What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2021-02-25 compared with 2020-03-03 · 270 added, 288 removed, 152 unchanged (79% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with “Item 6.

Selected Financial Data” and the financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

This Annual Report on Form 10-K 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”).

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 the financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or 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.

4 unchanged sentences

You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Annual Report on Form 10-K.

We are a team of experienced drug discoverers, developers, and innovators working to create life-altering medicines that target well-characterized genetic diseases at their source.

We founded BridgeBio in 2015 to identify and advance transformative medicines to treat patients who suffer from Mendelian diseases, which are diseases that arise from defects in a single gene, and cancers with clear genetic drivers.

BridgeBio Pharma, Inc.

(we or the Company) is a team of experienced drug discoverers, developers, and innovators working to create life-altering medicines that target well-characterized genetic diseases at their source.

BridgeBio was founded in 2015 to identify and advance transformative medicines to treat patients who suffer from Mendelian diseases, which are diseases that arise from defects in a single gene, and cancers with clear genetic drivers.

Our pipeline of over 30 development programs includes product candidates ranging from early discovery to late-stage development.

Several of our programs target indications that we believe present the potential for our product candidate, if approved, to target portions of market opportunities of at least $1.0 billion in annual sales.

We have initiated a rolling NDA submission for one of our product candidates, and have three product candidates in clinical trials that, if positive, we believe could support the filing of an application for marketing authorization.

We focus on genetic diseases because they exist at the intersection of high unmet patient need and tractable biology.

6 unchanged sentences

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 and controlled entities, (iii) recruit key management team members, (iv) raise and allocate capital across the portfolio and (v) provide certain shared services, including accounting and human resources, as well as workspaces.

We do not have any products approved for sale and have not generated any revenue from product sales.

To date, we have funded our operations with proceeds from the sale of our equity securities and, to a lesser extent, debt borrowings.

On July 1 , 2019, immediately prior to the completion of the initial public offering of our common stock (the IPO), we engaged in a series of transactions whereby BridgeBio Pharma LLC, or BBP LLC, became a wholly-owned subsidiary of BridgeBio Pharma, Inc., or BBP Inc., collectively with BBP LLC, BridgeBio.

As part of the transactions, holders of Preferred Units, Founder Units, Common Units and Management Incentive Units of BBP LLC exchanged all outstanding units for an aggregate of 99,999,967 shares of common stock of BBP Inc.

On July 1, 2019, we completed the IPO.

As part of the IPO, we issued and sold 23,575,000 shares of our common stock, which included 3,075,000 shares sold pursuant to the exercise of the underwriters’ over-allotment option, at a public offering price of $17.00 per share.

In July 2019, 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 .

As of December 31, 2019, we had cash, cash equivalents and marketable securities of $577.1 million or $385.9 million excluding Eidos.

To date, we have funded our operations with proceeds from the sale of our equity securities, issuance of convertible notes, debt borrowings and, to a lesser extent, revenue from licensing arrangements.

Since our 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 years ended December 31, 2020, 201 9 and 2018 , we incurred net losses of $ 50 5.5 million , $28 8 .

6 million and $169.5 million, respectively .

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of our product candidates at our wholly-owned subsidiaries and controlled entities.

We expect to continue to incur significant expenses and increasing operating losses for at least the next several years.

Financial Highlights

The following table summarizes our financial results:

Due to the inherently unpredictable nature of preclinical and clinical development, and given our novel therapeutic approaches and the stage of development of our product candidates, we cannot determine and are unable to estimate with certainty the timelines we will require and the costs we will incur for the development of our product candidates.

Clinical and preclinical development timelines and costs, and the potential of development success, can differ materially from expectations due to a variety of factors.

For example, in light of developments relating to the global outbreak of SARS-CoV-2, the novel strain of coronavirus that causes Coronavirus disease 19, or COVID-19, 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 duration of delays and their overall impact on our business are currently unknown, and we are continuing to actively monitor the COVID-19 pandemic as it continues to rapidly evolve.

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

We cannot predict the effects that such actions, the duration of the COVID-19 pandemic or its impact 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.

Basis of Presentation and Consolidation

Since our inception, we have created wholly-owned subsidiaries or made investments in certain controlled entities, including partially-owned subsidiaries for which we have majority voting interest under the VOE model or for which we are the primary beneficiary under the VIE model, which we refer to collectively as our consolidated entities.

Ownership interests in entities over which we have significant influence, but not a controlling financial interest, are accounted for as cost and equity method investments.

Ownership interests in consolidated entities that are held by entities other than us are reported as redeemable convertible noncontrolling interests and noncontrolling interests in our consolidated balance sheets.

Losses attributed to redeemable convertible noncontrolling interests and noncontrolling interests are reported separately in our consolidated statements of operations.

Results of Operations

Comparison of the years ended December 31, 2020 and 2019

We have included our financial results for 2020 compared to 2019.

Additional information required by Item 7 for the year ended December 31, 2018 can be found in Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the U.S.

Securities and Exchange Commission, or the SEC, on March 3, 2020 and is incorporated herein by reference.

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

Year Ended December 31,

1 unchanged sentence

License revenue

Total operating expenses

Cost of license revenue

Research and development

General and administrative

Loss from operations

3 unchanged sentences

marketable securities

License revenue increased by $40.6 million in 2019 due mainly to the upfront payment received by Eidos upon execution of the Alexion License Agreement.

Total operating expenses and loss from operations increased by $123.1 million and $82.6 million, respectively, in 2019 and $139.8 million in 2018 mainly attributed to increase in external-related costs to support the progression in our research and development programs, which also contributed primarily to the increase in net loss and net loss attributable to common stockholders of BridgeBio.

During 2019, we received net proceeds of $366.2 million from the BridgeBio IPO, $36.9 million from term loans and $23.9 million from Eidos’ at-the-market issuance of shares.

In 2018, we received total net proceeds of $487.0 million from the Eidos IPO, issuances of our convertible preferred units and availment of term loans.

As of December 31, 2019, we had cash, cash equivalents and marketable securities of $385.9 million excluding Eidos.

Basis of Presentation and Consolidation

Ownership interests in entities over which we have significant influence, but not a controlling financial interest, are accounted for as cost and equity method investments.

Losses attributed to redeemable convertible noncontrolling interests and noncontrolling interests are reported separately in our consolidated statements of operations.

We have either created or made investments in entities that are either wholly or partially-owned subsidiaries and VIEs.

Refer to Note 2 to our consolidated financial statements for a list of our VIEs.

Factors Affecting Comparability

Our historical financial condition and results of operations for the periods presented may not be comparable, either between periods or going forward due to the factors described below.

Eidos Therapeutics, Inc.

Transactions:

In February 2018, we entered into a note and warrant purchase agreement with Eidos pursuant to which Eidos issued a convertible promissory note, or the Eidos Note, with the principal amount of $10.0 million and a warrant to purchase a number of shares of preferred stock equal to $4.0 million at the price paid by investors in the next equity financing, or the Eidos Warrant.

In March 2018, we transferred 10% or $1.0 million of our interest in the Eidos Note and the Eidos Warrant to a minority stockholder of Eidos.

In March 2018, the Eidos Note was redeemed into shares of Series B redeemable convertible preferred stock of Eidos at a 30% discount to the price paid by other investors.

In conjunction with these transactions, Eidos recognized a preferred stock warrant liability, tranche liability and an embedded derivative, which were recorded at fair value at inception and remeasured to fair value at each subsequent reporting date until the instruments were settled.

For the year ended December 31, 2018, we recorded $1.3 million in other income (expense), net in the consolidated statements of operations related to these 2018 Eidos financing transactions.

All of these Eidos financial instruments were settled during 2018.

In June 2018, Eidos completed its initial public offering, or the Eidos IPO.

All redeemable convertible preferred stock of Eidos was converted into common stock at the closing of the Eidos IPO.

As part of the Eidos IPO, we purchased common stock in the amount of $17.0 million.

The Eidos Warrant was also net exercised upon the completion of the Eidos IPO.

We previously determined that Eidos was a controlled VIE as of December 31, 2017 and through its initial public offering in June 2018, at which time we determined that Eidos is no longer a VIE.

In May 2019, we purchased 1,103,848 shares of Eidos common stock from an existing Eidos stockholder for $28.6 million in a private purchase transaction.

In July 2019, we purchased 882,353 shares of Eidos common stock from an existing Eidos investor for $26.4 million in a private purchase transaction.

Subsequent to the Eidos IPO and through December 31, 2019, we held a majority voting interest in Eidos and consolidate Eidos under the VOE model.

PellePharm, Inc.

Transactions:

PellePharm entered into a series of agreements, or the LEO Agreement, with LEO Pharma A/S, or LEO, in November 2018.

As part of the LEO Agreement, we granted LEO an exclusive, irrevocable option, or the LEO Call Option, to acquire all of PellePharm’s shares held by us.

The LEO Call Option is exercisable by LEO on or before the occurrence of certain events relating to PellePharm’s clinical development programs and no later than July 30, 2021.

We account for the LEO Call Option as a current liability in our consolidated financial statements because we are obligated to sell our shares in PellePharm to LEO at a pre-determined price, if the option is exercised.

The fair value of the LEO Call Option on issuance in November 2018 was $1.9 million and increased to $3.0 million as of December 31, 2018 and to $4.1 million as of December 31, 2019.

We will remeasure the LEO Call Option to fair value at each subsequent balance sheet date until the LEO Call Option is either exercised or expires.

We previously determined that we were the primary beneficiary of PellePharm, as of December 31, 2017 and through the date of execution of the LEO Agreement in November 2018.

At the time of execution, we concluded that we are no longer the primary beneficiary of, and thus deconsolidated, PellePharm.

Subsequent to the LEO Agreement, we account for our retained investment in common and preferred stock of PellePharm under the equity method and cost method,

respectively.

Upon adoption ASU 2016-01 in 2019 (see Note 2 to our consolidated financial statements), we concluded that our investment in preferred stock of PellePharm did not have a readily available fair value.

As a result we started to measure the adjusted cost basis of our retained investment in PellePharm’s preferred stock of PellePharm at cost less impairment plus or minus observable price changes.

Since our investment in common stock was reduced to zero during the first quarter of 2019 as a result of applying the equity method, we subsequently adjusted the cost basis of our preferred stock investment by recording our percentage of net losses consistent with our preferred stock ownership percentage of 61.9% until the adjusted cost basis was also reduced to zero during the remaining period of 2019.

Results of Operations

The results of operations for the years ended December 31, 2020 and 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other future annual or interim period.

Cash, Cash Equivalents and Marketable Securities

As of December 31, 2020, we had cash, cash equivalents and marketable securities of $607.1 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, or the 2020 Note Offering, to qualified institutional buyers.

We received net proceeds from the 2020 Note Offering of approximately $537.0 million, after deducting 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 capped call transactions and approximately $75.0 million to pay for the repurchase of shares of our common stock.

We also received net proceeds of $24.1 million from the at-the-market issuance of shares by Eidos Therapeutics, Inc., or Eidos, in February 2020.

During the year ended December 31, 2020, we used cash of approximately $399.7 million to support our operations.

License Revenue

1 unchanged sentence

The level of license revenue to be recognized 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 amount of research and development work, and entering into new collaboration agreements, if any.

License revenue for 2019 was $40.6 million arising primarily from the recognition of the upfront payment received by Eidos upon execution of the Alexion License Agreement.

Eidos determined that the exclusive license granted to Alexion was a distinct performance obligation and, as of the effective date, Eidos had provided all necessary information to Alexion to benefit from the license and the license term had begun.

There were no revenues in 2018 and 2017.

License revenue for the year ended December 31, 2020 was $8.2 million arising primarily from the recognition of the $8.0 million upfront payment received by our subsidiary, Navire Pharma, Inc., from LianBio under the Navire-LianBio License Agreement (see Note 11 to our consolidated financial statements).

License revenue for 2019 was $40.6 million arising primarily from the recognition of the upfront payment received by Eidos of $26.7 million upon execution of the Eidos-Alexion License Agreement and $13.8 million in license revenue recognized by our subsidiary, QED Therapeutics, Inc., upon the execution of the QED-LianBio License Agreement (see Note 11 to our consolidated financial statements).

Operating Expenses

Cost of License Revenue

Cost of license revenue represents sublicensing fees payable under the Stanford License in connection with the Alexion License Agreement and was $2.5 million in 2019.

There were no costs of license revenue in 2018 and 2017.

Cost of license revenue for the year ended December 31, 2019 represents sublicensing fees payable under the Stanford License in connection with the Eidos-Alexion License Agreement and was $2.5 million in 2019.

There was no cost of license revenue in 2020.

Research and Development Expenses

1 unchanged sentence

(in thousands)

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

Research and development

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

License fees and other costs incurred after a product candidate has been designated and that are directly related to the product candidate are included in the specific program expense.

License fees and other costs incurred prior to designating a product candidate are included in early stage research programs.

Research and development expense increased by $127.1 million in 2020 compared to 2019 primarily due to an increase in external-related costs, including manufacturing validation activities for our late-stage programs, and in personnel costs resulting from an increase in the number of employees to support progression in our research and development programs, including our increasing research pipeline.

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

1 unchanged sentence

(in thousands)

BBP-265 (Eidos)(1)

Infigratinib (Previously known as

BBP-831) (QED)

Acoramidis (Previously known as

BBP-265 or AG10) (Eidos)

Fosdenopterin (Previously known as

BBP-870) (Origin)

BBP-631 (Adrenas)

BBP-812 (ASPA)

BBP-589 (PTR)

BBP-454 (TheRas)

BBP-009 (PellePharm)(2)

BBP-418 (ML Bio)

Other programs including early-stage

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

Results for PellePharm are not included in our research and development expenses subsequent to the deconsolidation date in November 2018.

Research and development expense increased by $69.9 million in 2019 and $109.5 million in 2018 primarily due to increase in external-related costs to support progression in our research and development programs including increasing research pipeline.

General and Administrative Expenses

2 unchanged sentences

General and administrative

General and administrative expenses increased by $50.8 million in 2019 and $30.3 million in 2018 due to increase in headcount to support the growth of our operations and external-related costs incurred as a result of preparation for the SEC listing and continuing compliance as a public company.

General and administrative expenses increased by $30.3 million in 2018 mainly due to increase in professional and consulting services largely due to our expanding operations.

General and administrative expenses increased by $51.3 million in 2020 compared to 2019 due to an increase in personnel costs resulting from an increase in the number of employees and external-related costs incurred to support organizational growth, including staged build out of our commercial organization as part of commercial launch readiness activities.

Other Income (Expense), Net

Interest Income

Interest income consists of interest income earned on our cash equivalents and marketable securities and the increase of $6.9 million in 2019 and $2.0 million in 2018 was attributed primarily to the additional income earned from higher investment balances following the initial public and debt offerings.

Year Ended December 31,

(in thousands)

Interest income

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

The changes in interest income in 2020 compared to 2019 were not significant.

Interest Expense

Interest expense consists primarily of interest expense incurred under our term loans with Hercules Capital, Inc., or Hercules and the increase of $6.2 million in 2019 and $2.5 million in 2018 was primarily attributed to increase in term loan amounts.

(Loss) Gain from Equity Investments

Year Ended December 31,

(in thousands)

Gain on deconsolidation of PellePharm

Share in net loss of equity method

Loss from equity investments increased by $20.6 million in 2019 and $0.3 million in 2018 primarily due to our share of losses from our investment in PellePharm totaling $17.1 million in 2019 and $0.3 million in 2018.

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.

In 2018, after the execution of the LEO Agreement, we concluded that PellePharm should be deconsolidated and we recorded our retained interest in PellePharm at fair value, resulting in a gain of $19.3 million being recognized during the year ended December 31, 2018.

There were no such transactions in 2017.

Other Expense

Other expense consists mainly of changes in fair value of the LEO Call Option liability.

We account for the LEO Call Option as a current liability as we have the obligation to sell our PellePharm shares to LEO at a pre-determined price if the LEO Call Option is exercised.

The LEO Call Option can be exercised at any time through the maturity date.

The LEO Call Option was recorded at fair value on the date the option agreement was entered into with LEO in November 2018.

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 expense decrease of $1.9 million in 2019 was due to change in fair value.

The increase of $3.0 million in 2018 was due to initial recognition and change in fair value.

Other expense in 2018 consists primarily of the change in fair value of the Eidos financial instruments issued and settled in 2018 and other miscellaneous expenses unrelated to our core operations.

Prior to the tax-free reorganization, BBP LLC was treated as a pass‑through entity for U.S.

Interest expense

Interest expense in 2020 consists primarily of interest expense incurred under our 2027 Notes issued in March 2020, our term loans with Hercules Capital, Inc.

pursuant to our Loan and Security Agreement, dated June 19, 2018, as amended, and 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.

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

The increase of $27.9 million in 2020 compared to 2019 was primarily attributed to an increase in principal amounts.

Share in Net Loss of Equity Method Investments

Year Ended December 31,

(in thousands)

Share in net loss of equity method investments

Loss from equity investment for the year ended December 31, 2019 pertained to our share of losses from our investment in PellePharm and LianBio totaling $17.1 million and $3.8 million, respectively.

We recognize our share of losses from our equity method investments as incurred.

We did not recognize our share of net losses for the year ended December 31, 2020 as our equity investment balances were reduced to zero as of December 31, 2019.

Other Income (Expense)

Year Ended December 31,

(in thousands)

Other income (expense)

Other income (expense) in 2020 consists mainly of the income recognized as a result of the change in fair value of the LianBio Warrants of approximately $3.3 million (see Note 11 to our consolidated financial statements), partially offset by the change in fair value of the LEO Call Option liability of $1.5 million.

Other expense in 2019 mainly represents the LEO Call Option expense of $1.1 million arising from change in fair value of the LEO Call Option liability.

Prior to the 2019 Reorganization (see Note 13 to our consolidated financial statements), which was a tax-free reorganization, BridgeBio Pharma LLC, or BBP LLC”, was treated as a pass‑through entity for U.S.

federal income tax purposes, and as such, was generally not subject to U.S.

3 unchanged sentences

For our consolidated entities, income taxes are accounted for under the asset and liability method as described below.

Upon the Reorganization on July 1, 2019, we became subject to typical corporate U.S.

Upon the Reorganization on July 1, 2019, we became subject to corporate U.S.

federal and state income taxation.

federal income tax purposes, we are required to file a consolidated U.S.

federal income tax return for the consolidated entities that meet the requirements as prescribed by the consolidated regulations.

Those entities that do not meet the threshold to be included in the consolidated filing continue to file separate U.S.

federal income tax returns.

To the extent we incur operating losses in the periods in which we are treated as a corporation for tax purposes, net operating loss carryforwards may generally be used by us to offset cash taxes on future taxable income, subject to applicable tax laws.

As of December 31, 2019, we had net operating losses of approximately $ 393.

4 million and $ 160.0 million for federal and state income tax purposes, respectively, available to reduce future taxable income, if any.

The federal net operating losses generated prior to 2018 will begin to expire in 203 7 and losses generated after 2018 will carryover indefinitely .

As of December 31, 2020, we had net operating losses of approximately $852.5 million and $177.9 million for federal and state income tax purposes, respectively, available to reduce future taxable income, if any.

The federal net operating losses generated prior to 2018 in the amount of $31.8 million will begin to expire in 2036 and losses generated after 2018 in the amount of $820.7 million will carry over indefinitely and would be subject to an 80% taxable income limitation in the year utilized.

State net operating losses will generally begin to expire in 2036.

As of December 31, 201 9 , we had federal research and development credit carryforwards of $ 17.6 million, which will expire beginning in 203 7 if not utilized.

As of December 31, 2020, we had federal research and development and orphan drug credit carryforwards of $41.0 million, which will expire beginning in 2037 if not utilized.

As of December 31, 2020, we had state research and development credit carryforwards of $6.3 million.

The state research and development tax credits have no expiration date.

The state research and development tax credits will expire at various dates while the California research and development tax credits will carry over indefinitely.

A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain.

The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize the deferred tax assets.

Based on the weight of the available evidence, which includes our consolidated entities’ historical operating losses and forecast of future losses, we have provided a full valuation allowance against the deferred tax assets resulting from the tax loss and credits carried forward.

Utilization of the net operating loss and credit carryforwards may be subject to a substantial annual limitation due to an ownership change limitation as provided by section 382 of the Code, and similar state provisions.

Based on the weight of the available evidence, which includes our consolidated entities’ historical operating losses and forecast of future losses, we have provided a valuation allowance against the deferred tax assets resulting from the tax loss and credits carried forward.

As a result of the issuance of our 2027 Notes in 2020, it was determined that our existing deferred tax assets do not fully offset the deferred tax liabilities when reviewing the reversals of temporary differences.

This resulted in a deferred tax liability of $1.1 million that was recognized for the year ended December 31, 2020.

The valuation allowance increased by $95.5 million and $79.2 million for the years ended December 31, 2020 and 2019, respectively.

The annual limitation may result in the expiration of net operating losses and credits before utilization.

4 unchanged sentences

Refer to Note 6 to our consolidated financial statements.

Net loss attributable to redeemable convertible noncontrolling interests and noncontrolling interests was $28.0 million in 2019, compared to $38.7 million in 2018 and $13.3 million in 2017.

Net loss attributable to redeemable convertible noncontrolling interests and noncontrolling interests was $56.8 million in 2020, compared to $28.0 million in 2019.

Liquidity and Capital Resources

We have historically financed our operations primarily through the sale of our equity securities, debt borrowings and revenue from collaboration arrangements.

As of December 31, 2019, we had cash, cash equivalents and marketable securities of $577.1 million or $385.9 million excluding Eidos.

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 December 31, 2020, we had cash, cash equivalents and marketable securities of $607.1 million.

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

The cash, cash equivalents and marketable securities of $191.2 million as of December 31, 2019 belonging to Eidos may only be used solely by Eidos or its subsidiaries, if any.

The cash and cash equivalents of $127.7 million as of December 31, 2020 belonging to Eidos may only be used solely by Eidos.

As of December 31, 2020, our outstanding debt was $477.3 million, net of debt issuance costs and accretion, or $460.4 million excluding Eidos.

2 unchanged sentences

We had an accumulated deficit as of December 31, 2020 of $888.8 million.

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

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

Our current business plan is also subject to significant uncertainties and risks as a result of, among other factors, our ability to generate product revenue sufficient to achieve profitability 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, we may require additional funding sooner in the form of public or private equity offerings, debt financings or additional collaborations and licensing arrangements.

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.

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

In addition, we are closely monitoring ongoing developments in connection with the COVID-19 pandemic, which may negatively impact our financial and operating results.

We will continue to assess our operating expenses and our cash and cash equivalents and, if circumstances warrant, we will make appropriate adjustments to our operating plan.

Sources of Liquidity

Initial public offerings

Initial public offerings and at-the-market share issuances

In June 2018, our controlled subsidiary, Eidos, completed its U.S.

2 unchanged sentences

All cash and cash equivalents held by Eidos are restricted and can be applied solely to fund the operations of Eidos.

On July 1, 2019, we completed the IPO of our common stock.

In October 2020, we entered into the Merger Agreement with Eidos, Globe Merger Sub I, Inc.

and Globe Merger Sub II, Inc.

(the two latter companies being our indirect wholly-owned subsidiaries), providing for, in a series of merger transactions, or the Merger Transactions, the acquisition by us of all of the outstanding shares of common stock of Eidos, or the Eidos Common Stock, other than shares of Eidos Common Stock that (i) are owned by Eidos as treasury stock, (ii) are owned by us and our subsidiaries and, in each case, not owned on behalf of third parties and (iii) are subject to an Eidos restricted share award.

We completed the Merger Transactions on January 26, 2021 and Eidos became our wholly-owned subsidiary.

Refer to Note 18 to our consolidated financial statements.

On July 1, 2019, we completed the initial public offering, or IPO, of our common stock.

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.

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 August 2, 2019, Eidos filed a registration statement on Form S-3, or the 2019 Shelf , with the SEC in relation to the registration of common stock, preferred stock, warrants and units of any combination thereof.

Eidos also simultaneously entered into an Open Market Sales Agreement , or the 2019 Sales Agreement, with the s ales a gents named therein, or the Sales Agents , to provide for the offering, issuance and sale of up to an aggregate offering price of $100.0 million of its common stock from time to time in “at-the-market” offerings under the 2019 Shelf and subject to the limitations thereof.

Eidos will pay to the applicable Eidos Sales Agent cash commissions of up to 3.0 percent of the gross proceeds of sales of common stock under the 2019 Sales Agreement.

Eidos issued 385,613 shares under this offering and received $23.9 million of net proceeds through December 31, 2019.

Eidos issued 448,755 shares under this offering and received $24.1 million of net proceeds in February 2020.

As a result of the completion of the Merger Transactions with Eidos on January 26, 2021, Eidos’ common stock cease d to trade on the Nasdaq prior to the opening of business on January 26, 2021 , the 2019 Sales Agreement was terminated and the 2019 Shelf was deregistered with the SEC.

On July 7, 2020, we filed a shelf registration statement on Form S-3ASR, or 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 a sales agreement, dated as of July 7, 2020, or the 2020 Sales Agreement, with the sales agents named therein, or the BridgeBio 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 BridgeBio 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 under the 2020 Sales Agreement through December 31, 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.

Bank National Association, as trustee, or the Trustee, in a private offering to qualified institutional buyers, or the 2020 Note Offering, pursuant to Rule 144A under the Securities Act.

The 2027 Notes issued in the 2020 Note Offering include $75.0 million aggregate principal amount of 2027 Notes sold to the initial purchasers in the offering, or the Initial Purchasers, pursuant to the exercise in full of their option to purchase additional 2027 Notes.

The 2027 Notes are senior, unsecured obligations of BridgeBio and will 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 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 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 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 in multiples of $1,000 only under the following circumstances:

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;

Upon the occurrence of specified corporate events.

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, regardless of the foregoing.

The conversion rate will initially be 23.4151 shares of our common stock per $1,000 principal amount of 2027 Notes (equivalent to an initial conversion price of approximately $42.71 per share of our common stock, for a total of approximately 12,878,305 shares).

The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest.

In addition, following certain corporate events that occur prior to the maturity date, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2027 Notes in connection with such a corporate event.

The maximum number of shares issuable should there be an increase in the conversion rate is 17,707,635 shares of our common stock.

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.

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”).

The outstanding balance of the loan was to be repaid monthly beginning on the Amortization Date and extending through the Maturity Date.

The term loan bears interest at a floating rate equal to the greater of:

(i) the prime rate as reported in the Wall Street Journal plus 4.35% and (ii) 9.35% (9.85% as of December 31, 2018 based on the prime rate as of that date), payable monthly.

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.

Upon draw of the additional $20.0 million, the interest-only period on the entire facility was extended until January 1, 2021 (the “Amended Amortization Date”).

The outstanding balance of the original loan of $35.0 million and the additional borrowing of $20.0 million is to be repaid monthly beginning on the Amended Amortization Date and extending through July 1, 2022 (the “Amended Maturity Date”).

The additional $20.0 million loan bears interest at a floating rate equal to the greater of:

(i) the prime rate as reported in the Wall Street Journal plus 3.35% and (ii) 9.10% (9.10% as of December 31, 2018), payable monthly.

On the earliest to occur of (i) the Amended Maturity Date, (ii) the date we prepay the outstanding principal amount of the Amended Hercules Term Loan or (iii) the date the outstanding principal amount of the Amended Hercules Term Loan otherwise becomes due, we will owe Hercules an end of term charge equal to 6.35% of the principal amount of the original $35.0 million term loan, or $2.2 million, and 5.75% of the principal amount of the incremental $20.0 million term loan, or $1.2 million.

These amounts will be accrued over the term of the loan using the effective-interest method.

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

In July 2019, the completion of our IPO triggered certain provisions of the Amended Hercules Term Loan.

We 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 “Amended Amortization Date”) and the entire facility received a maturity date of January 1, 2023 (the “Amended Maturity Date”).

The outstanding balance of the Amended Hercules Term Loan is to be repaid by us on a monthly basis beginning on the Amended Amortization Date and extending through the Amended Maturity Date.

The interest rate for the Amended Hercules Term Loan was established as follows:

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, 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 Second Amendment to the Loan and Security Agreement.

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, 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.

Under the Second Amendment to the Loan and Security Agreement, 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:

(i) the prime rate as reported in the Wall Street Journal plus 3.85% and (ii) 8.85% (8.85% as of December 31, 2019 based on the prime rate as of that date), payable monthly;

(2) Tranche II bears interest at a floating rate 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 December 31, 2019 ), payable monthly;

(i) the prime rate as reported in the Wall Street Journal plus 3.85% and (ii) 8.85%, payable monthly;

(2) Tranche II bears interest

at a floating rate equal to the greater of:

(i) the prime rate as reported in the Wall Street Journal plus 2.85% and (ii) 8.60%, payable monthly;

and (3) Tranche III bears interest at a floating rate equal to the greater of:

(i) the prime rate as reported in the Wall Street Journal plus 3.10% and (ii) 9.10% (9.10% as of December 31, 2019 ), payable monthly.

The Amended Hercules Term Loan contains customary representations and warranties, events of default, and affirmative and negative covenants for a term loan facility of this size and type.

However, Hercules imposes no liquidity covenants on us and Hercules cannot limit or restrict our ability to dispose of assets, make investments, or make acquisitions.

As pledged collateral for our obligations under the Amended Hercules Term Loan, we granted Hercules a security interest in all our assets or personal property , including all equity interests owned or hereafter acquired by us.

(i) the prime rate as reported in the Wall Street Journal plus 3.10% and (ii) 9.10%, payable monthly.

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 transactions to repurchase shares of our common stock concurrently with closing of the 2027 Notes offering in privately negotiated transactions from certain initial purchasers of our 2027 notes, or the Share Repurchase Transactions.

In April 2020, we entered into the Fourth Amendment to the Loan and Security Agreement, or the Amended Hercules Term Loan, which among other things,

extended the interest-only period under the Loan and Security Agreement to July 1, 2022, or the Amended Amortization Date, which may be further extended to January 1, 2023 and July 1, 2023, in each case, subject to certain conditions set forth in the Amended Hercules Term Loan,

extended the maturity date for the term loans under the Loan and Security Agreement to November 1, 2023, or 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,

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 December 31, 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 December 31, 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 December 31, 2020), payable monthly, and

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:

(a) an additional incremental loan in the amount of $25.0 million, available no later than December 15, 2020, (b) an additional incremental loan in the amount of $25.0 million, available no later than December 15, 2021, (c) an additional incremental loan following the achievement of certain performance milestones in the amount of $25.0 million, available no later than December 15, 2021 and (d) an additional $50.0 million discretionary incremental tranche, available no later than December 15, 2022.

We did not draw the incremental loan of $25.0 million that was available until December 15, 2020.

There have not been any additional draws on the $100.0 million additional available facilities as of December 31, 2020.

The Hercules Term Loan contains customary representations and warranties, events of default, and affirmative and negative covenants for a term loan facility of this size and type.

However, Hercules imposes no significant liquidity covenants on us and Hercules cannot limit or restrict our ability to dispose of assets, make investments, or make acquisitions.

As pledged collateral for our obligations under the Hercules Term Loan, we granted Hercules a security interest in all of our assets or personal property, including all equity interests owned or hereafter acquired by us.

Further, at Hercules’ sole discretion we must make a mandatory prepayment equal to 75% of net cash proceeds received from the sale or licensing of any pledged or collateral assets, including intellectual property, of a consolidated entity owned by us, or the repurchase or redemption of any pledged collateral by certain specified operating companies.

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

Silicon Valley Bank (SVB) and Hercules Loan Agreement

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 January 2021, we executed the Fifth Amendment to the Loan and Security Agreement primarily to allow us to issue our 2029 Notes (as described below) and to enter into the related capped call and share repurchase transactions, as discussed below.

Silicon Valley Bank and Hercules Loan Agreement

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

3 unchanged sentences

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 December 31, 2019.

There have not been any additional draws on the other tranches as of December 31, 2020, including the Tranche B loan that was available until October 31, 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 December 31, 2020).

3 unchanged sentences

The Tranche A loan is secured by substantially all of Eidos’ assets, except Eidos’ intellectual property, which is the subject of a negative pledge.

In January 2021, Eidos entered into an amendment to the SVB and Hercules Loan Agreement primarily to allow Eidos to enter into the Merger Transactions.

The amendment also requires Eidos to maintain a certain amount of cash and cash equivalents with SVB.

Issuance of 2029 Notes

On January 28, 2021, we issued an aggregate of $717.5 million principal amount of our 2.25% Convertible Senior Notes due 2029, or the 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 2029 Note Offering, pursuant to Rule 144A under the Securities Act.

The 2029 Notes issued in the 2029 Note Offering include $67.5 million aggregate principal amount of 2029 Notes sold to the initial purchasers, or the 2029 Notes Initial Purchasers, pursuant to the exercise in part of the 2029 Notes Initial Purchasers’ option to purchase $97.5 million principal amount of additional 2029 Notes.

On January 28, 2021, the 2029 Notes Initial Purchasers exercised the remaining portion of their option to purchase $30.0 million principal amount of additional 2029 Notes.

The sale of the additional 2029 Notes closed on February 2, 2021.

The 2029 Notes will 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 BridgeBio’s common stock or a combination of cash and shares of BridgeBio’s common stock, at our election.

The 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.

We received net proceeds from the 2029 Note Offering of approximately $ 731.7 million, after deducting the 2029 Notes Initial Purchasers’ discount and offering expenses.

We used approximately $ 61.3 million of the net proceeds from the 2029 Note Offering to pay for the cost of the c apped c all t ransactions and approximately $ 50.0 million to pay for the repurchase of shares of our common stock in connection with the 2029 Note Offering .

We intend to use the remainder of the net proceeds from the 2029 Note Offering for general corporate purposes, which may include research and development and clinical development costs to support the advancement of our drug candidates, including the continued growth of our commercial and medical affairs capabilities, the conduct of clinical trials and preclinical research and development activities;

working capital;

capital expenditures;

repayment of outstanding indebtedness;

general and administrative expenses;

and other general corporate purposes.

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 2029 Notes plus accrued special interest, if any, to be immediately due and payable.

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

1 unchanged sentence

(in thousands)

Net cash used in operating

Net cash used in investing

Net cash provided by

financing activities

Net (decrease) increase in

cash and cash equivalents

and restricted cash

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net decrease in cash and cash

equivalents and restricted cash

Net Cash Flows Used in Operating Activities

Net cash used in operating activities was $253.6 million in 2019, consisting primarily of net loss of $288.6 million, adjusted for non-cash items such as $21.4 million in stock-based compensation expense and $20.9 million for our share of losses of our equity method investments as well as net cash outflow of $10.9 million related to changes in operating assets and liabilities.

Net cash used in operating activities was $399.7 million in 2020, consisting primarily of our net loss of $505.5 million, adjusted for non-cash items such as $58.5 million in stock-based compensation expense, $17.7 million accretion of our 2027 Notes and term loans, $6.0 million fair value of shares issued under our license agreements, $4.7 million acquired in-process research and development assets and $3.1 million amortization of operating lease right-of-use assets, partially offset by $3.3 million change in fair value of LianBio Warrants, as well as net cash inflow of $14.9 million related to changes in operating assets and liabilities.

The $14.9 million net cash inflow related to changes in operating assets and liabilities was attributed mainly to an increase of $8.6 million in accrued compensation and benefits, an increase of $6.2 million in accrued research and development liabilities and an increase of $8.3 million in other accrued and other liabilities partially offset by an increase in prepaid expenses and other current assets of $7.1 million.

Net cash used in operating activities was $253.6 million in 2019, consisting primarily of our net loss of $288.6 million, adjusted for non-cash items such as $21.4 million in stock-based compensation expense and $20.9 million for our share of losses of our equity method investments, as well as net cash outflow of $10.9 million related to changes in operating assets and liabilities.

The $10.9 million net cash outflow related to changes in operating assets and liabilities was attributed mainly to an increase of $16.9 million in other assets, an increase of $13.5 million in prepaid expenses and other assets and a decrease of $4.7 million in accounts payable mostly due to payments of CROs’ and CMOs’ expenses for increased research activities, offset by changes in liabilities primarily due to an increase in accrued research and development liabilities of $12.0 million and an increase in accrued compensation and benefits of $9.3 million.

Net cash used in operating activities was $136.6 million in 2018, consisting primarily of net loss of $169.5 million, adjusted for non-cash charges such as $19.3 million gain on the deconsolidation of PellePharm, $17.9 million acquired in-process research and development assets, $6.1 million stock-based compensation expense and $3.0 million of expense related to the LEO Call Option as well as net cash inflow of $22.5 million related to changes in operating assets and liabilities.

The $22.5 million net cash inflow related to changes in operating assets and liabilities was primarily due to an increase of $16.7 million in accounts payable and an increase of $5.8 million in accrued research and development liabilities as a result of increased research and development activities and timing of payments to vendors.

Net cash used in operating activities was $40.5 million in 2017, consisting primarily of net loss of $43.8 million, adjusted for non-cash charges of $1.8 million stock-based compensation expense and net cash inflow of $1.2 million related to changes in operating assets and liabilities.

Net Cash Flows Used in Investing Activities

Net cash used in investing activities was $217.3 million in 2019, consisting primarily of $212.9 million used to purchase marketable securities, $2.6 million related to purchase of property and equipment and $2.5 million paid for in-progress research and development assets acquired in connection with asset acquisitions.

Net cash used in investing activities was $21.0 million in 2018, consisting primarily of $16.0 million paid for in-progress research and development assets acquired through asset acquisitions, $2.2 million related to purchase of property and equipment and $2.9 million decrease in cash and cash equivalents resulting from the deconsolidation of PellePharm.

Net cash used in investing activities was $0.5 million in 2017 due to purchases of property and equipment.

Net Cash Flows Provided by Financing Activities

Net cash provided by financing activities was $398.8 million in 2019, consisting primarily of the net proceeds from our IPO of $366.2 million, availment of term loans of $36.9 million, at-the-market issuance of noncontrolling interest by Eidos of $23.9 million, issuance of noncontrolling interest in Eidos to Alexion of $23.3 million and stock option exercises of $1.8 million, offset by $55.0 million payment in relation to our purchase of common stock of Eidos from a noncontrolling interest holder.

Net cash provided by financing activities was $501.5 million in 2018, consisting primarily of the net proceeds from the issuance of our redeemable convertible preferred units of $335.0 million, the issuance of common stock in connection with the Eidos IPO of $95.5 million, third-party investors redeemable noncontrolling interests of $58.4 million and term loans of $56.4 million, offset by our purchase of a noncontrolling interest in Eidos for $44.2 million.

The net cash proceeds from the Eidos IPO may only be used solely by Eidos or its subsidiaries, if any.

Net cash provided by financing activities was $113.0 million in 2017, consisting primarily of the net proceeds from the issuance of our redeemable convertible preferred units of $107.0 million and issuance of promissory notes of $4.0 million.

Net cash used in investing activities was $53.0 million in 2020, consisting primarily of purchases of marketable securities of $287.9 million, purchases of property and equipment of $7.5 million and payments of merger transaction costs of $6.9 million, partially offset by $249.1 million in maturities of marketable securities.

Net cash used in investing activities was $217.3 million in 2019 , consist ing primarily of $212.9 million used to purchase marketable securities, $2.6 million related to purchase of property and equipment and $2.5 million paid for in-pro c ess research and development assets acquired in connection with asset acquisitions .

Cash Flows Provided by Financing Activities

Net cash provided by financing activities was $447.2 million in 2020, consisting primarily of the net proceeds from the issuance of our 2027 Notes of $537.0 million, at-the-market issuance by Eidos of $24.1 million and stock option exercises of $12.9 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 $398.8 million in 2019, consisting primarily of the net proceeds from our IPO of $366.2 million, availment of term loans of $36.9 million, at-the-market issuance by Eidos of $23.9 million, issuance of noncontrolling interest in Eidos to Alexion of $23.3 million and stock option exercises of $1.8 million, offset by $55.0 million payment in relation to our purchase of common stock of Eidos from a noncontrolling interest holder.

Contractual Obligations

3 unchanged sentences

Operating lease obligations

Build-to-suit lease obligation

Finance lease obligations

Obligation under a manufacturing agreement

Interest on 2027 Notes

Interest on term loans and final end of

1 unchanged sentence

Total contractual obligations

In March 2019, Eidos entered into an amendment to its office lease.

The amended lease commenced in August 2019 and Eidos increased its rentable facilities to 10,552 square feet.

The amended lease is for 87 months and has $6.4 million of payments under this lease.

In July 2019, the completion of our IPO triggered certain provisions of the Amended Hercules Term Loan.

The outstanding balance of the Amended Hercules Term Loan is to be repaid by us monthly beginning on July 1, 2021 and extending through January 1, 2023.

Immediately prior to completion of our IPO, these dates were January 1, 2021 and July 1, 2022, respectively.

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

The SVB and Hercules Loan Agreement provides for up to $55.0 million in term loans to be drawn in three tranches.

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 December 31, 2019.

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 fully vested common stock of the Company at our sole election, upon achievement of each contingent milestones.

As of December 31, 2019, the potential milestone compensation amount is up to $34.0 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 above.

In December 2019, we entered into a manufacturing agreement in which we agreed to pay a one-time fee of $10.0 million for a dedicated manufacturing suite.

The amount included in the table above as ‘ Build-to-suit lease obligation ’ pertains to the unpaid portion of as of December 31, 2019.

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

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 between BridgeBio and U.S.

Bank National Association, as trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

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.

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

extended the interest-only period under the Loan and Security Agreement to July 1, 2022 (the Amended Amortization Date, which may be further extended to January 1, 2023 and July 1, 2023, in each case, subject to certain conditions set forth in the Amended Hercules Term Loan);

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 December 31 , 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:

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 December 31, 2020, including the available incremental loan of $25.0 million that was available to be drawn until December 15, 2020.

In October 2020, we entered into the Merger Transactions with Eidos.

Pursuant to the Merger Agreement, Eidos’ stockholders (other than us) had the right to receive in the transaction, at their election, either 1.85 shares of BridgeBio common stock or $73.26 in cash for each share of common stock of Eidos, or the Eidos Common Stock, subject to proration to ensure that the aggregate amount of cash consideration was no greater than $175.0 million.

Upon the closing of the Merger Transactions and subject to the terms of the Merger Agreement, Eidos became our wholly-owned subsidiary, and Eidos’ common stock ceased to trade on the Nasdaq.

On January 19, 2021, the stockholders of each of BridgeBio and Eidos voted to approve all proposals related to the Merger Transactions and on January 26, 2021, we closed and completed the Merger Transactions.

The acquisition of the Eidos Common Stock was settled through cash payments of $21.3 million and the issuance of approximately 26.1 million shares of our common stock.

Through the closing of the Merger Transactions on January 26, 2021, we have incurred estimated transaction costs aggregating to $78.2 million.

I n October 2020, we entered into a twelve-year real property lease agreement for an approximately 20,000 square feet facility in Montreal, Québec.

The lease is expected to commence in early 202 1 .

Future minimum rent payments under this lease are approximately $5.7 million.

Under the lease agreement, we are also required to secure a letter of credit of $1.6 million, subject to reduction of such amount by $0.1 million per year.

Effective as of October 2020, we entered into a five-year real property sublease agreement for an approximately 53,000 square feet facility in San Francisco, California.

Future minimum rent payments under this sublease are approximately $11.2 million.

We 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.

As of December 31, 2020, the potential performance-based milestone compensation amount was up to $99.0 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 and consultants as part of the 2020 Stock and Equity Award Exchange Program, or the “Exchange Program”, which is further discussed in Note 15 to our consolidated financial statements.

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 and under certain of our asset acquisitions.

Under these agreements we are required to make milestone payments upon successful completion and achievement of certain intellectual property, clinical, regulatory and sales milestones.

1 unchanged sentence

As the achievement and timing of these future milestone payments are not probable or estimable, such amounts have not been included in our consolidated balance sheet as of December 31, 2020, or in the contractual obligations table above.

In addition, we enter into agreements in the normal course of business with contract research organizations 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.

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.

These payments are not included in the contractual obligations table above.

2 unchanged sentences

While we have investments classified as VIEs, their purpose is not to provide off-balance sheet financing.

Critical Accounting Polices and Estimates

Critical Accounting Policies

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles.

3 unchanged sentences

We believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements for the periods in this report.

Licensing Arrangements

When we enter into licensing agreements with pharmaceutical and biotechnology partners, we assess whether the arrangements fall within the scope of Accounting Standards Codification (ASC) 808, Collaborative Arrangements (ASC 808) based on whether the arrangements involve joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards.

To the extent that the arrangement falls within the scope of ASC 808, we assess whether the payments between us and our partner fall within the scope of other accounting literature.

If we conclude that payments from the partner to us represent consideration from a customer, such as license fees and contract research and development activities, we account for those payments within the scope of ASC 606, Revenue from Contracts with Customers .

However, if we conclude that our partner is not a customer for certain activities and associated payments, such as for certain collaborative research, development, manufacturing and commercial activities, we record such payments as a reduction of research and development expense or general and administrative expense, based on where we record the underlying expense .

Revenue Recognition

We recognize license revenue based on the facts and circumstances of each contractual agreement and includes recognition of upfront fees and milestone payments.

At the inception of each agreement, we determine which promises represent distinct performance obligations, for which management must use significant judgment.

Additionally, at inception and at each reporting date thereafter, we must determine and update, as appropriate, the transaction price, which includes variable consideration such as development milestones.

We must use judgment to determine when to include variable consideration in the transaction price such that inclusion of such variable consideration will not result in a significant reversal of revenue recognized when the contingency surrounding the variable consideration is resolved.

We must also allocate the arrangement consideration to performance obligations based on their relative standalone selling prices, which we generally base on our best estimates and which require significant judgment.

For example, in estimating the standalone selling prices for granting licenses for our drug candidate, our estimates may include revenue forecasts, clinical development timelines and costs, discount rates and probabilities of clinical and regulatory success.

For performance obligations satisfied over time, we recognize revenue based on our estimates of expected future costs or other measures of progress.

Research and Development Expenses

Research and development costs are expensed as incurred.

Research and development costs consist of salaries, benefits, and other personnel related costs, including stock-based compensation expense, laboratory supplies, preclinical studies, clinical trials and related clinical manufacturing costs, costs related to manufacturing preparations, fees paid to other entities to conduct certain research and development activities on our behalf, and allocated facility and other related costs.

Non-refundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized as either prepaid expenses or other noncurrent assets depending on the timing of delivery of the goods or performance of the services.

Accrued Research and Development Liabilities

3 unchanged sentences

Examples of estimated research and development expenses that we accrue include:

fees paid to CROs in connection with preclinical and toxicology studies and clinical studies;

fees paid to investigative sites in connection with clinical studies;

fees paid to CMOs in connection with the production of product and clinical study materials;

fees paid to CROs in connection with preclinical and toxicology studies and clinical trials;

fees paid to investigative sites in connection with clinical trials;

fees paid to CMOs in connection with the production of product and clinical trial materials;

professional service fees for consulting and related services.

We base our expense accruals related to clinical studies on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical studies on our behalf.

We base our expense accruals related to clinical trials on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical trials on our behalf.

The financial terms of these agreements vary from contract to contract and may result in uneven payment flows.

Payments under some of these contracts depend on factors, such as the successful enrollment of patients and the completion of clinical study milestones.

Payments under some of these contracts depend on factors, such as the successful enrollment of patients and the completion of clinical trial milestones.

Our service providers generally invoice us monthly in arrears for services performed.

14 unchanged sentences

However, due to the nature of estimates, there is no assurance that we will not make changes to our estimates in the future as we become aware of additional information about the status or conduct of our clinical studies and other research activities.

We consolidate those entities in which we have a direct or indirect controlling financial interest based on either the VIE model or the VOE model.

VIEs are entities that, by design, either:

(i) lack sufficient equity to permit the entity to finance its activities without additional support from other parties;

or (ii) have equity holders that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity.

The primary beneficiary of a VIE is required to consolidate the assets and liabilities of the VIE.

The primary beneficiary is the party that has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE through its interest in the VIE.

To assess whether we have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, we consider all of the facts and circumstances, including our role in establishing the VIE and our ongoing rights and responsibilities.

Our assessment includes identifying the activities that most significantly impact the VIE’s economic performance and identifying which party, if any, has power over those activities.

In general, the parties that make the most significant decisions affecting the VIE (management and representation on the board of directors) and have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE.

To assess whether we have the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, we consider all of our economic interests, which primarily include equity investments in preferred and common stock and issuance of notes that are convertible into preferred stock, that are deemed to be variable interests in the VIE.

This assessment requires us to apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE.

Factors considered in assessing the significance include:

the design of the VIE, including its capitalization structure;

subordination of interests;

payment priority;

relative share of interests held across various classes within the VIE’s capital structure;

and the reasons why the interests are held by us.

At the VIE inception, we determine whether we are the primary beneficiary and if the VIE should be consolidated based on the facts and circumstances.

We then perform ongoing reassessments at each reporting period on whether changes in the facts and circumstances regarding our involvement with the VIE results in a change to our consolidation conclusion.

Entities that do not qualify as a VIE are assessed for consolidation under the VOE model.

Under the VOE model, we consolidate an entity if we determine that we, directly or indirectly, have greater than 50% of the voting shares and that other equity holders in such entities do not have substantive voting, participating or liquidation rights.

Stock-Based Compensation

Prior to the IPO, because there was no public market for our units as we were a private company, our board of managers determined the fair value of management incentive units and common units by considering a number of objective and subjective factors, including having contemporaneous and retrospective valuations of our equity performed by a third-party valuation specialist, valuations of comparable peer public companies, sales of our redeemable convertible preferred units, operating and financial performance, the lack of liquidity of our units, and general and industry-specific economic outlook.

The fair value of our management incentive unit and common unit were determined by our board of managers until the IPO.

Following our IPO, the closing sale price per share of our common stock as reported on the Nasdaq Global Select Market on the date of grant is used to determine the exercise price per share of our stock-based awards to purchase common stock.

Stock-based compensation is measured at the grant date for all stock-based awards made to employees and non-employees based on the fair value of the awards and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period.

We have elected to recognize the actual forfeitures by reducing the stock-based compensation in the same period as the forfeitures occur.

Stock-based compensation for awards made to non-employees was measured as per ASC 505-50 until we early adopted Accounting Standards Update, or ASU, 2018-07 Compensation-Stock Compensation (Topic 718) on January 1, 2017.

We remeasured our equity-classified non-employee awards for which a measurement date had not been established at their adoption-based fair-value based measurement (January 1, 2017), and determined there was no cumulative-effect adjustment to our opening accumulated deficit.

Subsequent to the adoption of ASU 2018-07, we account for non-employee awards similar to employee awards.

Prior to the IPO, we granted management incentive units and common units to employees and non-employees.

These awards generally have only a service condition and vest over a period of up to five years.

The awards have accelerated vesting upon a fundamental transaction, which is defined as (i) a merger, recapitalization or other business combination, (ii) a sale, transfer, exclusive license or disposition of BBP LLC or (iii) a final liquidation, dissolution, winding-up or termination of BBP LLC.

Our consolidated entities have granted stock options that are exercisable in the underlying entity’s equity and have issued restricted stock awards in the underlying entity’s equity to employees and non-employees.

None of the awards issued by the consolidated entities are issued for BBP LLC members’ capital.

These awards generally have only a service condition and generally vest over a period of up to four years.

On June 22, 2019, we adopted the 2019 Stock Option and Incentive Plan (the “2019 Plan”), which became effective on June 25, 2019.

The 2019 Plan provides for the grant of stock-based incentive awards, including common stock options and other stock-based awards.

On November 13, 2019, we adopted the 2019 Inducement Equity Plan (the “2019 Inducement Plan”).

The 2019 Inducement Plan provides for the grant stock-based awards to induce highly-qualified prospective officers and employees who are not currently employed by BridgeBio or its Subsidiaries to accept employment and to provide them with a proprietary interest in the Company, including common stock options and other stock-based awards.

We were authorized to issue 1,000,000 shares of common stock for inducement awards under the 2019 Inducement Plan, which may be allocated among stock options, awards of restricted common stock, restricted common units and other stock-based awards.

Milestone Compensation Arrangements with Employees

Compensation expense arising from each milestone is recognized when the specific contingent milestone is probable of achievement and is measured at each reporting period.

Under ASC 718, Compensation – Stock Compensation , we will classify the milestone compensation arrangements as liability-classified awards when it is probable of achievement because of the possible fixed monetary amounts settlement outcomes.

The arrangements would also result in settlement with a variable number of shares based on the then-current stock price at grant date should we elect to settle in equity.

Prior to the tax-free reorganization, BBP LLC was treated as a pass‑through entity for U.S.

federal income tax purposes, and as such, was generally not subject to U.S.

federal income tax at the entity level.

Rather, the tax liability with respect to its taxable income was passed through to its unitholders.

Therefore, no provision or liability for federal income tax has been included in our consolidated financial statements prior to the reorganization.

For our consolidated entities, income taxes are accounted for under the asset and liability method as described below.

Upon the Reorganization on July 1, 2019, we became subject to typical corporate U.S.

federal and state income taxation.

Income taxes are accounted for under the asset and liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base and net operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are determined based upon the difference between the consolidated financial statement carrying amounts and the tax basis of assets and liabilities and are measured using the enacted tax rate expected to apply to taxable income in the years in which the differences are expected to be reversed.

Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

federal income tax purposes, we are required to file separate U.S.

federal income tax returns for the consolidated entities.

We are required to assess stand-alone valuation allowances separately in each entity even though we consolidate their financial results in our consolidated financial statements.

We continue to file combined state tax returns in most jurisdictions.

As a result, we continue to assess the state portion of our valuation allowance for those jurisdictions on a consolidated basis.

We evaluate our deferred tax assets regularly to determine whether adjustments to the valuation allowance are appropriate due to changes in facts or circumstances, such as changes in expected future pre-tax earnings, tax law, interactions with taxing authorities and developments in case law.

In making this evaluation, we rely on our recent history of pre-tax earnings.

Our material assumptions are our forecasts of future pre-tax earnings and the nature and timing of future deductions and income represented by the deferred tax assets and liabilities, all of which involve the exercise of significant judgment.

Although we believe our estimates are reasonable, we are required to use significant judgment in determining the appropriate amount of valuation allowance recorded against our deferred tax assets.

We recognize uncertain income tax positions at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority.

Changes in recognition or measurement are reflected in the period in which judgment occurs.

BridgeBio’s consolidated entities’ policy is to recognize interest and penalties related to the underpayment of income taxes as a component of the provision for income taxes.

To date, there have been no interest or penalties recorded in relation to unrecognized tax benefits.

JOBS Act and Emerging Growth Company Status

We are an emerging growth company, as defined in 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.

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

We will remain an emerging growth company until the earliest of (i) December 31, 2024, (ii) the last day of our first fiscal year in which we have total annual gross revenues of $1.07 billion or more, (iii) the date on which we have issued more than $1.0 billion of non-convertible debt instruments during the previous three fiscal years, or (iv) the date on which we are deemed a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding equity securities held by non-affiliates as of the immediately preceding June 30.

Accrued Milestone Compensation Arrangements

We 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 (i) cash, (ii) equity of BridgeBio, or (iii) cash or equity of BridgeBio at our sole election, upon achievement of each contingent milestones.

For arrangements that involve settlement by cash or equity of BridgeBio at our sole election, we will classify the milestone compensation arrangements as liability-classified awards when it is probable of achievement because of the possible fixed monetary amounts settlement outcomes.

The arrangements would also result in settlement with a variable number of

shares based on the then-current stock price at achievement date of each contingent milestone should we elect to settle in equity .

We record accruals for the compensation expense arising from each development milestone when the specific contingent development milestone is probable of achievement and such accruals are measured at each reporting period.

We estimate the probability of achieving such milestones based on the progression and expected outcome of the related clinical programs.

We base our estimates on the best available information at that time.

However, additional information may become available to us which may allow us to make a more accurate estimate in future periods.

In this event, we may be required to record adjustments to milestone compensation expenses in future periods.

Any increases or decreases in such expenses are generally considered to be changes in estimates and will be reflected in the period identified.

To date, we have not experienced significant changes in our estimates of accrued milestone compensation expenses after a reporting period.

However, due to the nature of estimates, there is no assurance that we will not make changes to our estimates in the future as we become aware of additional information about the progression and expected outcome of our clinical programs.

Recent Accounting Pronouncements

1 unchanged sentence

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-K

Item 7. Management’s Discussion and Analysis