What changed in this filing

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Item 9A. Controls and Procedures

2024-03-05 compared with 2023-03-17 · 152 added, 146 removed, 821 unchanged (27% of the section changed)

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Other Information.

During the three months ended December 31, 2023, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non Rule 10b5-1 trading arrangement."

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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In addition, we intend to promptly disclose (1) the nature of any amendment to our Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions and (2) the nature of any waiver, including an implicit waiver, from a provision of our code of ethics that is granted to one of these specified officers, the name of such person who is granted the waiver and the date of the waiver on our website in the future.

Information contained in our website does not constitute a part of this report or our other filings with the SEC.

Executive Compensation.

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Certain Relationships and Related Transactions, and Director Independence.

The information required by this item will be set forth in the section headed “Certain Relationships and Related Person Transactions,” “Board Independence” and “Committees of the Board of Directors” in our Definitive Proxy Statement and is incorporated herein by reference.

The information required by this item will be set forth in the section headed “Certain Relationships and Related Person Transactions,” “Board Independence” and “Board Committees and Independence” in our Definitive Proxy Statement and is incorporated herein by reference.

Principal Accounting Fees and Services.

The information required by this item will be set forth in the section headed “Independent Registered Public Accountants’ Fees” in our Definitive Proxy Statement and is incorporated herein by reference.

The information required by this item will be set forth in the section headed “Independent Registered Public Accounting Firm's Fees” in our Definitive Proxy Statement and is incorporated herein by reference.

Exhibits, Financial Statement Schedules.

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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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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Accrued Research and Development Expenses

Description of the Matter

As of December 31, 2022, the Company accrued 15.6 million for research and development expenses.

Description of the Matter As of December 31, 2023, the Company accrued 7.8 million for research and development expenses.

As described in Note 2 of the consolidated financial statements, the Company records accruals for estimated research and development costs, comprising payments due for work performed by third party contractors, laboratories, participating clinical trial sites, and others.

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Auditing management’s accounting for accrued research and development expenses is especially challenging as evaluating the progress or stage of completion of the activities under the Company’s research and development agreements is dependent upon a high volume of data from third-party service providers and internal clinical personnel, which is tracked in spreadsheets and other end user computing programs.

How We Addressed the Matter in Our Audit

To test the completeness of the Company’s accrued research and development expenses, among other procedures, we obtained supporting evidence of the research and development activities performed for significant clinical trials.

How We Addressed the Matter in Our Audit To test the completeness of the Company’s accrued research and development expenses, among other procedures, we obtained supporting evidence of the research and development activities performed for significant clinical trials.

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

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Marketable securities 264,316 143,705

Restricted cash — 64

Prepaid expenses and other current assets 10,094 6,202

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Total liabilities 249,147 260,373

Commitments and contingencies

Commitments and contingencies (Note 11)

Stockholders' equity

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700,000,000 shares authorized as of December 31, 2023 and December 31, 2022;

94,478,405 shares issued and 94,423,181 shares outstanding as of December 31, 2022, and 76,470,588 shares issued and 75,752,664 shares outstanding as of December 31, 2021

225,409,315 shares issued and outstanding as of December 31, 2023, and 94,478,405 shares issued and 94,423,181 shares outstanding as of December 31, 2022

Additional paid-in capital 1,275,136 1,044,864

Accumulated deficit ( 1,212,040 ) ( 1,032,223 )

Accumulated other comprehensive (deficit) income ( 574 ) 45

Accumulated other comprehensive loss ( 350 ) ( 574 )

Total stockholders' equity 62,769 12,077

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(in thousands, except share and per share amounts)

Years Ended December 31,

Year Ended December 31,

2023 2022 2021

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Interest expense ( 13,511 ) ( 13,880 ) ( 19,440 )

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

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

Other income, net 15,456 1,512 799

Total other income (expense), net 3,942 ( 10,785 ) ( 17,880 )

Net loss $ ( 179,817 ) $ ( 229,378 ) $ ( 234,004 )

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Foreign currency translation 33 ( 544 ) ( 329 )

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

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

Unrealized income (loss) on marketable securities 191 ( 75 ) ( 225 )

Other comprehensive income (loss) 224 ( 619 ) ( 554 )

Comprehensive loss ( 179,593 ) ( 229,997 ) ( 234,558 )

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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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Balance as of December 31, 2022 94,423,181 $ 10 $ 1,044,864 $ ( 1,032,223 ) $ ( 574 ) $ 12,077

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

Issuance of common stock and warrants in connection with a private offering, net of offering costs of $ 10,779

129,869,440 13 201,310 — — 201,323

Vesting of restricted stock 55,225 — — — — —

Exercise of stock options 270,707 — 1,736 — — 1,736

Stock-based compensation — — 28,518 — — 28,518

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Net loss — — — ( 179,817 ) — ( 179,817 )

Other comprehensive loss — — — — ( 619 ) ( 619 )

Other comprehensive income — — — — 224 224

Balance as of December 31, 2023 225,409,315 $ 23 $ 1,275,136 $ ( 1,212,040 ) $ ( 350 ) $ 62,769

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(in thousands)

Years Ended December 31,

Year Ended December 31,

2023 2022 2021

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Amortization of discount (premium) on investments, net of accretion of discounts ( 9,450 ) ( 1,405 ) 339

Net realized loss on investments — — ( 256 )

Loss on disposal of property and equipment 726 — 20

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Maturities of marketable securities 330,700 237,500 36,225

Sales of marketable securities — — 83,515

Purchase of property and equipment — ( 410 ) ( 1,546 )

Net cash provided by (used in) investing activities ( 1,035 ) ( 117,427 ) 215,342

Net cash used in investing activities ( 110,970 ) ( 1,035 ) ( 117,427 )

Cash flows from financing activities

Proceeds from issuance of common stock in a public offering, net — — 117,110

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

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 issuance of common stock and warrants in a private offering, net of offering costs 201,323 119,946 —

Proceeds from issuance of common stock under Employee Stock Purchase Plan 444 1,214 1,315

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

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Effect of exchange rate changes on cash, cash equivalents and restricted cash 110 ( 517 ) ( 165 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 71,494 ) ( 303,153 ) 351,531

Net decrease in cash, cash equivalents and restricted cash ( 79,864 ) ( 71,494 ) ( 303,153 )

Cash, cash equivalents and restricted cash, at the beginning of the period 111,973 183,467 486,620

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Gossamer Bio, Inc.

(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.

(including its subsidiaries, referred to as "we," "us," "our,", or the “Company”) is a clinical-stage biopharmaceutical company focused on the development and commercialization of seralutinib for the treatment of pulmonary arterial hypertension, or PAH.

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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From the Company’s inception through the year ended December 31, 2023, 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.

The Company raised $ 1,263.2 million from October 2017 through December 31, 2023 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), issuance of common stock in May 2020 and July 2022 and issuance of common stock and accompanying warrants in July 2023.

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

On July 24, 2023, the Company completed a private placement of 129,869,440 shares of the Company’s common stock and accompanying warrants to purchase up to 32,467,360 shares of the Company's common stock at a combined purchase price of $ 1.63125 per share and accompanying warrant, or with respect to any purchaser that was an officer, director, employee or consultant of the Company, $ 1.85125 per share and accompanying warrant.

Each warrant will have an exercise price per share of $ 2.04 , will be immediately exercisable on the date of issuance and will expire five years from the closing of the private placement.

The aggregate gross proceeds for the private placement were approximately $ 212.1 million, before deducting offering expenses, which equaled approximately $ 10.7 million.

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

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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.

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 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.

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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The Company considers securities with original maturities of greater than 90 days to be marketable securities.

The Company has the ability, if necessary, to liquidate any of its cash equivalents and marketable securities to meet its liquidity needs in the next 12 months.

The Company has the ability, if necessary, to liquidate any of its marketable securities to meet its liquidity needs in the next 12 months.

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.

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The Company records an allowance for credit losses when unrealized losses are due to credit-related factors.

Realized gains and losses are calculated using the specific identification method and recorded as interest income or expense.

Realized gains and losses are calculated using the specific identification method and recorded in other income, net in the Company's consolidated statements of operation and comprehensive loss.

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

The Company has determined that there were no material declines in fair values of its investments due to credit-related factors as of December 31, 2023.

Restricted Cash

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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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 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.

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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.

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.

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.

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

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In process research and development

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.

In process research and development costs relate to a milestone payment to Pulmokine for the initiation of the Phase 3 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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Income and expense accounts are translated at average exchange rates during the year which approximate the rates in effect at the transaction dates.

The resulting translation adjustments are recorded in accumulated other comprehensive income in the Company's consolidated balance sheets.

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—Adopted

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

Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) (“ASU 2020-06”), which simplifies the accounting for convertible instruments and contracts in an entity's own equity.

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 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.

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

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

The resulting translation adjustments are recorded in accumulated other comprehensive loss in the Company's consolidated balance sheets.

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

Recent Accounting Pronouncements - Announced

In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740):

Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid.

ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted.

We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

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.

Diluted net loss per share excludes the potential impact of the Company’s common stock options, warrants for the purchase of common stock, 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.

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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Shares issuable upon exercise of stock options 23,626,115 17,487,165 9,434,660

Shares issuable upon exercise of warrants 32,467,360 — —

Non-vested shares under restricted stock grants 427,698 1,350,035 2,561,219

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Accrued expenses and other current liabilities consisted of the following (in thousands):

Years Ended December 31,

Accrued compensation and benefits $ 10,294 $ 13,534

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Accrued legal fees 385 380

Accrued litigation liability — 2,375

Accrued in process research and development 10,000 —

Accrued accounting fees 234 521

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Note 4— Fair Value Measurements and Available for Sale Investments

Fair Value Measurements

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 103,409 — 103,409 —

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Fair Value of Other Financial Instruments

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.

As of December 31, 2023 and 2022, the carrying amounts of the Company’s financial instruments, which include 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, 2023 and 2022, 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 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 statements of operations and comprehensive loss.

Realized gains and losses are calculated using the specific identification method and recorded in other income, net 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):

The aggregate market value, cost basis, and gross unrealized gains and losses of available-for-sale investments by security type, classified in marketable securities as of December 31, 2023 and 2022 are as follows (in thousands except securities amounts):

As of December 31, 2023

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Total marketable securities $ 264,249 $ 102 $ ( 35 ) $ 264,316

Number of securities with unrealized losses 12

As of December 31, 2022

Treasury and agency securities $ 31,445 $ 15 $ ( 2 ) $ 31,458

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

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Total marketable securities $ 143,829 $ 16 $ ( 140 ) $ 143,705

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.

Number of securities with unrealized losses 16

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, 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.

On May 2, 2019, the Company entered into a credit, guaranty and security agreement, as amended on September 18, 2019, July 2, 2020, December 7, 2022 and February 14, 2023 (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, 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, 2022.

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., GB007, Inc., GB008, Inc.

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

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

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

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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 Company accounted for the change in reference rate as a non-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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Debt, net $ 12,427

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

December 31, 2022

The scheduled future minimum principal payments as of December 31, 2023 are as follows (in thousands):

2024 $ 11,613

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As of December 31, 2023, 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, 2023 and 2022, 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 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 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 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.

As a result of the adoption of ASU 2020-06, the Company no longer accounts for the 2027 Notes separately as a liability and equity component.

The conversion feature of the 2027 Notes was previously represented by an equity component of $ 53.5 million at issuance, with the excess of the principal amount of the liability component over the carrying amount (“debt discount”) was amortized to interest expense over the term of the 2027 Notes at an effective interest rate of 11.17 %.

The Company 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.

The Company recorded $ 0.4 million of the debt issuance costs related to the 2027 Notes as a reduction to the liability and amortizes these costs to interest expense over the term of the 2027 Notes.

The net carrying amount of the liability component of the 2027 Notes was as follows (in thousands):

December 31, 2022 December 31, 2021

Principal amount $ 200,000 $ 200,000

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Net carrying amount $ 196,591 $ 195,709

The net carrying amount of the equity component of the 2027 Notes was as follows (in thousands):

December 31, 2022 December 31, 2021

Debt discount related to the value of conversion option $ — $ 53,635

Debt issuance cost — ( 109 )

Net carrying amount $ — $ 53,526

The following table sets forth the interest expense recognized related to the 2027 Notes (in thousands):

Years Ended December 31,

Year Ended December 31,

2023 2022 2021

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The assets acquired are in the early stages of the FDA approval process, and the Company intends to further develop the assets acquired through potential FDA approval as evidenced by the milestone arrangement in the contract.

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

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.

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

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.

The Company recorded the following IPR&D expense on the consolidated statements of operations (in thousands):

Years Ended December 31,

The Company made a milestone payment of $ 5.0 million in connection with the initiation of the first Phase 2 clinical trial of seralutinib in January 2021.

As of December 31, 2023, the Company accrued a milestone payment of $ 10.0 million in connection with the initiation of the Phase 3 clinical trial of seralutinib, which was paid in January 2024.

No other milestones had been accrued as the underlying contingencies had not yet been met.

The Company recorded the following IPR&D expense on the consolidated statements of operations and comprehensive loss (in thousands):

Year Ended December 31,

2023 2022 2021

Seralutinib $ 10,000 $ — $ —

GB004 — — 15,000

Other preclinical programs 65 75 3,380

Terminated programs — 65 75

Total in process research and development $ 10,000 $ 65 $ 75

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Foreign loss before taxes 45,736 53,593 50,802

Loss before income taxes $ 229,370 $ 233,996 $ 243,360

Pre-tax Loss $ 179,809 $ 229,370 $ 233,996

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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The foreign NOL can be carried forward indefinitely.

In the current year, the Company determined $ 140.0 million of foreign NOL carryforwards were relinquished due to liquidation and adjusted the carryforward accordingly.

As of December 31, 2023, the Company also had orphan drug credit and federal research tax credit carryforwards of approximately $ 48.6 million and California research tax credits of $ 12.4 million.

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Nondeductible interest ( 1.27 %) ( 0.99 %) ( 0.96 %)

Foreign Restructuring Impact ( 12.49 %) — % — %

Other ( 0.62 %) ( 0.37 %) 0.57 %

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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.

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.

The Company had an ownership change with the IPO in February of 2019 which resulted in no forfeiture of NOL’s or credits.

The Company is completing a review of whether an ownership change occurred for purposes of Sections 382 and 383 Code through 2023.

If ownership changes have occurred, including as a result of the Company's private placements of common stock in 2022 and 2023, or additional ownership changes occur 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.

The Company will update their NOL’s and credits once the analysis is completed.

If NOL’s and credits are forfeited, 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.

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Each share of common stock is entitled to one vote.

Common stock owners are entitled to dividends when funds are legally available and declared by the Board.

Common stock owners are entitled to dividends when funds are legally available and declared by the Company's board of directors.

Shelf Registration Statement and Stock Offering

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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.

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

The gross proceeds for the private placement were $ 120.1 million, before deducting offering expenses, which equaled $ 0.2 million.

On August 9, 2022, the Company 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.

Each warrant has an exercise price per share of $ 2.04 , was immediately exercisable on the date of issuance and will expire five years from the closing of the private placement.

The aggregate gross proceeds for the private placement were $ 212.1 million, before deducting offering expenses, which equaled $ 10.8 million.

On August 18, 2023, the Company filed a registration statement on Form S-3 registering the shares of common stock and shares of common stock issuable upon the exercise of warrants issued in the private placement, which registration statement was declared effective on August 28, 2023.

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”).

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

On 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 .

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

As of December 31, 2023, there were no shares of common stock subject to repurchase by the Company.

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

Note 9— Equity Incentive Plans

2023 Equity Inducement Incentive Plan

In November 2023, the Company approved the 2023 Employment Inducement Incentive Plan (the "2023 Inducement Plan").

The terms of the 2023 Inducement Plan are substantially similar to the terms of the Company’s 2019 Incentive Award Plan (as described below) with the exception that incentive stock options may not be issued under the 2023 Inducement Plan and awards under the 2023 Inducement Plan may only be issued to eligible recipients under the applicable Nasdaq rules.

The 2023 Inducement Plan was adopted without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules.

In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, awards under the 2023 Inducement Plan may only be made to an employee who has not previously been an employee or member of the board of directors of the Company or any parent or subsidiary, or following a bona fide period of non-employment by the Company or a parent or subsidiary, if he or she is granted such award in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary.

The Company has initially reserved 6,762,279 shares of the Company’s common stock for issuance pursuant to awards granted under the 2023 Inducement Plan.

As of December 31, 2023, an aggregate of 5,262,279 shares of common stock were available

for issuance under the 2023 Inducement Plan, and 1,500,000 shares of common stock were subject to outstanding awards under the 2023 Inducement Plan.

2019 Equity Incentive Plan

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As of December 31, 2023, 2,178,934 shares of common stock were subject to outstanding options under the 2017 Plan, and no shares of restricted stock awards granted under the 2017 Plan were unvested.

Fair Value of Stock Option Awards

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.

Stock Options

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

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.

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Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

On May 5, 2023, the Company granted to its Chairman and Chief Executive Officer 750,000 options with an exercise price of $ 1.36 per share.

This grant contains both service and market based vesting conditions.

The awards vest on the later of the date of achievement and the one-year anniversary of the grant date.

The market condition becomes satisfied in 50 %, 25 % and 25 % tranches upon achieving the average per-share closing price of the Company's common stock over any 30 consecutive calendar days following the grant date equal to or exceeding $ 5.00 , $ 7.50 and $ 10.00 , respectively.

In the event a

stock price tranche has not vested prior to the fourth anniversary of the grant date, any portion of the option attributable to such tranche will be forfeited.

Due to the market condition included in this grant, the Company used the Geometric Brownian Motion/Monte Carlo model to value this award.

The total stock-based compensation expense related to this award is $ 0.4 million, which is included in general and administrative expense on the consolidated statements of operations and comprehensive loss.

The Company expects to recognize this expense over a weighted average period of approximately 2.2 years.

Effective May 5, 2023, and in accordance with the terms of the 2019 Plan, the Company's board of directors approved a stock option repricing (the “Option Repricing”) whereby the exercise price of each Eligible Option (as defined below) was immediately reduced to $ 1.36 per share, the closing stock price on May 5, 2023.

For purposes of the Option Repricing, “Eligible Options” are 6,817,057 outstanding stock options as of May 5, 2023 (vested or unvested) granted under the 2019 Plan prior to November 30, 2022 and held by those eligible employees of the Company identified by the Company's board of directors, including the Company’s executive officers, except for the Company’s Chairman and Chief Executive Officer.

The participation of the executive officers of the Company in the Option Repricing was subject to their agreement to cancel a portion of their Eligible Options effective immediately (the “Cancelled Options”).

Each executive was required to agree to cancel one-third of his or her Eligible Options, on a grant-by-grant basis.

The Cancelled Options were deducted proportionately from the vested and unvested portions of each Repriced Option grant.

To the extent an Eligible Option is exercised prior to the Premium End Date (as defined below), or the eligible employee’s employment terminates prior to the Premium End Date, the eligible employee will be required to pay the original exercise price per share of the Eligible Options in connection with any exercise of the Eligible Option.

The “Premium End Date” means the earliest of (i) May 5, 2024, (ii) the date of a change in control, (iii) the eligible employee’s death or disability, or (iv) if an eligible employee is an executive subject to the cancellation of a portion of Eligible Options and is terminated under circumstances giving rise to severance under his or her employment agreement, the date of such termination.

Except for the reduction in the exercise prices of the Eligible Options as described above, the Eligible Options will retain their existing terms and conditions as set forth in the 2019 Plan and the applicable award agreements.

The repricing resulted in $ 3.4 million of incremental cost, which was calculated using the Black-Scholes option-pricing model, of which $ 2.0 million of the incremental cost was recognized immediately, and $ 1.4 million of the incremental cost will be recognized on the straight-line basis over the remaining vesting period of the repriced options.

The incremental cost is included in general and administrative expense and research and development expense on the consolidated statements of operations and comprehensive loss.

The following assumptions were used to estimate the fair value of stock option awards granted to employees under the Company’s equity incentive plans and the shares purchasable under the ESPP during the periods presented:

19 unchanged sentences

Dividend yield — — —

Stock Options

The following table summarizes stock option activity for the years ended December 31, 2023, 2022 and 2021:

27 unchanged sentences

At December 31, 2023, the total unrecognized compensation related to unvested stock option awards granted was $ 25.3 million, which the Company expects to recognize over a weighted-average period of approximately 2.7 years.

Each warrant has an exercise price per share of $ 2.04 , was immediately exercisable on the date of issuance and will expire five years from the closing of the private placement.

Given that the warrants are indexed to the Company's shares of common stock (and otherwise meet the requirements to be classified in equity), the Company recorded the consideration received from the issuance of the warrants as additional paid-in capital on the Company's consolidated balance sheets.

As of December 31, 2023, there were 32,467,360 warrants outstanding.

Restricted Stock

10 unchanged sentences

Nonvested at December 31, 2022 1,350,035 $ 10.83

Granted 572,901 11.94

Vested ( 779,900 ) 10.67

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Total stock-based compensation expense $ 28,518 $ 42,553 $ 32,008

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.

As of December 31, 2023, total unrecognized compensation expense related to the ESPP was $ 0.9 million, which the Company expects to recognize over a weighted-average period of approximately 0.8 years.

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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.

The options to extend must be exercised prior to the termination of the original lease agreement.

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.

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.

2 unchanged sentences

The operating leases are included in the balance sheet at the present value of the lease payments at a weighted average discount rate of 7 % using the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment as the leases do not provide an implicit rate.

The weighted average remaining lease term was 2.0 years.

As of December 31, 2023, the weighted average remaining lease term was 1.0 year.

Lease costs were comprised of the following (in thousands):

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For the years ended December 31, 2023, 2022 and 2021, the Company recorded approximately $ 3.4 million, $ 3.3 million and $ 4.3 million, respectively, in rent expense.

Rent expense is included in research and development and general and administrative expense on the consolidated statements of operations and comprehensive loss.

Subsequent events

5 unchanged sentences

3.1 Amended and Restated Certificate of Incorporation.

8-K 2/12/2019 3.1

3.2 Amended and Restated Bylaws.

10-Q 8/8/2023 3.1

3.2 Amended and Restated Bylaws.

8-K 11/27/2023 3.1

4.1 Form of Common Stock Certificate.

S-1/A 1/23/2019 4.1

4.2 Amended and Restated Investors’ Rights Agreement, dated July 20, 2018, by and among the Registrant and certain of its stockholders.

S-1 12/21/2018 4.2

4.2 Description of Securities Registered under Section 12 of the Exchange Act.

6 unchanged sentences

8-K 5/21/2020 4.3

4.6 Form of Warrant.

8-K 7/20/2023 4.1

10.1# Gossamer Bio, Inc.

20 unchanged sentences

10-Q 5/12/2020 10.1

10.9# Gossamer Bio, Inc.

2023 Employment Inducement Incentive Award Plan and Form of Stock Option Agreement thereunder.

8-K 11/27/2023 10.1

10.10# Letter Agreement, dated November 16, 2020, by and between Faheem Hasnain and the Registrant.

6 unchanged sentences

10-Q 8/9/2021 10.1

10.13# Employment Letter, dated May 1, 2021, by and between Laura Carter and the Registrant.

10-Q 8/9/2021 10.2

10.14# Employment Letter, dated June 21, 2021, by and between Richard Aranda and the Registrant.

10-Q 8/9/2021 10.3

10.15# Employment Letter, dated November 25, 2023, by and between Robert Smith and the Registrant.

10.16# Form of Indemnification Agreement.

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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.

10.24 Third Amendment to Credit, Guaranty 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-K 3/17/2023 10.23

10.25 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-K 3/17/2023 10.24

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

8-K 7/13/2022 10.1

10.27 Securities Purchase Agreement, dated July 19, 2023, by and among the Registrant and the Purchasers named therein.

8-K 7/20/2023 10.1

10.28 Form of Option Repricing and Cancellation Agreement .

10-Q 8/8/2023 10.1

21.1 List of Subsidiaries of the Registrant.

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32.2* Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

97 Policy for Recovery of Erroneously Awarded Compensation .

101.INS XBRL Report Instance Document X

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Bryan Giraudo

/s/ Joshua H.

Bilenker Director March 17, 2023

Bilenker, M.D.

/s/ Kristina Burow Director March 17, 2023

Kristina Burow

/s/ Russell Cox Director March 5, 2024

5 unchanged sentences

Director March 5, 2024

Sandra Milligan

Sandra Milligan, M.D., J.D.

/s/ John Quisel, J.D., Ph.D.

Director March 5, 2024

John Quisel, J.D., Ph.D.

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