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Item 2. Management’s Discussion and Analysis

2021-05-06 compared with 2020-11-05 · 150 added, 160 removed, 137 unchanged (69% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes thereto for the year ended December 31, 2019 included in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2020.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes thereto for the year ended December 31, 2020 included in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2021.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in this Quarterly Report on Form 10-Q.

Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, as updated by the information, if any, in Part II, Item 1A, “Risk Factors” included in this Quarterly Report on Form 10-Q.

The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q.

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Since our inception in 2015, we have focused substantially all of our efforts and financial resources on acquiring and developing product and technology rights, building our intellectual property portfolio and conducting research and development activities for our product candidates within our wholly-owned subsidiaries and controlled entities, including partially-owned subsidiaries and subsidiaries we consolidate based on our deemed majority control of such entities as determined using either the variable interest entity, or VIE model, or the voting interest entity, or VOE model.

To support these activities, we and our wholly-owned subsidiary, BridgeBio Services, Inc., (i) identify and secure new programs, (ii) set up new wholly-owned subsidiaries and controlled entities, (iii) recruit key management team members, (iv) raise and allocate capital across the portfolio and (v) provide certain shared services, including accounting and human resources, as well as workspaces.

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

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

We have experienced some delays in enrollment of ongoing clinical trials and delay in the start of planned trials due to the global outbreak of SARS-CoV-2, the novel strain of coronavirus that causes Coronavirus disease 19, or COVID-19.

The ultimate impacts of COVID-19 on our business are currently unknown.

We will continue 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.

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

Financial Operations Overview

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

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

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

For example, in light of developments relating to the global outbreak of SARS-CoV-2, the novel strain of coronavirus that causes Coronavirus disease 19, or COVID-19, the focus of healthcare providers and hospitals on fighting the virus, and consistent with the U.S.

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

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

The exact duration of delays and their overall impact on our business are currently unknown, and we are continuing to actively monitor the COVID-19 pandemic as it continues to rapidly evolve.

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

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

For example, depending on the full impact and prevalence of COVID-19 over time, we anticipate that we will report initial data from the ongoing Phase 2 dose-escalation and expansion study of infigratinib in children with achondroplasia by the end of 2021 .

Results of Operations

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

Three months ended March 31,

(in thousands)

License revenue

Research and development

General and administrative

Loss from operations

Net loss attributable to common

stockholders of BridgeBio

Cash, cash equivalents and

marketable securities

Cash, Cash Equivalents and Marketable Securities

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

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

We received net proceeds from the Note Offering of approximately $537.0 million, after deducting purchasers’ discount and offering expenses.

As of March 31, 2021 we had cash, cash equivalents and marketable securities of $1,001.3 million.

In January 2021, we issued an aggregate principal amount of $747.5 million of our 2.25% Convertible Senior Notes due 2029, or the 2029 Notes, in a private offering, or the 2021 Note Offering, to qualified institutional buyers.

We received net proceeds from the 2021 Note Offering of approximately $731.4 million, after deducting the purchasers’ discount.

We used approximately $61.3 million of the net proceeds from the 2021 Note Offering to pay for the cost of capped call transactions and approximately $50.0 million to pay for the repurchase of shares of our common stock.

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

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

License Revenue

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

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

On January 26, 2021, we closed and completed the Merger Transactions with Eidos.

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

Operating Expenses

Cost of License Revenue

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

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

Research and Development Expenses

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Research and development

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

Research and development expense increased by $54.3 million for the three months ended March 31, 2021 compared to the same period in 2020 primarily due to an increase in personnel costs and external costs.

The increase in personnel costs was attributed to increase in the number of employees to support progression in our research and development programs, including our increasing research pipeline, as well as increases in stock-based compensation related to performance-based milestone compensation arrangements for regulatory and development milestones achieved and determined to be probable of achievement.

Stock-based compensation recorded in research and development expense for the three months ended March 31, 2021 was $22.4 million as compared to $1.6 million for the same period in the prior year.

The increase in external costs was a result of increased manufacturing activities for early to late stage programs and one-time in-licensing development and regulatory milestone payments.

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

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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BBP-631 (Adrenas)

BBP-589 (PTR)

BBP-812 (ASPA)

BBP-681 (Venthera)

BBP-454 (TheRas)

BBP-418 (ML Bio)

Other programs including early-stage

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

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

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.

General and Administrative Expenses

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Three Months Ended March 31,

(in thousands)

General and administrative

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

General and administrative expenses increased by $11.1 million for the three months ended March 31, 2021 compared to the same period in 2020 due to costs incurred to support organizational growth, including staged build out of our commercial organization as part of commercial launch readiness activities and accelerated recognition of stock-based compensation arising from the merger with Eidos.

Other Income (Expense), Net

Interest Income

Three Months Ended March 31,

(in thousands)

Interest income

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

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

The decrease in interest income for the three months ended March 31, 2021 compared to the same period in 2020 was driven by a general decline in interest rates that began at the start of the COVID-19 pandemic and continued through the current period.

Interest Expense

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

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

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

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

Loss from an Equity Investment

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

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

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

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

Other Income (Expense)

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

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

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

Net Loss Attributable to Redeemable Convertible Noncontrolling Interests and Noncontrolling Interests

Net loss attributable to redeemable convertible noncontrolling interests and noncontrolling interests in our condensed consolidated statements of operations consists of the portion of the net loss of those consolidated entities that is not allocated to us.

Changes in the amount of net loss attributable to noncontrolling interests are directly impacted by changes in the net loss of our consolidated entities and are the result of ownership percentage changes.

Refer to Note 6 to our condensed consolidated financial statements.

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

Three Months Ended March 31,

(in thousands)

Interest expense

Interest expense for the three months ended March 31, 2021 consists primarily of interest expense incurred under our 2029 Notes issued in January 2021, our 2027 Notes issued in March 2020, our term loans with Hercules Capital, Inc., or Hercules, pursuant to our Loan and Security Agreement, dated June 19, 2018, as amended, and Eidos’ term loan with Silicon Valley Bank and Hercules pursuant to its Loan and Security Agreement, dated November 13, 2019, or the SVB and Hercules Loan Agreement.

Interest expense for the same period in 2020 consists primarily of interest expense incurred under our 2027 Notes and our term loans with Hercules and SVB and Hercules.

The increase of $5.7 million for the three months ended March 31, 2021 compared to the same period in 2020 was primarily attributed to increases in principal amounts.

Three Months Ended March 31,

(in thousands)

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

The LEO Call Option was subject to remeasurement to fair value at each balance sheet date until the LEO Call Option either was exercised, terminated or had expired.

As a result of the notice of termination by LEO of the LEO call option, we have derecognized the LEO call option liability balance of $5.6 million as of March 2021.

The LEO Call Option income of $0.5 million for the three months ended March 31, 2020 was due to a change in fair value.

Liquidity and Capital Resources

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

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

As of March 31, 2021, we had cash, cash equivalents and marketable securities of $1,001.3 million.

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

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

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

As of March 31, 2021, our outstanding debt was $1,364.8 million, net of debt discounts and issuance costs and accretion.

Since inception, we have incurred significant operating losses.

For the years ended December 31, 2020, 2019 and 2018, we incurred net losses of $505.5 million, $288.6 million and $169.5 million, respectively.

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

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

For the three months ended March 31, 2021, we incurred net losses of $171.1 million.

We had an accumulated deficit as of March 31, 2021 of $1,037.5 million.

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

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

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

Our short-term and long-term liquidity requirements include contractual payments related to our 2029 Notes, 2027 Notes, term loans and obligations under our real estate leases.

We also have performance-based milestone compensation arrangements with certain employees and consultants, whose vesting is contingent upon meeting various regulatory and development milestones, with fixed monetary amounts known at inception that can be settled in the form of cash or equity at our sole election, upon achievement of each contingent milestone.

Additionally, we have certain contingent payment obligations under various license and collaboration agreements in which we are required to make milestone payments upon successful completion and achievement of certain intellectual property, clinical, regulatory and sales milestones.

We also enter into agreements in the normal course of business with CROs and other vendors for clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are generally cancelable upon written notice.

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

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

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Initial public offerings and at-the-market share issuances

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

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

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

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

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

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

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

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

On March 9, 2020, we issued an aggregate principal amount of $550.0 million of our 2027 Notes, pursuant to an Indenture dated March 9, 2020, or the Indenture, between BridgeBio and U.S.

Bank National Association, as trustee, or the Trustee, in a private offering to qualified institutional buyers, or the Note Offering, pursuant to Rule 144A under the Securities Act of 1933, as amended, or the Securities Act.

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

We have not issued any shares or received any proceeds from this offering through March 31, 2021.

On January 28, 2021, we issued an aggregate of $717.5 million principal amount of our 2029 Notes, pursuant to an Indenture dated January 28, 2021, or the 2029 Notes Indenture, between us and U.S.

Bank National Association, as trustee, or the 2029 Notes Trustee, in a private offering to qualified institutional buyers, or the 2021 Note Offering, pursuant to Rule 144A under the Securities Act of 1933, as amended, or 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, or the 2029 Notes Initial Purchasers, pursuant to the exercise in part of the 2029 Notes Initial Purchasers’ option to purchase $97.5 million principal amount of additional 2029 Notes.

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

The sale of 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.

We received net proceeds from the 2021 Note Offering of approximately $731.4 million, after deducting the 2029 Notes Initial Purchasers’ discount (there were no direct offering expenses borne by us for the 2029 Notes).

We used approximately $61.3 million of the net proceeds from the 2021 Note Offering to pay for the cost of the 2021 Capped Call Transactions and approximately $50.0 million to pay for the repurchase of shares of BridgeBio common stock described below.

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.

A holder of 202 9 Notes may convert all or any portion of its 202 9 Notes at its option at any time prior to the close of business on the business day immediately preceding November 1, 2028 in multiples of $ 1,000 only under the following circumstances:

During any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (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, or the measurement period, in which the “trading price” (as defined in the 2029 Notes Indenture) per $1,000 principal amount of 2029 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;

If we call such notes for redemption, at any time prior to the close of business on the second business day immediately preceding the redemption date;

Upon the occurrence of specified corporate events.

On or after November 1, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its 2029 Notes at any time, regardless of the foregoing.

The conversion rate will initially be 10.3050 shares of BridgeBio’s common stock per $1,000 principal amount of 2029 Notes (equivalent to an initial conversion price of approximately $97.04 per share of BridgeBio’s common stock, for a total of approximately 7,702,988 shares).

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

In addition, following certain corporate events that occur prior to the maturity date or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2029 Notes in connection with such a corporate event.

The maximum number of shares issuable should there be an increase in the conversion rate is 11,361,851 shares of BridgeBio’s common stock.

We may not redeem the 2029 Notes prior to February 6, 2026.

We may redeem for cash all or any portion of the 2029 Notes, at our option, on a redemption date occurring on or after February 6, 2026 and on or before the 41st scheduled trading day immediately before the maturity date, under certain circumstances.

No sinking fund is provided for the Notes.

If we undergo a fundamental change (as defined in the 2029 Notes Indenture), holders may require us to repurchase for cash all or any portion of their 2027 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2029 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The 2029 Notes Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the 2029 Notes Trustee or the holders of not less than 25% in aggregate principal amount of the 2029 Notes then outstanding may declare the entire principal amount of all the Notes plus accrued special interest, if any, to be immediately due and payable.

The 2029 Notes are our general unsecured obligations and rank senior in right of payment to all of our indebtedness that is expressly subordinated in right of payment to the 2029 Notes;

equal in right of payment with all of our liabilities that are not so subordinated, including our 2027 Notes;

effectively junior to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness;

and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.

On March 9, 2020, we issued an aggregate principal amount of $550.0 million of our 2027 Notes, pursuant to an Indenture dated March 9, 2020, or the 2027 Notes Indenture, between BridgeBio and U.S.

Bank National Association, as trustee, or the 2027 Notes Trustee, in a private offering to qualified institutional buyers, or the 2021 Note Offering, pursuant to the Securities Act.

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

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The 2027 Notes will mature on March 15, 2027, unless earlier converted or repurchased.

Upon maturity, the 2027 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

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

The 2027 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

We received net proceeds from the 2020 Note Offering of approximately $537.0 million, after deducting the 2027 Notes Initial Purchasers’ discount and offering expenses.

We used approximately $49.3 million of the net proceeds from the 2020 Note Offering to pay for the cost of the 2020 Capped Call Transactions, and approximately $75.0 million to pay for the repurchases of shares of our common stock.

We intend to use the remainder of the net proceeds from the Note Offering for working capital and other general corporate purposes, including for our commercial organization and launch preparations.

We intend to use the remainder of the net proceeds from the 2020 Note Offering for working capital and other general

corporate purposes, including for our commercial organization and launch preparations.

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

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

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

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

Upon the occurrence of specified corporate events.

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

If we undergo a fundamental change (as defined in the Indenture), holders may require us to repurchase for cash all or any portion of their 2027 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2027 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the 2027 Notes then outstanding may declare the entire principal amount of all the Notes plus accrued special interest, if any, to be immediately due and payable.

If we undergo a fundamental change (as defined in the 2027 Notes Indenture), holders may require us to repurchase for cash all or any portion of their 2027 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2027 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The 2027 Notes Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the 2027 Notes Trustee or the holders of not less than 25% in aggregate principal amount of the 2027 Notes then outstanding may declare the entire principal amount of all the Notes plus accrued special interest, if any, to be immediately due and payable.

The 2027 Notes are our general unsecured obligations and rank senior in right of payment to all of our indebtedness that is expressly subordinated in right of payment to the 2027 Notes;

equal in right of payment with all of our liabilities that are not so subordinated;

equal in right of payment with all of our liabilities that are not so subordinated, including our 2029 Notes;

effectively junior to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness;

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

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

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

payable monthly;

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

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

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

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

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

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

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

provided for 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 September 30, 2020), payable monthly,

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

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

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

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

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

Hercules Term Loan .

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 March 31, 2021.

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 2021 Capped Call and share repurchase transactions.

On April 13, 2021, we executed the Sixth Amendment to the Loan and Security Agreement, or the Hercules Loan Amendment, to amend our existing Hercules Term Loan with Hercules.

The Hercules Loan Amendment, among other things, (1) extends the interest-only period to June 1, 2024 (which may be further extended to June 1, 2025, subject to certain conditions), (2) extends the maturity date for the term loans to May 1, 2025 (which may be further extended to May 1, 2026, subject to certain conditions), (3) provides for an additional $25.0 million advance pursuant to the Hercules Loan Amendment (which we received upon execution of the Hercules Loan Amendment), (4) provides for an interest rate on the outstanding principal equal to the greater of (x) a floating interest rate linked to the prime rate as reported in the Wall Street Journal plus 4.40% and (y) 7.65%, and (5) provides for (a) an additional incremental loan in the amount of $70.0 million, available no later than June 15, 2022, (b) an additional incremental loan following the achievement of certain performance milestones in the amount of $40.0 million, available no later than September 15, 2022, and (c) an additional $75.0 million discretionary incremental tranche, subject to Hercules’ approval in its sole and absolute discretion, available no later than December 15, 2023.

We used a portion of the proceeds from the additional $25.0 million advance referred to above to prepay in full the $17.5 million principal under Eidos’ Tranche A Loan and outstanding interest payable under the SVB and Hercules Loan Agreement.

The Hercules Loan Amendment also provides us with greater flexibility to incur additional convertible debt and repurchase and/or redeem convertible debt, each subject to certain conditions set forth in the Hercules Loan Amendment.

Silicon Valley Bank and Hercules Loan Agreement

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

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

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

There have not been any additional draws on the other tranches as of March 31, 2021, including the Tranche B loan that was available until October 31, 2020.

The Tranche A loan bears interest at a fixed rate equal to the greater of either (i) 8.50% or (ii) 3.25% plus the prime rate as reported in The Wall Street Journal (8.50% as of March 31, 2021).

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

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

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

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

The Tranche A loan was prepaid in full in April 2021 as mentioned above.

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

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents

and restricted cash

Net increase in cash, cash equivalents and restricted cash

Net Cash Flows Used in Operating Activities

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

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

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

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

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

Net Cash Flows Used in Investing Activities

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

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

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

Net Cash Flows Provided by (Used in) Financing Activities

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

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

Contractual Obligations

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

Payments Due by Period

(in thousands)

Operating lease obligations

Obligation under a manufacturing agreement

Interest on 2027 Notes

Interest on term loans and final end of

term payments

Total contractual obligations

We have performance-based milestone compensation arrangements with certain employees, whose vesting is contingent upon meeting various regulatory and development milestones, with fixed monetary amounts known at inception that can be settled in the form of cash or equity at our sole election, upon achievement of each contingent milestone.

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

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

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

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

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

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

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

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

In addition, we enter into agreements in the normal course of business with CROs and other vendors for clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are generally cancelable upon written notice.

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

Net cash used in operating activities was $150.8 million for the three months ended March 31, 2021, consisting primarily of our net loss of $171.1 million, adjusted for non-cash items including $33.6 million in stock-based compensation expense and $5.6 million of income from the derecognition of the LEO Call Option liability, as well as $15.4 million net cash outflow related to changes in operating assets and liabilities.

The $15.4 million net cash outflow related to changes in operating assets and liabilities was attributed mainly to a decrease of $13.0 million in accrued compensation and benefits mainly due to timing of payments and an increase of $6.1 million in other assets due to prepayment of long-term directors and officers’ tail insurance arising from the Merger Transactions with Eidos.

The outflow in these operating assets and liabilities was partially offset by an increase of $6.1 million in accrued research and development liabilities mainly due to increases in our CROs’ and CMOs’ expenses for research activities.

Net cash used in operating activities was $83.9 million for the three months ended March 31, 2020, consisting primarily of our net loss of $104.1 million, adjusted for non-cash items such as $10.2 million in stock-based compensation expense and $1.8 million accretion of our 2027 Notes and term loans, partially offset by net cash inflow of $7.7 million related to changes in operating assets and liabilities.

The $7.7 million net cash inflow related to changes in operating assets and liabilities was attributed mainly to an increase of $8.6 million in accrued research and development liabilities and an increase of $4.2 million in accounts payable mostly due to increase in our CROs’ and CMOs’ expenses for research activities, and a decrease of $2.8 million in prepaid expenses and other current assets primarily due to the receipt of a receivable from a related party.

The increase in these operating assets and liabilities was partially offset by a decrease in accrued compensation and benefits of $7.7 million due to timing of payments.

Net Cash Flows Provided by (Used in) Investing Activities

Net cash used in investing activities was $282.1 million for the three months ended March 31, 2021, consisting primarily of purchases of marketable securities of $379.3 million, partially offset by $99.2 million in maturities of marketable securities

Net cash provided by investing activities was $38.0 million for the three months ended March 31, 2020, consisting primarily of $42.5 million maturities of marketable securities, partially offset by $4.5 million related to purchase of property and equipment.

Net Cash Flows Provided by Financing Activities

Net cash provided by financing activities was $547.9 million for the three months ended March 31, 2021, consisting primarily of the net proceeds from the issuance of our 2029 Notes of $731.4 million, offset by purchase of capped calls of $61.3 million and repurchase of our common stock of $50 million, both in relation to the issuance of our 2029 Notes.

We also used cash of $80.3 million to repurchase the noncontrolling interest of Eidos and pay for related direct transaction costs.

Net cash provided by financing activities was $439.2 million for the three months ended March 31, 2020, consisting primarily of the net proceeds from the issuance of our 2027 Notes of $537.6 million and at-the-market issuance of noncontrolling interest by Eidos of $24.1 million, offset by repurchase of our common stock of $75.0 million and purchase of capped calls of $49.3 million, both in relation to the issuance of our 2027 Notes.

Off-Balance Sheet Arrangements

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

Critical Accounting Polices and Estimates

Critical Accounting Polic i es

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

The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as revenues and expenses incurred during the reporting periods.

The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as revenues, if any, and expenses incurred during the reporting periods.

Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

There have been no significant changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in the section titled “Management’s Discussion and Analysis of Financial Condition and Operations” included in our Form 10-K for the year ended December 31, 2019, as filed with the SEC, except for the adoption in January 1, 2020, of Accounting Standards Codification 842 discussed in Note 1, as well as the accounting for the 2027 Notes and the Capped Call and Repurchase Transactions discussed in Note 9, and the 2020 Stock and Equity Award Exchange Program discussed in Note 14 in our unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2020.

JOBS Act and Emerging Growth Company Status

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

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

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

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

We will cease 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.

Recent Accounting Pronouncements

See Note 2, “Summary of Significant Accounting Policies—Recently Adopted Accounting Pronouncements” to our condensed consolidated financial statements appearing under Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.

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

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

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

government agency securities.

We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.

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

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

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

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

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

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

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

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

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

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

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

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis