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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2021-02-25 compared with 2020-03-03 · 887 added, 893 removed, 820 unchanged (68% of the section changed)

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks in the ordinary course of our business.

These risks primarily include interest rate sensitivities.

The primary objective of our investment activities is to preserve our capital to fund our operations.

We also seek to maximize income from our investments without assuming significant risk.

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

As of December 31, 2019, we held cash, cash equivalents and marketable securities of $577.1 million.

Our cash equivalents consist of amounts invested in money market accounts, such as money market funds and overnight repurchase agreements collateralized with securities issued by the U.S.

government or its agencies.

As of December 31, 2020 and 2019, we held cash, cash equivalents and marketable securities of $607.1 million and $577.1 million, respectively.

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

Our marketable securities consisted of commercial paper, corporate debt securities and U.S.

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We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates.

A hypothetical 100 basis point change in interest rate during any of the periods presented would not have had a material impact on our financial statements.

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

As of December 31, 2019, we had $75.0 million in variable rate debt outstanding.

The Amended Hercules Term Loan matures in January 2023, with interest-only monthly payments until July 2021.

As of December 31, 2020 and 2019, we had $92.5 million in variable rate debt outstanding.

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

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

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(i) the prime rate as reported in the Wall Street Journal plus 3.10% and (ii) 8.85% (8.85% as of December 31, 2020).

The Silicon Valley Bank and Hercules Loan Agreement entered into by Eidos had a principal balance of $17.5 million as of December 31, 2019 and bears interest at a fixed rate.

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

The SVB and Hercules Loan Agreement entered into by Eidos, which matures in October 2023, had a principal balance of $17.5 million as of December 31, 2020 and bears interest equal to the greater of either (i) 8.50% or (ii) 3.25% plus the prime rate as reported in The Wall Street Journal (8.50% as of December 31, 2020).

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

A hypothetical 100 basis point change in interest rate during any of the periods presented would not have had a material impact on our financial statements.

Our 2027 Notes issued in March 2020 had a principal balance of $550.0 million as of December 31, 2020 and bear interest at a fixed rate.

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

FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA

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Notes to Consolidated Financial Statements

Supplementary Financial Data (unaudited)

Report of Independent Registered Public Accounting Firm

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Short-term marketable securities

Receivable from a related party

Prepaid expenses and other current assets

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Property and equipment, net

Operating lease right-of-use assets, net

Long-term marketable securities

Investments in nonconsolidated entities

Liabilities, Redeemable Convertible Noncontrolling Interests and

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Accrued professional services

Accrued distributions to stockholders

LEO call option liability

Build-to-suit lease obligation

Operating lease liabilities, current portion

Term loans, current portion

Other accrued liabilities

Total current liabilities

Term loans, noncurrent

Term loans, net of current portion

2027 Notes, net

Operating lease liabilities, net of current portion

Other liabilities

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Undesignated preferred stock, $ 0.001 par value;

25,000,000 and no shares

authorized as of December 31, 2019 and 2018;

no shares issued and

outstanding as of December 31, 2019 and 2018

25,000,000 shares

no shares issued and outstanding

Common stock, $ 0.001 par value;

500,000,000 and 97,412,870 shares

authorized as of December 31, 2019 and 2018, respectively;

and 92,057,704 shares issued and outstanding as of

December 31, 2019 and 2018, respectively

500,000,000 shares authorized;

125,264,070 shares issued and 122,849,389 shares outstanding as of

December 31, 2020, 123,658,287 shares issued and outstanding as

of December 31, 2019

Treasury stock, at cost;

2,414,681 shares as of December 31, 2020, nil as of

December 31, 2019

Additional paid-in capital

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The accompanying notes are an integral part of these consolidated financial statements.

The consolidated balance sheet as of December 31, 2018 is derived from the audited consolidated financial statements as of that date and was retroactively adjusted, including shares and per share amounts, as a result of the Reorganization.

See Note 3 to the consolidated financial statements for additional details.

BRIDGEBIO PHARMA, INC.

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Gain on deconsolidation of PellePharm

Loss from ML Bio asset acquisition

Share in net loss of equity method investments

Other expense

Other income (expense)

Total other income (expense), net

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The accompanying notes are an integral part of these consolidated financial statements.

The weighted-average shares used in computing net loss per share, basic and diluted were retroactively adjusted as a result of the Reorganization.

See Note 3 to the consolidated financial statements for additional details.

BRIDGEBIO PHARMA, INC.

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Year Ended December 31,

Other comprehensive income:

Unrealized gain on available-for-sale securities

Other comprehensive income (loss):

Unrealized gain (loss) on available-for-sale securities

Comprehensive loss

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Noncontrolling

Treasury Stock

Comprehensive

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Balances as of December 31, 2017

MyoKardia distributions

Issuance and vesting of restricted common stock and

related stock-based compensation expense

Issuance of common stock at $2.22 per share, net

of issuance costs of $0

Issuance of common stock at $4.21 per share, net of

issuance costs of $818

Issuance of common stock at $4.25 per share through

conversion of promissory note

Capital transaction upon Merger

Deemed dividends to common stockholders

Repayment on nonrecourse notes

Issuance (repurchase) of noncontrolling interest

Transfers to (from) and conversion of noncontrolling

Balances as of December 31, 2017 (1)

Vesting of restricted common stock and related

stock-based compensation expense

Issuance of shares under equity compensation

Stock-based compensation

Issuance of common stock at $ 4.29 per share,

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Issuance (repurchase) of noncontrolling interest

Transfers to (from) noncontrolling interest

Transfers from (to) noncontrolling interest

Deconsolidation of PellePharm

Balances as of December 31, 2018

Issuance of common stock and restricted stock

awards and associated stock-based compensation

Issuance of shares under equity compensation

Stock-based compensation

Repayment of nonrecourse notes

Stock-based compensation expense related to

stock-option and incentive plan

Stock-based compensation expense related to

employee stock ownership plan

Issuance of common stock at $ 17.00 per share in

connection with the initial public offering, net of

underwriter discounts and issuance costs of $34,538

Exercise of common stock options

Issuance of common stock under ESPP

connection with the initial public offering,

net of underwriter discounts and issuance

costs of $ 34,538

Issuance of common stock under employee

stock purchase plan ("ESPP")

Unrealized gains on available-for-sale securities

Issuance (repurchase) of noncontrolling interest

Transfers to (from) noncontrolling interest

Transfers from (to) noncontrolling interest

Balances as of December 31, 2019

Issuance of shares under equity

compensation plans

Issuance of shares under the 2020 Stock

and Equity Award Exchange Program

Stock-based compensation

Equity component of 2027 Notes, net of

issuance costs and deferred tax liability

Purchase of capped calls

Repurchase of common stock

Issuance of common stock under ESPP

Repurchase of common stock to satisfy tax withholding

Unrealized loss on available-for-sale securities

Issuance (repurchase) of noncontrolling interest

Transfers from (to) noncontrolling interest

Balances as of December 31, 2020

The accompanying notes are an integral part of these consolidated financial statements.

The consolidated balances as of December 31, 2018, 2017 and 2016 are derived from the audited consolidated financial statements as of that date and were retroactively adjusted, including shares and per share amounts, as a result of the Reorganization.

See Note 3 to the consolidated financial statements for additional details.

BRIDGEBIO PHARMA, INC.

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Stock-based compensation

Amortization of operating lease right-of-use assets

Gain on deconsolidation of PellePharm

Share in net loss of equity method investments

Change in fair value of LianBio Warrants

Fair value of equity method investment

Accretion of term loans and convertible promissory notes

Fair value of shares issued under license agreements

Accretion of 2027 Notes and term loans

Acquired in-process research and development assets

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Changes in operating assets and liabilities:

Receivable from a related party

Prepaid expenses and other current assets

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Accrued professional services

Other accrued liabilities

Other liabilities

Operating lease liabilities

Other accrued and other liabilities

Net cash used in operating activities

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Purchases of marketable securities

Maturities of marketable securities

Payments of merger transaction costs

Decrease in cash and cash equivalents resulting from deconsolidation of PellePharm

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Cash and cash equivalents acquired in ML Bio asset acquisition

Proceeds from disposal of property and equipment

Purchases of property and equipment

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Financing activities

Proceeds from issuance of common stock in connection with the initial public

offering of the Corporation in 2019 and Eidos in 2018, net of underwriting

discounts and commissions

Proceeds from issuance of noncontrolling interest to Alexion (Note 13)

Proceeds from issuance of common stock in connection with the initial public offering of BridgeBio in 2019

and Eidos in 2018, net of underwriting discounts and commissions

Proceeds from issuance of 2027 Notes

Issuance costs and discounts associated with issuance of 2027 Notes

Purchase of capped calls

Repurchase of common stock

Proceeds from issuance of noncontrolling interest to Alexion

Proceeds from issuance of promissory notes

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Proceeds from the issuance of redeemable convertible preferred units, net of issuance costs

Proceeds from third-party investors in redeemable convertible noncontrolling interests

Proceeds from issuance of redeemable convertible noncontrolling interests to third-party investors

Proceeds from repayment of the loans received by noncontrolling interest shareholder

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Proceeds from BridgeBio common stock issuances under ESPP

Proceeds from stock option exercises

Repurchase of shares to satisfy tax withholding

Proceeds from stock option exercises, net of repurchases

Net cash provided by financing activities

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Supplemental Disclosures of Non-Cash Investing and Financing Information:

Deferred merger transaction costs included in accounts payable and accrued professional services

Tenant improvement paid by landlord

Conversion of promissory note upon issuance of Series C redeemable convertible preferred units

Transfers (from) to noncontrolling interest (Note 6)

Recognition of property and equipment previously classified in other assets

Non-cash contribution by a noncontrolling interest

Unpaid property and equipment

Build-to-suit funding liability accrual (Note 13)

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Conversion of promissory note into redeemable convertible noncontrolling interest

Capital transaction upon Merger

Fair value of redeemable convertible noncontrolling interest issued for acquired

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BridgeBio Pharma, Inc.

(the “Corporation”) was formed as a Delaware corporation on May 17, 2019 for the purpose of completing an initial public offering of the Corporation’s common stock (the “IPO”) and related organizational transactions (the “Reorganization”) in order to carry on the business of BridgeBio Pharma LLC (“BBP LLC”).

The Corporation, the reporting entity in these consolidated financial statements, and BBP LLC, the predecessor reporting entity before the completion of the Reorganization and the Corporation’s wholly-owned subsidiary after the completion of the Reorganization, are collectively referred to as BridgeBio.

Since inception, BridgeBio has either created wholly-owned subsidiaries or has made investments in certain controlled entities, including partially-owned subsidiaries for which BridgeBio has a majority voting interest and variable interest entities (“VIEs”) for which BridgeBio is the primary beneficiary (collectively, “we”, “our”, “us”).

BridgeBio is headquartered in Palo Alto, California.

(“BridgeBio”) was established 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’s pipeline of programs spans early discovery to late-stage development.

Reorganization and Initial Public Offering

On July 1, 2019, the Corporation closed the IPO of its common stock.

As part of the IPO, the Corporation issued and sold 23,575,000 shares of its 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.

The Corporation 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.

Upon the closing of the IPO on July 1, 2019, BridgeBio completed the Reorganization, whereby all unitholders of BBP LLC exchanged their units for shares of common stock of the Corporation, and BBP LLC became a wholly-owned subsidiary of the Corporation.

Subsequent to the Reorganization, as the sole managing member, the Corporation operates and controls all of BBP LLC’s businesses and affairs.

See Note 3 for additional details.

On July 1, 2019, BridgeBio completed the 2019 Reorganization, whereby all unitholders of BridgeBio Pharma LLC (“BBP LLC”) exchanged their units for shares of common stock of BridgeBio, and BBP LLC became a wholly-owned subsidiary of BridgeBio, and closed the Initial Public Offering (“IPO”) of its common stock.

Since inception, BridgeBio has either created wholly-owned subsidiaries or has made investments in certain controlled entities, including partially-owned subsidiaries for which BridgeBio has a majority voting interest, and variable interest entities (“VIEs”) for which BridgeBio is the primary beneficiary (collectively, “we”, “our”, “us”).

Our consolidated financial statements include the accounts of our majority-owned subsidiary, Eidos Therapeutics, Inc.

(“Eidos”), which completed an IPO in June 2018 and became our wholly-owned subsidiary in January 2021.

BridgeBio is headquartered in Palo Alto, California.

The results of operations and cash flows prior to the IPO closing on July 1, 2019 relate to BBP LLC, its subsidiaries and controlled entities.

Subsequent to the IPO closing, the information relates to the Corporation, its subsidiaries and controlled entities.

All share and per share amounts in these consolidated financial statements and related notes have been retroactively adjusted, where applicable, for all periods presented to give effect to the exchange ratio applied in connection with the Reorganization.

See Note 3 for additional details.

Subsequent to the IPO closing, the information relates to BridgeBio, its subsidiaries and controlled entities.

All share and per share amounts in these consolidated financial statements and related notes have been retroactively adjusted, where applicable, for the comparable periods presented to give effect to the exchange ratio applied in connection with the 2019 Reorganization.

Summary of Significant Accounting Policies

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All intercompany balances and transactions have been eliminated in consolidation.

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of our financial position, our results of operations and comprehensive loss, and our cash flows for the periods presented.

For consolidated entities where we own or are exposed to less than 100% of the economics, we record net loss attributable to noncontrolling interests in our consolidated statements of operations equal to the percentage of the economic or ownership interests retained in such entities by the respective noncontrolling parties.

In determining whether an entity is considered a controlled entity, we applied the VIE and Voting Interest Entity (“VOE”) models.

We assess whether we are the primary beneficiary of a VIE based on our power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and our obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

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

Under the VOE model, BridgeBio consolidates the entity if it determines that it has a controlling financial interest in the entity through its ownership of greater than 50 % of the outstanding voting shares of the entity and that other equity holders do not have substantive voting, participating or liquidation rights.

We assess whether we are the primary beneficiary of a VIE or whether we have a majority voting interest for entities consolidated under the VOE model at the inception of the arrangement and at each reporting date.

Refer to Note 5.

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S.

GAAP”) and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of our financial position, our results of operations and comprehensive loss, and our cash flows for the periods presented.

The results of operations for the years ended December 31, 2020, 2019 and 2018 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.

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 increased to $4.1 million as of December 31, 2019.

The change in fair value of the LEO Call Option is recorded as part of other expense in our consolidated statements of operations.

We 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 Recently Adopted Accounting Pronouncements ), 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 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.

Presentation Reclassifications

Certain reclassifications have been made to the consolidated balance sheet as of December 31, 2019.

These reclassifications had no effect on net loss or cash flows as previously reported.

Variable Interest Entities and Voting Interest Entities

BridgeBio consolidates those entities in which it has a direct or indirect controlling financial interest based on either the Variable Interest Entity (“VIE”) model or the Voting Interest Entity (“VOE”) model.

BridgeBio consolidates those entities in which it has 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 subordinated financial support from other parties;

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At the VIE’s inception, BridgeBio determines whether it is the primary beneficiary and if the VIE should be consolidated based on the facts and circumstances.

BridgeBio then performs on-going reassessments of the VIE based on reconsideration events and reevaluates whether a change to the consolidation conclusion is required each reporting period.

Refer to Note 6.

We have determined that the consolidated VIEs, in which BridgeBio is the primary beneficiary, individually meets the definition of a business.

There are no significant restrictions on the assets and liabilities of BridgeBio’s consolidated VIEs.

BridgeBio then performs on-going reassessments of the VIE based on reconsideration events and reevaluates whether a change to the consolidation and disclosure conclusions are required each reporting period.

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

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Refer to Note 5.

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

The following are the VIEs as of December 31, 2019 and 2018:

Variable Interest Entities

Relationship as of

December 31, 2019

First Acquired

Fortify Therapeutics, Inc.

Controlled VIE

Calcilytix Therapeutics, Inc.

("Calcilytix")

Controlled VIE

December 2018

Audition Therapeutics, Inc.

Controlled VIE

Molecular Skin Therapeutics, Inc.

Controlled VIE

Quartz Therapeutics, Inc.

Controlled VIE

PellePharm, Inc.

(”PellePharm”) (1)

December 2016

Navire Pharma, Inc.

Controlled VIE

February 2017

CoA Therapeutics, Inc.

Controlled VIE

February 2017

Dermecular Therapeutics, Inc.

(”Dermecular”)

Controlled VIE

Phoenix Tissue Repair, Inc.

Controlled VIE

QED Therapeutics, Inc.

Controlled VIE

Adrenas Therapeutics, Inc.

Controlled VIE

Orfan Biotech, Inc.

Controlled VIE

Ferro Therapeutics, Inc.

Controlled VIE

Origin Biosciences, Inc.

Controlled VIE

Venthera, Inc.

Controlled VIE

Aspa Therapeutics, Inc.

Controlled VIE

ML Bio Solutions, Inc.

Controlled VIE

Subsequent to the execution of a series of agreements (the “LEO Agreement”) with LEO Pharma A/S and LEO Spiny Merger Sub, Inc.

(“LEO”) in November 2018, BridgeBio determined that it is no longer the primary beneficiary of PellePharm, Inc.

(“PellePharm”) and deconsolidated PellePharm.

Refer to Note 8.

Not included in the above list is Eidos, which is a partially-owned subsidiary that we consolidate under the VOE model.

Equity Method and Other Investments in Equity Method Investees

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Payments to investees such as additional investments, loans and expenses incurred on behalf of investees, as well as payments from investees such as dividends, distributions and repayments of loans are recorded as adjustments to the carrying value of the investment.

In the event that net losses of the investee reduce the carrying amount to zero, additional net losses may be recorded if we have other investment in the investee not accounted for under the equity method, have guaranteed obligations of the investee, or we are otherwise committed to provide further financial support for the investee.

In the event that net losses of the investee reduce the carrying amount to zero, additional net losses may be recorded if we ha ve other investment in the investee not accounted for under the equity method , have guaranteed obligations of the investee, or we are otherwise committed to provide further financial support for the investee.

We account for investments at fair value when we do not have significant influence over the investee.

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We recognize income for any dividends declared from the distribution of the investee’s earnings.

As of December 31, 2019 and 2018, we have an equity method and equity security investments in PellePharm, which are presented in the consolidated financial statements as part of single line item titled “Investments in nonconsolidated entities.” The equity security investments in PellePharm are without a readily determinable fair value and is carried at cost less impairment plus or minus observable price changes.

As of December 31, 2020 and 2019, we have an equity method and equity security investments in PellePharm.

The equity security investments in PellePharm are without a readily determinable fair value and are carried at cost less impairment plus or minus observable price changes.

Refer to Note 7 for further discussion on the PellePharm investment.

We have an equity method investment in another third party for ordinary shares representing 10% of the third party’s fully-diluted equity (see Note 13).

The amount of the investment was reduced to zero as of December 31, 2019 after recognizing our equity share in the net losses on the investment for the year ended December 31, 2019.

We have an equity method investment in LianBio for ordinary shares representing 6 % and 10 % of LianBio’s fully-diluted equity as of December 31, 2020 and 2019, respectively (see Note 7).

Under the equity method of accounting, our investments are reviewed for indicators of impairment at each reporting period and are written down to fair value if there is evidence of a loss in value that is other-than-temporary.

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regulatory approval and market acceptance of, and reimbursement for, product candidates;

performance of third-party clinical research organizations and manufacturers upon which we rely;

performance of third-party contract research organizations and manufacturers upon which we rely;

development of sales channels;

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These programs could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs.

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

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

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

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

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

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

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reporting period.

Significant estimates and assumptions made in the accompanying consolidated financial statements include, but are not limited to, fair value of the liability component of our 2.50 % convertible senior notes due 2027 (the “2027 Notes”, see Note 10), the fair value of the LEO call option liability (see Note 7), the fair value of the LianBio Warrants (see Note 11), the fair value of Eidos’ derivative liability (see Note 10), the present value of lease payments of our leases on the respective lease commencement dates, the valuation of our stock-based awards, accounting for stock-based award modifications, accruals for performance-based milestone compensation arrangements, accruals for research and development activities and accruals for contingent intellectual property, clinical, regulatory and sales milestones payments in our in-licensing agreements.

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable.

Actual results may differ from those estimates or assumptions.

Restricted Cash

Under certain lease agreements and letters of credit, we have pledged cash and cash equivalents as collateral.

As of December 31, 2019 and 2018, restricted cash related to such agreements was $0.4 million and $0.2 million, respectively and is classified in other assets in our consolidated balance sheets.

As of December 31, 2020 and 2019, restricted cash related to such agreements was $ 2.6 million and $ 0.4 million, respectively.

Cash, Cash Equivalents and Investments

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Cash and cash equivalents

Restricted cash

Restricted cash — Included in "Prepaid expenses and other current assets"

Restricted cash — Included in "Other assets"

Total cash, cash equivalents and restricted cash

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Fair Value Measurements

Assets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values.

Assets and liabilities recorded at fair value on a recurring basis in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values.

Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

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Property and equipment are stated at cost, net of accumulated depreciation and amortization.

Depreciation and amortization of property and equipment is calculated using the straight-line method over the estimated useful lives of the respective assets.

Depreciation and amortization of property and equipment are calculated using the straight-line method over the estimated useful lives of the respective assets.

Maintenance and repairs that do not improve or extend the life of the assets are expensed when incurred.

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Furniture and office equipment

Lab equipment

Laboratory and machinery equipment

Leasehold improvements

Shorter of remaining lease term or estimated useful life

Shorter of remaining lease term or estimated useful life of the related asset

Depreciation and amortization expense were not material during the periods presented.

Our lease portfolio includes leases for our headquarters, office spaces and laboratory facility.

We determine if an arrangement is a lease at the inception of the contract.

The asset component of our operating leases is recorded as “Operating lease right-of-use assets”, and the liability component is recorded as “Operating lease liabilities, current portion” and “Operating lease liabilities, net of current portion” in our consolidated balance sheet.

The asset component of our finance leases are included in “Property and equipment, net”;

and current and noncurrent finance lease liabilities are presented as part of “Other accrued liabilities” and “Other liabilities”, respectively, in our consolidated balance sheet.

Assets under finance leases are depreciated in a manner similar to other property and equipment.

Right-of-use assets and lease liabilities are recognized based on the present value of lease payments over the lease term at the lease commencement date.

The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable;

otherwise, we use an incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments.

Right-of-use assets are adjusted for incentives expected to be received.

On the lease commencement date, we estimate and include in our lease payments any lease incentive amounts based on future events when (1) the events are within our control and (2) the event triggering the right to receive the incentive is deemed reasonably certain to occur.

If the lease incentive received is greater or less than the amount recognized at lease commencement, we recognize the difference as an adjustment to right-of-use asset and/or lease liability, as applicable.

Right-of-use assets and lease liabilities are remeasured upon certain modifications to leases using the present value of remaining lease payments and estimated incremental borrowing rate upon lease modification.

Operating lease cost is recognized on a straight-line basis over the lease term, and includes amounts related to short-term leases.

For finance leases, we record interest expense on the lease liability in addition to amortizing the right-of-use asset, which is generally straight-line, over the shorter of the lease term or the useful life of the right-of-use asset.

We recognize variable lease payments as operating expenses in the period in which the obligation for those payments is incurred.

Variable lease payments primarily include common area maintenance, utilities, real estate taxes, insurance, and other operating costs that are passed on from the lessor in proportion to the space we lease.

Asset Acquisitions

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There was no impairment of long-lived assets for any of the periods presented.

We determined that we operate in a single segment, which is the business of identifying and advancing transformative medicines to treat patients.

We determined that we are a single operating and reportable segment, which is the business of identifying and advancing transformative medicines to treat patients.

We operate in one segment because our business offerings have similar economics and other characteristics, including the nature of products and manufacturing processes, types of customers, distribution methods and regulatory environment.

We are comprehensively managed as one business segment by our Chief Executive Officer and his management team.

All of our capitalized property and equipment is located in the United States.

We are comprehensively managed as one business segment by the Chief Operating Decision Maker, which is our Chief Executive Officer.

Substantially all of our capitalized property and equipment is located in the United States.

Revenue from license and collaborative arrangements are attributed to regions based on the headquarters of the partner.

For the year ended December 31, 2019, approximately 66% of our revenue is from Alexion Pharmaceuticals with headquarters located in the United States and 34% with a third-party biotech company with headquarters located in Shanghai, China.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reporting period.

Significant estimates and assumptions made in the accompanying consolidated financial statements include, but are not limited to, the fair value of the LEO Call Option liability, the valuation of our stock-based awards, accruals for certain employees’ performance-based milestones, accruals for research and development activities, accruals for contingent milestone payments in our license agreements and income tax uncertainties.

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable.

Actual results may differ from those estimates or assumptions.

For the year ended December 31, 2020, approximately 97 % of our revenue is from LianBio with headquarters located in Shanghai, China.

For the year ended December 31, 2019, approximately 66 % of our revenue is from Alexion Pharmaceuticals with headquarters located in the United States and 34 % with LianBio.

We had no revenues for the year ended December 31, 2018.

Capped Call Transactions

In March 2020, in connection with the issuance of the 2027 Notes (see Note 10) , BridgeBio entered into certain capped call transactions (the “Capped Call Transactions”).

The Capped Call Transactions are expected generally to reduce the potential dilution to the holders of BridgeBio’s common stock upon any conversion of the 2027 Notes and/or offset any cash payments BridgeBio is required to make in excess of the principal amount of converted 2027 Notes, with such reduction and/or offset subject to a cap based on the cap price (see Note 10).

The capped calls meet the conditions outlined in Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging , to be classified in stockholders’ equity as a reduction to additional paid-in capital and are not subsequently remeasured as long as the conditions for equity classification continue to be met.

Debt Issuance Costs

Debt issuance costs are amortized to interest expense over the estimated life of the related debt based on the effective interest method.

In accordance with ASC 835, Interest , we present debt issuance costs on the consolidated balance sheets as a direct deduction from the associated debt.

A portion of debt issuance costs incurred in connection with the 2027 Notes issued in March 2020 was deemed to relate to the equity component and was recorded as a reduction to additional paid in capital and is not amortized to interest expense over the estimated life of the related debt.

The 2027 Notes are more fully described in Note 10.

Treasury Stock

Repurchased treasury stock is recorded at cost, including any commissions and fees.

License Arrangements and Multiple-Element Arrangements

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If we have continuing obligations to perform under the arrangement, such fees are recognized over the estimated period of continuing performance obligation.

When we enter into license agreements, 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.

When we enter into license agreements, we assess whether the arrangements fall within the scope of 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.

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Revenue Recognition

For elements of those arrangements that we determine should be accounted for under ASC 606, we assess which activities in our license or collaboration agreements are performance obligations that should be accounted for separately and determine the transaction price of the arrangement, which includes the assessment of the probability of achievement of future milestones and other potential consideration.

For arrangements that include multiple performance obligations, such as granting a license or performing contract research and development activities or participation on joint steering or other committees, we allocate upfront and milestone payments under a relative standalone selling price method.

Accordingly, we develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract.

These key assumptions may include revenue forecasts, clinical development timelines and costs, discount rates and probabilities of clinical and regulatory success.

For elements of those arrangements that we determine should be accounted for under ASC 606, we perform the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when (or as) we satisfy our performance obligation.

We apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfers to the customer.

At inception of the arrangement, once it is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and then identify the performance obligations and assess whether each promised good or service is distinct.

We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation, on a relative standalone selling price basis, when (or as) the performance obligation is satisfied.

As part of the accounting for these arrangements, we develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract.

These key assumptions may include forecasted revenue or costs, development timelines, discount rates and probabilities of clinical and regulatory success.

License Fees :

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Generally, we would conclude that the license is distinct if the customer is able to benefit from the license with the resources available to it.

For licenses that are distinct, we recognize revenues from nonrefundable, upfront payments and other consideration allocated to the license when the license term has begun and we have provided all necessary information regarding the underlying intellectual property to the customer, which generally occurs at or near the inception of the arrangement.

Milestone Payments :

We are required to include additional consideration in the transaction price when it is probable.

We include milestone payments for research and development services in the transaction price when they are achieved.

For licenses that are distinct, we recognize revenues from nonrefundable, upfront license fees and other consideration allocated to the license when the license term has begun and we have provided all necessary information regarding the underlying intellectual property to the customer, which generally occurs at or near the inception of the arrangement.

For licenses that are bundled with other promises, we determine whether the combined performance obligation is satisfied over time or at a point in time.

If the combined performance obligation is satisfied over time, we use judgment in determining the appropriate method of measuring progress for purposes of recognizing revenue from the up-front license fees.

We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.

Development and Regulatory Milestone Payments :

At the inception of each arrangement that includes development and regulatory milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method.

We include these milestone payments when they are achieved because there is considerable uncertainty in the research and development processes that trigger these payments under our agreements.

Similarly, we include approval milestone payments in the transaction price once the product is approved by the applicable

regulatory agency.

We will recognize sales based milestone payments in the period we achieve the milestone under the sales-based royalty exception allowed under accounting rules.

We recognize milestone payments that relate to an ongoing performance obligation over our period of performance.

Conversely, we recognize in full those milestone payments that we earn based on our partners’ activities when our partner achieves the milestone event.

Similarly, we include approval milestone payments in the transaction price once the product is approved by the applicable regulatory agency.

At the end of each subsequent reporting period, we re-evaluate the probability of achieving such development and regulatory milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis.

Sales-based Milestone Payments and Royalties :

For arrangements that include sales-based royalties, including milestone payments based on the volume of sales, we will determine whether the license is deemed to be the predominant item to which the royalties or sales-based milestones relate and if such is the case, we will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Product supply services :

Arrangements that include a promise for the future supply of drug product for either clinical development or commercial supply at the licensee’s discretion are generally considered as options.

We will assess if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations and recognized when the future goods or services related to the option are provided or the option expires.

Research and Development Expenses

Research and development costs are expensed as incurred.

Research and development expenses 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.

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 prepaid expenses until the related goods are delivered or services are performed.

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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.

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Stock-based compensation arrangements include stock option grants, restricted stock awards (“RSA”) and restricted stock units (“RSU”) awards under our equity incentive plans, as well as shares issued under our Employee Stock Purchase Plan (“ESPP”), through which employees may purchase our common stock at a discount to the market price.

We use the Black‑Scholes‑Merton option pricing model to estimate the fair value of options granted under our equity incentive plans and rights to acquire shares granted under our employee share purchase plan (“ESPP”).

We use the Black‑Scholes‑Merton option pricing model to estimate the fair value of options granted under our equity incentive plans and rights to acquire shares granted under our ESPP.

The Black‑Scholes‑Merton option valuation model requires the use of assumptions, including the expected term of the award and the expected share price volatility.

The Company uses the “simplified” method to estimate the expected option term.

We use the “simplified” method to estimate the expected option term.

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.

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Stock -based compensation is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period.

The estimated fair value of performance-contingent equity awards is expensed using an accelerated method over the term of the award once we have determined that it is probable that performance milestones will be achieved.

Compensation expense for equity awards that contain performance conditions is based on the grant date fair value of the award.

The estimated fair value of equity awards that contain performance conditions is expensed using an accelerated method over the term of the award once we have determined that it is probable that performance milestones will be achieved.

Compensation expense for equity-classified awards that contain performance conditions is measured based on the grant date fair value of the award.

Compensation expense for liability-classified awards that contain performance conditions is initially measured based on the grant date fair value of the award and is remeasured at fair value at each reporting date until the date of settlement.

Compensation expense is recorded over the requisite service period based on management’s best estimate as to whether it is probable that the shares awarded are expected to vest.

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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 (“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 date fair-value based measurement (January 1, 2017) and determined there was no cumulative-effect adjustment to opening accumulated deficit.

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

BBP LLC had granted Management Incentive Units and Common Units to employees and non-employees.

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

The awards had accelerated vesting upon a fundamental transaction (a “Fundamental Transaction”) which is defined as (i) a merger, recapitalization or other business combination, (ii) a sale, transfer, exclusive license or disposition of the Company or (iii) a final liquidation, dissolution, winding-up or termination of the Company.

The unvested outstanding management incentive units and common units of BBP LLC were exchanged for shares of the Corporation’s unvested restricted stock, subject to the same time-based vesting conditions as the original management incentive units and common units terms and conditions (see Note 3).

The awards had accelerated vesting upon a fundamental transaction (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.

The unvested outstanding management incentive units and common units of BBP LLC were exchanged for shares of BridgeBio’s unvested restricted stock, subject to the same time-based vesting conditions as the original management incentive units and common units terms and conditions (see Note 14).

Stock-based compensation is recorded in research and development expense, and general and administrative expense based on the function of the applicable employee and non-employee.

Milestone Compensation Arrangements with Employees

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.

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.

Amortization of Debt Issuance Costs

Debt issuance costs are amortized to interest expense over the estimated life of the related debt based on the effective interest method.

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 (1) cash, (2) equity of BridgeBio, or (3) cash or equity of BridgeBio at our sole election, upon achievement of each contingent milestone.

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.

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

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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.

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

federal income tax return for the consolidated entities which 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.

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

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Any change in the fair value of the LEO Call Option is recognized as a component of “Other income (expense), net” in the consolidated statements of operations.

Refer to Note 4 and Note 8 for further discussion.

Refer to Notes 3 and 7 for further discussion.

Net Loss per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of the Corporation’s common stock outstanding for the period, without consideration for potential dilutive shares of common stock, such as stock options, unvested restricted stock units and shares issuable under the employee stock purchase plan.

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of BridgeBio’s common stock outstanding for the period, without consideration for potential dilutive shares of common stock, such as such as stock options, unvested restricted stock units and awards and performance-based milestone compensation awards, shares issuable under the employee stock purchase plan and assumed conversion of our 2027 Notes.

The common stock equivalents of performance-based milestone compensation arrangements are included as potentially dilutive shares only if the performance condition has been met as of the end of the reporting period.

Shares of common stock subject to repurchase are excluded from the weighted-average shares.

Since we were in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share since the effects of potentially dilutive securities are antidilutive.

No adjustment for cumulative returns on BBP LLC’s redeemable convertible preferred units has been applied to the calculation of basic and diluted net loss per share, since such units were retroactively adjusted as if the Reorganization occurred at the beginning of the earliest period to be presented in our financial statements for the year ending December 31, 2019.

See Note 14 to for additional details.

Emerging Growth Company Status

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (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 this 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 it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act.

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

As described in “Recently Adopted Accounting Pronouncements” below, we early adopted multiple accounting standards, as the JOBS Act does not preclude an emerging growth company from adopting a new or revised accounting standard earlier than the time that such standard applies to private companies.

We expect to use the extended transition period for any other new or revised accounting standards during the period in which we remain an emerging growth company.

Emerging Growth Company (EGC) Status

We have ceased to be an EGC on December 31, 2020 because our aggregate worldwide market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2020, our most recently completed second fiscal quarter, was greater than $ 700 million.

Effective January 1, 2021, we will no longer be able to use the exemptions from certain reporting requirements available to EGCs.

Recently Adopted Accounting Pronouncements

ASU 2015-17 Income Taxes (Topic 740).

In November 2015, the FASB issued ASU 2015-17 Income Taxes (Topic 740):

Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”) , which simplifies the presentation of deferred taxes in a classified balance sheet by eliminating the requirement to separate deferred income tax liabilities and assets into current and noncurrent amounts.

Instead, ASU 2015-17 requires that all deferred tax liabilities and assets be shown as noncurrent in a classified balance sheet.

ASU 2015-17 is effective for fiscal years beginning after December 15, 2017 and may be applied either prospectively or retrospectively to all periods presented.

We adopted this guidance on January 1, 2018.

There is no impact to the consolidated balance sheets as of December 31, 2019 and December 31, 2018 because of the full valuation allowance position taken for deferred taxes.

ASU 2016-01 Recognition and Measurement of Financial Assets and Financial Liabilities .

In January 2016, the FASB issued ASU 2016-01, which changes how companies recognize, measure, present and make disclosures about certain financial assets and financial liabilities.

Under this guidance, entities have to measure equity investments (except those accounted for under the equity method, those that result in consolidation of the investee and certain other investments) at fair value and recognize any changes in fair value in net income.

Entities can elect a measurement alternative for equity investments that do not have readily determinable fair values and do not qualify for the practical expedient in ASC 820 to estimate fair value using the net asset value per share (or its equivalent).

ASU 2016-01 does not change the guidance for recognizing and measuring investments in debt securities.

For public business entities, ASU 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods therein.

For all other entities, ASU 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.

We adopted this guidance for our fiscal year ending December 31, 2019.

The adoption of ASU 2016-01 impacts how we account for our equity investments that do not qualify for equity method of accounting, that is, any unrealized change in fair value of these investments is recognized in our consolidated statements of operations.

ASU 2016-09 Stock Compensation—Improvements to Employee Share-Based Payment Accounting.

In March 2016, the FASB issued ASU 2016-09, Stock Compensation—Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) .

ASU 2016-09 was issued to simplify accounting guidance by identifying, evaluating, and improving areas for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements.

The areas affected by ASU 2016-09 include accounting for income taxes, classification of excess tax benefits in the statement of cash flows, minimum statutory tax withholding requirements, and classification of employee taxes paid in the statement of cash flows when an

employer withholds shares for tax-withholding purposes.

In addition, under this guidance, an entity can make an accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur.

ASU 2016-09 is effective for fiscal years beginning after December 15, 2017 and should be applied using a retrospective transition method to each period presented.

Early adoption is permitted.

Upon early adoption of this guidance on January 1, 2016, we changed our policy to account for forfeitures as they occur.

The adoption of this guidance did not materially impact our consolidated financial statements.

ASU 2016-15 Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230):

Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”) .

The areas affected by ASU 2016-15 are debt prepayment and debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies), distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle.

Specifically, under this guidance, cash payments for debt prepayment or debt extinguishment costs will be classified as cash outflows for financing activities.

The amendments in ASU 2016-15 are effective for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019.

Early adoption is permitted, including adoption in an interim period.

If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

The adoption of this guidance did not materially impact our consolidated financial statements.

ASU 2016-16 Income Taxes:

Intra-Entity Transfers of Assets Other Than Inventory.

In October 2016, the FASB issued ASU 2016-16, Income Taxes:

Intra-Entity Transfers of Assets Other Than Inventory .

ASU 2016-16 will require the tax effects of intercompany transactions, other than sales of inventory, to be recognized currently, eliminating an exception under current GAAP in which the tax effects of intra-entity asset transfer are deferred until the transferred asset is sold to a third party or otherwise recovered through use.

For public business entities, the guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods.

For all other entities, the guidance is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

Early adoption is permitted for all entities as of the beginning of a fiscal year for which neither the annual or interim (if applicable) financial statements have been issued.

If an entity chooses to early adopt the amendments in the ASU, it must do so in the first interim period of its annual financial statements (if the entity issues interim financial statements).

That is, an entity cannot adopt the amendments in the ASU in a later interim period and apply them as if they were in effect as of the beginning of the year.

The adoption of this guidance did not materially impact our consolidated financial statements.

ASU 2016-18 Statement of Cash Flows (Topic 230).

In November 2016, the FASB issued ASU 2016-18 Statement of Cash Flows (Topic 230) Restricted Cash—a consensus of the FASB Emerging Issues Task Force (“ASU 2016-18”) , which requires that amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows.

ASU 2016-18 is effective for fiscal years beginning after December 15, 2018 and should be applied using a retrospective transition method to each period presented.

Early adoption is permitted.

We early adopted this guidance on January 1, 2017.

The adoption of this guidance did not materially impact our consolidated financial statements.

ASU 2017-01 Business Combinations (Topic 805).

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805):

Clarifying the Definition of a Business (“ASU 2017-01”) .

This ASU provides guidance to evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.

If substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single asset or a group of similar assets, the assets acquired (or disposed of) are not considered a business.

This guidance is effective for annual periods beginning after December 15, 2018, with early adoption permitted.

We early adopted this guidance.

As a result of applying this guidance, we accounted for our acquisition of PellePharm, Inc.

in 2016 as an asset acquisition (see Note 8) and other asset acquisitions (see Note 12).

ASU 2017-09 Compensation—Stock Compensation (Topic 718).

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718):

Scope of Modification Accounting (“ASU 2017-09”).

This ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718.

The guidance is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted.

We early adopted this guidance on January 1, 2016.

The adoption of this guidance did not materially impact our consolidated financial statements.

ASU 2017-11 Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815).

In July 2017, FASB issued a two-part ASU 2017-11, I.

Accounting for Certain Financial Instruments with Down Round Features, and II.

Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”).

ASU 2017-11 amends guidance in ASC 260, Earnings Per Share , ASC 480, Distinguishing Liabilities from Equity , and ASC 815, Derivatives and Hedging.

Part I of this ASU changes the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features and clarifies existing disclosure requirements.

Part II does not have an accounting effect.

The standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted.

We early adopted this guidance effective January 1, 2016.

The adoption of this guidance did not materially impact our consolidated financial statements.

ASU 2018-07 Compensation-Stock Compensation (Topic 718).

In June 2018, the FASB issued ASU No.

2018-07, Compensation-Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”).

ASU 2018-07 is intended to reduce the cost and complexity and to improve financial reporting for nonemployee share-based payments.

The ASU expands the scope of Topic 718, (which currently only includes share-based payments to employees) to include share-based payments issued to non-employees for goods or services.

Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned.

The standard is effective for fiscal years beginning after December 15, 2019.

Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606.

We early adopted this guidance effective January 1, 2017.

The adoption of this guidance did not materially impact our consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

ASU 2016-02 Leases (Topic 842).

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02” ), which, for operating leases, requires the lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet.

The guidance also requires a lessee to recognize single lease costs, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02” or “ASC 842” ), which requires the lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet.

The guidance also requires a lessee to recognize single lease costs under operating leases, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis.

In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases .

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ASU 2019-10, Financial Instruments — Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

Effective Dates , issued in November 2019, delayed the effective date of Topic 842 for companies like us to January 1, 2021 but early adoption is still permitted.

We plan to adopt these ASUs on January 1, 2020 and we have chosen to use the practical expedient and recognize a cumulative-effect adjustment to the opening balance of the accumulated deficit.

We also plan to apply other practical expedients provided by the standard.

We have commenced the implementation of this new standard, including the identification of our lease population and the implementation of changes to our existing processes that will be required to implement the new lease standard.

We believe that the most significant changes to the financial statements will relate to the recognition of right-of-use assets and offsetting lease liabilities in the consolidated balance sheet for operating leases.

The impact on the consolidated balance sheet will be based on the population of operating leases at adoption, which we are still analyzing.

However, we do not expect the standard to have a material impact on the consolidated statement of cash flows or the consolidated statement of operations.

Effective Dates , issued in November 2019, delayed the effective date of Topic 842 for non-public business entities to January 1, 2021 but early adoption is still permitted.

Effective January 1, 2020, we adopted ASC 842 using the optional transition method and applied the standard only to leases that existed at that date.

Under the optional transition method, we do not need to restate the comparative periods in transition and will continue to present financial information and disclosures for periods before January 1, 2020 in accordance with ASC 840.

As part of the ASC 842 adoption, we elected certain practical expedients outlined in the guidance.

We have also chosen to apply the package of practical expedients for existing leases, which provides relief from reassessing:

(i) whether a contract is or contains a lease, (ii) lease classification, and (iii) whether initial direct costs can be capitalized.

Upon transition, we also elected to use hindsight with respect to determining the lease term and in assessing any impairment of right-of-use assets for existing leases.

We have also made some accounting policy elections for post-transition to:

(i) account for leases at the portfolio level, where applicable, (ii) allow us not to separate nonlease components from lease components, and instead to account for those as a single lease component for the asset class of operating lease right-of-use real estate assets, and (iii) elect not to recognize a right-of-use asset and a lease liability for all of our leases with a term of 12 months or less (“short-term leases”).

The adjustments due to the adoption of ASC 842 primarily related to the recognition of right-of-use assets of $ 9.2 million and lease liabilities of $ 11.5 million at January 1, 2020 for our operating leases.

The lease liabilities were determined based on the present value of the remaining minimum lease payments.

The right-of-use assets were determined based on the value of the lease liabilities, adjusted for the deferred rent balances of approximately $ 2.3 million.

Upon adoption of ASC 842, we also (i) derecognized the build-to-suit lease asset of $ 10.0 million previously presented in other assets as of December 31, 2019, and recognized a construction-in-progress asset for the same amount, and (ii) derecognized the build-to-suit lease liability of $ 8.0 million as of December 31, 2019 and recognized a liability presented in other accrued liabilities (see Note 13).

The adoption did not have a material impact on our accumulated deficit and on our consolidated statements of operations and cash flows.

ASU 2016-13 Financial Instruments - Credit Losses.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses.

This update requires immediate recognition of management’s estimates of current expected credit losses (“CECL”).

This update requires immediate recognition of management’s estimates of current expected credit losses.

Under the prior model, losses were recognized only as they were incurred.

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Early adoption is permitted.

The delay in effective date for certain entities of ASU 2016-13 by the issuance of ASU 2019-10 in November 2019 does not apply to companies like us.

We are currently assessing the impact of this update on our consolidated financial statements.

The delay in effective date for certain entities of ASU 2016-13 by the issuance of ASU 2019-10 in November 2019 does not apply to filers with the SEC that are not smaller reporting companies.

The adoption of this guidance did not materially impact our consolidated financial statements.

ASU 2018-13 Fair Value Measurement – Disclosure Framework (Topic 820) .

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The updated guidance improves the disclosure requirements on fair value measurements and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

Early adoption is permitted upon issuance of the standard for disclosures modified or removed with a delay of adoption of the additional disclosures until their effective date.

The adoption of this guidance did not significantly impact our financial statement disclosures.

ASU 2018-15 – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement.

In August 2018, the FASB issued ASU 2018-15 – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement .

The guidance amends ASC 350-40, Intangibles - Goodwill and Other - Internal-Use Software .

The ASU requires implementation costs incurred by customers in cloud computing arrangements to be deferred and recognized over the term of the arrangement, if these costs were capitalized by the customer in a software licensing arrangement.

This guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.

We adopted this guidance effective January 1, 2020 .

The adoption of this guidance did not materially impact our consolidated financial statements.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

We early adopted ASU 2019-12 effective January 1, 2020 and the adoption did not materially impact our financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.

In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 81 5.

The guidance is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions.

ASU 2020-01 amends ASU 2016-01, which made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Among other topics, the amendments in ASU 2020-01 clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting.

For public business entities, the amendments in the ASU are effective for fiscal years beginning after December 31, 2020, and interim periods within those fiscal years.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

Early adoption is permitted.

We are currently assessing the impact of this update on our consolidated financial statements.

Reorganization

On June 13, 2019, the Corporation formed BridgeBio Pharma Merger Sub LLC (“Merger Sub LLC”), a Delaware limited liability company and direct wholly-owned subsidiary.

The Reorganization was executed on July 1, 2019, immediately prior to completion of the IPO of the Corporation’s common stock.

As part of the Reorganization, the existing ownership interest in BBP LLC held by all BBP LLC unitholders was transferred to Merger Sub LLC, and all outstanding units of BBP LLC were cancelled and exchanged for shares of common stock of the Corporation.

Merger Sub LLC was then merged with and into BBP LLC, the surviving entity, which became a wholly-owned subsidiary of the Corporation.

At the conclusion of the Reorganization, the Corporation became the reporting entity.

The number of shares of the Corporation’s common stock issued to BBP LLC unitholders in the Reorganization is shown in the below table by unit class:

BBP LLC unit class

the Corporation's

Shares Issued

Series D Preferred Units

Series C Preferred Units

Series B Preferred Units

Series A Preferred Units

Founder Units

Management Incentive Units

Total shares issued

Included in the amounts above, the unvested outstanding management incentive units and common units of BBP LLC were exchanged for 6,819,455 shares of the Corporation’s unvested restricted stock, subject to the same time-based vesting conditions as the original management incentive units and common units terms and conditions.

See Note 16 for additional details.

The Reorganization was accounted for as a reverse acquisition and recapitalization for financial reporting purposes.

The assets and liabilities of the Corporation, the legal acquirer, were nominal and there were no material pre-combination activities.

Therefore, BBP LLC, the legal acquiree, was determined to be the accounting acquirer.

Accordingly, the historical financial statements of BBP LLC became the Corporation’s historical financial statements, including the comparative prior periods.

All share and per share amounts in these consolidated financial statements and related notes have been retroactively adjusted, where applicable, for all periods presented.

The shares of the Corporation’s common stock for periods prior to July 1, 2019 represent the outstanding BBP LLC units recalculated to give effect to the exchange ratio applied in connection with the Reorganization.

All BBP LLC units that were previously reported as temporary equity and were converted to common stock of the Corporation upon the execution of the Reorganization, have been reclassified to equity for all periods presented, as if the Reorganization occurred at the beginning of the earliest period presented in our financial statements for the year ending December 31, 2019, as follows:

December 31, 2018

(in thousands)

Redeemable convertible preferred units

Redeemable founder units

Redeemable common units

Management incentive units

Redeemable convertible noncontrolling

Stockholders' equity (Members’ deficit):

Undesignated preferred stock

Additional paid-in capital

Accumulated deficit

Total BridgeBio stockholders' equity

(Members' deficit)

Noncontrolling interests

Total stockholders' equity

(Members' deficit)

December 31, 2017

(in thousands)

Redeemable convertible preferred units

Redeemable founder units

Redeemable common units

Management incentive units

Redeemable convertible noncontrolling

Stockholders' equity (Members’ deficit):

Undesignated preferred stock

Additional paid-in capital

Accumulated deficit

Total BridgeBio stockholders' equity

(Members' deficit)

Noncontrolling interests

Total stockholders' equity

(Members' deficit)

ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

The guidance simplifies the complexity associated with applying U.S.

GAAP for certain financial instruments with characteristics of liabilities and equity.

This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt:

Debt with Conversion and Other Options , that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock;

(2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification;

and (3) revises the guidance in ASC 260, Earnings Per Share , to require entities to calculate diluted earnings per share for convertible instruments by using the if-converted method.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted, but no earlier

than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

Adoption is either a modified retrospective method or a fully retrospective method of transition.

We plan to early adopt ASU 2020-06 effective January 1, 2021, specifically with respect to the accounting for our 2027 Notes.

We are currently in the process of determining the effect that the adoption will have on our consolidated financial statements.

ASU 2020-10, Codification Improvements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements .

The guidance contains improvements to the Codification by ensuring that all guidance that requires or provides an option for an entity to provide information in the notes to financial statements is codified in the Disclosure Section of the Codification.

The guidance also contains Codifications that are varied in nature and may affect the application of the guidance in cases in which the original guidance may have been unclear.

For public business entities, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020.

For all other entities, the amendments are effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022.

Early adoption is permitted.

We do not expect the adoption of ASU 2020-10 to have a material impact on our consolidated financial statements.

Fair Value Measurements

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation:

December 31, 2020

(in thousands)

Redeemable convertible preferred units

Redeemable founder units

Redeemable common units

Management incentive units

Redeemable convertible noncontrolling

Stockholders' equity (Members’ deficit):

Undesignated preferred stock

Additional paid-in capital

Accumulated deficit

Total BridgeBio stockholders' equity

(Members' deficit)

Noncontrolling interests

Total stockholders' equity

(Members' deficit)

Fair Value Measurement

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation:

Cash equivalents:

Money market funds

Short-term marketable securities:

treasury bills

treasury notes

Commercial paper

Corporate debt securities

Total short-term marketable securities

LianBio Warrants

Total financial assets

LEO call option liability

Embedded derivative

Total financial liabilities

December 31, 2019

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Total financial liabilities

December 31, 2018

(in thousands)

Money market funds

LEO call option liability

There were no transfers between Level 1, Level 2 or Level 3 during the periods presented.

There are uncertainties on the fair value measurement of the instruments classified under Level 3 due to the use of unobservable inputs and interrelationships between these unobservable inputs, which could result in higher or lower fair value measurements.

Marketable Securities

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Change in fair value upon remeasurement

recognized in other income (expense), net

recognized as other expense

Balance as of December 31, 2018

Change in fair value upon remeasurement

recognized in other income (expense), net

recognized as other expense

Balance as of December 31, 2019

The fair value of our outstanding term loans with Hercules Capital, Inc.

(see Note 10) is estimated using the net present value of the payments, discounted at an interest rate that is consistent with a market interest rate, which is a Level 2 input.

Change in fair value upon remeasurement

recognized as other expense

Balance as of December 31, 2020

The fair value of the 2027 Notes (see Note 10), which differs from its carrying value, is determined by prices for the 2027 Notes observed in market trading.

The market for trading of the 2027 Notes is not considered to be an active market and therefore the estimate of fair value is based on Level 2 inputs.

As of December 31, 2020, the estimated fair value of the 2027 Notes, which have an aggregate face value of $ 550.0 million, was $ 997.9 million based on the market price on the last trading day for the period.

The fair value of our outstanding term loans (see Note 10) is estimated using the net present value of the payments, discounted at an interest rate that is consistent with a market interest rate, which is a Level 2 input.

The estimated fair value of our outstanding term loans approximates the carrying amount, as the term loan bears a floating rate that approximates the market interest rate.

Eidos Embedded Derivative Liability in Loan Agreement

For the SVB and Hercules Loan entered in November 2019 (see Note 10), Eidos determined that the requirement to pay a fee (“Success Fee”) upon certain events is an embedded derivative liability to be measured at fair value.

The fair value of the derivative was determined based on an income approach that identified the cash flows using a “with-and-without” valuation methodology.

The inputs used to determine the estimated fair value of the derivative instrument were based primarily on the probability of an underlying event triggering the embedded derivative occurring and the timing of such event.

Cash Equivalents and Marketable Securities

We invest in certain money market funds and reverse repurchase agreements, classified as cash equivalents, which are collateralized by deposits in the form of U.S.

We invest in certain money market funds and repurchase agreements, classified as cash equivalents, which are collateralized by deposits in the form of U.S.

treasury securities for an amount no less than 102 % of their value.

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Money market funds

Short-term marketable securities:

treasury bills

treasury notes

Commercial paper

Corporate debt securities

Total short-term marketable securities

Total cash equivalents and marketable

December 31, 2019

(in thousands)

Cash equivalents:

Money market funds

Repurchase agreements

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Total long-term marketable securities

Total cash equivalents and marketable securities

As of December 31, 2018, we had $395.8 million in money market funds and no marketable securities.

Total cash equivalents and marketable

There have been no significant realized gains or losses on available-for-sale securities for the periods presented.

As of December 31, 2020, our short-term marketable securities have average contractual maturities of approximately five months .

As of December 31, 2019, our short-term and long-term marketable securities have average contractual maturities of approximately eight months and 16 months, respectively.

Variable Interest Entities and Voting Interest Model

The entities consolidated by BridgeBio are comprised of wholly-owned subsidiaries and partially-owned entities consolidated under the VOE model and VIEs for which BridgeBio is the primary beneficiary under the VIE model.

The results of operations of the consolidated entities are included within the BridgeBio consolidated financial statements for the years ended December 31, 2019, 2018 and 2017.

Upon the Reorganization, BBP LLC became a wholly-owned subsidiary of the Corporation through the series of transactions described in Note 3.

At that time, the consolidation assessment was updated on behalf of the Corporation with no changes in the BridgeBio group composition, other than the merger of BBP LLC and Merger Sub LLC as a result of the Reorganization described in Note 3.

As of December 31, 2019 and 2018, there were no significant restrictions on the VIE assets or liabilities except for the cash held by our VIEs presented below.

For VIEs, BridgeBio calculates the maximum exposure to loss to be equal to the amount invested in the equity of the VIE and the amount of outstanding convertible notes.

Included within Note 2 is a list of partially-owned entities that were determined to be under BridgeBio’s control under the VIE model as of December 31, 2019 and December 31, 2018, with the exception of PellePharm as discussed in Note 8.

At each reporting period, we reassess whether we have a majority voting interest for entities consolidated under the VOE model and whether we remain the primary beneficiary of the VIEs consolidated under the VIE model.

Eidos is a clinical stage biopharmaceutical company focused on the development of BBP-265 to address the large and growing unmet need in diseases caused by transthyretin amyloidosis.

We do not intend to sell our marketable securities and it is not more likely than not that we will be required to sell these securities before recovery of their amortized cost bases.

Voting Interest Model - Eidos

Eidos is a clinical-stage biopharmaceutical company focused on the development of acoramidis (formerly AG10 or BBP-265) to address the large and growing unmet need in diseases caused by transthyretin amyloidosis.

In April 2016, we initially invested $ 1.0 million and determined that our investment in Eidos represented a variable interest.

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BridgeBio was determined to be the primary beneficiary of Eidos as it controlled the activities that most significantly impacted Eidos’ economic performance, controlled the most significant decisions affecting Eidos through its representation within management and Eidos’ Board of Directors, and BridgeBio had a majority ownership interest.

In February 2018, BridgeBio entered into a note and warrant purchase agreement with Eidos, pursuant to which Eidos issued a convertible promissory note (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 (the “Eidos Warrant”).

In February 2018, BridgeBio entered into a note and warrant purchase agreement with Eidos, pursuant to which Eidos issued a convertible promissory note (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 (the “Eidos Warrant”).

In March 2018, BridgeBio transferred 10 % or $ 1.0 million of its interests in the Eidos Note and the Eidos Warrant to the minority stockholder of Eidos.

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

In September 2019, Eidos issued 556,173 shares of Eidos common stock to a third-party , which is futher described in Note 13 .

On August 2, 2019, Eidos filed a 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 Sale Agreement with the Sales Agent, to provide for the offering, issuance and sale by Eidos 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 Sales Agent cash commissions of up to 3.0 percent of the gross proceeds of sales of common stock under the 2019 Sales Agreement.

In September 2019, Eidos issued 556,173 shares of Eidos common stock to a third-party, which is further described in Note 11.

Eidos Shelf Registration

On August 2, 2019, Eidos filed a shelf registration statement on Form S-3 (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 Sale Agreement (the “2019 Sales Agreement”) with the sales agents named therein (the “Sales Agents”), to provide for the offering, issuance and sale by Eidos 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 Sales Agents cash commissions of up to 3.0 percent of the gross proceeds of sales of common stock under the 2019 Sales Agreement.

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

Consolidated VIEs

The entities identified as a “Controlled VIE” in Note 2 are VIEs for which BridgeBio was determined to be the primary beneficiary as of December 31, 2019 and 2018.

For each entity, the initial investment was determined to represent a variable interest as, at that time, the entity did not have sufficient resources to carry out its principal activities without additional financial support.

BridgeBio was determined to be the primary beneficiary of each entity as it controlled the activities that most significantly impact the entity’s economic performance and controlled the most significant decisions affecting the entity through its representation within management and the entity’s board of directors.

BridgeBio also had a majority ownership interest in these entities as of December 31, 2019 and December 31, 2018.

ML Bio is a biopharmaceutical company focused on developing BBP-418, an orally administered ribitol replacement therapy, for the treatment of Limb Girdle Muscular Dystrophy type 2i.

In July 2019, BridgeBio purchased shares of preferred stock of ML Bio for $7.0 million.

Upon the initial investment, BridgeBio received a majority ownership interest in ML Bio and it was determined that ML Bio is a VIE and BridgeBio is the primary beneficiary.

BridgeBio controlled the activities that most significantly impact ML Bio’s economic performance and, through its representation within management on ML Bio’s Board of Directors, also controlled the most significant decisions affecting ML Bio.

BridgeBio has consolidated ML Bio under the VIE model since the initial investment date in July 2019 through December 31, 2019.

Refer to Note 12 for additional details with respect to this transaction.

MoST is a biopharmaceutical company focused on developing BBP-561, a series of topical KLK5/7 inhibitors, for the treatment of Netherton Syndrome.

BridgeBio made investments in MoST of $1.4 million, $1.2 million and $1.5 million in 2019, 2018 and 2017, respectively, in exchange for shares of redeemable convertible preferred stock.

Quartz is a biopharmaceutical company focused on the development of effective therapies for patients suffering from RAS-driven cancers.

BridgeBio made investments in Quartz of $4.0 million in 2017 in exchange for shares of redeemable convertible preferred stock.

Quartz issued convertible notes to BridgeBio in 2019 and 2018 totaling $0.4 million and $1.1 million, respectively, that are outstanding as of December 31, 2019.

Navire is a biopharmaceutical company advancing our BBP-398 discovery program for small molecule inhibitors of SHP2 for the potential treatment of cancers driven by hyperactive receptor tyrosine kinase, or MAPK signaling.

BridgeBio made investments in Navire of $4.5 million, $6.8 million and $3.2 million in 2019, 2018 and 2017, respectively, in exchange for shares of redeemable convertible preferred stock.

CoA is a biopharmaceutical company focused on the development of BBP-671, an oral small molecule, for the treatment of Pantothenate Kinase Associated Neurodegeneration, or PKAN.

BridgeBio made investments in CoA of $5.1 million $7.0 million and $1.5 million in 2019, 2018 and 2017, respectively, in exchange for shares of redeemable convertible preferred stock.

Dermecular is a biopharmaceutical company focused on the development of BBP-321, an oral S1P lyase inhibitor, for the treatment of Darier Disease and Hailey-Hailey Disease.

BridgeBio made investments in Dermecular of $0.7 million and $4.5 million in 2018 and 2017, respectively, in exchange for shares of redeemable convertible preferred stock.

PTR is a biopharmaceutical company focused on developing BBP-589, an IV-administered recombinant collagen type VII, protein replacement therapy, for the treatment of recessive dystrophic epidermolysis bullosa.

BridgeBio made investments in PTR of $7.0 million, $10.5 million and $3.0 million in 2019, 2018 and 2017, respectively, in exchange for shares of redeemable convertible preferred stock.

Adrenas is a biopharmaceutical company focused on developing BBP-631, an adeno-associated virus, gene transfer product candidate, for the treatment of congenital adrenal hyperplasia, caused by 21-hydroxylase deficiency.

BridgeBio made investments in Adrenas of $21.6 million and $13.4 million in 2019 and 2018, respectively, in exchange for shares of redeemable convertible preferred stock.

QED is a biopharmaceutical company focused on developing infigratinib, an oral FGFR1-3 selective tyrosine kinase inhibitor, for the treatment of FGFR-driven cancers.

BridgeBio made investments in QED of $100.0 million and $50.0 million in 2019 and 2018, respectively, in exchange for shares of redeemable convertible preferred stock.

Orfan is a biopharmaceutical company focused on developing BBP-711, a series of oral small molecule inhibitors of glycolate oxidase, for the treatment of primary hyperoxaluria and recurrent kidney stone disease.

BridgeBio made investments in Orfan of $9.7 million and $3.0 million in 2019 and 2018, respectively, in exchange for shares of redeemable convertible preferred stock.

Ferro is a biopharmaceutical company focused on developing BBP-954 for irreversible inhibitors of glutathione peroxidase 4, for the treatment of solid and hematological cancers.

BridgeBio made investments in Ferro of $7.0 million and $3.0 million in 2019 and 2018, respectively, in exchange for shares of redeemable convertible preferred stock.

Venthera is a biopharmaceutical company focused on developing BBP-681, a transdermal PI3K inhibitor, for the treatment of cutaneous venous and lymphatic malformations.

BridgeBio made investments in Venthera of $4.5 million and $5.5 million in 2019 and 2018, respectively, in exchange for shares of redeemable convertible preferred stock.

Aspa is a biopharmaceutical company focused on developing BBP-812, an adeno-associated virus, gene transfer therapy, for the treatment of Canavan Disease.

BridgeBio made investments in Aspa of $15.6 million and $8.0 million in 2019 and 2018, respectively, in exchange for shares of redeemable convertible preferred stock.

Origin is a biopharmaceutical company focused on developing BBP-870, an IV formulation of synthetic cyclic pyranopterin monophosphate for the treatment of molybdenum cofactor deficiency Type A.

BridgeBio made investments in Origin of $24.0 million and $10.0 million in 2019 and 2018, respectively, in exchange for shares of redeemable convertible preferred stock.

Theras is a biopharmaceutical company focused on developing BBP-454, a preclinical development program for small molecule inhibitors of KRAS for the treatment of pan-mutant KRAS-driven cancers.

BridgeBio made investments in Theras of $14.0 million and $5.0 million in 2019 and 2018, respectively, in exchange for shares of redeemable convertible preferred stock.

The following table provides the assets and liabilities for all consolidated VIEs as of December 31, 2019 :

(in thousands)

Current assets:

Cash and cash

Prepaid expenses and

other current assets

Total current assets

Property and equipment,

Current liabilities:

Accounts payable

Accrued compensation

Accrued research and

development liabilities

Accrued professional services

Build-to-suit lease obligation

Other accrued liabilities

Total current liabilities

Other liabilities

Total liabilities

The following table provides the assets and liabilities for all consolidated VIEs as of December 31, 2018:

(in thousands)

Current assets:

Cash and cash

Prepaid expenses and

other current assets

Total current assets

Property and equipment,

Current liabilities:

Accounts payable

Accrued compensation

Accrued research and

development liabilities

Other accrued liabilities

Total current liabilities

Other liabilities

Total liabilities

VIEs included in the “All Other” category of the above table are not significant individually for separate presentation as of the respective dates presented.

Going forward, BridgeBio may not provide any further investment in certain of these VIEs.

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 ceased to trade on the Nasdaq Global Select Market 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 (see Note 18).

Merger Agreement with Eidos

On October 5, 2020, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Eidos, Globe Merger Sub I, Inc.

(“Merger Sub”) and Globe Merger Sub II, Inc.

(“Merger Sub II”) (the two latter companies being our indirect wholly-owned subsidiaries), providing for, in a series of merger transactions (the “Merger Transactions”), the acquisition by us of all of the outstanding shares of common stock of Eidos (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 (as defined below).

Under the Merger Agreement, the stockholders of Eidos will have the right to receive, at their election, either 1.85 shares of our common stock or $ 73.26 in cash per Eidos share in the transaction, subject to proration as necessary to ensure that the aggregate amount of cash consideration is no greater

than $ 175.0 million.

In addition, immediately prior to the effective time of the merger of Merger Sub with and into Eidos (the “Effective Time”), (i) each option to purchase Eidos Common Stock (an “Eidos Option”) will be converted into an option, on the same terms and conditions applicable to such Eidos Option immediately prior to the Effective Time, to purchase a specified number of shares of BridgeBio common stock, calculated pursuant to the terms of the Merger Agreement, and (ii) each outstanding award of shares of Eidos Common Stock that is subject to forfeiture conditions (subject to certain exceptions) (each, an “Eidos Restricted Share Award”) will be converted into an award, on the same terms and conditions applicable to such Eidos Restricted Share Award immediately prior to the Effective Time, covering a number of whole restricted shares of BridgeBio common stock, calculated pursuant to the terms of the Merger Agreement, with any fractional shares being paid out to the holder of such Eidos Restricted Share Award in cash.

The Merger Transactions were subject to various closing conditions, including, but not limited to:

(i) approval of the majority of the outstanding shares of Eidos Common Stock, (ii) approval of a majority of the shares of Eidos Common Stock held by stockholders other than (A) us and any person or entity controlling, controlled by or under common control with us (any such person, an “Affiliate”) (including Merger Sub and Merger Sub II), (B) any of our directors or officers or our Affiliates’ directors or officers (including Merger Sub and Merger Sub II) and (C) any director or officer of Eidos (other than members of the special committee of independent directors of Eidos (the “Eidos Special Committee”));

(iii) approval of at least 66 and 2/3% of the aggregate voting stock (as defined in Section 203 of the Delaware General Corporation Law (the “DGCL”)) of Eidos that is not owned (as defined in Section 203 of the DGCL) by BridgeBio, Merger Sub, Merger Sub II or any of their respective affiliates or associates (as such terms are defined in Section 203 of the DGCL);

(iv) approval of the issuance of our common stock in connection with the Merger Transactions by at least a majority of the votes cast by the holders of shares of our common stock voting on the matter;

(v) the absence of any statute, rule, order, decree or regulation prohibiting the Mergers;

(vi) the approval for listing of the common stock issuable to the holders of Eidos Common Stock on Nasdaq;

(vii) the SEC having declared effective our Form S-4 registration statement, which would contain our joint proxy statement/prospectus with Eidos in connection with the Merger Transactions;

and (viii) subject to certain materiality exceptions, the accuracy of certain representations and warranties by us and Eidos contained in the Merger Agreement and the compliance by each party with the covenants contained in the Merger Agreement.

In connection with the execution of the Merger Agreement, Eidos entered into voting agreements with members of our Board of Directors and KKR Genetic Disorder L.P., collectively owning approximately 36 % of our outstanding common stock, pursuant to which they agreed, among other things, to vote their shares in favor of the issuance of our common stock in connection with the Merger Transactions.

The Merger Agreement included customary representations, warranties and covenants, including, but not limited to, covenants by us and Eidos to conduct our businesses in the ordinary course during the period between the execution of the Merger Agreement and consummation of the Merger Transactions and to refrain from taking certain actions specified in the Merger Agreement.

The Merger Agreement may be terminated, among other circumstances, (i) by either party if the Merger Transactions are not consummated by June 4, 2021, (ii) by Eidos if our Board of Directors changes its recommendation with respect to the issuance of shares of our common stock in connection with the Merger Transactions or (iii) by us if the Eidos board of directors or the Eidos Special Committee changes its recommendation with respect to the Merger Transactions.

The Merger Agreement further provides that upon termination of the Merger Agreement under certain circumstances, Eidos must pay us a termination fee of $ 35.0 million, and upon termination of the Merger Agreement under certain circumstances, we must pay Eidos a termination fee of $ 100.0 million.

O n January 26, 2021, we closed and completed the Merger Transactions (see Note 1 8) .

Noncontrolling Interests

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These balances are reported as separate components outside stockholders’ equity in “Redeemable convertible noncontrolling interests” and as part of stockholders’ equity in “Noncontrolling interests” in the consolidated balance sheets.

We adjust the carrying value of noncontrolling interest to reflect the book value attributable to noncontrolling shareholders of consolidated partially-owned entities when there is a change in the ownership during the respective reporting period.

We adjust the carrying value of noncontrolling interests to reflect the book value attributable to noncontrolling shareholders of consolidated partially-owned entities when there is a change in the ownership during the respective reporting period.

During the years ended December 31, 2020, 2019 and 2018, such adjustments in the aggregate amounts of $( 12.0 ) million, $ 28.6 million and $( 21.6 ) million, respectively, are recorded to additional paid-in capital.

All such adjustments are disclosed within the “Transfers to (from) noncontrolling interest” line item in the consolidated statements of redeemable convertible noncontrolling interests and stockholders’ equity.

All such adjustments are disclosed within the “Transfers from (to) noncontrolling interest” line item in the consolidated statements of redeemable convertible noncontrolling interests and stockholders’ equity.

Upon the Eidos IPO in June 2018, all outstanding shares of Eidos’ redeemable convertible preferred stock were converted into shares of common stock of Eidos.

This transaction is reflected as conversion of redeemable noncontrolling interest into noncontrolling interest in the table below.

The net exercise of the Eidos Warrants upon the Eidos IPO is presented as the issuance of noncontrolling interest in the table below.

The following table provides a rollforward of the redeemable convertible noncontrolling interests balance:

(in thousands)

Balance as of January 1, 2017

Issuance of redeemable convertible

noncontrolling interest

Net loss attributable to redeemable

convertible noncontrolling interest

Transfers to (from) redeemable

convertible noncontrolling interest

Balance as of December 31, 2017

Issuance of redeemable convertible

noncontrolling interest

Net loss attributable to redeemable

convertible noncontrolling interest

Deconsolidation of PellePharm

Transfers to (from) and conversion of

noncontrolling interest:

Transfers to (from) redeemable

convertible noncontrolling interest

Conversion of redeemable

convertible noncontrolling

interest to noncontrolling interest

Balance as of December 31, 2018

Issuance of redeemable convertible

noncontrolling interest

Net loss attributable to redeemable

convertible noncontrolling interest

Transfers to (from) redeemable convertible

noncontrolling interest

Balance as of December 31, 2019

The following table provides a rollforward of the noncontrolling interests balance:

(in thousands)

Balance as of January 1, 2017

Issuance of noncontrolling

Transfers to (from)

noncontrolling interest

Net loss attributable to

noncontrolling interest

Balance as of December 31, 2017

Issuance of noncontrolling

Net loss attributable to

noncontrolling interest

Deconsolidation of PellePharm

Repurchase of redeemable

noncontrolling interest

Transfers to (from) and

conversion of noncontrolling

Transfers to (from)

noncontrolling interest

Conversion of redeemable

convertible noncontrolling

interest to noncontrolling

Balance as of December 31, 2018

Issuance (repurchase) of

noncontrolling interest

Transfers to (from)

noncontrolling interest

Net loss attributable

to noncontrolling interest

Balance as of December 31, 2019

PellePharm Investment

This transaction is reflected as conversion of redeemable noncontrolling interest into noncontrolling interest.

The net exercise of the Eidos Warrants upon the Eidos IPO is presented as the issuance of noncontrolling interest in the consolidated statements of redeemable convertible noncontrolling interests and stockholders’ equity.

As of December 31, 2020 and 2019, the significant components of the noncontrolling interest balances pertain mainly to Eidos.

Upon closing and completion of the Merger Transactions with Eidos on January 26, 2021 (see Note 18), Eidos became our wholly-owned subsidiary and the balance of the noncontrolling interest in Eidos was reduced to zero.

Equity Method and Other Investments in Equity Method Investees

LianBio, a related party, is a clinical-stage biopharmaceutical company founded by Perceptive Advisors.

LianBio is focused on sourcing the best opportunities and creating new therapeutic paradigms for first-in-class programs to bring the world’s leading science to China and major Asian markets.

In October 2019, BBP LLC entered into an exclusivity agreement with LianBio, pursuant to which BBP LLC received equity in LianBio representing a 10 % ownership interest, valued at approximately $ 3.8 million at the time of the transaction and recognized as license revenue for the year ended December 31, 2019 (see Note 11).

The equity interest was issued in consideration for certain rights of first negotiation and rights of first offer granted by BBP LLC to LianBio with respect to specified transactions covering intellectual property rights owned or controlled by BBP LLC or its affiliates in certain territories outside the United States.

The amount of our 10 % ownership interest was reduced to zero as of December 31, 2019 after recognizing our equity share in the net losses of LianBio for the year ended December 31, 2019.

The carrying amount of the investment in LianBio in the consolidated balance sheets represents our maximum loss exposure related to its investment in LianBio.

There have been no impairments related to the LianBio investment.

PellePharm is a clinical-stage biopharmaceutical company developing BBP-009, a topical gel formulation of patidegib, a hedgehog inhibitor, for the treatment of Gorlin Syndrome and High-Frequency Basal Cell Carcinoma.

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After the deconsolidation of PellePharm in November 2018, BridgeBio accounted for its retained common stock investment as an equity method investment.

BridgeBio’s common stock investment valued at $0.5 million upon deconsolidation was compared to BridgeBio’s percentage of underlying equity in net assets of PellePharm.

BridgeBio’s common stock investment valued at $ 0.5 million

upon deconsolidation was compared to BridgeBio’s percentage of underlying equity in net assets of PellePharm.

BridgeBio concluded that there was no material basis difference.

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The carrying amount of BridgeBio’s investment in PellePharm in the consolidated balance sheets represents its maximum loss exposure related to its VIE investment in PellePharm.

The aggregate carrying amount of the PellePharm investment is presented as a separate line item in the consolidated balance sheets as of December 31, 2019 and 2018 as part of “Investments in nonconsolidated entities”.

We did not recognize an impairment related to our PellePharm investment during the year ended December 31, 2019 and 2018.

We did no t recognize an impairment related to our PellePharm investment during the years ended December 31, 2020, 2019 and 2018.

Asset Acquisitions

Origin Asset Acquisition

In June 2018, Origin entered into an Asset Purchase Agreement with Alexion Pharma Holding Unlimited Company (“Alexion”) to acquire intellectually property rights, including patent rights, know-how, and contracts, related to the ALXN1101 molecule.

As consideration, Origin made an upfront cash payment of $ 1.0 million.

There were no material direct transaction costs related to the transaction.

Origin accounted for the transaction as an asset acquisition as substantially all of the estimated fair value of the gross assets acquired was concentrated in a single identified asset, IPR&D, thus satisfying the requirements of the screen test in ASU 2017-01.

The assets acquired and liabilities assumed in the transaction were measured based on their fair values.

The fair value of the IPR&D acquired was $ 1.0 million and was charged to research and development expense for the year ended December 31, 2018 as it had no alternative future use at the time of the acquisition.

If certain substantive milestones are met in the future, Origin could be required to pay up to $ 18.8 million if Origin receives a priority review voucher from the Food and Drug Administration, $ 3.0 million in regulatory milestone payments, $ 17.0 million in sales milestone payments, and pay royalties of up to low double-digit percentages on future net sales, if any.

QED Asset Acquisition

In January 2018, QED entered into a License Agreement with Novartis International Pharmaceutical, Inc.

(“Novartis”), pursuant to which QED acquired certain intellectual property rights, including patents and know-how, related to BBP-831 for the treatment of patients with FGFR-driven diseases.

As consideration for the License Agreement, QED made an upfront cash payment of $ 15.0 million and issued 2,941,176 shares of QED Series A Preferred Stock to Novartis.

There were no material direct transaction costs related to the transaction.

The fair value of the QED Series A Preferred Stock was valued by a third-party specialist at $ 0.59 per share or a total fair value of shares issued of $ 1.7 million.

QED accounted for the transaction as an asset acquisition as substantially all of the estimated fair value of the gross assets acquired was concentrated in a single identified asset, IPR&D, thus satisfying the requirements of the screen test in ASU 2017-01.

The assets acquired and liabilities assumed in the transaction were measured based on their fair values.

The fair value of the IPR&D acquired was $ 16.7 million and was charged to research and development expense for the year ended December 31, 2018 as it had no alternative future use at the time of the acquisition.

If certain substantive milestones are met in the future, QED could be required to pay up to $ 60.0 million in regulatory milestone payments, $ 35.0 million in sales milestone payments, and pay royalties of up to low double-digit percentages on future net sales, if any.

Commitments and Contingencies

Operating Lease Commitments

We lease office space and laboratory facilities under noncancelable operating leases that have terms expiring through October 2026.

In March 2017, BridgeBio entered into a three-year agreement to rent 3,900 square feet of office space in Palo Alto, California.

In May 2019, the lease was extended by three years through April 2023.

The aggregate rent expense under the lease is $2.2 million.

In November 2017, Eidos entered into a five-year agreement to rent 4,659 square feet of office space in San Francisco, California.

The aggregate rent expense under the lease was $1.7 million.

In March 2019, Eidos entered into an amendment to the November 2017 lease and the amended lease commenced on August 2019.

In connection with the amendment, Eidos leases 10,552 rentable square feet.

The amended Eidos lease is for 87 months and has $6.4 million of future minimum lease payments.

In February 2018, QED entered into a thirty-seven-month agreement to rent 1,944 square feet of office space in San Francisco, California.

The aggregate rent expense under the lease is $0.6 million.

In October 2018, QED entered into a thirty-four-month agreement to rent 10,000 square feet of office space in San Francisco, California.

The aggregate rent expense under the lease is $2.6 million.

In October 2019, Adrenas entered into a sixty-one-month agreement to rent 11,376 square feet of laboratory facility in Raleigh, North Carolina.

The aggregate rent expense under the lease is $1.9 million.

We recognize rent expense on a straight-line basis over the noncancelable lease period and record the difference between cash payments and the recognition of rent expense as a deferred rent liability.

Where leases contain escalation clauses, rent abatements and/or concessions, such as rent holidays and landlord or tenant incentives or allowances, we apply them in the determination of straight-line rent expense over the lease period.

As of December 31, 2019, future minimum lease payments for all noncancelable operating leases with remaining lease terms in excess of one year, are as follows:

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 cash or equity as shown in the table below, upon achievement of each contingent milestone.

We accrue such contingent compensation when the related milestone is probable of achievement and record in “Accrued compensation and benefits” for the current portion and in “Other liabilities” for the noncurrent portion in the consolidated balance sheet.

The table below shows our commitment for the potential milestone amounts of up to $ 267.4 million and the accruals as of December 31, 2020 for milestones deemed probable of achievement.

There were no such accruals as of December 31, 2019.

Fixed Monetary Amount

Accrued Amount (1)

Settlement Type

(in thousands)

Year Ending December 31:

Total future minimum lease payments

Total rent expense for the years ending December 31, 2019, 2018 and 2017 was $2.8 million, $1.5 million and $0.4 million, respectively.

Milestone Compensation Arrangements with Employees

As of December 31, 2019, the potential milestone compensation amount under these arrangements is up to $34.0 million.

Under these arrangements, there was no compensation expense recognized or liability recorded for the year ended December 31, 2019 because the performance milestones are not considered probable of achievement.

Cash or stock at our sole discretion

Amount recorded for performance-based milestone awards that are probable of achievement.

Includes the performance-based milestone awards that were granted as part of the 2020 Stock and Equity Award Exchange Program (the “Exchange Program”) further discussed in Note 15.

Other Research and Development Agreements

We may also enter into contracts in the normal course of business with clinical research organizations for clinical trials, with contract manufacturing organizations for clinical supplies and with other vendors for preclinical studies, supplies and other services and products for operating purposes.

These contracts generally provide for termination on notice, with the exception of potential termination charges related to one of our contract manufacturing agreements in the event that certain minimum purchase volumes are not met.

As of December 31, 2019 and 2018, there were no amounts accrued related to termination charges for minimum purchase volumes not being met.

These contracts generally provide for termination on notice with potential termination charges.

As of December 31, 2020 and 2019, there were no amounts accrued related to termination charges.

Indemnification

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In addition, we have entered into indemnification agreements with directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees.

No demands have been made upon the us to provide indemnification under such agreements, and thus, there are no claims that we are aware of that could have a material effect on our consolidated balance sheets, statements of operations and comprehensive loss, or statements of cash flows.

No material demands have been made upon us to provide indemnification under such agreements, and thus, there are no claims that we are aware of that could have a material effect on our consolidated balance sheets, statements of operations and comprehensive loss, or statements of cash flows.

We also maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors.

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We are not currently a party to any material legal proceedings.

On March 9, 2020, BridgeBio issued an aggregate principal amount of $ 550.0 million of its 2.50 % Convertible Senior Notes due 2027 (the “2027 Notes”), pursuant to an Indenture dated March 9, 2020 (the “Indenture”), between BridgeBio and U.S.

Bank National Association, as trustee (the “Trustee”), in a private offering to qualified institutional buyers (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 in aggregate principal amount of 2027 Notes sold to the initial purchasers (the “Initial Purchasers”) resulting from 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 BridgeBio’s common stock or a combination of cash and shares of BridgeBio’s common stock, at BridgeBio’s election.

BridgeBio received net proceeds from the 2020 Note Offering of approximately $ 537.0 million, after deducting the Initial Purchasers’ discount and offering expenses.

BridgeBio used approximately $ 49.3 million of the net proceeds from the 2020 Note Offering to pay for the cost of the Capped Call Transactions described below, and approximately $ 75.0 million to pay for the repurchase of shares of its common stock described below.

BridgeBio intends to use the remainder of the net proceeds from the 2020 Note Offering for working capital and other general corporate purposes, including for its commercial organization and launch preparations.

BridgeBio may also use any remaining net proceeds to fund possible acquisitions of, or investments in, complementary businesses, products, services and technologies.

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 BridgeBio’s 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 BridgeBio’s 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 BridgeBio’s common stock per $ 1,000 principal amount of 2027 Notes (equivalent to an initial conversion price of approximately $ 42.71 per share of BridgeBio’s common stock, for a total of approximately 12,878,305 shares).

Based on the closing price of our common stock on December 31, 2020, the if-converted value of the 2027 Notes exceeded its principal amount by approximately $ 365.8 million.

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, BridgeBio 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 BridgeBio’s common stock.

BridgeBio may not redeem the 2027 Notes prior to the maturity date, and no sinking fund is provided for the 2027 Notes.

If BridgeBio undergoes a fundamental change (as defined in the Indenture), holders may require BridgeBio 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 BridgeBio’s general unsecured obligations and rank senior in right of payment to all of BridgeBio’s indebtedness that is expressly subordinated in right of payment to the 2027 Notes;

equal in right of payment with all of BridgeBio’s liabilities that are not so subordinated;

effectively junior to any of BridgeBio’s 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 BridgeBio’s subsidiaries.

In accounting for the issuance of the 2027 Notes, we separately accounted for the liability and equity components of the 2027 Notes by allocating the proceeds between the liability component and the embedded conversion options, or equity component, due to BridgeBio’s ability to settle the 2027 Notes in cash, its common stock, or a combination of cash and common stock at BridgeBio’s option.

The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature.

The allocation was performed in a manner that reflected BridgeBio’s non-convertible debt borrowing rate for similar debt.

The equity component of the 2027 Notes was recognized as a debt discount and represents the difference between the gross proceeds from the issuance of the 2027 Notes and the fair value of the liability of the 2027 Notes on the date of issuance.

The equity component is not remeasured as long as it continues to meet the conditions for equity classification.

The outstanding 2027 Notes balances consisted of the following as of December 31, 2020:

(in thousands)

Liability component

Unamortized debt discount

Unamortized debt issuance costs

Net carrying amount

Equity component, net of issuance costs

In connection with the issuance of the 2027 Notes, BridgeBio incurred approximately $ 13.0 million of debt issuance costs, which primarily consisted of initial purchasers’ discounts and legal and other professional fees.

We allocated these costs to the liability and equity components based on the allocation of the proceeds.

The portion of these costs allocated to the equity component totaling approximately $ 4.1 million was recorded as a reduction to additional paid-in capital.

The portion of these costs allocated to the liability component totaling approximately $ 8.9 million was recorded as a reduction in the carrying value of the debt on the consolidated balance sheet and is amortized to interest expense using the effective interest method over the expected life of the 2027 Notes or approximately their seven-year term.

The effective interest rate on the liability component of the 2027 Notes for the period from the date of issuance through December 31, 2020 was 8.8 %.

The following table sets forth the total interest expense recognized related to the 2027 Notes for the year ended December 31, 2020:

(in thousands)

Contractual interest expense

Amortization of debt discount

Amortization of debt issuance costs

Total interest and amortization expense

Future minimum payments under the 2027 Notes as of December 31, 2020, are as follows:

(in thousands)

Year ending December 31:

Total future payments

Less amounts representing interest

Total principal amount

Capped Call and Share Repurchase Transactions with Respect to the 2027 Notes

On March 4, 2020, concurrently with the pricing of the 2027 Notes, we entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions (the “Capped Call Counterparties”).

We used approximately $ 49.3 million of the net proceeds from the 2020 Note Offering to pay for the cost of the Capped Call Transactions.

The Capped Call Transactions are expected generally to reduce the potential dilution to BridgeBio’s common stock upon any conversion of 2027 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap initially equal to $ 62.12 (which represents a premium of 100 % over the last reported sale price of BridgeBio’s common stock on March 4, 2020) and is subject to certain adjustments under the terms of the Capped Call Transactions.

The Capped Calls cover 12,878,305 shares of our common stock (subject to anti-dilution and certain other adjustments), which is the same number of shares of common stock that initially underlie the 2027 Notes.

The Capped Calls have an initial strike price of approximately $ 42.71 per share, which corresponds to the initial conversion price of the 2027 Notes.

The Capped Call Transactions are separate transactions, entered into by us with the Capped Call Counterparties, and are not part of the terms of the 2027 Notes.

These Capped Call instruments meet the conditions outlined in ASC 815-40 to be classified in stockholders’ equity and are not subsequently remeasured as long as the conditions for equity classification continue to be met.

We recorded a reduction to additional paid-in capital of approximately $ 49.3 million related to the premium payments for the Capped Call Transactions.

Additionally, we used approximately $ 75.0 million of the net proceeds from the 2020 Note Offering to repurchase 2,414,681 shares of our common stock concurrently with the closing of the 2020 Note Offering from certain of the Initial Purchasers in privately negotiated transactions.

The agreed to purchase price per share of common stock in the Repurchases is equal to $ 31.06 , which was the last reported sale price per share of our common stock on The Nasdaq Global Select Market (“Nasdaq”) on March 4, 2020.

The shares repurchased are recorded as treasury stock.

Hercules Loan and Security Agreement

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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”).

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 .

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.

On the earliest to occur of (i) the 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 the Corporation’s IPO triggered certain provisions of the Amended Hercules Term Loan.

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

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

The outstanding balance of the Amended Hercules Term Loan was 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:

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(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 .

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

In April 2020, we entered into the Fourth Amendment to the Loan and Security Agreement (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) ;

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 ;

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.

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 were no gains or losses arising from the amendment, which is considered a debt modification.

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 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.

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 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.

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

During the years ended December 31, 2019 and 2018, we recognized interest expense related to the Amended Hercules Term Loan of $8.3 million and $2.4 million, respectively, of which $1.4 and $0.5 million, respectively, relates to amortization of debt discount.

In January 2021, we executed the Fifth Amendment to the Loan and Security Agreement primarily to allow us to issue our 2029 Notes and to enter into the related capped call and share repurchase transactions, as discussed in Note 18.

During the years ended December 31, 2020, 2019 and 2018, we recognized interest expense related to the Amended Hercules Term Loan of $ 7.9 million, $ 8.3 million and $ 2.4 million, respectively, of which $ 1.3 million, $ 1.4 million and $ 0.5 million, respectively, relates to amortization of debt discount.

The term loans balance is as follows:

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

There have not been any additional draws on the other tranches as of December 31, 2019.

There have not been any additional draws on the other tranches as of December 31, 2020, including the available Tranche B loan of up to $ 22.5 million that was available to be drawn 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).

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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 (see Note 18).

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

Embedded derivatives and debt discounts

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The Success Fee amount is $ 1.0 million if conditions are met prior to November 13, 2021 and $ 2.0 million if conditions are met after November 13, 2021.

Eidos also determined that certain events of default provisions resulting in the prepayment of the loan or a change in the default rate of interest should also be recorded as an embedded derivative liability but were deemed immaterial for this reporting period due to the triggers being deemed unlikely.

Eidos also determined that certain events of default provisions resulting in the prepayment of the loan or a change in the default rate of interest should also be recorded

as an embedded derivative liability but were deemed immaterial for this reporting period due to the triggers being deemed unlikely .

Eidos recorded a compound embedded derivative liability of $ 1.1 million on issuance, which was recorded as a derivative liability in other liabilities on the balance sheet and as a corresponding debt discount.

Eidos calculated the fair values of the derivative liability on issuance and as of December 31, 2019 based on a probability weighted valuation of certain event outcomes and discounted to the present value.

The key valuation assumptions used consist of the discount rate of 11.6% and the probability of an underlying event triggering the Success Fee payment and the timing of such events.

Eidos calculated the fair values of the derivative liability on issuance and as of December 31, 2020 and 2019 based on a probability weighted valuation of certain event outcomes and discounted to the present value.

The key valuation assumptions used as of December 31, 2020 and 2019 consist of the discount rate of 12.6 % and 11.6 %, respectively, and the probability of an underlying event triggering the Success Fee payment and the timing of such events.

The derivative liability is being remeasured at each financial reporting period with any changes in fair value being recognized as a component of other income (expense), net.

The fair value of the derivative liability was approximately $1.2 million as of December 31, 2019 and was classified as other liabilities on the balance sheet and there was an immaterial change in the fair value of the derivative liability for the year ended December 31, 2019.

The fair value of the derivative liability was approximately $ 1.3 million and $ 1.2 million as of December 31, 2020 and 2019 and was classified as part of “Other liabilities” on the consolidated balance sheets.

There was immaterial change in the fair value of the derivative liability for the years ended December 31, 2020 and 2019.

The facility fee, fair value of the bifurcated embedded derivative liability on issuance, and other debt issuance costs have been treated as debt discounts on our consolidated balance sheet and together with the final payment charge are being amortized to interest expense throughout the life of the Tranche A loan using the effective interest rate method.

As of December 31, 2019, the net carrying value of the Tranche A loan is $16.1 million.

As of December 31, 2019, there are unamortized debt discounts of $2.4 million.

Eidos recorded interest expense and amortization of the debt discount in the amount of $0.3 million on the Tranche A loan for the year ended December 31, 2019.

As of December 31, 2020 and 2019, the net carrying value of the Tranche A loan was $ 16.9 million and $ 16.1 million, respectively.

As of December 31, 2020 and 2019, there are unamortized debt discounts of $ 1.6 million and $ 2.4 million, respectively.

Eidos recorded interest expense and amortization of the debt discount in the amount of $ 2.3 million and $ 0.3 million on the Tranche A loan for the years ended December 31, 2020 and 2019, respectively.

Future minimum payments

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Total principal amount of term loan payments

License Agreements

Out-licensing Agreements

License Agreement Between QED and LianBio

In October 2019, our subsidiary, QED entered into an exclusive license agreement with a related party, LianBio (the “QED-LianBio License Agreement”).

Pursuant to the QED-LianBio License Agreement, QED granted to LianBio an exclusive, sublicensable license under the licensed patent rights and know-how to develop, manufacture and commercialize infigratinib for any and all human prophylactic and therapeutic uses in all cancer indications (including in combination with other therapies) in certain territories outside the United States.

Under the QED-LianBio License Agreement, QED received a nonrefundable upfront payment of $ 10.0 million and is entitled to receive development and sales milestones payments of up to $ 132.5 million and tiered royalties on net sales ranging from the low to mid-teens.

In addition, QED also received warrants which entitles QED to purchase 10 % of the then-fully diluted shares of one of the subsidiaries of LianBio upon achievement of certain contingent development milestones (the “LianBio Warrants”).

We accounted for the QED-LianBio License Agreement and the LianBio Exclusivity Agreement (see Note 7) as a single transaction under ASC 606 and identified the exclusive license as a distinct performance obligation since LianBio can benefit from the license on its own by developing and commercializing the underlying product using its own resources.

In addition, we will enter into clinical and commercial supply agreements for the licensed territory.

We determined that the LianBio’s optional right to future products under these supply agreements is not considered to represent a material right.

During the year ended December 31, 2019, we recognized $ 13.8 million in license revenue comprising of $ 10.0 million in upfront payment received and the fair value of the ordinary shares received valued at approximately $ 3.8 million.

We determined that the license was a right to use the intellectual property of QED and as of December 31, 2019, we had provided all necessary information to LianBio to benefit from the license and the license term.

As of December 31, 2019, we also determined the contingent development milestones related to our ability to exercise the LianBio Warrants are not probable.

As a result, we did not recognize any fair value of the LianBio Warrants, which we considered to be immaterial, as license revenue or record as an asset.

For the year ended December 31, 2020, certain contingent development milestones related to our ability to exercise the LianBio Warrants were achieved, and, as a result, we recognized changes in the fair value of the warrants of approximately $ 3.3 million in “Other income (expense)”.

We consider the future potential development milestone as well as the sales-based royalties to be variable consideration.

The future potential milestone payments were not included in the transaction price as they were all determined to be fully constrained under ASC 606.

We determined that the achievements of such development milestones are contingent upon success in future clinical trials and regulatory approvals, which are not within our control and are uncertain at this stage.

We expect that the royalty arrangements and sales-based milestones will be recognized when the sales occur or the milestones are achieved pursuant to the sales-based royalty exception under ASC 606-10-55-65 because the license is the predominant item to which the royalties or sales-based milestones relate.

We will re-evaluate the transaction price at each reporting period and as uncertain events are resolved or other changes in circumstances occur.

During the year ended December 31, 2020, we received reimbursements for research and development expenses incurred in 2019 amounting to $ 2.8 million from LianBio, in connection with the QED-LianBio License Agreement.

This amount was recorded as reduction in research and development expenses for the year ended December 31, 2019.

License Agreement Between Navire and LianBio

In August 2020, our subsidiary, Navire Pharma, Inc.

(“Navire”) entered into an exclusive license agreement with LianBio (the “Navire-LianBio License Agreement”).

Pursuant to the Navire-LianBio License Agreement, Navire granted to LianBio an exclusive, sublicensable license under the licensed patent rights and know-how to develop, manufacture and commercialize SHP2 inhibitor BBP-398 (“BBP-398”), for tumors driven by RAS and receptor tyrosine kinase mutations.

Under the terms of the Navire-LianBio License Agreement, LianBio will receive commercial rights in China and selected Asian markets and participate in clinical development activities for BBP-398.

In consideration for the rights granted to LianBio, we received a nonrefundable $ 8.0 million upfront payment.

We will also receive future development and sales milestone payments of up to $ 382.1 million, and tiered royalty payments from single-digit to low-teens on net sales of the product in licensed territories.

We accounted for the Navire-LianBio License Agreement under ASC 606 and identified the exclusive license as a distinct performance obligation since LianBio can benefit from the license on its own by developing and commercializing the underlying product using its own resources.

In addition, we will enter into clinical and commercial supply agreements for the licensed territory.

We determined that the optional right to future products under these supply agreements is not considered to represent a material right.

During the year ended December 31, 2020, we recognized $ 8.0 million in license revenue which comprised of the upfront payment.

We determined that the license was a right to use the intellectual property of Navire and as of December 31, 2020, we had provided all necessary information to LianBio to benefit from the license and the license term.

We consider the future potential development milestone as well as the sales-based royalties to be variable consideration.

The future potential milestone payments were not included in the transaction price as they were all determined to be fully constrained under ASC 606.

We will re-evaluate the transaction price at each reporting period and as uncertain events are resolved or other changes in circumstances occur.

License Agreements Between Eidos and Alexion

In September 2019, our subsidiary, Eidos, entered into an exclusive license agreement with Alexion Pharma International Operations Unlimited Company, a subsidiary of Alexion Pharmaceuticals, Inc.

(together, “Alexion”) to develop, manufacture and commercialize in Japan the compound known as acoramidis (previously known as BBP-265 or AG10) and any of its various chemical forms and any pharmaceutical products containing acoramidis (the “Eidos-Alexion License Agreement”).

Under the agreement, Eidos received an upfront nonrefundable payment of $ 25.0 million.

Eidos also entered into a stock purchase agreement with Alexion, under which Eidos sold to Alexion 556,173 shares of Eidos common stock at a price per share of $ 44.95 , for an aggregate purchase price of approximately $ 25.0 million.

The excess of the purchase price over the value of the Eidos shares, determined based on the closing price of a share of Eidos’ common stock of $ 41.91 as reported on Nasdaq as of the date of execution, was $ 1.7 million and recognized in revenue as part of the upfront payment as discussed below.

Eidos is also eligible to receive $ 30.0 million in regulatory milestone payments subject to the achievement of regulatory milestones.

Eidos will also receive royalty payments in the low-teens based on net sales of acoramidis in Japan.

The royalty rate is subject to reduction if Alexion is required to obtain intellectual property rights from third parties to develop, manufacture or commercialize acoramidis in Japan, or upon the introduction of generic competition into market.

Eidos accounted for the license agreement under ASC 606 and identified the exclusive license as a distinct performance obligation since Alexion can benefit from the license on its own by developing and commercializing the underlying product using its own resources.

In addition, Eidos entered into a clinical supply agreement and will enter into a commercial supply agreement for the licensed territory.

Eidos determined that the optional right to future products under these supply agreements is not considered to represent a material right.

Eidos recognized the $ 25.0 million upfront fee and $ 1.7 million premium paid for Eidos’ stock for a total upfront payment of $ 26.7 million in license revenue upon the effective date of the license agreement in September 2019.

Eidos determined that the license was a right to use its intellectual property and as of the effective date, it had provided all necessary information to Alexion to benefit from the license and the license term had begun.

Eidos considers the future potential regulatory milestones of up to approximately $ 30.0 million and the sales-based royalties to be variable consideration.

Eidos excluded the regulatory milestones from the transaction price because it determined such payments to be fully constrained under ASC 606 due to the inherent uncertainty in the achievement of such milestone payments and are highly susceptible to factors outside of Eidos’ control.

As the sales-based royalties are all related to the license of the intellectual property rights, Eidos will recognize revenue in the period when subsequent sales are made pursuant to the sales-based royalty exception under ASC 606-10-55-65.

Eidos will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Eidos finalized the clinical supply agreement with Alexion on July 10, 2020, which was determined to be a separate performance obligation from the license.

Eidos has billed $ 0.2 million to Alexion for the year ended December 31, 2020 and recognized such amount as license revenue from the clinical supply agreement.

Direct costs for the year ended December 31, 2020 were immaterial.

In-licensing Agreements

Stanford License Agreement

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In addition, Eidos is obligated to pay Stanford University a percentage of non-royalty revenue received by Eidos from its sublicensees, with the amount owed decreasing annually for three years based on when the applicable sublicense agreement is executed.

During the years ended December 31, 2019, 2018 and 2017, Eidos recognized research and development expense of $0.2 million, $0.3 million and less than $0.1 million, respectively, in connection with this agreement.

During the years ended December 31, 2020, 2019 and 2018, Eidos recognized research and development expense of zero , $ 0.2 million and $ 0.3 million, respectively, in connection with this agreement.

Additionally, under the license agreement with Stanford University, we will pay Stanford University a portion of all nonroyalty sublicensing consideration attributable to the sublicense of the licensed compounds.

The license agreement states that if this event occurred in the third year, 10 % is payable to Stanford University.

During the year ended in December 31, 2019, we recognized $2.5 million as a cost of license revenue upon execution of the Alexion license agreement (see Note 13).

During the year ended in December 31, 2019, we recognized $ 2.5 million as a cost of license revenue upon execution of the Eidos-Alexion License Agreement (see Note 11).

The Regents of the University of California License Agreement

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During the years ended December 31, 2020, 2019 and 2018, TheRas recognized research and development expenses of $ 2.3 million, $ 1.9 million and $ 0.9 million, respectively, in connection with the Leidos Agreements.

Foundation Medicine Diagnostics Agreement

In November 2018, QED and Foundation Medicine, Inc.

entered into a diagnostics agreement relating to QED’s drug discovery and development initiatives.

During the years ended December 31, 2020, 2019 and 2018, QED recognized research and development expenses of $ 4.8 million, $ 1.6 million and zero , respectively, in connection with this agreement.

Other License and Collaboration Agreements

In addition to the agreements described above, we have also entered into other license and collaboration agreements with various institutions and business entities on terms similar to those described above, none of which are material individually or in the aggregate.

Asset Acquisitions

ML Bio Asset Acquisition

As described in Note 6, as of July 2019, ML Bio was a variable interest entity.

Based on the qualitative assessment performed under ASC 805 Business Combinations , we concluded that ML Bio was not considered to be a business and accounted for the initial July 2019 investment in ML Bio as an asset acquisition.

The assets acquired, liabilities and noncontrolling interest assumed in the transaction were measured based on their fair values.

We recognized a loss of $0.4 million in other income (expense), net.

The loss was calculated as the sum of consideration paid of $7.0 million and fair value of noncontrolling interest issued of $4.0 million, less fair value of identifiable net assets acquired of $10.6 million.

The fair value of the IPR&D acquired of $1.0 million was charged to research and development expense as it had no alternative future use at the time of the acquisition.

BridgeBio may be required to purchase additional shares of preferred stock of up to $24.5 million upon achievement of certain development milestones by ML Bio.

The assembled workforce acquired of $0.2 million was amortized during the year ended December 31, 2019.

Retinagenix Asset Acquisition

In June 2019, Retinagenix, Inc.

(“Retinagenix”) entered into a Unit Purchase and Sale Agreement with the owners of a biopharmaceutical entity to acquire 100% of the outstanding equity of the entity.

Retinagenix accounted for the transaction as an asset acquisition as substantially all of the estimated fair value of the gross assets acquired were concentrated in a group of similar identified assets, IPR&D.

The assets acquired and liabilities assumed in the transaction were measured based on their fair values.

The fair value of the IPR&D acquired was $0.5 million and was charged to research and development expense as it had no alternative future use at the time of the acquisition.

If certain substantive milestones are met in the future, Retinagenix could be required to pay up to $7.0 million in regulatory milestone payments, $65.0 million in sales milestone payments, and pay royalties of up to low single-digit percentages on future net sales.

Royalties may increase to up to mid-single-digit percentages in certain circumstances.

Origin Biosciences, Inc.

(“Origin”) Asset Acquisition

As consideration, Origin made an upfront cash payment of $1.0 million.

There were no material direct transaction costs related to the transaction.

The assets acquired and liabilities assumed in the transaction were measured based on their fair values.

The fair value of the IPR&D acquired was $1.0 million and was charged to research and development expense as it had no alternative future use at the time of the acquisition.

If certain substantive milestones are met in the future, Origin could be required to pay up to $18.8 million if Origin receives a priority review voucher from the Food and Drug Administration, $3.0 million in regulatory milestone payments, $17.0 million in sales milestone payments, and pay royalties of up to low double-digit percentages on future net sales, if any.

QED Therapeutics, Inc.

(“QED”) Asset Acquisition

In January 2018, QED entered into a License Agreement with Novartis International Pharmaceutical, Inc.

(“Novartis”), pursuant to which QED acquired certain intellectual property rights, including patents and know-how, related to BBP-831 for the treatment of patients with FGFR-driven diseases.

As consideration for the License Agreement, QED made an upfront cash payment of $15.0 million and issued 2,941,176 shares of QED Series A Preferred Stock to Novartis.

There were no material direct transaction costs related to the transaction.

The fair value of the QED Series A Preferred Stock was valued by a third-party specialist at $0.59 per share or a total fair value of shares issued of $1.7 million.

The assets acquired and liabilities assumed in the transaction were measured based on their fair values.

The fair value of the IPR&D acquired was $16.7 million and was charged to research and development expense as it had no alternative future use at the time of the acquisition.

If certain substantive milestones are met in the future, QED could be required to pay up to $60.0 million in regulatory milestone payments, $35.0 million in sales milestone payments, and pay royalties of up to low double-digit percentages on future net sales, if any.

Phoenix Tissue Repair, Inc.

Asset Acquisition

In July 2017, PTR entered into the Contribution Agreement and Asset Purchase Agreement with Shire Human Genetic Therapies, Inc.

and its subsidiary Lotus Tissue Repair, Inc.

to acquire the right, title, and interest in certain intellectual property, research program assets, and contracts relating to recombinant human collagen type VII.

As consideration, in 2017, PTR made an upfront cash payment of $1.5 million and issued 10,019,900 shares of PTR common stock valued at a nominal fair value at issuance.

There were no material direct transaction costs related to the transaction.

PTR accounted for the transaction as an asset acquisition as substantially all of the estimated fair value of the gross assets acquired was concentrated in a single identified asset, IPR&D, thus satisfying the requirements of the screen test in ASU 2017-01.

The assets acquired and liabilities assumed in the transaction were measured based on their fair values.

The fair value of the IPR&D acquired was $1.5 million and was charged to research and development expense as it had no alternative future use at the time of the acquisition.

If certain substantive milestones are met in the future, PTR could be required to pay up to $27.0 million in regulatory milestone payments, $60.0 million in sales milestone payments, and pay royalties of up to low single-digit percentages on future net sales, if any.

During the year ended December 31, 2019, PTR made a milestone payment of $2.0 million in connection with this agreement related to the Phase I initiation milestone being met.

This amount was charged to research and development expense as the underlying in-process research and development asset has no alternative future use.

License Revenue

Alexion License Agreements

In September 2019, Eidos and an affiliate of Alexion Pharmaceuticals, Inc.

(“Alexion”) entered into an exclusive license agreement with Alexion to develop, manufacture and commercialize the compound known as AG10 and any of its various chemical forms and any pharmaceutical products containing AG10 in Japan.

Under the agreement, Eidos received an upfront nonrefundable payment of $25.0 million.

Additionally, Eidos and Alexion entered into a stock purchase agreement (collectively with the exclusive license agreement, the “Alexion Agreements”), under which Eidos sold to Alexion 556,173 shares of the common stock of Eidos at a price per share of $44.95, for an aggregate purchase price of approximately $25.0 million.

The excess of the purchase price over the value of the shares of Eidos’ common stock, determined based on the closing price of a share of the common stock of Eidos of $41.91 as reported on The Nasdaq Global Select Market as of the date of execution, was $1.7 million.

Eidos accounted for the exclusive license agreement under ASC 606 and identified the exclusive license as a distinct performance obligation since Alexion can benefit from the license on its own by developing and commercializing the underlying product using its own resources.

In addition, Eidos will enter into clinical and commercial supply agreements for the licensed territory.

Eidos determined that the optional right to future products under these supply agreements is not considered to represent a material right.

Eidos is also eligible to receive $30.0 million in regulatory milestone payments subject to the achievement of regulatory milestones.

Eidos will also receive low double-digit royalty payments based on net sales of AG10 in Japan.

The royalty rate is subject to reduction if Alexion is required to obtain intellectual property rights from third parties to develop, manufacture or commercialize AG10 in Japan, or upon the introduction of generic competition into market.

Eidos is also in discussions with Alexion on a supply agreement that has not yet been finalized as of the period ending December 31, 2019.

Eidos accounted for the Alexion License Agreement under ASC 606 and identified the exclusive license as a distinct performance obligation since Alexion can benefit from the license on its own by developing and commercializing the underlying product using its own resources.

In addition, Eidos will enter into clinical and commercial supply agreements for the licensed territory.

Eidos recognized the $25.0 million upfront fee and $1.7 million premium paid for the Eidos’ stock for a total upfront payment of $26.7 million in license revenue upon the effective date of the Alexion License Agreement in September 2019.

Eidos determined that the license was a right to use Eidos’ intellectual property 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.

Eidos considers the future potential regulatory milestones of up to approximately $30.0 million and the sales-based royalties to be variable consideration.

As the sales-based royalties are all related to the license of the IP, Eidos will recognize revenue in the period when subsequent sales are made pursuant to the sales-based royalty exception under ASC 606-10-55-65.

Eidos will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

License and Exclusivity Agreements with Entities Affiliated with Perceptive Advisors LLC

In October 2019, our subsidiary, QED entered into an exclusive license agreement (the “License Agreement”) with a licensee entity in which Perceptive Life Sciences Master Fund, Ltd.

(“Perceptive Master Fund”) and certain of its affiliated funds hold a majority of the outstanding voting securities.

Perceptive Master Fund directly holds shares of our common stock representing a greater than 5% ownership interest.

Perceptive Advisors LLC (“Perceptive Advisors,” and collectively with Perceptive Master Fund and its affiliated funds, “Perceptive”) serves as the investment manager to the Master Fund and may be deemed to beneficially own the securities directly held by Perceptive Master Fund.

Joseph Edelman is the managing member of Perceptive Advisors and may be deemed to beneficially own the securities directly held by Perceptive Master Fund.

Pursuant to the License Agreement, QED granted to the licensee an exclusive, sublicensable license under the licensed patent rights and know-how to develop, manufacture and commercialize infigratinib for any and all human prophylactic and therapeutic uses in all cancer indications (including in combination with other therapies) in certain territories outside the United States.

Under the License Agreement, QED received a nonrefundable upfront payment of $10.0 million and was granted certain equity rights in an affiliate of the licensee.

Additionally, QED is entitled to receive payments from the licensee totaling an aggregate of up to $132.5 million upon the achievement of specified development and sales milestones and tiered royalties on net sales ranging from the low to mid teens.

In October 2019, our subsidiary, BBP LLC, concurrently entered into an exclusivity agreement with the above-mentioned licensee entity controlled by Perceptive, pursuant to which BBP LLC received equity in the entity representing a 10% ownership interest, valued at approximately $3.8 million at the time of the transaction.

The equity interest was issued in consideration for certain rights of first negotiation and rights of first offer granted by BBP LLC to the entity with respect to specified transactions covering intellectual property rights owned or controlled by BBP LLC or its affiliates in certain territories outside the United States.

Pursuant to the exclusivity agreement, BBP LLC also received warrant to purchase 10% of the then-fully diluted shares of one of the subsidiary of the above-mentioned licensee entity controlled by Perceptive upon achievement of certain contingent milestones.

We accounted for the license and exclusivity agreement as a single transaction under ASC 606 and identified the exclusive license as a distinct performance obligation since the third party can benefit from the license on its own by developing and commercializing the underlying product using its own resources.

In addition, we will enter into clinical and commercial supply agreements for the licensed territory.

The Company determined that the optional right to future products under these supply agreements is not considered to represent a material right.

During the year ended December 31, 2019, we recognized $13.8 million in license revenue comprising of $10.0 million in upfront payment received and the fair value of the ordinary shares received amounting to $3.8 million.

We determined that the license was a right to use the intellectual property of QED and as of the effective date, we had provided all necessary information to the third party to benefit from the license and the license term.

As of December 31, 2019, we also determined the contingent milestone related to our ability to exercise the warrant is not probable.

As a result, we did not recognize any fair value of the warrant, which we considered to be immaterial, as revenue or record as an asset.

We consider the future potential development and sales milestones as well as the sales-based royalties to be variable consideration.

We excluded the regulatory-based development and sales milestones from the transaction price because we determined such payments to be fully constrained under ASC 606 due to the inherent uncertainty in the achievement of such milestone payments and are highly susceptible to factors outside of our control.

As the sales-based royalties are all related to the license of the IP, the Company will recognize revenue in the period when subsequent sales are made pursuant to the sales-based royalty exception under ASC 606-10-55-65.

The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Build-to-Suit Operating Lease

In December 2019, we entered into a manufacturing agreement to secure clinical and commercial scale manufacturing capacity for the manufacture of batches of active pharmaceutical ingredients for product candidates of certain subsidiaries of the Company.

We have operating leases for our corporate headquarters, office spaces and a laboratory facility.

One of our office space leases has a finance lease component representing lessor provided furniture and office equipment wherein we have assessed that we have the right to obtain substantially all of the economic benefits from use of these assets throughout the term of the lease.

The assets acquired under this finance lease included in “Property and equipment, net” in the consolidated balance sheet was immaterial as of December 31, 2020.

Certain leases include renewal options at our discretion and we include the extension options when we determine the lease term for our operating and finance leases, if we are reasonably certain that the extension option would be exercised.

The lease liabilities were measured using a weighted average discount rate based on the most recent borrowing rate as of the calculation of the respective lease liability, adjusted for the remaining lease term and aggregate amount of the lease.

The components of lease cost for the year ended December 31, 2020 are as follows:

(in thousands)

Straight line operating lease costs

Interest on finance lease liability

Variable lease costs

Total lease cost

Supplemental cash flow information related to leases are as follows:

(in thousands)

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows for operating leases

Operating cash flows for finance lease — cash paid for interest

Financing cash flows for finance lease — cash paid for principal

Right-of-use assets obtained in exchange of lease obligations

Operating leases

Finance lease

Supplemental information related to the remaining lease term and discount rate are as follows:

(in thousands)

Weighted-average remaining lease term (in years)

Operating leases

Finance lease

Weighted-average discount rate

Operating leases

Finance lease

As of December 31, 2020, future minimum lease payments for our noncancelable operating and finance leases under ASC 842 are as follows:

Operating Leases

Finance Lease

(in thousands)

Year ending December 31:

Total future minimum lease payments

Imputed interest

Reported as of December 31, 2020

Operating lease liabilities, current portion

Operating lease liabilities, net of current portion

Total operating lease liabilities

Finance lease liability, current portion — Included

in "Other accrued liabilities"

Finance lease liability, net of current portion —

Included in "Other liabilities"

Total finance lease liability

As of December 31, 2020, we have operating leases for facilities that have not yet commenced, since we have not obtained the right to control the assets while the lessors perform the construction of necessary improvements, with aggregated undiscounted future payments of $ 6.0 million.

These operating leases will commence throughout fiscal year 2021 and have lease terms ranging from five to twelve years and, therefore, we did not reflect these on the consolidated balance sheet as of December 31, 2020 and the tables above.

As of December 31, 2019, future minimum lease payments for our noncancelable operating leases under ASC 840 were as follows:

(in thousands)

Year Ending December 31:

Total future minimum lease payments

Total rent expense under ASC 840 for the years ending December 31, 2019 and 2018 was $ 2.8 million and $ 1.5 million, respectively.

Manufacturing Agreement

Unless terminated as allowed within the manufacturing agreement, the agreement will expire five years from when qualified operations begin.

Under the terms of the agreement, we are assigned a dedicated manufacturing suite for certain months in each calendar year for a one-time fee of $ 10.0 million, which will be applied to the buildout, commissioning, qualification, validation, equipping and exclusive use of the dedicated manufacturing suite.

We evaluated our involvement during the construction period and determined the scope of the tenant improvements within dedicated manufacturing suite including the building shells did not qualify as “normal tenant improvements” under ASC Topic 840, Leases .

Accordingly, for accounting purposes, we will be the deemed owner of the dedicated manufacturing suite during the construction period and considered an embedded operating lease arrangement.

We recorded the $10.0 million one-time fee in noncurrent asset.

As of December 31, 2019, we paid $2.0 million of the $10.0 million one-time fee and the remaining $8.0 million payable is classified as build-to-suit lease obligation under current liabilities.

Upon commencement of construction, we will re-classify such reservation fee under noncurrent asset to construction-in-progress under property and equipment.

Related Party Transactions

During the year ended December 31, 2019 and during November through December 2018, we provided nominal services to PellePharm.

Prior to the adoption of ASC 842, we were deemed to be the owner, for accounting purposes, during the construction phase of the dedicated manufacturing suite because of our exposure to substantially all of the construction period risks and our other commitments under the arrangement.

As of December 31, 2019, we recorded the $ 10.0 million one-time fee as a non-current asset and the remaining build-to-suit lease liability of $ 8.0 million within our consolidated balance sheets.

As of January 1, 2020, upon adoption of ASC 842, we derecognized the build-to-suit lease asset of $ 10.0 million as we do not control the dedicated manufacturing suite during the construction phase.

Under the new lease guidance, we recorded a construction-in-progress asset of $ 10.0 million for the payments directly associated with the dedicated manufacturing suite as these payments are deemed to represent a non-lease component.

The construction phase and readiness determination of the dedicated manufacturing suite is expected to be completed in early 2021.

The remaining $ 4.0 million payable related to the dedicated manufacturing suite is recorded as part of “Other accrued liabilities” as of December 31, 2020.

2019 Reorganization and IPO and 2020 Shelf Registration

2019 Reorganization and IPO

On June 13, 2019, BridgeBio formed BridgeBio Pharma Merger Sub LLC (“Merger Sub LLC”), a Delaware limited liability company and direct wholly-owned subsidiary.

The 2019 Reorganization was executed on July 1, 2019, immediately prior to completion of the IPO of BridgeBio’s common stock.

As part of the 2019 Reorganization, the existing ownership interest in BBP LLC held by all BBP LLC unitholders was transferred to Merger Sub LLC, and all outstanding units of BBP LLC were cancelled and exchanged for shares of common stock of BridgeBio.

Merger Sub LLC was then merged with and into BBP LLC, the surviving entity, which became a wholly-owned subsidiary of BridgeBio.

Subsequent to the 2019 Reorganization, as the sole managing member, BridgeBio operates and controls all of BBP LLC’s businesses and affairs.

The number of shares of BridgeBio’s common stock issued to BBP LLC unitholders in the Reorganization is shown in the below table by unit class:

BBP LLC unit class

Shares Issued

Series D Preferred Units

Series C Preferred Units

Series B Preferred Units

Series A Preferred Units

Founder Units

Management Incentive Units

Total shares issued

Included in the amounts above, the unvested outstanding management incentive units and common units of BBP LLC were exchanged for 6,819,455 shares of BridgeBio’s unvested restricted stock, subject to the same time-based vesting conditions as the original management incentive units and common units terms and conditions.

See Note 15 for additional details.

At the conclusion of the 2019 Reorganization, BridgeBio became the reporting entity.

The 2019 Reorganization was accounted for as a reverse acquisition and recapitalization for financial reporting purposes.

The assets and liabilities of BridgeBio, the legal acquirer, were nominal and there were no material pre-combination activities.

Therefore, BBP LLC, the legal acquiree, was determined to be the accounting acquirer.

Accordingly, the historical financial statements of BBP LLC became BridgeBio’s historical financial statements, including the comparative prior periods.

All share and per share amounts in these consolidated financial statements and related notes had been retroactively adjusted, where applicable, for all periods presented.

The shares of BridgeBio’s common stock for periods prior to July 1, 2019 represent the outstanding BBP LLC units recalculated to give effect to the exchange ratio applied in connection with the 2019 Reorganization.

All BBP LLC units that were previously reported as temporary equity and were converted to common stock of BridgeBio upon the completion of the 2019 Reorganization have been reclassified to equity for all periods presented, as if the Reorganization occurred at the beginning of the earliest period presented in our financial statements.

At that the time of the 2019 Reorganization, the consolidation assessment on all consolidated entities was updated on behalf of BridgeBio resulting in no change in the treatment of the consolidated entities.

On July 1, 2019, BridgeBio closed the IPO of its common stock.

As part of the IPO, BridgeBio issued and sold 23,575,000 shares of its 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.

BridgeBio 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.

2020 Shelf Registration

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

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

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

We have not issued any shares or received any proceeds from this offering as of December 31, 2020.

Stock-Based Compensation

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Total stock-based compensation

Stock -Based Awards of the Corporation

Stock-Based Awards of BridgeBio

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

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We were authorized to issue 11,500,000 shares of common stock for issuance of awards under the 2019 Plan, which may be allocated among stock options, awards of restricted common stock, restricted common units and other stock-based awards.

On June 2, 2020, our stockholders approved an amendment and restatement of the 2019 Plan (the “A&R 2019 Plan”) to, among other things, increase the number of shares of common stock reserved for issuance thereunder by 2,500,000 shares.

The 2019 Plan provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2020, by 5 % of the issued and outstanding number of shares of common stock on the immediately preceding December 31, or such lesser number of shares as determined by the Compensation Committee of the Board of Directors.

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

The 2019 Inducement Plan provides for the grant of stock-based awards to induce highly-qualified prospective officers and employees who are not currently employed by the Corporation 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.

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

The 2019 Inducement Plan provides for the grant of 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 BridgeBio, 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.

The following table summarizes our authorized shares activity under the 2019 Plan and the 2019 Inducement Plans (the “Plans”):

Balance as of December 31, 2018

Granted — Stock options

Granted — Restricted stock units

Granted — Restricted stock awards

Granted — Common stock

Granted — Market-based restricted stock units

Cancelled — Stock options

Cancelled — Restricted stock

Balance as of December 31, 2019

Stock O ption Grants of the Corporation

The following table summarizes the Corporation’s stock option activity under the Plans for the period through December 31, 2019:

(in thousands, except share and per share amounts)

As of December 31, 2020, 3,820,622 shares and 204,664 shares were reserved for future issuances under the 2019 Plan and 2019 Inducement Plan, respectively.

2020 Stock and Equity Award Exchange Program (Exchange Program)

On April 22, 2020, we completed our 2020 Stock and Equity Award Exchange Program (the “Exchange Program”) for certain subsidiaries, which was an opportunity for eligible controlled entities’ employees and consultants to exchange their subsidiary equity (including common stock, vested and unvested stock options and restricted stock awards (RSAs)) for BridgeBio equity (including common stock, vested and unvested stock options and RSAs) and/or performance-based milestone awards tied to the achievement of certain development and regulatory milestones.

The Exchange Program aligns our incentive compensation structure for employees and consultants across the BridgeBio group of companies to be consistent with the achievement of our overall corporate goals.

In connection with the Exchange Program, we issued awards of BridgeBio equity under the 2019 A&R Plan to 149 grantees covering 554,064 shares of common stock, 1,268,110 stock options to purchase common stock, 50,145 shares of RSAs and 22,611 shares of performance-based RSAs.

The exchange also included performance-based milestone awards of up to $ 183.4 million to be settled in shares of BridgeBio’s common stock in the future upon achievement of the milestones (collectively the “New Awards”).

In consideration for all the subsidiaries’ shares tendered, BridgeBio increased its ownership in controlled entities included in the Exchange Program and the corresponding noncontrolling interest decreased.

On November 18, 2020, we completed a stock and equity award under our Exchange Program for a subsidiary.

We issued awards of BridgeBio equity under the 2019 A&R Plan to 16 grantees covering 24,924 shares of common stock, 70,436 stock options to purchase common stock, and 10,772 shares of performance-based stock options to purchase common stock.

The exchange also included performance-based milestone awards of up to $ 11.7 million to be settled in shares of BridgeBio’s common stock in the future upon achievement of the milestones.

We evaluated the exchange of the controlled entities’ outstanding common stock and equity awards for BridgeBio awards as a modification under ASC 718, Share Based Payments .

Under ASC 718, a modification is a change in the terms or conditions of a stock-based compensation award.

In assessing the accounting treatment, we consider the fair value, vesting conditions and classification as an equity or liability award of the controlled entity equity before the exchange, compared to the BridgeBio equity received as part of the exchange to determine whether modification accounting must be applied.

When applying modification accounting, we considered the type of modification to determine the appropriate stock-based compensation cost to be recognized on April 22 and November 18 , 2020, ( each the “M odification D ate ”) , and subsequent to the M odification D ate.

We considered the total shares of common stock and equity awards, whether vested or unvested, held by each participant in each controlled entity as the unit of account.

The controlled entity’s common stock and equity awards in each unit of account was exchanged for a combination of BridgeBio’s common stock, time-based vesting equity awards and/or performance-based milestone awards.

Other than the exchange of the controlled entity equity awards for performance-based milestone awards, all other exchanged BridgeBio equity awards retained the original vesting conditions.

As a result, there was no incremental stock-based compensation expense resulting from the exchange of time-based equity awards.

At the completion of the Exchange Program on April 22, 2020, we determined $ 17.4 million of the performance-based milestone awards is probable of achievement and represented the incremental stock-based compensation cost resulting from the modification of time-based equity awards to performance-based milestone awards.

These performance-based milestone awards were to be recognized over a period ranging from 0.7 year to 1.7 years.

There was no incremental stock-based compensation cost arising from the completion of the Exchange Program on November 18, 2020.

Under ASC 718, we account for such performance-based milestone awards as a liability in “Accrued compensation and benefits” and in “Other liabilities” in the consolidated balance sheet due to the fixed milestone amount that will be converted into a variable number of shares of BridgeBio common stock to be granted upon the achievement date.

As of December 31, 2020, we determined that $ 11.1 million of the $17.4 million incremental stock-based compensation cost above remained probable of achievement and is being recognized over a period ranging from 0.9 year to 2.9 years.

For the year ended December 31, 2020, we recognized $ 9.6 million of stock based compensation cost associated with performance based milestone awards that were determined to be probable as of December 31, 2020.

We have recognized stock-based compensation expense of $ 2.0 million for the year ended December 31, 2020 for performance-based milestone awards that were achieved during the year and settled with 73,248 restricted stock awards due to achievement of regulatory milestones related to IND acceptance that were completed during the year ended December 31, 2020.

There were no such compensation awards in the comparative periods in 2019.

Stock O ption Grants of BridgeBio

The following table summarizes BridgeBio’s stock option activity under the Plans for the period through December 31, 2020:

(in thousands, except shares and per share amounts)

Outstanding as of December 31, 2019

Granted — Exchange Program

Exercised — Exchange Program

Cancelled — Exchange Program

Outstanding as of December 31, 2020

— Exchange Program

Exercisable as of December 31, 2020

The options granted to employees and non-employees are exercisable at the price of the Corporation’s common stock at the respective grant dates.

Exercisable as of December 31, 2020

— Exchange Program

The options granted to employees and consultants are exercisable at the price of the BridgeBio’s common stock at the respective grant dates.

The options granted have a service condition and generally vest over a period of four years .

The aggregate intrinsic value of options outstanding and exercisable as of December 31, 2019 is calculated based on the difference between the exercise price and the current fair value the Corporation’s common stock.

During the year ended December 31, 2019, we recognized stock-based compensation expense of $3.9 million related to stock options under the Plans.

As of December 31, 2019, there was $32.2 million of total unrecognized compensation cost related to stock options under the Plans.

The unrecognized stock-based compensation cost is expected to be recognized over a weighted-average period of 3.4 years.

Restricted Stock Units (RSUs) of the Corporation

During the year ended December 31, 2019, the Board of Directors approved grants of RSUs to senior management and officers subject to continued employment and generally vest over a period of four years.

As of December 31, 2019, there are 362,163 RSUs issued and outstanding with weighted average grant date fair value of $31.98.

There were no releases of RSUs during the year ended December 31, 2019.

During the year ended December 31, 2019, we recognized stock-based compensation expense of $0.2 million related to shares of RSUs under the Plans.

As of December 31, 2019, there was $11.4 million of total unrecognized compensation cost related to RSUs under the Plans.

The unrecognized stock-based compensation cost is expected to be recognized over a weighted-average period of 4.0 years.

Restricted Stock Awards (RSAs) of the Corporation

As disclosed in Note 3, upon the Reorganization, all unvested outstanding management incentive units and common units of BBP LLC were cancelled and converted into shares of the Corporation’s RSAs.

The following table summarizes our RSA activity under the Plan s for the period through December 31 , 2019:

The aggregate intrinsic value of options outstanding and exercisable as of December 31 2020 and 2019 is calculated based on the difference between the exercise price and the current fair value the BridgeBio’s common stock.

During the year ended December 31, 2020 and 2019, we recognized stock-based compensation expense of $ 15.6 million and $ 3.9 million, respectively, related to stock options under the Plans.

As of December 31, 2020, there was $ 43.8 million of total unrecognized compensation cost related to stock options under the Plans that is expected to be recognized over a weighted-average period of 2.6 years.

Restricted Stock Units (RSUs) of BridgeBio

The following table summarizes BridgeBio’s RSU activity under the Plans for the year ended December 31, 2020:

Balance at December 31, 2019

BBP LLC units converted into shares of unvested

restricted stock of the Corporation

Balance at December 31, 2020

During the year ended December 31, 2019, we recognized stock-based compensation expense of $4.2 million related to RSAs under the Plans.

As of December 31, 2019, there was $26.0 million of total unrecognized compensation cost related to RSAs under the Plans.

The unrecognized stock-based compensation cost is expected to be recognized over a weighted-average period of 3.5 years.

The 5,603,452 unvested RSAs as of December 31, 2019 are included as outstanding shares disclosed in the consolidated balance sheet as of December 31, 2019 as the shares were actually issued upon Reorganization but are subject to forfeiture per the terms of the awards.

Market-Based RSUs of the Corporation

During the year ended December 31, 2019, the Board of Directors approved and granted market-based RSUs.

One such market-based RSU award includes a market condition based on the Total Shareholders’ Return (TSR) of the Corporation’s common stock as compared to the TSR of the Nasdaq Biotechnology Index and the vesting percentage of the award is calculated based on the three-year performance period from vesting commencement date.

The other market-based RSU award includes a market condition based on the Corporation’s market capitalization reaching $5.0 billion and vests immediately at 100% upon achievement of said market capitalization.

The market-based RSUs require continuous employment.

The RSUs have a service condition and generally vest over a period of four years .

During the years ended December 31, 2020 and 2019, we recognized stock-based compensation expense of $ 7.4 million and $ 0.2 million, respectively, related to shares of RSUs under the Plans.

As of December 31, 2020, there was $ 32.8 million of total unrecognized compensation cost related to RSUs under the Plans that is expected to be recognized over a weighted-average period of 3.2 years.

Restricted Stock Awards (RSAs) of BridgeBio

As disclosed in Note 14, upon the Reorganization, all unvested outstanding management incentive units and common units of BBP LLC were cancelled and converted into shares of BridgeBio’s RSAs.

The following table summarizes our RSA activity under the Plans for the year ended December 31, 2020:

Balance at December 31, 2019

Granted — Exchange Program

Granted — Performance-based milestone awards

Balance at December 31, 2020

During the years ended December 31, 2020 and 2019, we recognized stock-based compensation expense of $ 10.7 million and $ 4.2 million, respectively, related to RSAs under the Plans.

As of December 31, 2020, there was $ 16.5 million of total unrecognized compensation cost related to RSAs under the Plans that is expected to be recognized over a weighted-average period of 2.8 years.

The 3,364,366 and 5,603,452 unvested RSAs as of December 31, 2020 and 2019, respectively, are included as outstanding shares disclosed in the consolidated balance sheet as of December 31, 2020 and 2019 as the shares were actually issued but are subject to forfeiture per the terms of the awards.

Market-Based RSUs of BridgeBio

During the year ended December 31, 2019, the Board of Directors approved and granted market-based RSUs that were subject to continuous employment at the time of achievement of the market conditions.

One such market-based RSU award includes a market condition based on the Total Shareholders’ Return (TSR) of BridgeBio’s common stock as compared to the TSR of the Nasdaq Biotechnology Index and the vesting percentage of the award is calculated based on the three-year performance period from vesting commencement date.

In connection with the separation of the grantee from BridgeBio in 2020, this particular market-based RSU representing 53,234 shares was forfeited and the previously recognized stock-based compensation expense, which was not material, was reversed.

The other market-based RSU award includes a market condition based on BridgeBio’s market capitalization reaching $ 5.0 billion and vests immediately at 100 % upon achievement of said market capitalization.

The respective grant date fair values of these awards, which aggregate to $ 3.8 million for the year December 31, 2019, were determined using a Monte Carlo valuation model and are recognized as compensation expense over the implied service period of the awards.

As of December 31, 2019, there are 129,871 market-based RSUs outstanding with weighted average grant date fair value of $28.98.

For the year ended December 31, 2019, we recognized $2.3 million stock-based compensation expense related to market-based RSU awards.

As of December 31, 2019, there was $1.5 million of total unrecognized compensation cost related to market-based RSUs under the Plans.

There were no such awards prior to 2019.

2019 Employee Stock Purchase Plan

On June 22, 2019, we adopted the 2019 Employee Stock Purchase Plan (the “ESPP”) which became effective on June 25, 2019.

The following table summarizes our market-based RSU activity under the Plans for the year ended December 31, 2020:

Balance at December 31, 2019

Balance at December 31, 2020

For the year ended December 31, 2020 and 2019, we recognized stock-based compensation expense of $ 1.0 million and $ 2.3 million, respectively, related to market-based RSU awards.

As of December 31, 2020, unrecognized compensation cost related to market-based RSUs under the Plans was immaterial.

2019 Employee Stock Purchase Plan (ESPP) of BridgeBio

On June 22, 2019, we adopted the 2019 ESPP, which became effective on June 25, 2019 and was amended and restated effective as of December 12, 2019.

The ESPP initially reserves and authorizes the issuance of up to a total of 2,000,000 shares of common stock to participating employees.

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An employee’s payroll deductions under the ESPP are limited to 15 % of the employee’s compensation and employees may not purchase more than 3,500 of shares of BridgeBio common stock during any offering period.

During the year ended December 31, 2019, the Company recognized stock-based compensation expense of $0.4 million related to the ESPP.

During the year ended December 31, 2020 and 2019, we recognized stock-based compensation expense of $ 1.0 million and $ 0.4 million, respectively, related to the ESPP.

As of December 31, 2020, 3,123,169 shares were reserved for future issuance under the ESPP.

Valuation Assumptions

We used the Black-Scholes model to estimate the fair value of stock options and stock purchase rights under ESPP.

For the year ended December 31, 2020, we used the following weighted-average assumptions in the Black-Scholes calculations:

Year Ended December 31,

Stock Options

Expected term (in years)

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Dividend yield

Weighted-average fair value of stock-based awards

Weighted-average fair value of stock-based

awards granted

Equity-Based Awards of BBP LLC

Up until the reorganization, BBP LLC issued management incentive units and common units (collectively, “BBP LLC equity-based awards”).

BBP LLC’s Second Amended and Restated Limited Liability Company Agreement, Third Amended and Restated Limited Liability Company Agreement and LLC Agreement provided for the issuance of Management Incentive Units and Common Units to employees and non-employees.

During 2019 and 2018, BBP LLC issued Management Incentive Units and Common Units based on the approval of the board of BBP LLC for each grant date.

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No distributions can be made to the holders of Management Incentive Units until the aggregate distributions made to other members (Preferred Unit, Founder Unit and Common Unit members) exceed the Management Incentive Units’ participation threshold.

BridgeBio has determined that the underlying terms and intended purpose of the Management Incentive Units and Common Units are more akin to an equity-based compensation for employees and non-employees than a performance bonus or profit-sharing arrangement.

BridgeBio has determined that the underlying terms and intended purpose of the Management Incentive Units and Common Units are more akin to an equity-based compensation for employees and consultants than a performance bonus or profit-sharing arrangement.

As described in Note 14, BBP LLC equity-based awards were cancelled and exchanged for shares of BridgeBio restricted common stock.

For the years ended December 31, 2019, 2018 and 2017, equity-based compensation from BBP LLC equity-based awards was $3.4 million, $3.2 million and $0.5 million, respectively.

The following table summarizes authorized BBP LLC equity-based awards activity as if the Management Incentive Units and Common Units were converted to restricted common stock of the Corporation at the earliest period presented :

For the years ended December 31, 2019 and 2018, equity-based compensation from BBP LLC equity-based awards was $ 3.4 million and $ 3.2 million, respectively.

Shares of the

Corporation's

Balance as of January 1, 2017

Balance as of December 31, 2017

1 unchanged sentence

Authorized and granted

Converted into common stock of the Corporation

Converted into common stock of BridgeBio

Converted into unvested restricted common

stock of the Corporation

stock of BridgeBio

Balance as of December 31, 2019

The following table summarizes vested BBP LLC equity-based awards activity as if the Management Incentive Units and Common Units were converted to restricted common stock of the Corporation at the earliest period presented:

The following table summarizes vested BBP LLC equity-based awards activity as if the Management Incentive Units and Common Units were converted to restricted common stock of BridgeBio at the earliest period presented:

Shares of the

Corporation's

Balance at January 1, 2017

Balance at December 31, 2017

Balance at December 31, 2018

Converted into common stock of the Corporation

Converted into common stock of BridgeBio

Balance at December 31, 2019

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Employee stock options generally vest 25 % upon one year of continued service to Eidos, with the remainder in monthly increments over three additional years.

Upon adoption of the Eidos 2018 Plan, no additional stock awards will be issued under

the Eidos 2016 Plan.

Upon adoption of the Eidos 2018 Plan, no additional stock awards will be issued under the Eidos 2016 Plan.

Options granted under the Eidos 2016 Plan that were outstanding on the date the Eidos 2018 Plan became effective remain subject to the terms of the Eidos 2016 Plan.

1 unchanged sentence

In December 2019, Eidos’ Board of Directors approved an additional increase in the number of shares reserved under the 2018 Plan by 1,500,000 shares.

As of December 31, 2019, Eidos has reserved 2,798,000 shares of common stock for issuance under the 2018 Plan, of which the 1,500,000 shares subject to the December 2019 increase remain subject to stockholder approval.

As of December 31, 2020, Eidos has reserved 2,798,000 shares of common stock for issuance under the 2018 Plan.

Eidos Employee Stock Purchase Plan

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The first purchase period commenced upon the completion of Eidos’ IPO and ended on November 30, 2018.

In connection with the Merger Agreement further discussed in Note 5, Eidos did not commence a new offering period on December 1, 2020.

The fair value of the rights granted under the Eidos 2018 ESPP was calculated using the Black-Scholes option-pricing model with the following assumptions:

Year Ended December 31,

Expected term (in years)

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Activity under the Eidos equity incentive plans is set forth below:

(in thousands, except per share and per share data)

Available for

(in thousands, except shares and per share amounts)

Outstanding as of December 31, 2019

Additional authorized

Options granted

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Options cancelled

Outstanding—December 31, 2019

Options exercisable—December 31, 2019

Options vested and expected to vest—December

Outstanding as of December 31, 2020

Options exercisable as of December 31,

Options vested and expected to vest as

of December 31, 2020

Aggregate intrinsic value represents the difference between Eidos’ estimated fair value of its common stock and the exercise price of outstanding in–the–money options.

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The total fair value of Eidos shares vested during the years ended December 31, 2020, 2019 and 2018 was $ 11.7 million, $ 5.2 million and $ 2.5 million, respectively.

Eidos Stock Options Granted to Non-employees

Stock-based compensation related to stock options granted to non-employees is recognized as the stock options are earned.

The fair value of non-employee stock options is estimated using the Black-Scholes valuation model with assumptions generally consistent with those used for employee stock options, with the exception of the expected term, which is the remaining contractual life at each measurement date.

During the years ended December 31, 2019, 2018 and 2017, Eidos granted 20,361, 35,880 and 569,252 shares, respectively, to non-employee consultants.

Eidos recognized stock-based compensation expense for non-employee awards during the years ended December 31, 2019, 2018 and 2017 of $0.1 million, $1.7 million and $ 0.7 million, respectively.

Eidos Stock Options Valuation

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For stock options granted after the completion of the IPO, Eidos determines the fair value of each share of underlying common stock based on the closing price of Eidos common stock as reported on the date of grant.

The fair value of employee and non-employee director of Eidos stock option awards was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:

December 31, 2019

December 31, 2018

December 31, 2017

The fair value of employee of Eidos stock option awards was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:

Year Ended December 31,

Expected term (in years)

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The shares cliff vest 25 % after one year and vest monthly thereafter over 36 months.

As of December 31, 2019 and 2018, 170,866 and 268,504 shares remain subject to repurchase.

As of December 31, 2020 and 2019, 73,230 shares and 170,866 shares remain subject to repurchase.

Eidos recognizes stock-based compensation expense upon the approval of these awards by the Eidos Board of Directors in September 2017 as vesting provisions are not considered substantive due to the fair value repurchase right.

Stock-based compensation expense related to the restricted stock is recognized based on the fair value of the stock on the approval date using the Black-Scholes pricing model.

During the years ended December 31, 2019, 2018 and 2017, Eidos recognized expense related to these awards of zero, zero and $0.2 million, respectively.

During the years ended December 31, 2020, 2019 and 2018, Eidos recognized zero expense related to these awards.

Eidos Stock-Based Compensation

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The unrecognized stock-based compensation cost is expected to be recognized over a weighted-average period 2.8 years.

BridgeBio is subject to U.S.

Upon the 2019 Reorganization, BridgeBio is subject to U.S.

federal and state income taxes as a corporation.

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

Prior to the 2019 Reorganization, which was 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.

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Total loss before income taxes

There was no income tax expense (domestic and foreign) for the years ended December 31, 2019, 2018 and 2017.

There was no current or deferred income tax expense or benefit (domestic and foreign) for the years ended December 31, 2020, 2019 and 2018.

The following table presents a reconciliation of the statutory federal rate and our effective tax rate:

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Tax at statutory federal rate

State income taxes, net of federal benefit

Change in valuation allowance

Research and development credits

Stock-based compensation

Change in entity status

Nontaxable partnership income

Impact of tax reform

Effective income tax rate

Significant components of our deferred tax assets and liabilities as of December 31, 201 9 and 201 8 are as follows :

Significant components of our deferred tax assets and liabilities are as follows:

(in thousands)

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Equity method investment

Lease liabilities

Gross deferred tax assets

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Deferred tax liabilities:

Right-of-use assets

Deferred tax liabilities

Net deferred tax assets

As of December 31, 2019, we have net operating loss carryforwards available to reduce future taxable income, if any, for federal and California state income tax purposes of approximately $393.4 million and $160.0 million respectively.

The federal net operating losses generated prior to 2018 will begin to expire in 2037, losses generated after 2018 will carryover indefinitely.

Net deferred tax assets (liabilities)

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

The federal net operating losses generated prior to 2018 amounting to $ 31.8 million will begin to expire in 2036 , losses generated after 2018 amounting to $ 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, 2019, we have federal research and development credit carryforwards of $17.6 million, which will expire beginning in 2037 if not utilized.

As of December 31, 2019, we have state research and development tax credit carryforwards of $2.6 million.

The state research and development tax credits will expire at various dates.

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 have California and other state research and development tax credit carryforwards of $ 6.3 million.

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.

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

The valuation allowance increased by $79.2 million for the year ended December 31, 2019.

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 year s ended December 31, 2020 and 2019 , respectively .

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 Internal Revenue Code of 1986, as amended, and similar state provisions.

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Balance at the end of the year

As of December 31, 2019, we have not recorded interest and penalties associated with our unrecognized tax benefits.

As of December 31, 2020 and 2019, we have no t recorded interest and penalties associated with our unrecognized tax benefits.

Our policy is to recognize interest and penalties related to income tax matters in income tax expense.

Our unrecognized gross tax benefits would not reduce the annual effective tax rate if recognized because we have recorded a full valuation allowance on our deferred tax assets.

We do not foresee any material changes to the gross unrecognized tax benefit within the next twelve months.

Our unrecognized gross tax benefits would not reduce the annual effective tax rate if recognized because we have recorded a valuation allowance on our deferred tax assets.

We file federal and various income tax returns.

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All years are open for examination by federal and state authorities.

In December 2017, the United States government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) and the new legislation contains several key provisions, including a reduction of the federal corporate income tax rate to 21% effective January 1, 2018.

We are required to recognize the effect of the tax law changes in the period of enactment, such as remeasuring our United States deferred tax assets and liabilities as well as our valuation allowance against our net United States deferred tax assets.

In December 2017, the U.S.

Securities and Exchange Commission staff issued Staff Accounting Bulletin No.

118 (“SAB 118”), which allowed us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date.

During the fourth quarter of 2018, we completed our accounting for the Tax Act as summarized below.

Due to the change in the statutory tax rate from the Tax Act, we remeasured our federal deferred tax assets as of December 31, 2017 to reflect the reduced rate that will apply in future periods when these deferred taxes are settled or realized.

The result was a decrease of $6.8 million to deferred tax assets.

No adjustments were made to the provisional estimates recorded.

We determined the one-time transition tax would not be applicable given our facts and circumstances.

The one-time transition tax would be based on total post-1986 foreign earnings and profits that were previously deferred from United States income tax.

The applicable tax rate is based on the amount of those post-1986 earnings that is held in cash and other specified assets (the “cash position”).

We did not have any foreign earnings and profits and thus we would not have any transition tax liability.

Our position has not materially changed.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law.

The CARES Act includes income tax provisions relating to net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act also allowed for the deferral of employer payroll taxes, which we have done and the liability is accounted for in our consolidated financial statement.

The provisions of the CARES Act did not have a material impact on our financial statements.

On June 29, 2020, the Governor of California signed Assembly Bill (“AB”) 85 suspending California net operating loss (“NOL”) utilization and imposing a cap on the amount of business incentive tax credits that companies can utilize, effective for tax years 2020, 2021 and 2022.

AB 85 will not impact our income tax provisions as we are in taxable loss position.

On December 27, 2020, the Consolidated Appropriations Act of 2021 (“CAA”), a tax, funding and spending bill was signed into law.

We have reviewed the legislation and we do not believe the CAA will materially impact our 2020 income tax provision.

Net Loss Per Share

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Unvested market-based RSUs

Unvested performance-based RSUs

Unvested performance-based RSAs

Common stock options issued and outstanding

Estimated shares issuable under performance-based milestone

compensation arrangements

Estimated shares issuable under the ESPP

Assumed conversion of 2027 Notes

Our 2027 Notes issued in March 2020 are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election.

The impact of the assumed conversion to diluted net income per share would be computed using the treasury stock method.

As discussed in Notes 9 and 15, we have performance-based milestone compensation arrangements, 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.

The common stock equivalents of such arrangements were estimated assuming the contingent milestones were achieved as of the reporting date and the arrangements were all settled in equity.

Subsequent Events

Subsequent to the year ended December 31, 2019, Eidos has issued an additional 448,755 shares of common stock in “at-the-market” offerings under the 2019 Shelf and received $23.8 million of net proceeds.

SUPPLEMENTARY FINANC IAL DATA (UNAUDITED)

(In thousands, except per share data)

The following table presents certain unaudited consolidated quarterly financial information for the eight quarters in the period ended December 31, 2019.

This information has been prepared on the same basis as the audited consolidated financial statements and includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the unaudited quarterly results of operations set forth herein

For the Quarters Ended

License revenue

Total operating expenses

Loss from operations

Net loss attributable to common stockholders of

Net loss per share, basic and diluted

For the Quarters Ended

License revenue

Total operating expenses

Loss from operations

Net loss attributable to common stockholders of

Net loss per share, basic and diluted

Amount for the three months ended June 30, 2019 includes the results of operations of BridgeBio Pharma, Inc.

prior to the Reorganization.

REPORT OF INDEPENDENT REGIS TERED PUBLIC ACCOUNTING FIRM

Closing and Completion of Merger Transactions with Eidos

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 issuance of approximately 26.1 million of our common stock.

We also issued 2,776,672 stock options to purchase common stock of BridgeBio and 25,972 shares of BridgeBio RSUs to certain employees of Eidos in exchange for their then outstanding common stock options and RSUs under the Eidos 2016 Plan and the Eidos 2018 Plan.

Upon closing and completion of the Merger Transactions with Eidos, Eidos became our wholly-owned subsidiary.

Eidos’ common stock ceased to trade on the Nasdaq Global Select Market prior to the opening of business on January 26, 2021 and Eidos’ Certification and Notice of Termination of Registration under Section 12(g) of the Exchange Act was filed with the SEC on February 5, 2021.

We have incurred $ 8.7 million of deferred merger transaction costs that are included in “Other current assets” in our consolidated balance sheet as of December 31, 2020.

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

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 (the “2029 Notes”), pursuant to an Indenture dated January 28, 2021 (the “2029 Notes Indenture”), between us and U.S.

Bank National Association, as trustee (the “2029 Notes Trustee”), in a private offering to qualified institutional buyers (the “2021 Note Offering”) pursuant to Rule 144A under the Securities Act.

The 2029 Notes issued in the 2021 Note Offering include $ 67.5 million aggregate principal amount of 2029 Notes sold to the initial purchasers in (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 those 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 2021 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 2021 Note Offering to pay for the cost of the capped call transactions and approximately $ 50.0 million to pay for the repurchase of shares of its common stock in connection with the 2021 Note Offering.

We intend to use the remainder of the net proceeds from the 2021 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.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of BridgeBio Pharma, Inc.

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We have audited the accompanying consolidated balance sheets of BridgeBio Pharma, Inc., its subsidiaries and controlled entities (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, redeemable convertible noncontrolling interests and shareholders' equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity accounting principles generally accepted in the United States of America.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

2027 Notes — Refer to Note 10 to the financial statements

Critical Audit Matter Description

On March 9, 2020, the Company issued $550 million in aggregate principal amount of 2.50% Convertible Senior Notes due 2027 (the “2027 Notes”) in a private placement offering.

As of December 31, 2020, the carrying value of the 2027 Notes was $383.4 million.

As the 2027 Notes may be settled in cash upon conversion, the Company determined the 2027 Notes should be separated into liability and equity components.

The liability component was calculated by measuring the fair value of a similar liability without an associated conversion feature.

The conversion

option was recorded as a component of equity, resulting in a debt discount that represents the difference between the gross proceeds from the issuance of the 2027 Notes and the fair value of the liability component on the date of issuance.

We identified the accounting evaluation and valuation of the 2027 Notes as a critical audit matter, primarily due to significant judgments by management related to:

1) the evaluation of the contractual terms to identify potential embedded derivatives requiring bifurcation from the debt instrument and 2) the estimation of the fair value of the debt component of the convertible notes, which was determined using a discounted cash flow method that is dependent upon significant assumptions related to the Company’s implied credit rating and credit spread.

Auditing of these accounting and valuation considerations involved challenging and complex auditor judgment, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the accounting evaluation and valuation of the 2027 Notes included, but were not limited to, the following:

We tested the effectiveness of controls over the Company’s accounting for and valuation of the 2027 Notes, including controls addressing the evaluation of embedded derivatives under applicable accounting guidance and estimating the fair value of the standalone liability component.

We evaluated the Company’s accounting analysis of the initial accounting of the 2027 Notes, including the identification of potential embedded derivatives included in the arrangements.

We evaluated the Company’s estimate of the fair value of the liability component of the 2027 Notes by:

involving fair value specialists to evaluate the reasonableness of the (1) valuation methodology and (2) valuation assumptions applied including the Company's credit rating and credit spread by developing a developing a range of independent estimates and comparing our estimates to those used by management.

testing the source information underlying the significant assumptions and estimates and the mathematical accuracy of the calculation.

Accrued Research and Development Liabilities — Refer to Notes 2 and 9 to the financial statements

Critical Audit Matter Description

The Company incurs research and development expenses related to the costs of research and development activities, including third-party service agreements with contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”) to provide research and development services related to preclinical studies and clinical trials, which are estimated at each reporting period.

As of December 31, 2020, the Company had accrued for $27.3 million of research and development expenses, of which $24.2 million is related to CROs and CMOs.

In addition, the Company’s total prepaid expenses and other current assets were $35.7 million and other assets were $23.9 million, which included $7.9 million and $14.3 million, respectively, for amounts paid in advance of services incurred to be performed by CROs and CMOs.

The Company had incurred $337.0 million of research and development expenses for the year then ended, of which $134.3 million is related to services provided by CROs and CMOs.

The Company records these expenses based on estimates of the services and activities completed to date pursuant to the provisions of the signed contracts relative to the amounts invoiced and paid to date, resulting in an accrued liability or prepaid expense balance at period end.

We identified the accrual of these third-party research and development costs as a critical audit matter because of the judgments necessary for management to estimate the cost of services provided but not yet invoiced, the significant volume of transactions and the varied nature of audit evidence obtained from vendor to vendor.

The amount of expense recognized and the corresponding accrual and prepaid balances recorded are based on the unique terms and conditions in each arrangement and are often dependent on limited information available from the vendors regarding

the progress of the services through the reporting date.

This required extensive audit effort due to the volume and variability in the arrangements and available information from the vendors and required a high degree of auditor judgment when performing audit procedures to audit management’s estimates of total expenses, accrued and prepaid balances and evaluating the results of those procedures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the estimate of research and development expenses and the related accrued and prepaid balances included the following, among others:

We tested the effectiveness of controls over the Company’s research and development expense accrual process, including controls over the estimation of activities completed to date.

We evaluated publicly available information (e.g., the Company’s website, news and press releases, and investor presentations) and board of directors’ materials, and corroborated this information gathered with Company personnel responsible for overseeing the clinical trial activities regarding the status of such activities.

We then compared this information to the judgements applied in management’s estimate of the recorded expenses and corresponding accrual and prepaid balances.

We evaluated management’s ability to accurately estimate accrual of these third-party research and development costs by comparing actual results to management’s historical estimates.

For a sample of contracts, we evaluated the third-party research and development expenses and the corresponding accrued and prepaid expense balances by:

inspecting related agreements, including master service agreements, change orders, statements of work, and amendments, and agreeing key provisions of the agreements including timeline, budget, and relevant rates, to the Company’s analysis of estimated expenses incurred to date.

sending written confirmations directly to contract research organizations or contract manufacturing organizations to confirm completeness of agreements as well as payments received, invoices billed and yet to be billed, and costs incurred to date and inspecting correspondence received directly from them, including status reports, and comparing such information to the amounts used in the Company’s estimates.

agreeing other third-party information to the inputs used in the Company’s analysis and recalculating the Company’s estimated expense, accrual, and prepaid balances.

performing a lookback analysis by comparing the estimated accrual balance as of December 31, 2020 to the invoices received after year-end to evaluate the Company’s ability to estimate the accrual.

/s/ DELOITTE & TOUCHE LLP

San Francisco, California

March 2, 2020

February 25, 2021

We have served as the Company’s auditor since 2018.

CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

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 7A. Quantitative and Qualitative Disclosures About Market Risk