 million as of September 30, 2020 belonging to Eidos may only be used solely by Eidos.

As of September 30, 2020, our outstanding debt was $471.9 million, net of debt discounts and issuance costs and accretion or $455.2 million excluding Eidos’ debt.

Since inception, we have incurred significant operating losses.

For the years ended December 31, 2019, 2018 and 2017, we incurred net losses of $288.6 million, $169.5 million and $43.8 million, respectively.

For the six months ended June 30, 2020, we incurred net losses of $240.3 million.

We had an accumulated deficit as of June 30, 2020 of $652.9 million.

For the nine months ended September 30, 2020, we incurred net losses of $370.5 million.

We had an accumulated deficit as of September 30, 2020 of $768.8 million.

We expect to continue to incur net losses over the next several years as we continue our drug development and discovery efforts and incur significant clinical and preclinical development costs related to our current research and development programs as well as costs related to commercial launch readiness for our late-stage programs.

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Our current business plan is also subject to significant uncertainties and risks as a result of, among other factors, our ability to generate product revenue sufficient to achieve profitability, which will depend heavily on the successful development and eventual commercialization of our product candidates at our consolidated entities.

We expect our cash and cash equivalents and marketable securities will fund our operations for at least the next 12 months based on current operating plans and financial forecasts.

If our current operating plans or financial forecasts change, including the effects of the COVID-19 pandemic on our research and development activities, we may require additional funding sooner in the form of public or private equity offerings, debt financings or additional collaborations and licensing arrangements.

We expect our cash and cash equivalents and marketable securities will fund our operations for at least the next 12 months based on curre nt operating plans and financial forecasts.

If our current operating plans or financial forecasts change, i ncluding the effects of the COVID-19 pandemic on our research and development activities , we may require additional funding sooner in the form of public or private equity offerings, debt financings or additional collaborations and licensing arrangements.

However, future financing may not be available in amounts or on terms acceptable to us, if at all.

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initial public offering of its common stock of which net proceeds received were $95.5 million.

As of June 30, 2020, we held 24,575,501 shares of common stock of Eidos.

As of September 30, 2020, we held 24,575,501 shares of common stock of Eidos.

In December 2019 and February 2020, Eidos received net proceeds of $23.9 million and $24.1 million, respectively, from its at-the-market issuance of shares.

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We received net proceeds of approximately $366.2 million from the IPO, after deducting underwriters’ discounts and commissions of $28.1 million and offering costs of $6.5 million.

On July 7, 2020, we filed a shelf registration statement on Form S-3 (the “2020 Shelf”) with the SEC in relation to the registration of common stock, preferred st ock, debt securities, warrants and units or any combination thereof.

We also simultaneously entered into an Open Market Sale Agreement with Jefferies LLC and SVB Leerink LLC (the “Sales Agents”), to provide for the offering, issuance and sale by us of up t o an aggregate of $350.0 million of our common stock from time to time in “at-the-market” offerings under the 2020 Shelf and subject to the limitations thereof (the “2020 Sales Agreement”).

On July 7, 2020, we filed the 2020 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 simultaneously entered into the 2020 Sales Agreement with the Sales Agents, to provide for the offering, issuance and sale by us of up to an aggregate of $350.0 million of our common stock from time to time in “at-the-market” offerings under the 2020 Shelf and subject to the limitations thereof.

We will pay to the applicable Sales Agents cash commissions of up to 3.0 percent of the gross proceeds of sales of common stock under the 2020 Sales Agreement.

We have not issued any shares or received any proceeds from this offering through August 1 1 , 2020.

We have not issued any shares or received any proceeds from this offering through September 30, 2020.

On March 9, 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.

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During any calendar quarter commencing after the calendar quarter ending on June 30, 2020 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

During the five business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the Indenture) per $1,000 principal amount of 2027 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;

During the five business day period after any five consecutive trading day perio d (the “measurement period”) in which the “trading price” (as defined in the Indenture) per $1,000 principal amount of 2027 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;

Upon the occurrence of specified corporate events.

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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), hold ers 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.

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.

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Hercules Loan and Security Agreement

In June 2018, we executed a Loan and Security Agreement with Hercules Capital, Inc.

(“Hercules”), under which we borrowed $35.0 million (“Tranche I”).

The term of the loan was approximately 42 months, with a maturity date of January 1, 2022 (the “Maturity Date”).

No principal payments were due during an interest-only period, commencing on the initial borrowing date and continuing through July 1, 2020 (the “Amortization Date”).

In December 2018, we executed the First Amendment to the Loan and Security Agreement, whereby we borrowed an additional $20.0 million (“Tranche II”) to increase the total principal balance outstanding to $55.0 million.

In June 2018, we executed a Loan and Security Agreement with Hercules Capital, Inc., or Hercules, under which we borrowed $35.0 million, or Tranche I.

The term of the loan was approximately 42 months, with a maturity date of January 1, 2022, or the Maturity Date.

No principal payments were due during an interest-only period, commencing on the initial borrowing date and continuing through July 1, 2020, or the Amortization Date.

In December 2018, we executed the First Amendment to the Loan and Security Agreement, whereby we borrowed an additional $20.0 million, or Tranche II, to increase the total principal balance outstanding to $55.0 million.

Upon draw of the additional $20.0 million, the interest-only period on the entire facility was extended until January 1, 2021 and the maturity date for the entire facility was July 1, 2022.

In May 2019, we executed the Second Amendment to the Loan and Security Agreement whereby we borrowed an additional $20.0 million (“Tranche III”) to increase the total principal balance outstanding to $75.0 million.

In May 2019, we executed the Second Amendment to the Loan and Security Agreement whereby we borrowed an additional $20.0 million, or Tranche III, to increase the total principal balance outstanding to $75.0 million.

In July 2019, the completion of BridgeBio’s IPO triggered certain provisions of the Hercules Term Loan.

BridgeBio received an option to pay up to 1.5% of scheduled cash pay interest on the entire facility as payment in kind, or PIK Interest, with such cash pay interest paid as PIK Interest at a 1:1.2 ratio.

The interest-only period will continue through July 1, 2021 (the “Modified Amortization Date”) and the entire facility received a maturity date of January 1, 2023 (the “Modified Maturity Date”).

The interest-only period will continue through July 1, 2021, or the Modified Amortization Date, and the entire facility received a maturity date of January 1, 2023, or the Modified Maturity Date.

The outstanding balance of the Hercules Term Loan is to be repaid by BridgeBio monthly beginning on the Modified Amortization Date and extending through the Modified Maturity Date.

Prior to the Fourth Amendment to the Loan and Security Agreement (the “Amended Hercules Term Loan”) described below, the interest rate for the Hercules Term Loan was established as follows:

Prior to the Fourth Amendment to the Loan and Security Agreement, or the Amended Hercules Term Loan, described below, the interest rate for the Hercules Term Loan was established as follows:

(1) Tranche I bears interest at a floating rate equal to the greater of:

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None of our consolidated entities are a party to, nor provide any credit support or other security in connection with the Hercules Term Loan.

In March 2020, we executed the Third Amendment to the Loan and Security Agreement primarily to allow us to issue our 2027 Notes and to enter into the Capped Call and Share Repurchase Transactions.

In March 2020, we executed the Third Amendment to the Loan and Security Agreement primarily to allow us to issue our 2027 Notes and to enter into the Capped Call and Share Rep urchase Transactions .

In April 2020, we entered into the Amended Hercules Term Loan, which among other things,

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extended the maturity date for the term loans under the Loan and Security Agreement to November 1, 2023 (the Amended Maturity Date, which may be further extended to May 1, 2024, subject to certain conditions set forth in the Amended Hercules Term Loan),

provide d for an interest rate on the Tranche I equal to the greater of (x) a floating interest rate linked to the prime rate as reported in the Wall Street Journal plus 3.85% and (y) 8.75% (8.75% as of June 30, 2020), payable monthly,

provided for an interest rate on the Tranche II equal to the greater of (x) a floating interest rate linked to the prime rate as reported in the Wall Street Journal plus 2.85% and (y) 8.60% (8.60% as of June 30, 2020), payable monthly,

provided for an interest rate on the Tranche III equal to the greater of (x) a floating interest rate linked to the prime rate as reported in the Wall Street Journal plus 3.10% and (y) 8.85% (8.85% as of June 30, 2020), payable monthly, and

provided for an interest rate on the Tranche I equal to the greater of (x) a floating interest rate linked to the prime rate as reported in the Wall Street Journal plus 3.85% and (y) 8.75% (8.75% as of September 30, 2020), payable monthly,

provided for, subject to Hercules’ approval in its sole and absolute discretion, an additional increase in available loan facilities aggregating to $125.0 million as follows:

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The Amended Hercules Term Loan also provides us with more flexibility to consummate acquisitions and investments, incur additional debt, dispose of assets and repurchase and/or redeem stock, each subject to certain conditions set forth in the Amended Hercules Term Loan.

There have not been any additional draws on the $125.0 million additional available facilities as of June 30, 2020.

Silicon Valley Bank (SVB) and Hercules Loan Agreement

There have not been any additional draws on the $125.0 million additional available facilities as of September 30, 2020.

Silicon Valley Bank and Hercules Loan Agreement

On November 13, 2019, Eidos entered into the SVB and Hercules Loan Agreement.

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The Tranche A loan of $17.5 million was drawn on November 13, 2019.

There have not been any additional draws on the other tranches as of June 30, 2020.

The Tranche A loan bears interest at a fixed rate equal to the greater of either (i) 8.50% or (ii) 3.25% plus the prime rate as reported in The Wall Street Journal (8.50% as of June 30, 2020).

There have not been any additional draws on the other tranches as of September 30, 2020.

The Tranche A loan bears interest at a fixed rate equal to the greater of either (i) 8.50% or (ii) 3.25% plus the prime rate as reported in The Wall Street Journal (8.50% as of September 30, 2020).

The Tranche A loan repayment schedule provides for interest only payments until November 1, 2021, followed by consecutive equal monthly payments of principal and interest commencing on this date continuing through the maturity date of October 2, 2023.

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

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

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Net cash used in investing activities

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents

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Net Cash Flows Used in Operating Activities

Net cash used in operating activities was $171.8 million for the six months ended June 30, 2020, consisting primarily of our net loss of $240.3 million, adjusted for non-cash items such as $28.6 million in stock-based compensation expense and $7.0 million accretion of our 2027 Notes and term loans, partially offset by net cash inflow of $29.3 million related to changes in operating assets and liabilities.

The $29.3 million net cash inflow related to changes in operating assets and liabilities was attributed mainly to an increase of 16.3 million in accrued research and development liabilities, an increase of $6.4 million in accrued professional services, an increase of $5.3 million in other accrued and other liabilities, and an increase of $4.0 million in accounts payable mostly due to increase in our CROs’ and CMOs’ expenses for research activities and other expenses to support the growth of our operation.

Net cash used in operating activities was $127.4 million for the six months ended June 30, 2019, consisting primarily of our net loss of $143.8 million, adjusted for non-cash items such as $9.6 million share in net loss of our equity method investment, $5.6 million for stock-based compensation expense, $2.5 million for acquired in-process research and development assets and $1.3 million of expense related to the revaluation of the LEO Call Option liability, as well as net cash outflow of $3.7 million related to changes in operating assets and liabilities.

The $3.7 million net cash outflow related to changes in operating assets and liabilities was attributed mainly to an increase of $3.3 million in prepaid expenses and other assets and of $2.1 million in other assets, both increases were primarily due to the advance payments made for research due to increased activities at CROs and CMOs.

These increases were partially offset by an increase of $1.0 million in accrued professional services due to increased consulting expenses as we prepared for our IPO.

Net cash used in operating activities was $303.5 million for the nine months ended September 30, 2020, consisting primarily of our net loss of $370.5 million, adjusted for non-cash items such as $46.3 million in stock-based compensation expense and $12.3 million accretion of our 2027 Notes and term loans.

The net cash from changes in operating assets and liabilities was minimal during the period and is attributed mainly to an increase of $4.0 million in accrued research and development liabilities, an increase of $2.4 million in accrued compensation and benefits, and an increase of $4.9 million in other accrued and other liabilities, mostly due to increase in our CROs’ and CMOs’ expenses for research activities and other expenses to support the growth of our operation, partially offset by an increase in receivable from a related party of $5.2 million, an increase in prepaid and expenses and other current assets of $5.4 million, and a decrease in operating lease liabilities of $2.3 million.

Net cash used in operating activities was $177.4 million for the nine months ended September 30, 2019, consisting primarily of our net loss of $204.4 million, adjusted for non-cash items such as $16.1 million share in net loss of our equity method investment, $11.4 million for stock-based compensation expense, $3.6 million for acquired in-process research and development assets and $1.0 million of expense rela ted to the revaluation of the LEO Call Option liability, as well as net cash outflow of $7.0 million related to changes in operating assets and liabilities.

The $7.0 million net cash outflow related to changes in operating assets and liabilities was attributed mainly to an increase of $12.5 million in prepaid expenses and other current assets and of $1.7 million in other assets, and a decrease of $3.2 million in accounts payable, primarily due to the payments made for research due to increased activities at CROs and CMOs.

These increases were partially offset by increases of $4.3 million in accrued professional services and of $3.5 million in accrued compensation and benefits, which was primarily related to the timing of payments.

Net Cash Flows Used in Investing Activities

Net cash used in investing activities was $91.0 million for the six months ended June 30, 2020, consisting primarily of purchases of marketable securities of $168.8 million and purchases of property and equipment of $4.8 million, partially offset by $82.5 million in maturities of marketable securities.

Net cash used in investing activities was $3.0 million for the six months ended June 30, 2019, which consisted of $2.5 million paid for in-progress research and development assets acquired primarily in connection with the Phoenix Tissue Repair, Inc.

asset acquisition related to a Contribution Agreement and Asset Purchase Agreement entered into in July 2017 and $0.5 million related to purchase of property and equipment.

Net cash used in investing activities was $136.0 million for the nine months ended September 30, 2020, consisting primarily of purchases of marketable securities of $269.8 million and purchases of property and equipment of $5.4 million, partially offset by $139.0 million in maturities of marketable securities.

Net cash used in investing activities was $200.4 million for the nine months ended September 30, 2019, which consisted primarily of $197.7 million purchases of marketable securities and $2.5 million payment for in-progress research and development assets acquired primarily in connection with the Phoenix Tissue Repair, Inc.

asset acquisition related to a Contribution Agreement and Asset Purchase Agreement entered into in July 2017.

Net Cash Flows Provided by (Used in) Financing Activities

Net cash provided by financing activities was $439.9 million for the six months ended June 30, 2020, consisting primarily of the net proceeds from the issuance of our 2027 Notes of $537.0 million and at-the-market issuance of noncontrolling interest by Eidos of $24.1 million, offset by repurchase of our common stock of $75.0 million and purchase of capped calls of $49.3 million, both in relation to the issuance of our 2027 Notes.

Net cash used in financing activities of $11.6 million for the six months ended June 30, 2019 was primarily due to $28.6 million payment in relation to repurchase of common stock of Eidos from a noncontrolling interest holder and $2.5 million payment of deferred offering costs, partially offset by proceeds from our term loan of $19.8 million.

Net cash provided by financing activities was $442.7 million for the nine months ended September 30, 2020, consisting primarily of the net proceeds from the issuance of our 2027 Notes of $537.0 million and at-the-market issuance of noncontrolling interest by Eidos of $24.1 million, offset by the repurchase of our common stock of $75.0 million and purchase of capped calls of $49.3 million, both in relation to the issuance of our 2027 Notes.

Net cash provided by financing activities was $355.9 million for the nine months ended September 30, 2019, consisting primarily of the proceeds from our IPO of $366.2 million, issuance of noncontrolling interest in Eidos to Alexion of $23.3 million, availment of term a loan of $19.8 million and the issuance of redeemable convertible noncontrolling interest to third-party investors of $1.5 million, offset by a $55.0 million payment in relation to the repurchase of common stock of Eidos from a noncontrolling interest holder.

Contractual Obligations

The following table summarizes our contractual obligations as of June 30, 2020:

The following table summarizes our contractual obligations as of September 30, 2020:

Payments Due by Period

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Total contractual obligations

We have performance-based milestone compensation arrangements with certain employees, whose vest ing 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.

As of June 3 0 , 20 20 , the potential milestone compensation amount is up to $ 5 4.9 million.

We have performance-based milestone compensation arrangements with certain employees, 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.

As of September 30, 2020, the potential performance-based milestone compensation amount is up to $68.2 million.

Since the timing of the payments is contingent on the occurrence of these performance-based milestones, these payments are not included in the contractual obligations table above.

We also have performance-based milestone compensation arrangements with certain employees as part of the Exchange Program, which is further discussed in Note 14 to our condensed consolidated financial statements.

The compensation arrangements under the Ex change Program are excluded from the table above because such compensation arrangements are to be settled in the form of equity only.

The compensation arrangements under the Exchange Program are excluded from the table above because such compensation arrangements are to be settled in the form of equity only.

We have certain payment obligations under various license and collaboration agreements.

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The payment obligations under the license and collaboration agreements are contingent upon future events such as our achievement of specified development, clinical, regulatory and commercial milestones, and we will be required to make development milestone payments and royalty payments in connection with the sale of products developed under these agreements.

As the achievement and timing of these future milestone payments are not probable or estimable, such amounts have not been included in our condensed consolidated balance sheet as of June 30, 2020, or in the contractual obligations table above.

As the achievement and timing of these future milestone payments are not probable or estimable, such amounts have not been included in our condensed consolidated balance sheet as of September 30, 2020, or in the contractual obligations table above.

In addition, we 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.

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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 Form 10-K for the year ended December 31, 2019, as filed with the SEC, except for the adoption in January 1, 2020, of Accounting Standards Codification 842 discussed in Note 1, as well as the accounting for the 2027 Notes and the Capped Call and Repurchase Transactions discussed in Note 9, and the 2020 Stock and Equity Award Exchange Program discussed in Note 14 in our unaudited condensed consolidated financial statements as of and for the three and six months ended June 30, 2020.

JOBS Act and Emerging Growth Company Status

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

We have elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

We are an emerging growth company, or EGC, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act.

Under the JOBS Act, EGCs can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

We have elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an EGC or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

As a result, our condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

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To achieve our objectives, we maintain a portfolio of cash equivalents and investments in a variety of marketable securities of high credit quality.

As of June 30, 2020, we held cash, cash equivalents and marketable securities of $840.9 million.

As of September 30, 2020, we held cash, cash equivalents and marketable securities of $710.7 million.

Our cash equivalents consist of amounts invested in money market accounts, such as money market funds and short-term commercial paper.

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

As of June 30, 2020, we had $92.5 million in variable rate debt outstanding.

As of September 30, 2020, we had $92.5 million in variable rate debt outstanding.

The Hercules Term Loan, which had a principal balance of $75.0 million, matures in November 2023, with interest-only monthly payments until July 2022.

Tranche I bears interest at a floating rate equal to the greater of:

(i) the prime rate as reported in the Wall Street Journal plus 3.85% and (ii) 8.75% (8.75% as of June 30, 2020);

(i) the prime rate as reported in the Wall Street Journal plus 3.85% and (ii) 8.75% (8.75% as of September 30, 2020);

Tranche II bears interest at a floating rate of equal to the greater of:

(i) the prime rate as reported in the Wall Street Journal plus 2.85% and (ii) 8.60% (8.60% as of June 30, 2020);

(i) the prime rate as reported in the Wall Street Journal plus 2.85% and (ii) 8.60% (8.60% as of September 30, 2020);

and Tranche III bears interest at a floating rate of equal to the greater of:

(i) the prime rate as reported in the Wall Street Journal plus 3.10% and (ii) 8.85% (8.85% as of June 30, 2020).

The Silicon Valley Bank and Hercules Loan Agreement entered into by Eidos, which matures in October 2023, had a principal balance of $17.5 million as of June 30, 2020 and bears interest equal to the greater of either (i) 8.50% or (ii) 3.25% plus the prime rate as reported in The Wall Street Journal (8.50% as of June 30, 2020).

Our 2027 Notes had a principal balance of $550.0 million as of June 30, 2020 and bear interest at a fixed rate.

(i) the prime rate as reported in the Wall Street Journal plus 3.10% and (ii) 8.85% (8.85% as of September 30, 2020).

The SVB and Hercules Loan Agreement entered into by Eidos, which matures in October 2023, had a principal balance of $17.5 million as of September 30, 2020 and bears interest equal to the greater of either (i) 8.50% or (ii) 3.25% plus the prime rate as reported in The Wall Street Journal (8.50% as of September 30, 2020).

Our 2027 Notes had a principal balance of $550.0 million as of September 30, 2020 and bear interest at a fixed rate.

Our cash flows on this debt obligation are not subject to variability as a result of changes in interest rates.

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