What changed in this filing

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Item 9A. Controls and Procedures

2023-03-17 compared with 2022-03-03 · 157 added, 175 removed, 810 unchanged (29% of the section changed)

48 unchanged sentences

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of Gossamer Bio, Inc.

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, and stockholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

Adoption of ASU No.

As discussed in Note 1 to the consolidated financial statements, the Company changed its method for accounting for convertible instruments and contracts in an entity's own equity due to the adoption of Accounting Standards Update (ASU) No.

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) (“ASU 2020-06”) , effective January 1, 2022.

Basis for Opinion

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We corroborated the status of significant research and development activities through meetings with accounting and clinical project managers.

To verify the appropriate measurement of accrued research and development costs, we compared the costs for a sample of transactions against the related invoices and contracts, confirmed amounts incurred to-date with third-party service providers, and performed lookback analyses.

To verify the appropriate measurement of accrued research and development costs, we compared the costs for a sample of transactions against the related invoices and contracts, and confirmed amounts incurred to-date with third-party service providers.

We also examined a sample of subsequent payments to evaluate the completeness of the accrued research and development expenses.

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Total assets $ 272,450 $ 343,657

LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

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Accrued research and development expenses 15,626 16,205

Current portion of long-term debt 11,613 —

Accrued expenses and other current liabilities 20,532 20,410

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Accumulated deficit ( 1,032,223 ) ( 811,534 )

Accumulated other comprehensive income 45 599

Accumulated other comprehensive (deficit) income ( 574 ) 45

Total stockholders' equity 12,077 121,463

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Loss from operations ( 218,593 ) ( 216,124 ) ( 233,962 )

Other (expense) income

Other income (expense)

Interest income 1,583 761 3,442

Interest expense ( 13,880 ) ( 19,440 ) ( 12,666 )

Other income (expense) 799 ( 174 ) 2,207

Total other (expense) income, net ( 17,880 ) ( 9,398 ) 5,832

Other income (expense), net 1,512 799 ( 174 )

Total other expense, net ( 10,785 ) ( 17,880 ) ( 9,398 )

Net loss $ ( 229,378 ) $ ( 234,004 ) $ ( 243,360 )

Other comprehensive (loss) income:

Foreign currency translation, net of tax ( 329 ) 441 ( 12 )

Unrealized (loss) gain on marketable securities, net of tax ( 225 ) ( 100 ) 331

Foreign currency translation ( 544 ) ( 329 ) 441

Unrealized loss on marketable securities ( 75 ) ( 225 ) ( 100 )

Other comprehensive (loss) income ( 619 ) ( 554 ) 341

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GOSSAMER BIO, INC.

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

preferred stock Series A

preferred stock Series B

preferred stock Common stock Additional

Common stock Additional

capital Accumulated

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income (loss) Total

equity (deficit)

Shares Amount Shares Amount Shares Amount Shares Amount

Shares Amount

Balance as of December 31, 2019 61,635,477 $ 7 $ 686,390 $ ( 334,170 ) $ 258 $ 352,485

Issuance of common stock in connection with a public offering, net of underwriting discounts, commissions, and offering costs 9,433,963 1 117,093 — — 117,094

Conversion of convertible preferred stock into common stock ( 20,000,000 ) ( 29,200 ) ( 45,714,286 ) ( 79,615 ) ( 71,506,513 ) ( 229,552 ) 30,493,460 3 338,364 — — 338,367

Equity component of convertible note issuance — — 53,635 — — 53,635

Debt issuance costs attributable to convertible feature — — ( 109 ) ( 109 )

Vesting of restricted stock 2,557,375 — — — — —

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Stock-based compensation — — 38,748 — — 38,748

Issuance of common stock pursuant to Employee Stock Purchase Plan 113,286 — 1,300 — — 1,300

Other additional paid-in capital — — 16 — — 16

Net loss — — — ( 243,360 ) — ( 243,360 )

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Balance as of December 31, 2020 73,874,904 $ 8 $ 897,607 $ ( 577,530 ) $ 599 $ 320,684

Issuance of common stock in connection with a public offering, net of underwriting discounts, commissions, and offering costs — — — — — — 9,433,963 1 117,093 — — 117,094

Equity component of convertible note issuance — — — — — — — — 53,635 — — 53,635

Debt issuance costs attributable to convertible feature — — — — — — — — ( 109 ) — — ( 109 )

Vesting of restricted stock 906,037 — — — — —

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Issuance of common stock pursuant to Employee Stock Purchase Plan 160,790 — 1,315 — — 1,315

Other additional paid-in capital — — — — — — — — 16 — — 16

Issuance of common stock for restricted stock units vested 485,439 — — — — —

Net loss — — — ( 234,004 ) — ( 234,004 )

Other comprehensive income — — — — — — — — — — 341 341

Other comprehensive loss — — — — ( 554 ) ( 554 )

Balance as of December 31, 2021 75,752,664 $ 8 $ 932,944 $ ( 811,534 ) $ 45 $ 121,463

Cumulative-effect adjustment from change in accounting principle (See Note 2) — — ( 53,527 ) 8,689 — ( 44,838 )

Issuance of common stock in connection with a private offering, net of offering costs of $ 184

16,649,365 2 119,944 — — 119,946

Vesting of restricted stock 662,700 — — — — —

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Amortization of long-term debt discount and issuance costs 1,163 6,731 3,857

Amortization of premium on investments, net of accretion of discounts 339 98 ( 2,364 )

Net realized loss (gain) on investments — ( 256 ) ( 28 )

Amortization of discount (premium) on investments, net of accretion of discounts ( 1,405 ) 339 98

Net realized loss on investments — — ( 256 )

Loss on disposal of property and equipment — 20 —

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Proceeds from issuance of convertible senior notes, net — — 193,596

Proceeds from the issuance of long-term debt, net of debt discount and issuance costs $ 1,778

Proceeds from issuance of common stock in a private offering, net of offering costs 119,946 — —

Purchase of shares pursuant to Employee Stock Purchase Plan 1,214 1,315 1,300

Proceeds from the exercise of stock options 1,736 2,014 534

Principal repayments of long-term debt ( 5,806 ) — —

Net cash provided by financing activities 117,090 3,329 312,540

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Derecognition ROU lease assets obtained in exchange for operating lease liabilities — $ 1,650 $ —

Conversion of convertible preferred stock to common stock $ — $ — $ 338,367

Change in unrealized gain (loss) on marketable securities, net of tax $ ( 225 ) $ ( 100 ) $ 331

Change in unrealized loss on marketable securities, net $ ( 75 ) $ ( 225 ) $ ( 100 )

Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities $ 83 $ — $ 15

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Notes to Consolidated Financial Statements

Note 1— Organization and Basis of Presentation

Note 1— Description of Business

Gossamer Bio, Inc.

(including its subsidiaries, referred to as the “Company”) is a clinical-stage biopharmaceutical company focused on discovering, acquiring, developing and commercializing therapeutics in the disease areas of immunology, inflammation and oncology.

(including its subsidiaries, referred to as "we," "us," "our,", or the “Company”) is a clinical-stage biopharmaceutical company focused on discovering, acquiring, developing and commercializing therapeutics in the disease areas of immunology, inflammation and oncology.

The Company was incorporated in the state of Delaware on October 25, 2015 (originally as FSG Bio, Inc.) and is based in San Diego, California.

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As of December 31, 2022 and 2021, the Company had an accumulated deficit of $ 1,032.2 million and $ 811.5 million, respectively.

From the Company’s inception through the year ended December 31, 2021, the Company has funded its operations primarily through equity financings and debt issuance.

The Company raised $ 942.0 million from October 2017 through December 31, 2021 through Series A and Series B convertible preferred stock financings, a convertible note financing, its IPO, its Credit Facility (as defined in Note 5 below), and concurrent underwritten public offerings of its 5.00 % convertible senior notes, its 2027 Notes and common stock in May 2020.

From the Company’s inception through the year ended December 31, 2022, the Company has funded its operations primarily through equity and debt financings.

The Company raised $ 1,062.1 million from October 2017 through December 31, 2022 through the sale of Series A and Series B convertible preferred stock, issuance of convertible notes, its initial public offering ("IPO"), the Credit Facility and 2027 Notes (as defined in Note 5 below), and issuance of common stock in May 2020 and July 2022.

See Note 5 for additional information regarding the Credit Facility and the 2027 Notes.

The Company expects to continue to incur significant operating losses for the foreseeable future and may never become profitable.

As a result, the Company will need to raise capital through equity offerings, debt financings and other capital sources, including potential collaborations, licenses and other similar arrangements.

As a result, the Company will need to raise additional capital through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements.

Management believes that it has sufficient working capital on hand to fund operations through at least the next 12 months from the date these consolidated financial statements were available to be issued.

There can be no assurance that the Company will be successful in acquiring additional funding, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years.

The COVID-19 pandemic has caused significant business disruption around the globe.

The extent of the impact of COVID-19 on the Company’s operational and financial performance will depend on certain developments, including the duration and spread of the pandemic worldwide and the impact on the Company’s clinical trials, employees and vendors.

At this point, the degree to which COVID-19 may continue to impact the Company’s financial condition or results of operations remains uncertain.

A prolonged pandemic could have a material and adverse impact on financial results and business operations of the Company, including the timing and ability of the Company to complete certain clinical trials and other efforts required to advance the development of its product candidates and raise additional capital.

For example, certain sites temporarily closed enrollment in the Company's Phase 2 clinical trial in pulmonary arterial hypertension ("PAH") in 2020 as a result of the COVID-19 pandemic and related staffing shortages at sites and key vendors.

In addition, due to the challenges of enrolling patients worldwide posed by the COVID-19 pandemic and related staffing shortages at sites and key vendors, the Company has experienced and may continue to experience delays in enrollment of patients in its Phase 2 clinical trial of seralutinib, also known as GB002, in PAH, as well as delays in reporting data results from its ongoing trials.

As we continue to actively advance our programs, we are in close contact with our principal investigators and clinical sites and continue to assess any impacts of the ongoing COVID-19 global pandemic on our drug manufacturing, nonclinical activities, clinical trials, expected timelines and costs on an ongoing basis.

In addition, while we are continuing the clinical trials we have underway in sites across the globe, COVID-19 precautions and related staffing shortages at sites and key vendors have delayed, such as the temporary closure of enrollment in 2020 at certain sites in our ongoing Phase 2 trial for seralutinib in PAH, and may continue to delay completion of our current and future trials and may directly or indirectly impact the timeline for data readouts, initiation of, as well as monitoring, data collection and analysis and other related activities for some of our current and future clinical trials.

In light of the COVID-19 pandemic, and consistent with the FDA’s updated industry guidance for conducting clinical trials, clinical trials may be deprioritized in favor of treating patients who have contracted the virus or to prevent the spread of the virus.

The direct and indirect impacts of COVID-19 on our business could alter our forecasted timelines, which could have a material adverse effect on our business, results of operations and financial condition.

We will continue to evaluate the impact of the COVID-19 pandemic on our business.

Note 2— Summary of Significant Accounting Policies

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The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and 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.

The most significant estimates in the Company’s consolidated financial statements relate to the allocation of the 2027 Notes

into liability and equity components and accrued research and development expenses.

These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources.

The most significant estimates in the Company’s consolidated financial statements relate to accrued research and development expenses.

These estimates and assumptions are based on current facts, historical experience and various other factors believed

to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources.

Actual results could differ from those estimates.

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Accordingly, those investments with contractual maturities greater than one year from the date of purchase are classified as current assets on the accompanying consolidated balance sheets.

The Company’s marketable securities consist of commercial paper and corporate debt securities.

The Company’s marketable securities consist of U.S.

Treasury and agency securities, commercial paper and corporate debt securities.

Marketable securities are recorded at fair value and unrealized gains and losses are recorded within accumulated other comprehensive loss.

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Restricted Cash

Restricted cash as of December 31, 2021, and 2020 represents cash held as collateral for the Company's facility leases.

As of December 31, 2022, all restricted cash was released related to the Company's facility lease, which as of December 31, 2021 was cash held as collateral.

Concentrations of Credit Risk and Off-Balance Sheet Risk

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Property and Equipment, Net

Property and equipment, net, which consists mainly of office equipment and leasehold improvements, are carried at cost less accumulated depreciation.

Property and equipment, net, which consists mainly of lab equipment and leasehold improvements, are carried at cost less accumulated depreciation.

Depreciation is computed over the estimated useful lives of the respective assets, generally two to seven years , using the straight-line method.

Convertible Senior Notes

In accounting for the issuance of the 2027 Notes, the Company separated the 2027 Notes into liability and equity components.

The carrying amount of the liability component was calculated by measuring the fair value of similar debt

instruments that do not have associated convertible features.

The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2027 Notes.

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

The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense over the term of the 2027 Notes.

Prior to the adoption of ASU 2020-06, the Company accounted for the 2027 Notes as a liability and equity component.

The carrying amount of the liability component was calculated by measuring the fair value of similar debt instruments that do not have associated convertible features.

The carrying amount of the equity component representing the

conversion option was determined by deducting the fair value of the liability component from the par value of the 2027 Notes.

The equity component was not re-measured as long as it continued to meet the condition for equity classification.

The excess of the principal amount of the liability component over its carrying amount (“debt discount”) was amortized to interest expense over the term of the 2027 Notes.

The Company allocated the issuance costs incurred to the liability and equity components of the 2027 Notes based on their relative fair values.

Issuance costs attributable to the liability component were recorded as a reduction to the liability portion of the 2027 Notes and are being amortized to interest expense over the term of the 2027 Notes.

Issuance costs attributable to the liability component were recorded as a reduction to the liability portion of the 2027 Notes and were amortized to interest expense over the term of the 2027 Notes.

Issuance costs attributable to the equity component, representing the conversion option, were netted with the equity component in stockholders' equity.

Effective January 1, 2022 the Company adopted ASU 2020-06.

After adoption, the Company now accounts for the 2027 Notes as a single liability measured at amortized cost.

As the equity component is no longer required to be split into a separate component, the Company recorded an adjustment to reflect this update.

See Recent Accounting Pronouncements - Adopted for the impact of this adjustment upon adoption to the 2027 Notes.

In accordance with Accounting Standards Update (“ASU”) No.

2016-02, Leases (Topic 842), as adopted on January 1, 2019, the Company determines if an arrangement is a lease at inception.

2016-02, Leases (Topic 842), the Company determines if an arrangement is a lease at inception.

Operating leases are included in the balance sheet as right-of-use assets and operating lease liabilities at the present value of the lease payments calculated using the Company’s incremental borrowing rate, unless the implicit rate is readily available.

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In process research and development

In process research and development costs relate to upfront payment to Aadi in connection with the amendment to the in-license agreement of GB004 and a milestone payment to Pulmokine for the initiation of the Phase 2 clinical trial for seralutinib.

In process research and development costs relate to upfront payment to Aadi Bioscience, Inc.

in connection with the amendment to the in-license agreement of GB004 and a milestone payment to Pulmokine for the initiation of the Phase 2 clinical trial for seralutinib.

Costs related to filing and pursuing patent applications are expensed as incurred, as recoverability of such expenditures is uncertain.

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When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority.

The determination as to whether the tax benefit will

more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

Deferred tax assets and liabilities reflect the future tax consequences of the differences between the financial reporting and tax bases of assets and liabilities using current enacted tax rates.

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Foreign exchange transaction gains and losses are included in other income (expense) in the Company’s consolidated statement of operations and comprehensive loss.

Recent Accounting Pronouncements—To Be Adopted

Recent Accounting Pronouncements—Adopted

In August 2020, the FASB issued ASU 2020-06, Debt:

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This guidance is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those years, with early adoption permitted only as of annual reporting periods beginning after December 15, 2020.

The Company plans to adopt ASU 2020-06 on January 1, 2022 using the modified retrospective approach, and accordingly the Company will record an adjustment that reflects the 2027 Notes as if the embedded conversion feature had not been separated.

The impact upon adoption on the Consolidated Balance Sheets is anticipated to be an increase of approximately $ 44.8 million in convertible senior notes, net, a write-off of approximately $ 9.4 million in deferred income tax liabilities and a decrease of approximately $ 53.5 million in additional paid-in capital.

In addition, upon adoption, there is an adjustment to increase the beginning balance of retained earnings on the Consolidated Balance Sheets for previously recognized interest expense, of approximately $ 8.7 million for amortization of debt discount related to the carrying value of the embedded conversion feature upon issuance.

There will be no impact to the Company’s net loss per share calculation.

Debt for further information regarding the 2027 Notes.

The Company adopted ASU 2020-06 on January 1, 2022 using the modified retrospective approach, and accordingly the Company recorded an adjustment that reflects the 2027 Notes as if the embedded conversion feature had not been separated.

The impact upon adoption on the Consolidated Balance Sheets was an increase of approximately $ 44.8 million in convertible senior notes, net, a write-off of $ 9.4 million in deferred income tax liabilities and a decrease of $ 53.5 million in additional paid-in capital.

In addition, upon adoption, there was an adjustment of $ 8.7 million to increase the beginning balance of accumulated deficit on the Consolidated Balance Sheets for previously recognized interest expense related to amortization of debt discount related to the carrying value of the embedded conversion feature upon issuance.

There was no impact to the Company’s net loss per share calculation.

See Note 5 "Indebtedness" for further information regarding the 2027 Notes.

Net Loss Per Share

Basic net loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period.

The Company uses the if-converted method for assumed conversion of the 2027 Notes to compute the weighted average shares of common stock outstanding for diluted net loss per share.

Diluted net loss per share excludes the potential impact of the Company’s common stock options and unvested shares of restricted stock and the potential shares issuable upon conversion of the 2027 Notes

because their effect would be anti-dilutive due to the Company’s net loss.

The Company uses the if-converted method for assumed conversion of the 2027 Notes to compute the weighted average shares of common stock

outstanding for diluted net loss per share.

Since the Company had a net loss in each of the periods presented, basic and diluted net loss per common share are the same.

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Non-vested shares under restricted stock grants 1,350,035 2,561,219 3,330,821

Total potentially dilutive securities 31,159,100 24,317,779 25,053,803

Note 3— Accrued Expenses and Other Current Liabilities

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Years Ended December 31,

Accrued compensation $ 11,916 $ 12,194

Accrued compensation and benefits $ 13,534 $ 11,916

Operating lease liabilities 2,983 2,902

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Accrued accounting fees 521 154

Accrued in process research and development — 225

Accrued other 945 839

Total accrued expenses $ 20,410 $ 20,711

Note 4— Fair Value Measurements

Total accrued expenses and other current liabilities $ 20,532 $ 20,410

Note 4— Fair Value Measurements and Available for Sale Investments

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis.

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Money market funds $ 54,662 $ 54,662 $ — $ —

Treasury and agency securities 31,458 31,458 — —

Commercial paper 134,954 — 134,954 —

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Money market funds $ 139,794 $ 139,794 $ — $ —

Treasury and agency securities 18,280 18,280 — —

Commercial paper 113,939 — 113,939 —

Corporate debt securities 37,873 — 37,873 —

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Fair Value of Other Financial Instruments

As of December 31, 2021 and 2020, the carrying amounts of the Company’s financial instruments, which include cash, restricted cash, prepaid and other current assets, interest receivable, accrued research and development expenses, accounts payable and accrued expenses and other current liabilities, approximate fair values because of their short maturities.

Interest receivable as of December 31, 2021 and 2020 was $ 0.2 million and $ 0.2 million, respectively, and is recorded as a component of prepaid expenses and other current assets on the consolidated balance sheets.

As of December 31, 2022 and 2021, the carrying amounts of the Company’s financial instruments, which include cash, restricted cash, prepaid and other current assets, interest receivable, accrued research and development expenses, accounts payable and accrued expenses and other current liabilities, approximate fair values because of their short-term maturities.

There was no significant interest receivable as of December 31, 2022.

Interest receivable as of December 31, 2021 was $ 0.2 million, and is recorded as a component of prepaid expenses and other current assets on the consolidated balance sheets.

The Company believes that its Credit Facility bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics and, accordingly, the carrying value of the Credit Facility approximates fair value.

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The Company invests its excess cash in U.S.

Treasury and agency securities and debt instruments of corporations and commercial obligations, which are classified as available-for-sale investments.

Treasury and agency securities, corporate debt securities, and commercial paper, which are classified as available-for-sale investments.

These investments are carried at fair value and are included in the tables below.

The Company evaluates securities with unrealized losses to determine whether such losses, if any, are due to credit-related factors.

Realized gains and losses are calculated using the specific identification method and recorded in other income (expense) in the Company’s consolidated statement of operations and comprehensive loss.

The Company does not generally intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

Realized gains and losses are calculated using the specific identification method and recorded in other income (expense) in the Company's consolidated statements of operations and comprehensive loss.

The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recover of their amortized cost basis.

The aggregate market value, cost basis, and gross unrealized gains and losses of available-for-sale investments by security type, classified in marketable securities and long-term investments as of December 31, 2022 and 2021 are as follows (in thousands):

As of December 31, 2022

U.S Treasury and agency securities $ 31,445 $ 13 $ — $ 31,458

Corporate debt securities 8,876 — ( 38 ) 8,838

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Corporate debt securities $ 37,921 $ — $ ( 48 ) $ 37,873

Commercial paper 103,942 — — 103,942

Total marketable securities $ 141,863 $ — $ ( 48 ) $ 141,815

As of December 31, 2021 and 2020, the Company classified $ 10.0 million and $ 18.3 million, respectively, of assets with original maturities of 90 days or less as cash equivalents.

As of December 31, 2022 and 2021, the Company classified $ 31.5 million and $ 10.0 million, respectively, of assets with original maturities of 90 days or less as cash and cash equivalents.

At each reporting date, the Company performs an evaluation of impairment to determine if any unrealized losses are due to credit-related factors.

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Credit Facility

On May 2, 2019, the Company entered into a credit, guaranty and security agreement, as amended on September 18, 2019 and July 2, 2020 (the “Credit Facility”), with MidCap Financial Trust (“MidCap”), as agent and lender, and the additional lenders party thereto from time to time (together with MidCap, the “Lenders”), pursuant to which the Lenders, including affiliates of MidCap and Silicon Valley Bank, agreed to make term loans available to the Company for working capital and general business purposes, in a principal amount of up to $ 150.0 million in term loan commitments, including a $ 30.0 million term loan that was funded at the closing date, with the ability to access the remaining $ 120.0 million in two additional tranches (each $ 60.0 million), subject to specified availability periods, the achievement of certain clinical development milestones, minimum cash requirements and other customary conditions.

The Company, GB001, Inc., GB002, Inc., and GB004, Inc., each wholly-owned subsidiaries of the Company, are designated as co-borrowers to the Credit Facility, whereas GB003, Inc., GB005, Inc., GB006, Inc., GB007, Inc., GB008, Inc., and Gossamer Bio Services, Inc., each wholly-owned subsidiaries of the Company, are designated as guarantors.

The remaining two tranches are available no earlier than the satisfaction of the applicable funding conditions, including the applicable clinical development milestones, and no later than December 31, 2022.

As of December 31, 2021, no other tranches under the Credit Facility were available to be drawn.

On May 2, 2019, the Company entered into a credit, guaranty and security agreement, as amended on September 18, 2019, July 2, 2020 and December 7, 2022 (the “Credit Facility”), with MidCap Financial Trust (“MidCap”), as agent and lender, and the additional lenders party thereto from time to time (together with MidCap, the “Lenders”), pursuant to which the Lenders, including affiliates of MidCap and Silicon Valley Bank, agreed to make term loans available to the Company for working capital and general business purposes, in a principal amount of up to $ 150.0 million in term loan commitments, including a $ 30.0 million term loan that was funded at the closing date, with the ability to access the remaining $ 120.0 million in two additional tranches (each $ 60.0 million), subject to specified availability periods, the achievement of certain clinical development milestones, minimum cash requirements and other customary conditions.

The Company did not achieve the clinical development milestone required to access one of the $ 60.0 million tranches and access to the other $ 60.0 million tranche expired on December 31, 2021.

and Gossamer Bio Services, Inc., each wholly-owned subsidiaries of the Company, are designated as

The Credit Facility is secured by substantially all of the Company’s and its domestic subsidiaries’ personal property, including intellectual property.

Each term loan under the Credit Facility bears interest at an annual rate equal to the sum of (i) one-month LIBOR (customarily defined, with a change to prime rate if LIBOR funding becomes unlawful or impractical) plus (ii) 7.00 %, subject to a LIBOR floor of 2.00 %.

Each term loan under the Credit Facility bears interest at an annual rate equal to the sum of (i) the secured overnight financing rate (“SOFR”), plus corresponding spread, plus (ii) 7.00 %, subject to a SOFR floor of 2.00 %.

The borrower is required to make interest-only payments on the term loan for all payment dates prior to July 1, 2022.

The term loans under the Credit Facility will begin amortizing on July 1, 2022, with equal monthly payments of principal plus interest being made by the Company to the Lenders in consecutive monthly installments following such interest-only period until the Credit Facility matures on January 1, 2025.

The term loans under the Credit Facility began amortizing on July 1, 2022, with equal monthly payments of principal plus interest being made by the Company to the Lenders in consecutive monthly installments following such interest-only period until the Credit Facility matures on January 1, 2025.

Upon final repayment of the term loans, the borrower must pay an exit fee of 1.75 % of the amount borrowed under the Credit Facility, less any partial exit fees previously paid.

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At the borrower’s option, the borrower may prepay the outstanding principal balance of the term loan in whole or in part, subject to a prepayment fee of 3.00 % of any amount prepaid if the prepayment occurs through and including the first anniversary of the second amendment effective date, 2.00 % of the amount prepaid if the prepayment occurs after the first anniversary of the second amendment effective date through and including the second anniversary of the second amendment effective date, and 1.00 % of any amount prepaid after the second anniversary of the second amendment effective date and prior to January 1, 2025.

On December 7, 2022, the Company entered into the Third Amendment to the Credit Facility, with no change to the principal or repayment terms, except with respect to the interest rate applicable to the Credit Facility, with the implementation of a forward-looking term rate based on SOFR as the replacement of LIBOR as the benchmark interest rate.

The Company accounted for the change in reference rate as a not substantial modification as allowed under ASU 2020-04

The Credit Facility includes affirmative and negative covenants applicable to the Company and certain of its subsidiaries.

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Food and Drug Administration ("FDA") and regulatory events, failure to remain registered with the SEC and listed for trading on Nasdaq, the occurrence of a material adverse change, the occurrence of a default under a material agreement reasonably expected to result in a material adverse change, the occurrence of certain defaults under certain other indebtedness in an amount greater than $ 2.5 million and the occurrence of certain defaults under subordinated indebtedness and convertible indebtedness.

Long-term debt as of December 31, 2021 consisted of the following (in thousands):

Debt consisted of the following (in thousands):

December 31, 2022

Term loan $ 30,000

Debt discount and issuance costs ( 921 )

Long-term debt $ 29,079

Debt, current portion $ 11,613

Debt, non-current portion 12,581

Total debt 24,194

unamortized debt discount and issuance costs ( 593 )

Debt, net $ 23,601

The scheduled future minimum principal payments are as follows (in thousands):

December 31, 2022

2023 $ 11,613

Total $ 24,194

1 unchanged sentence

On May 21, 2020, the Company issued $ 200.0 million aggregate principal amount of 5.00 % convertible senior notes due 2027 in a public offering (the "2027 Notes").

The 2027 Notes were registered pursuant to the Company’s Shelf Registration Statement (as defined in Note 8 below).

The 2027 Notes were registered pursuant to the Company’s shelf registration statement on Form S-3 filed with the SEC on April 10, 2020.

The interest rate on the 2027 Notes is fixed at 5.00 % per annum.

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As of December 31, 2022, the Company was in compliance with these covenants.

In the case of certain events of bankruptcy, insolvency or reorganization, the principal amount of the 2027 Notes together with accrued and unpaid interest, if any, thereon will automatically become and be immediately due and payable.

In the case of

certain events of bankruptcy, insolvency or reorganization, the principal amount of the 2027 Notes together with accrued and unpaid interest, if any, thereon will automatically become and be immediately due and payable.

As of December 31, 2022 and 2021, there were no events or market conditions that would allow holders to convert the 2027 Notes.

When the 2027 Notes become convertible within 12 months of the balance sheet date, the carrying value of the 2027 Notes will be reclassified to short-term.

In accounting for the issuance of the 2027 Notes, the Company separated the 2027 Notes into liability and equity components.

In accounting for the issuance of the 2027 Notes prior to the adoption of ASU 2020-06, the Company separated the 2027 Notes into liability and equity components.

The carrying amount of the liability component was calculated by measuring the fair value of similar debt instruments that do not have associated convertible features.

The carrying amount of the equity component representing the conversion option was $ 53.5 million and was determined by deducting the fair value of the liability component from the par

value of the 2027 Notes.

The carrying amount of the equity component representing the conversion option was $ 53.5 million and was determined by deducting the fair value of the liability component from the par value of the 2027 Notes.

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

The debt discount is amortized to interest expense over the term of the 2027 Notes at an effective interest rate of 11.17 % over the contractual terms of the 2027 Notes.

As of January 1, 2022 the Company adopted ASU 2020-06, see Note 2 for the impact upon adoption to the 2027 Notes.

In accounting for the debt issuance costs of $ 0.4 million related to the 2027 Notes, the Company allocated the total amount incurred to the liability and equity components of the 2027 Notes based on their relative fair values.

Issuance costs attributable to the liability component were $ 0.3 million and will be amortized to interest expense using the effective interest method over the contractual terms of the 2027 Notes.

Issuance costs attributable to the liability component were $ 0.3 million and were amortized to interest expense using the effective interest method over the contractual terms of the 2027 Notes.

Issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity.

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Years Ended December 31,

December 31, 2021 December 31, 2020 December 31, 2019

2022 2021 2020

Contractual interest expense $ 10,000 $ 9,972 $ 6,139

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Total interest expense related to the 2027 Notes $ 10,835 $ 16,368 $ 9,711

Note 6— License and Asset Acquisitions

Note 6— Licenses, Asset Acquisitions and Contingent Consideration

The following purchased assets were accounted for as asset acquisitions as substantially all of the fair value of the assets acquired were concentrated in a group of similar assets and/or the acquired assets were not capable of producing outputs due to the lack of employees and early stage of development.

Because the assets had not yet received regulatory approval, the fair value attributable to these assets was recorded as in process research and development (“IPR&D”) expenses in the Company’s consolidated statement of operations for the years ended December 31, 2021, 2020, and 2019.

Because the assets had not yet received regulatory approval, the fair value attributable to these assets was recorded as in process research and development (“IPR&D”) expenses in the Company’s consolidated statements of operations and comprehensive loss for the years ended December 31, 2022, 2021, and 2020.

The Company accounts for contingent consideration payable upon achievement of certain regulatory, development or sales milestones in such asset acquisitions when the underlying contingency is met.

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The development activities cannot be performed without significant cost and effort by the Company.

The agreement will remain in effect from the effective date, unless terminated earlier, until, on a licensed product-by-licensed product and country-by-country

basis, the later of ten years from the date of first commercial sale or when there is no longer a valid patent claim covering such licensed product or specified regulatory exclusivity for the licensed product in such country.

The Company is obligated to make future development and regulatory milestone payments of up to $ 58.0 million, commercial milestone payments of up to $ 45.0 million, and sales milestone payments of up to $ 190.0 million.

The agreement will remain in effect from the effective date, unless terminated earlier, until, on a licensed product-by-licensed product and country-by-country basis, the later of ten years from the date of first commercial sale or when there is no longer a valid patent claim covering such licensed product or specified regulatory exclusivity for the licensed product in such country.

The Company is obligated to make future development and regulatory milestone payments of up to $ 58.0 million, which includes a payment of $ 10.0 million due upon initiation of the first Phase 3 clinical trial, commercial milestone payments of up to $ 45.0 million, and sales milestone payments of up to $ 190.0 million.

The Company is also obligated to pay tiered royalties on sales for each licensed product, at percentages ranging from the mid-single digits to the high single-digits.

In addition, if the Company chooses to sublicense or assign to any third parties its rights under the agreement with respect to a licensed product, or the Company’s seralutinib operating subsidiary undergoes a change of control, the Company must pay to Pulmokine a specified percentage of all revenue to be received in connection with such transaction.

The Company made an upfront payment of $ 5.5 million in October 2017.

As of December 31, 2020, the Company accrued a milestone payment of $ 5.0 million in connection with the initiation of the first Phase 2 clinical trial of seralutinib, which was paid in January 2021.

As of December 31, 2021, no other milestones had been accrued as the underlying contingencies had not yet been met.

License from Aadi Biosciences, Inc.

On June 24, 2018, the Company entered into a license agreement with Aerpio Pharmaceuticals, Inc., now known as Aadi Biosciences, Inc.

("Aadi"), under which the Company was granted an exclusive worldwide license and sublicense to certain intellectual property rights owned or controlled by Aadi to develop and commercialize GB004, and certain other related compounds for all applications.

The Company made an upfront payment of $ 20.0 million in June 2018, which represented the purchase consideration for an asset acquisition.

On May 11, 2020, the Company entered into an amendment to the license agreement with Aadi pursuant to which the Company made an upfront payment of $ 15.0 million to Aadi for a reduction in future milestone payments and royalties.

Under the amended license agreement, the Company is obligated to make future approval milestone payments of up to $ 40.0 million and a sales milestone payment of $ 50.0 million.

The Company also has the right to sublicense its rights under the license agreement, subject to certain conditions.

The Company is also obligated to pay tiered royalties on sales for each licensed product, at percentages ranging from low- to mid-single digits, subject to certain customary reductions.

Aadi retains its twenty percent ( 20.00 %) participation right on a disposition of GB004.

As of December 31, 2021and 2020, no milestones had been accrued as the underlying contingencies had not yet been met.

Adhaere Pharmaceuticals, Inc.

Acquisition (GB1275)

On September 21, 2018, the Company acquired Adhaere Pharmaceuticals, Inc.

("Adhaere") pursuant to a merger agreement for an upfront payment of $ 7.5 million in cash, and with the acquisition acquired the rights to GB1275 and certain backup compounds.

The Company is obligated to make future regulatory, development and sales milestone payments of up to $ 62.0 million and pay tiered royalties on worldwide net sales, at percentages ranging from low to mid-single digits, subject to customary reductions.

The Company recorded IPR&D of $ 7.5 million in connection with the acquisition of Adhaere.

In May 2019, the Company made a milestone payment of $ 1.0 million in connection with the filing of the Investigational New Drug application for the GB1275 program.

In December 2020, the Company accrued a milestone payment of $ 5.0 million in connection with the initiation of the first Phase 2 clinical trial of seralutinib, which was paid in January 2021.

As of December 31, 2022 and 2021, no other milestones had been accrued as the underlying contingencies had not yet been met.

4 unchanged sentences

GB004 — — 15,000

GB1275 — — 1,000

Other preclinical programs 65 75 3,380

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Accrued compensation 2,514 2,238 2,137

Section 174 21,840 — —

Other 37 18 16

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As of December 31, 2022, the Company had federal and state NOL carryforwards of approximately $ 494.6 million and $ 1.6 million, respectively.

The federal and state NOL carryforwards that are subject to expiration will begin to expire in 2034, unless previously utilized.

The federal NOL generated after 2017 of $ 457.5 million can be carried forward indefinitely but may only be used to offset up to 80 % of future taxable income each year.

The federal NOL carryforwards generated prior to January 1, 2018 begin to expire in 2034, unless previously utilized.

The federal NOLs generated in taxable years beginning after December 31, 2017 of $ 491.6 million can be carried forward indefinitely but may only be used to offset up to 80 % of future taxable income each year.

The California NOL carryforwards begin to expire in 2036.

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Provision for income taxes — % — % — %

The NOL and credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities.

Under Section 382 and 383 of the Code, the NOL and credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders (or groups of stockholders) in excess of 50 percentage points over a rolling three-year period.

Similar rules may apply under state and foreign tax laws.

The NOL carryforward may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions if the Company experienced one or more ownership changes which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax respectively.

In general, an ownership change as defined by Sections 382 and 383, results from the transactions increasing ownership of certain stockholders or public groups in the stock of the corporation of more than 50 percentage points over a three-year period.

In connection with the Company's IPO in February 2019, the Company experienced an ownership change for the purposes of Section 382 and 383 of the Code.

The ownership change did not result in the forfeiture of any NOLs or credits generated prior to this date.

Consequently, the Company’s federal and state NOLs and tax credits generated through February 2019 will be subject to annual limitations.

However, the Company’s NOLs and tax credits are not expected to expire unused as a result of such annual limitations, assuming we otherwise have taxable income or income tax liabilities in future periods.

If a change in ownership occurs in the future as a result of changes in the Company’s stock ownership, many of which are outside the Company’s control, the NOL and credit carryforwards could be subject to further annual limitations.

If the Company earns taxable income, such annual limitations could result in increased future tax liability to the Company and its future cash flows could be adversely affected.

The Company has recorded a full valuation allowance related to its NOLs and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.

The Company files income tax returns in the United States, California, Ireland, and Luxembourg.

If additional ownership changes have occurred, or additional ownership changes occur, the NOL and tax credits carryforwards could be eliminated or restricted.

If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance.

Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s effective tax rate.

The Company files income tax returns in the United States, California, Florida, Ireland, and Luxembourg.

Due to the Company’s losses incurred, the Company is subject to the income tax examination by authorities since inception.

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Note 8— Stockholders’ Equity

In connection with the Company’s IPO, the outstanding shares of the Company’s Series Seed, Series A, and Series B convertible preferred stock automatically converted into 30,493,460 shares of common stock.

Each share of common stock is entitled to one vote.

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The shares sold in the offering were registered pursuant to the Company’s Shelf Registration Statement.

On March 3, 2022, the Company filed a universal shelf registration statement on Form S-3 covering the offering from time to time of common stock, preferred stock, debt securities, warrants and units, which registration statement became automatically effective on March 3, 2022.

Private Placement Financing

On July 15, 2022, we completed a private placement of 16,649,365 shares of our common stock at purchase price of $ 7.21 per share.

The gross proceeds for the private placement were approximately $ 120.1 million, before deducting offering expenses.

On August 9, 2022, we filed a registration statement on Form S-3 registering the shares of common stock issued in the private placement, which registration statement became automatically effective on August 9, 2022.

Shares of Common Stock Subject to Repurchase

On December 3, 2015, the Company issued 9,160,888 shares of common stock as founder shares for services rendered to the Company, valued at $ 0.0001 par value per share, for a total of approximately $ 4,100 (the “founder shares”).

On January 4, 2018, incremental vesting conditions were placed on the previously issued founder shares.

January 4, 2018, incremental vesting conditions were placed on the previously issued founder shares.

Fifty percent of the previously issued founder shares vested on January 4, 2018, and the remaining founder shares are subject to vesting restrictions over a period of five years .

3 unchanged sentences

In addition, on September 6, 2018, the Company issued 1,795,023 shares of common stock to the founders for services rendered to the Company, valued at $ 9.63 per share, with an additional 1,795,023 shares of restricted stock subject to the same vesting restrictions and vesting period as the founder shares.

For the year ended December 31, 2021, 25,383 shares were forfeited due to termination of employment.

For the year ended December 31, 2022, no shares were forfeited due to termination of employment.

Any shares subject to repurchase by the Company are not deemed, for accounting purposes, to be outstanding until those shares vest.

As such, the Company recognizes the measurement date fair value of the restricted stock over the vesting period as compensation expense.

As of December 31, 2021, 2020 and 2019, 717,927 shares, 1,649,348 shares and 4,648,526 shares of common stock, respectively, were subject to repurchase by the Company.

As of December 31, 2022, 55,227 shares of common stock were subject to repurchase by the Company.

The unvested stock liability related to these awards is immaterial to all periods presented.

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2019 Employee Stock Purchase Plan

In January 2019, the Company’s board of directors and stockholders approved and adopted the ESPP.

In January 2019, the Company’s board of directors and stockholders approved and adopted the 2019 Employee Stock Purchase Plan (the "ESPP").

The ESPP became effective as of February 6, 2019, the day prior to the effectiveness of the registration statement filed in connection with the IPO.

2 unchanged sentences

In addition, the number of shares of common stock available for issuance under the ESPP will be automatically increased on the first day of each calendar year during the first ten-years of the term of the ESPP, beginning with January 1, 2020 and ending with January 1, 2029, by an amount equal to 1 % of the outstanding number of shares of the Company’s common stock on December 31 of the preceding calendar year or such lesser amount as determined by the Company’s board of directors.

During the year ended December 31, 2021, 160,790 shares were issued pursuant to the ESPP.

During the years ended December 31, 2022 and 2021, 157,858 shares and 160,790 shares were issued pursuant to the ESPP, respectively.

As of December 31, 2022, an aggregate of 2,450,855 shares of common stock were available for issuance under the ESPP.

5 unchanged sentences

The fair value of each employee and non-employee stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model.

The Company estimates its expected volatility based on the historical volatility of a publicly traded set of peer companies.

The Company uses its own volatility to the extent it has sufficient trading history, and for awards in which sufficient trading history is not available, a peer group is used.

Due to the lack of historical exercise history, the expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method for awards.

58 unchanged sentences

Nonvested at December 31, 2019 4,648,526 $ 3.98

Granted 2,003,900 10.96

Vested ( 2,557,377 ) 4.00

11 unchanged sentences

Stock-Based Compensation Expense

Stock-based compensation expense has been reported in the Company’s consolidated statements of operations as follows (in thousands):

Stock-based compensation expense has been reported in the Company’s consolidated statements of operations and comprehensive loss as follows (in thousands):

Year Ended December 31,

2 unchanged sentences

General and administrative 18,138 13,065 19,751

Total stock-based compensation $ 32,008 $ 38,748 $ 20,819

Total stock-based compensation expense $ 42,553 $ 32,008 $ 38,748

In connection with the departure of the Company's former President and Chief Executive Officer in November 2020, the Company recognized $ 5.5 million of incremental stock-based compensation expense during the year ended December 31, 2020, due to a modification of the executive's existing restricted stock award, which included 18 months of accelerated vesting of the executive's outstanding restricted stock in accordance with the terms of the executive's transition agreement.

14 unchanged sentences

Property and equipment, net $ 3,981 $ 5,320

Depreciation expense for the years ended December 31, 2021, 2020 and 2019 was approximately $ 1.7 million, $ 1.4 million and $ 0.9 million, respectively, and was recorded in general and administrative expense and research and development expense, respectively, on the consolidated statements of operations.

Depreciation expense for the years ended December 31, 2022, 2021 and 2020 was approximately $ 1.8 million, $ 1.7 million and $ 1.4 million, respectively, and was recorded in general and administrative expense and research and development expense, respectively, on the consolidated statements of operations and comprehensive loss.

Note 11— Commitments and Contingencies

The Company subleases certain office and laboratory space under a non-cancelable operating lease expiring in January 2025 for the initial leased space and for the expansion space leased pursuant to an amendment to the lease agreement entered into in August 2018.

In February 2022, the Company exercised its renewal option to extend the term of the expansion space until January 2025.

The sublease agreement included options to extend for the entire premises through October 2028.

1 unchanged sentence

The period covered by the options was not included in the non-cancellable lease term as it was not determined to be reasonably certain to be executed.

In February 2022, the Company exercised its renewal option to extend the term of the expansion space until January 2025.

The lease is subject to charges for common area maintenance and other costs, and base rent is subject to an annual 3 % increase each subsequent year.

Costs determined to be variable and not based on an index or rate were not included in the measurement of the operating lease liabilities.

In November 2019, the Company entered into an additional non-cancelable lease agreement for certain office and laboratory space (the “Permanent Space”) in San Diego, California, commencing on May 1, 2020 and expired on December 31, 2021.

The lease agreement included a lease for temporary space commencing on January 1, 2020 and expired on the commencement date of the lease of the Permanent Space.

The monthly base rent for the permanent and temporary space was $ 63,425 and $ 28,745 , respectively.

The lease was subject to charges for common area maintenance and other costs, and base rent is subject to an annual 3 % increase each subsequent year.

In June 2020, the Company entered into a sublease agreement for the Permanent Space with a third party.

The sublease commenced on July 1, 2020 and expired on December 31, 2021.

The sublessee paid the monthly base rent of $ 63,425 , subject to an annual 3 % increase, and was obligated to pay for common area maintenance and other costs.

The sublessee received a 6 months base rent abatement.

The Company determined that there was no impairment on the original right-of-use asset and continued to account for the Permanent Space as it did before the commencement of the sublease.

The Company recognized $ 1.1 million and $ 0.2 million in sublease income for the years ended December 31, 2021 and 2020, respectively.

On July 29, 2020, the Company entered into a lease assignment agreement, whereby it became the assignee to a lease for certain office and laboratory space in Ann Arbor, Michigan.

On August 4, 2021, the Company entered into a lease assignment agreement, whereby it assigned the lease to another assignee.

The Company derecognized the related operating lease obligation and right-of-use asset of $ 1.7 million.

Monthly rent expense is recognized on a straight-line basis over the term of the leases.

7 unchanged sentences

Total lease cost $ 3,142 $ 4,082 $ 3,693

Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2021 and 2020 was $ 4.0 million and $ 3.6 million, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities as of December 31, 2022 and 2021 was $ 3.2 million and $ 4.0 million, respectively.

Gross future minimum annual rental commitments as of December 31, 2022, were as follows (in thousands):

8 unchanged sentences

For the years ended December 31, 2022, 2021 and 2020, the Company recorded approximately $ 3.3 million, $ 4.3 million and $ 4.0 million, respectively, in rent expense.

Gossamer Bio, Inc., et.

On April 3, 2020, Scott Kuhne, individually and on behalf of all others similarly situated, filed a putative class action lawsuit against the Company, certain of its executive officers and directors, and the underwriters of its IPO in the United States District Court for the Southern District of California (Case No.

3:20-cv-00649-DMS-DEB).

The second amended complaint was filed on November 20, 2020.

The complaint was filed on behalf of all investors who purchased the Company's securities pursuant to or traceable to the Company's February 8, 2019 IPO.

The complaint alleged that the Company, certain of its executive officers and directors, and the underwriters of its IPO made false and/or misleading statements and failed to disclose material adverse facts about its business, operations and prospects in violation of Sections 11 and 15 of the Securities Act of 1933, as amended.

The plaintiff sought damages, interest, costs, attorneys’ fees, and other unspecified equitable relief.

The Company moved to dismiss the complaint on January 19, 2021.

On April 19, 2021, the Court granted the Company's motion to dismiss in substantial part without leave to amend, and denied the motion to dismiss as to single claim.

On October 29, 2021, the parties informed the Court that they had reached a settlement in principle, and the Court vacated all deadlines.

The parties entered a settlement agreement on February 1, 2022.

Pursuant to the agreement, the Company has agreed to pay approximately $ 2.4 million, in exchange for customary releases and settlement terms.

The lead plaintiff filed a motion for preliminary approval of the settlement and authorization of dissemination of notice to the class on February 2, 2022, which remains pending.

In accordance with the authoritative guidance on the evaluation of loss contingencies, the Company recorded a $ 2.4 million litigation charge related to this matter in the third quarter of 2021, which is included as a component of General and Administrative expense in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2021.

Subsequent events

The Company has evaluated all subsequent events and transactions through the filing date.

There were no material events that impacted the audited consolidated financial statements or disclosures.

EXHIBIT INDEX

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S-1 12/21/2018 10.16

10.18 Second Amendment to Sublease Agreement, dated June 1, 2022, by and between the Medicines Company and the Registrant.

10-Q 8/9/2022 10.10

10.19† Exclusive License Agreement, dated October 2, 2017, by and between GB002, Inc., the Registrant and Pulmokine, Inc.

S-1 12/21/2018 10.17

10.19† License Agreement, dated June 24, 2018, by and between Aadi Bioscience, Inc.

and GB004, Inc.

S-1 12/21/2018 10.18

10.20† Amendment No.

1 to License Agreement, dated May 11, 2020, by and between GB004, Inc.

and Aadi Bioscience, Inc.

10-Q 8/11/2020 10.2

10.20 Credit, Guaranty and Security Agreement, dated May 2, 2019, by and among GB001, Inc., as Borrower, Gossamer Bio, Inc., as Guarantor, MidCap Financial Trust, as Agent and Lender, and the additional lenders from time to time party thereto.

8-K 5/3/2019 10.1

Number Exhibit Description Incorporated by Reference Filed

Form Date Number

10.21 First Amendment to Credit, Guaranty and Security Agreement, dated September 18, 2019, by and among GB001, Inc., as borrower, the Registrant, as guarantor, the other guarantors from time to time party thereto and MidCap Financial Trust, as Agent and as Lender, and the additional lenders from time to time party thereto.

10-Q 11/12/2019 10.1

Number Exhibit Description Incorporated by Reference Filed

Form Date Number

10.22 Second Amendment to Credit, Guaranty and Security Agreement, dated July 2, 2020, by and among the Registrant, GB001, Inc., GB002, Inc.

1 unchanged sentence

8-K 7/2/2020 10.1

10.23 Third Amendment to Credit, Guarant y and Security Agreement, dated December 7, 2022, by and among the Registrant, GB001, Inc., GB002, Inc.

and GB004, Inc., as co-borrowers, the other guarantors from time to time party thereto and MidCap Financial Trust, as Agent and as a Lender and the additional lenders from time to time party thereto.

10.24 Fourth Amendment to Credit, Guarantee and Security Agreement, dated February 14, 2023, by and among the Registrant, GB001, Inc., GB002, Inc.

and GB004, Inc., as co-borrowers, the other guarantors from time to time party thereto and MidCap Financial Trust, as Agent and as a Lender and the additional lenders from time to time party thereto.

10.3 Stock Purchase Agreement, dated July 12, 2022, by and among the Registrant and the Purchasers named therein.

8-K 7/13/2022 10.1

21.1 List of Subsidiaries of the Registrant.

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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 9A. Controls and Procedures