UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 001-38959
BridgeBio Pharma, Inc.
(Exact name of registrant as specified in its charter)
Delaware
State or other jurisdiction of
incorporation or organization
3160 Porter Drive, Suite 250, Palo Alto, CA
(Address of principal executive offices)
84-1850815
(I.R.S. Employer
Identification No.)
94304
(Zip Code)
Registrant’s telephone number, including area code: (650) 391-9740
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.001 per share
Trading
Symbol(s)
BBIO
Securities registered pursuant to section 12(g) of the Act: NONE
Name of each exchange on which registered
The Nasdaq Global Select Market
Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§ 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See
the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 726(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of
an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Act). Yes ☐ No ☒
The aggregate market value of the voting and non‑voting common equity held by non‑affiliates of the registrant based upon the closing price of the registrant’s Common Stock on
The Nasdaq Global Select Market on June 30, 2023 was approximately $2,075.1 million. Shares of the registrant’s Common Stock held by each executive officer and director and by each other
person who may be deemed an affiliate of the Registrant have been excluded from this computation. The determination of affiliate status for this purpose is not necessarily a conclusive
determination for other purposes.
On February 15, 2024, there were 175,831,536 shares of the registrant’s Common Stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Specified portions of the registrant’s definitive Proxy Statement to be issued in conjunction with the registrant’s 2024 Annual Meeting of Stockholders, which is expected to be filed
not later than 120 days after the registrant’s fiscal year ended December 31, 2023, are incorporated by reference into Part III of this Annual Report. Except as expressly incorporated by reference,
the registrant’s Proxy Statement shall not be deemed to be a part of this Annual Report on Form 10‑K.
BRIDGEBIO PHARMA, INC.
2023 Form 10‑K Annual Report
Table of Contents
PART I
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
PART III
PART IV
Exhibits and Financial Statement Schedules
Form 10‑K Summary
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Exhibits
Signatures
Page
1
46
114
114
115
115
115
116
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118
137
138
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203
203
204
204
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204
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206
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212
In this Annual Report on Form 10-K, unless otherwise stated or as the context requires, references to “BridgeBio,” “the Company,” “we,” “us,” “our” or
similar references refer to BridgeBio Pharma, Inc., together with its consolidated subsidiaries.
i
Special Note Regarding Forward‑Looking Statements
This Annual Report on Form 10‑K contains forward‑looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward‑looking statements involve substantial risks, uncertainties
and assumptions. All statements in this Annual Report on Form 10‑K, other than statements of historical fact, including, without limitation, statements
regarding our strategy, future operations, future operating expenses, future financial position, future revenue, projected costs, prospects, plans, intentions,
expectations, goals and objectives may be forward‑looking statements. The words “anticipates,” “approximately,” “believes,” “could,” “designed,”
“estimates,” “expects,” “goal,” “intends,” “may,” “objective,” “plans,” “potential,” “predicts,” “projects,” “pursuing,” “seeks,” “should,” “will,” “would”
and similar expressions (including the negatives thereof) are intended to identify forward‑looking statements, although not all forward‑looking statements
contain these identifying words. The forward-looking statements in this report include, but are not limited to, statements about:
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the success, cost and timing of our clinical development of our product candidates, including the progress of, and results from, our ongoing
Phase 2 and planned Phase 3 clinical trials of low-dose infigratinib, our ongoing Phase 2 and planned Phase 3 clinical trials of BBP-418, and
our ongoing Phase 2b and Phase 3 clinical trials of encaleret, as well as the potential indications for each;
our ability to continue planned preclinical and clinical development of our respective development programs, and the timing, cost and
success of any such continued preclinical and clinical development and planned regulatory submissions;
our ability to initiate, recruit and enroll patients in and conduct our clinical trials at the pace that we project;
the timing of our submissions to the U.S. Food and Drug Administration, or FDA, and any review or comments on data that we will need to
generate to file our Investigational New Drug applications, or INDs, including pending or new clinical hold notices;
our plans to implement certain development strategies, including our ability to attract and retain potential collaborators with development,
regulatory and commercialization expertise;
our ability to obtain and maintain regulatory approval of our product candidates in any of the indications for which we are developing or we
plan to develop, and any related restrictions, limitations or warnings in the label of any of our product candidates, if approved;
our ability to successfully commercialize acoramidis and our other current product candidates, if approved, and any other product candidates
we may identify and pursue, if approved, including our ability to successfully build a specialty sales force and commercial infrastructure to
market our current product candidates and any other product candidates we may identify and pursue;
our ability to compete with companies currently marketing approved treatments or engaged in the development of treatments that may
become available for any of the indications that our product candidates are designed to target;
our reliance on third parties to conduct our clinical trials and to manufacture drug substance for use in our clinical trials;
our ability to contract with and the performance of our and our collaborators’ third-party suppliers and manufacturers;
the pricing and reimbursement of our product candidates, if approved;
the size and growth potential of the markets for our current product candidates or other product candidates we may identify and pursue, and
our ability to serve and gain acceptance by those markets;
our ability to identify and advance through clinical development any additional product candidates;
the implementation and effects of the restructuring initiative that we commenced in January 2022 and any future restructuring plans that we
may pursue;
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the impacts of public health crises or macroeconomic factors that could impact our business, such as the effects of the Russian invasion of
Ukraine or the armed conflict in Israel and the Gaza Strip on the global economy and supply chain and inflationary pressures;
our ability to retain and recruit key personnel;
the success of competing therapies that are or may become available;
our ability to obtain and maintain adequate intellectual property rights for our product candidates and our ability to operate our business
without infringing on the intellectual property rights of others;
our expectations regarding government and third-party payor coverage and reimbursement;
our estimates of our expenses, ongoing losses, capital requirements and our use of cash resources, and our needs for or ability to pay for debt
interests and obtain additional financing to complete the clinical trials of any of our product candidates;
the impact of laws and regulations in the United States and foreign countries;
our financial performance;
adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-
performance by financial institutions or transactional counterparties; and
developments and projections relating to our competitors or our industry.
We may not actually achieve the plans, intentions, expectations or objectives disclosed in our forward‑looking statements and the assumptions
underlying our forward‑looking statements may prove incorrect. Furthermore, if our forward‑looking statements prove to be inaccurate, the inaccuracy may
be material. Therefore, you should not place undue reliance on our forward‑looking statements, and you should not regard these statements as a
representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. Actual results or
events could differ materially from the plans, intentions, expectations and objectives disclosed in the forward‑looking statements that we make. Important
factors that we believe could cause actual results or events to differ materially from our forward‑looking statements include, but are not limited to, those
listed under “Risk Factors” in Item 1A of Part I, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of
Part II and elsewhere in this Annual Report on Form 10‑K. Our forward‑looking statements in this Annual Report on Form 10‑K are based on current
expectations as of the date hereof and we do not assume any obligation to update any forward‑looking statements on account of new information, future
events or otherwise, except as required by law.
iii
RISK FACTOR SUMMARY
Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address all of
the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the
heading “Risk Factors” and should be carefully considered, together with other information in this Annual Report on Form 10-K and our other filings with
the U.S. Securities and Exchange Commission, or the SEC, before making investment decisions regarding our common stock.
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Drug development is a highly uncertain undertaking and involves a substantial degree of risk. We have incurred significant losses since our
inception and anticipate that we will continue to incur significant losses for the foreseeable future. We have not generated significant revenue
since inception, which, together with our limited operating history, may make it difficult for you to assess our future viability.
• We may encounter substantial delays in clinical trials for a variety of reasons, including difficulties in patient enrollment, and we may not be able
to conduct or complete clinical trials on the expected timelines, if at all.
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Results of earlier studies or clinical trials may not be predictive of future clinical trial results, and initial studies or clinical trials may not
establish an adequate safety or efficacy profile for our product candidates to justify proceeding to advanced clinical trials or an application for
regulatory approval.
Use of our product candidates, including for the treatment of patient populations with significant comorbidities, could be associated with side
effects, adverse events or other properties or safety risks, which could delay or halt their clinical development, prevent their regulatory approval,
cause us to suspend or discontinue clinical trials, abandon a product or product candidate, limit the commercial potential of a product candidate,
if approved, or result in other significant negative consequences that could harm our business, prospects, operating results and financial
condition.
Interim, “top-line,” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data
become available or as additional analyses are conducted, and as the data are subject to audit and verification procedures that could result in
material changes in the final data.
Our clinical trials may fail to demonstrate substantial evidence of the safety and efficacy of product candidates that we may identify and pursue
for their intended uses, which would prevent, delay or limit the scope of regulatory approval and commercialization.
• We conduct clinical trials for product candidates outside the United States, and the FDA and comparable foreign regulatory authorities may not
accept data from such trials.
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Even if we obtain FDA approval for any of our current product candidates in the United States, we may never obtain approval to commercialize
any of these product candidates outside of the United States, which would limit our ability to realize their full market potential.
Even though we may apply for orphan drug designation for our product candidates, we may not be able to obtain orphan drug marketing
exclusivity.
Our product candidates, if approved, will be subject to ongoing regulatory obligations and continued regulatory review, which may result in
significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated
problems with our product candidates.
Certain of our product candidates, including our protein therapeutic and gene therapy product candidates, are novel, complex and difficult to
manufacture. We could experience manufacturing problems that result in delays in our development or commercialization programs or otherwise
harm our business.
• We expect to rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, and those third parties
may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research or testing.
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• We rely entirely on third parties for the manufacturing of our current product candidates or other product candidates that we may develop for
preclinical studies and clinical trials. Our business could be harmed if those third parties fail to provide us with sufficient quantities of drug
product or fail to do so at acceptable quality levels or prices.
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If we are unable to obtain and maintain sufficient intellectual property protection for our product candidates, including acoramidis, low-dose
infigratinib, BBP-418, and encaleret, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors
could develop and commercialize products or product candidates similar or identical to ours, and our ability to successfully commercialize our
product candidates may be impaired.
Our rights to develop and commercialize our product candidates are subject in part to the terms and conditions of licenses granted to us by
others, and the patent protection, prosecution and enforcement for some of our product candidates may be dependent on our licensors.
If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties, or these
agreements are terminated or we otherwise experience disruptions to our business relationships with our licensors, we could lose intellectual
property rights that are important to our business.
Our product candidates, if approved, may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors, and others in
the medical community necessary for commercial success.
If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market any product candidates
we may develop, we may not be successful in commercializing those product candidates if and when they are approved.
• We face significant competition in an environment of rapid technological and scientific change, and there is a possibility that our competitors
may achieve regulatory approval before us or develop therapies that are safer, more advanced or more effective than ours, which may negatively
impact our ability to successfully market or commercialize any product candidates we may develop and ultimately harm our financial condition.
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Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-
performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations,
financial condition and results of operations.
Our future success depends on our ability to retain key employees, directors, consultants and advisors and to attract, retain and motivate qualified
personnel.
Because we have multiple programs and product candidates in our development pipeline and are pursuing a variety of target indications and
treatment modalities, we may expend our limited resources to pursue a particular product candidate and fail to capitalize on development
opportunities or product candidates that may be more profitable or for which there is a greater likelihood of success.
• We have incurred a significant amount of debt and may in the future incur additional indebtedness. Servicing our debt requires a significant
amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.
• We may require substantial additional funding to achieve our business goals. If we are unable to obtain this funding when needed and on
acceptable terms, we could be forced to delay, limit or terminate our product development and commercialization efforts.
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The Funding Agreement contains certain conditions to the Purchasers’ funding obligations and various covenants and restrictions on our
operations that, if violated, may adversely affect our financial condition and operating results.
Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.
v
ITEM 1. BUSINESS
Overview
PART I
BridgeBio Pharma, Inc. is a commercial-stage biopharmaceutical company founded to discover, create, test and deliver transformative medicines to
treat patients who suffer from genetic diseases and cancers with clear genetic drivers. BridgeBio’s pipeline of development programs ranges from early
science to advanced clinical trials. BridgeBio was founded in 2015 and its team of experienced drug discoverers, developers and innovators are committed
to applying advances in genetic medicine to help patients as quickly as possible. Since inception, BridgeBio has created 17 Investigational New Drug
applications, or INDs, and had two products approved by the U.S. Food and Drug Administration, or FDA. We work across over 20 disease states at
various stages of development. Several of our programs target indications that we believe present the potential for our product candidates, if approved, to
target portions of market opportunities of at least $1.0 billion in annual sales.
We focus on genetic diseases because they exist at the intersection of high unmet patient need and tractable biology. Our approach is to translate
research pioneered at academic laboratories and leading medical institutions into products that we hope will ultimately reach patients. We are able to realize
this opportunity through a confluence of scientific advances, including: (i) identification of the genetic underpinnings of disease as more cost-efficient
genome and exome sequencing becomes available; (ii) progress in molecular biology; and (iii) the development and maturation of longitudinal data and
retrospective studies that enable the linkage of genes to diseases. We believe that this early-stage innovation represents one of the greatest practical sources
for new drug creation.
We believe we have developed a world-class product platform that supports the continued growth of our Company and the advancement of our
pipeline.
Our Late-Stage Pipeline
Our late-stage pipeline has delivered positive Phase 3 results for acoramidis, the New Drug Application (NDA), for which has been accepted for
review by the FDA with the deadline for the FDA to review such NDA, or the Prescription Drug User Fee Act (PDUFA) date, set on November 29, 2024.
This pipeline is expected to deliver Phase 3 results in three additional programs in potential markets of $1.0 billion dollars or more (low-dose infigratinib
for achondroplasia, encaleret for ADH1, and BBP-418 for LGMD2I/R9) over the next two years. The following table summarizes the product candidates in
our late-stage development pipeline, their estimated patient populations, their therapeutic modalities and their development status:
Indication
Drug Mechanism
ATTR Amyloidosis
Achondroplasia
ADH1
LGMD2I/R9
TTR stabilizer (acoramidis)
Low-dose FGFRi (infigratinib)
CaSR antagonist (encaleret)
Glycosylation substrate (BBP-418)
1 Treatable population
2 Carriers
Pt. pop.
(US + EU)
>400k
1
7-10k
2
20-25k
7k
Program Status
NDA
Phase 3 Enrolling
Phase 3 Enrolling
Phase 3 Enrolling
Our robust late-stage pipeline is supported by our productive early-stage research engine, which has produced 17 INDs since our inception.
The following section is a selection of our programs which we believe have the greatest potential to drive significant near-term value for our Company due
to a combination of factors, including their stage of development, potential availability of expedited development pathways, degree of unmet medical need
and potential market size in the applicable target indication.
1
Acoramidis (Eidos): TTR Amyloidosis
Summary
We are developing acoramidis, also known as AG10, a next-generation oral small molecule near-complete TTR stabilizer, for the treatment of TTR
amyloidosis, or ATTR. We believe that acoramidis has the potential to demonstrate greater potency than first-generation partial stabilizers based on results
from comparative nonclinical studies.
On July 17, 2023, the Company announced positive data from its Phase 3 ATTRibute-CM clinical trial of acoramidis for patients with transthyretin
amyloid cardiomyopathy (ATTR-CM). The primary endpoint (a hierarchical analysis inclusive of all-cause mortality and frequency of cardiovascular-
related hospitalization) was met (Win Ratio of 1.8) with a highly statistically significant p-value (p<0.0001). This primary endpoint result consistently
favored acoramidis treatment across key subgroups, including across both variant and wild-type ATTR patients as well as across New York Heart
Association (NYHA) Class I, II, and III patients. Absolute values observed across all-cause mortality (ACM), cardiovascular mortality (CVM) and CVH
showed that over 30 months, patients survived more and were hospitalized less than has been seen in prior controlled studies of ATTR-CM to the
Company’s knowledge. Acoramidis was well-tolerated, with no safety signals of potential clinical concern identified. In additional results from ATTRibute-
CM presented by the Company on November 12, 2023, the placebo and acoramidis time-to-first event Kaplan-Meier curves for a composite of ACM and
CVH separated beginning at Month 3, representing the most rapid and sustained clinical benefit on the composite endpoint of ACM and CVH in ATTR-
CM patients through Month 30 to the Company’s knowledge.
On December 5, 2023, the Company announced that it had submitted an NDA for acoramidis for the treatment of ATTR-CM to the FDA. On
February 5, 2024, the Company announced that the NDA for acoramidis for the treatment of ATTR-CM had been accepted by the FDA, with a PDUFA
date of November 29, 2024, and that the Marketing Authorization Application (MAA) had been accepted by the European Medicines Agency (EMA).
Market Opportunity
We believe that the total market for ATTR therapeutic interventions will continue to grow for the foreseeable future as the population of diagnosed
patients increases as a result of heightened disease awareness and the increased adoption of non-invasive diagnostic techniques, and that the global total
addressable market could reach as high as $15.0 billion. The number of estimated diagnosed ATTR-CM patients in the United States has grown from fewer
than 5,000 in 2019 to more than 30,000 in 2021. As such, if acoramidis is approved, we believe that there could be a significant population of newly
diagnosed patients who have not previously been treated with a disease-modifying therapy and could be treated with acoramidis. If approved, we believe
acoramidis will also be an important treatment option for patients inadequately managed by the current treatment. If approved, we believe that acoramidis
could have meaningful commercial potential. Further, we believe that acoramidis, if approved, has the potential to be a best-in-class stabilizer for the
treatment of ATTR-CM.
Disease Overview
ATTR is a disease caused by destabilization of TTR tetramers resulting in progressive amyloid deposition. TTR is a protein that occurs naturally in
the form of a tetramer, consisting of four identical subunits, or monomers, and performs multiple physiologic roles, including the transport of essential
hormones and vitamins. In ATTR, TTR tetramers become destabilized due to a mutation in the TTR gene or as part of the natural aging process.
Destabilized TTR dissociates into monomers, self-aggregates, and assembles into fibrils that are deposited, predominantly in the heart and nervous system,
driving disease pathophysiology.
Cardiomyopathic ATTR is commonly categorized by its genotypic cause with wild-type ATTR cardiomyopathy, or ATTRwt-CM, which results
from an age-related process, and variant ATTR cardiomyopathy, or ATTRv-CM. Both forms of the disease are progressive and fatal. ATTRwt-CM and
ATTRv-CM patients generally present with symptoms later in life (older than 50) and have median life expectancies of two to five years from diagnosis if
untreated. Progression of both forms of the disease can cause significant disability, impact productivity and quality of life, and create a significant
economic burden due to the costs associated with patient need for supportive care. As the disease progresses, ATTRwt-CM and ATTRv-CM patients may
experience recurrent hospitalizations and repeated interventions.
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The worldwide estimated prevalence of ATTRwt-CM and ATTRv-CM is greater than 400,000 and 40,000, respectively. We believe that
cardiomyopathic ATTR is significantly underdiagnosed today. For example, recent literature has suggested that between 10% to 13% of patients diagnosed
with heart failure with preserved ejection fraction may have undiagnosed ATTR-CM. The heart failure with preserved ejection fraction segment represents
approximately half of the 6.0 million to 7.0 million estimated people with heart failure in the United States. With the increasing availability of disease-
modifying therapeutics, disease awareness is heightened.
We believe the population of diagnosed ATTR-CM patients is also growing rapidly due to the shift to an accurate and reliable non-invasive
diagnostic imaging technique. Historically, a heart biopsy was required to make a diagnosis of ATTR-CM. Recently, however, it has been shown that
scintigraphy with technetium-labeled radiotracers paired with single-photon emission computerized tomography, or SPECT, imaging is a highly accurate,
non-invasive, and cost-effective method for ATTR-CM diagnosis. We believe that both increased disease awareness and availability of this non-invasive
diagnostic imaging technique allow for earlier diagnosis of ATTR-CM patients and the identification of previously misdiagnosed patients.
Design Criteria
Acoramidis is a clinical-stage, orally administered, small molecule TTR stabilizer being developed to treat ATTR at its source. We designed
acoramidis to meet two primary criteria – to preserve circulating native TTR and to reduce amyloid deposition by minimizing toxic TTR monomer
formation.
TTR is a protein which has been highly conserved throughout evolution, and which is abundant in the plasma with relatively rapid turnover
requiring sustained metabolic energy expenditure. Thus, we seek to achieve maximal stabilization of the TTR tetramer rather than elimination.
Acoramidis has been shown in preclinical studies and clinical trials to prevent the dissociation of tetrameric TTR into monomers, and in preclinical
studies, to reduce the rate of amyloid fibril formation. In addition, it has been shown to lead to increased circulating levels of tetrameric TTR. Acoramidis
has been designed to bind TTR in a way that causes TTR’s conformational structure to mimic that of the well-characterized T119M variant, a naturally
occurring rescue mutation that super stabilizes the TTR tetramer. The T119M variant has been observed to prevent the dissociation of TTR tetramers into
monomers; T119M tetramers dissociate 40-fold more slowly than wild-type tetramers in biochemical assays. Known as a trans-allelic trans-suppressor,
individuals who coinherit the T119M rescue mutation along with a TTR-destabilizing mutation are protected against the development of ATTR.
In third-party clinical trials of tafamidis, another orally administered, small molecule TTR stabilizer, interventional approaches that increased TTR
stabilization led to improved outcomes in this disease, as measured by all-cause mortality and cardiovascular-related hospitalizations, and were correlated
with increases in serum TTR. Further, based on genetic data, there is a correlation between the level of TTR stabilization, serum TTR levels and disease
severity. As a result, we believe that serum TTR is a predictive biomarker for disease prognosis and that there may be a relationship between more effective
TTR stabilization, serum TTR levels and improved clinical outcomes. Based on results from comparative nonclinical studies, we believe that acoramidis
has the potential to stabilize TTR to a greater extent than other TTR stabilizers.
Clinical Data
Phase 2 Data
In November 2018, we announced Phase 2 data for acoramidis in symptomatic patients with ATTR-CM. The randomized, placebo-controlled, dose-
ranging clinical trial included 49 patients with symptomatic ATTR-CM, of which 14 had ATTR-CM. Eligible patients were randomized in a 1:1:1 ratio to
placebo or 400 milligrams or mg, or 800 mg of acoramidis twice daily over 28 days. Overall, acoramidis was well-tolerated in symptomatic ATTR-CM
subjects with no safety signals of potential clinical concern attributed to study drug. Acoramidis significantly raised serum TTR concentrations (p < 0.0001)
by 50% and 36% in subjects administered 800 mg twice daily and 400 twice daily, respectively, at day 28. Normalized serum TTR levels were observed in
all actively treated subjects at day 28.
3
In November 2019, we announced data from our Phase 2 open-label extension, or OLE, suggesting long-term tolerability of acoramidis and
stabilization of ATTR-CM disease measures. Acoramidis was well-tolerated in the OLE and no safety signals of potential clinical concern were attributed
to study drug. The rate of all-cause mortality (including either death or cardiac transplantation, 8.5%) and cardiovascular-related hospitalizations
(proportion experiencing at least one event, 25.5%) observed in an exploratory analysis of OLE participants following a median of 15 months since Phase 2
initiation were lower than those observed at 15 months in placebo-treated patients in the ATTR-ACT study (all-cause mortality including death or cardiac
transplantation, 15.3%; cardiovascular-related hospitalizations, 41.8%).
In October 2023, we presented updated results from our Phase 2 OLE, demonstrating continued long-term tolerability of acoramidis and
stabilization of ATTR-CM disease measures. With a median of 55 months of continuous treatment, acoramidis was generally well-tolerated in the OLE and
no safety signals of potential clinical concern were attributed to study drug. In patients with symptomatic ATTR-CM, long-term treatment with acoramidis
is associated with both stable median NT-proBNP levels and sustained increases in serum TTR. In this ongoing open-label study, at least 53% of patients
with ATTR-CM and NYHA Class II or III at entry to the phase 2 trial have survived for a median follow-up of 4.6 years.
Phase 3 Data
In February 2019, we initiated ATTRibute-CM, a global Phase 3 randomized, placebo-controlled clinical trial of acoramidis in ATTR-CM.
ATTRibute-CM enrolled 632 subjects with symptomatic ATTR-CM, associated with either wild-type or variant TTR and New York Heart Association, or
NYHA, Class I-III symptoms. Subjects were randomized 2:1 between treatment (acoramidis 800 mg) and placebo twice daily in a two-part trial. In Part A,
change in 6MWD at 12 months was compared between treatment and placebo groups as a potential registrational endpoint. In Part B, the hierarchical
composite primary endpoint including all-cause mortality and cardiovascular hospitalizations will be compared between treatment and control groups at 30
months. Secondary endpoints include quality of life as assessed by the KCCQ-OS, safety parameters, serum TTR levels, a measure of TTR stabilization,
and NT-proBNP levels, a cardiac biomarker. In Part B, concomitant use of tafamidis is allowed. A schematic of the trial is shown below:
On December 27, 2021, we reported topline data from Part A of the ATTRibute-CM trial which did not meet its primary endpoint of change from
baseline in 6MWD (p = 0.76). Mean observed 6MWD decline for the acoramidis and placebo arms were 9 meters and 7 meters, respectively. Decline
observed in both arms of ATTRibute-CM was similar to expected functional decline in healthy elderly adults at 12 months. We observed
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improvements in acoramidis-treated participants relative to placebo-treated participants at Month 12 on secondary and exploratory endpoints including NT-
proBNP, serum TTR concentration and KCCQ-OS.
On July 17, 2023, the Company announced positive data from its Phase 3 ATTRibute-CM clinical trial of acoramidis for patients with transthyretin
amyloid cardiomyopathy (ATTR-CM). The primary endpoint (a hierarchical analysis inclusive of all-cause mortality and frequency of cardiovascular-
related hospitalization) was met (Win Ratio of 1.8) with a highly statistically significant p-value (p<0.0001). This primary endpoint result consistently
favored acoramidis treatment across key subgroups, including across both variant and wild-type ATTR patients as well as across New York Heart
Association (NYHA) Class I, II, and III patients. In particular, consistency against cardiovascular-related hospitalizations (CVH) was observed across all
prespecified subgroups at 30 months. Absolute values observed across all-cause mortality (ACM), cardiovascular mortality (CVM) and CVH showed that
over 30 months, patients survived more and were hospitalized less than has been seen in prior controlled studies of ATTR-CM to the Company’s
knowledge. Assessment of measures of disease progression in the trial suggest that of participants assigned to receive acoramidis treatment who completed
a Month 30 visit, 45% experienced an improvement from baseline in N-terminal prohormone of brain natriuretic peptide (NT-proBNP), 40% experienced
an improvement from baseline on 6-minute walk distance (6MWD), and 13% experienced an improvement from baseline in NYHA class. The placebo and
acoramidis time-to-first event Kaplan-Meier (K-M) curves for a composite of all-cause mortality (ACM) and cardiovascular-related hospitalization (CVH)
separated beginning at Month 3, representing rapid and sustained clinical benefit on the composite endpoint of ACM and CVH in ATTR-CM patients
through Month 30 (Hazard Ratio = 0.645, 95% CI: 0.500-0.832). Acoramidis was well-tolerated, with no safety signals of potential clinical concern
identified.
Competition
If acoramidis is approved as a treatment for ATTR-CM, we expect to face competition from Vyndaqel / Vyndamax (tafamidis meglumine /
tafamidis), which is approved in certain territories, including the United States, the European Union, and Japan as a treatment for ATTR-CM. Additionally,
there are a number of RNAi, antisense oligonucleotide, antibody, and gene editing product candidates that are currently in development as potential
treatments for ATTR-CM.
Low-dose Infigratinib: Achondroplasia
Summary
We are developing low-dose infigratinib, an oral FGFR1-3 selective tyrosine kinase inhibitor, or TKI, as a treatment option for children with
achondroplasia. We are currently enrolling patients in PROPEL, a prospective observational study in children with achondroplasia and PROPEL 3, a Phase
3 double-blinded, placebo-controlled pivotal study of low-dose infigratinib at a dose level of 0.25 milligrams per kilogram per day (mg/kg/day) in children
with achondroplasia.
On June 20, 2023, the Company announced positive topline results from PROPEL2, its Phase 2 clinical trial of infigratinib in children with
achondroplasia. In the highest dose level (Cohort 5, 0.25mg/kg once daily), the mean change from baseline in annualized height velocity (“AHV”) at six
months was +3.38 centimeters per year (cm/yr) (p = 0.001). Infigratinib demonstrated clear dose-responsiveness when given as a single daily oral dose and
was well-tolerated with no treatment-related adverse events (“AEs”) assessed in Cohort 5.
Market Opportunity
We believe that achondroplasia and other FGFR-driven skeletal dysplasias represent a potentially over $5.0 billion total global market opportunity.
The achondroplasia market alone has grown steadily since the end of 2021, driven by a newly available therapy driving children to seek treatment, as well
as growing awareness of the new treatment among pediatric endocrinologists. We believe that low-dose infigratinib, if approved, would have meaningful
commercial potential to demonstrate best-in-class efficacy as well as a differentiated oral route of administration preferred by many patients.
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Condition Overview
Achondroplasia is the most frequent cause of disproportionate short stature, and mutations in the FGFR3 gene have been shown to be the molecular
source of the condition. Achondroplasia has a prevalence of greater than 55,000 in the United States and European Union, and an estimated worldwide
incidence of one in 10,000 to 30,000 live births. The condition leads to a disproportionate short stature with anomalies in bone development and potential
for foramen magnum stenosis, spinal stenosis, cardiovascular complications and obesity. The average height is approximately 4’4” for a male and 4’1” for
a female with achondroplasia. Lifespan and intelligence are most often normal.
Achondroplasia is an autosomal dominant condition caused by a gain-of-function point mutation in the FGFR3 gene. Approximately 97% of cases
are due to G380R substitution and 80% of cases are the result of de novo mutations. FGFR3 is expressed in osteoblasts and chondrocytes where it plays a
critical role in regulating bone growth through the MAPK pathway, which drives hypertrophic differentiation, and through the STAT1 pathway, which
drives chondrocyte proliferation. Apart from growth hormones, which are approved in Japan, there is only one medicine approved for marketing by the
FDA, the EMA, and the Pharmaceuticals and Medical Devices Agency, or PMDA, for the treatment of achondroplasia: Voxzogo (vosoritide), a C-type
natriuretic peptide, or CNP, analog which activates the MAPK pathway but not the STAT1 pathway.
Design Criteria
We are developing low-dose infigratinib based upon two key design principles – we seek to target achondroplasia at its source (FGFR3 gain-of-
function mutations) in order to maximize clinical activity against all manifestations of the condition, not just height; and we seek to provide a tolerable oral
treatment option in order to provide a reduced burden of treatment versus injection for children and their families. We believe low-dose infigratinib is the
only investigational therapy in development that incorporates both of these design principles.
Low-dose infigratinib is designed to directly target FGFR3 gain-of-function mutations which are the drivers behind the pathophysiology of
achondroplasia. As an FGFR1-3 inhibitor, we believe that low-dose infigratinib has the potential to decrease pathologic signaling downstream of FGFR3
and treat achondroplasia at its source. Unlike potentially competitive CNP mimetic approaches, which only inhibit MAPK signaling, our approach is aimed
at also inhibiting STAT1 signaling.
Low-dose infigratinib is also designed for an oral route of administration. Blinded market research indicates that oral administration is the preferred
route of administration amongst healthcare providers who treat children with achondroplasia.
Preclinical Data
Low-dose infigratinib has been studied preclinically in a mouse model of achondroplasia that recapitulates anomalies of the growth plates,
vertebrae, and intervertebral discs. Investigators observed that low-dose infigratinib rescued ex vivo bone growth of mutant mouse embryo femurs after six
days of treatment. Further, 15 days of treatment showed in vivo bone growth, which mimics human achondroplasia in many respects. Effects on both
appendicular and axial skeletal parameters were observed in this study.
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Below are figures demonstrating the extent of femur growth and intervertebral disc width rescue in wild-type, untreated model, and low-dose
infigratinib treated (2 mg/kg) model mice:
In vivo bone growth was further demonstrated at lower doses (0.2 mg/kg and 0.5 mg/kg) by the same laboratory. Together, preclinical studies at all
doses have demonstrated meaningful increases in skeletal growth parameters between treated and untreated mutant mice, as follows:
Increase in length compared to non-treated mouse (%)
Notably, treatment with low-dose infigratinib did not modify the expression of FGFR1 in the hypertrophic zone of the growth plate. The effects seen
were mainly due to FGFR3 inhibition, with no other gross side effects being observed in these preclinical studies. Furthermore, survival was improved after
15 days in low-dose infigratinib treated mice, regardless of dose, as compared to untreated mice.
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Clinical Development Plan
We are currently enrolling patients in PROPEL, a prospective observational study in children with achondroplasia. The study will establish
annualized height velocity, or AHV, for each child for a minimum period of six months. PROPEL is designed to provide baseline measurements for
children that we anticipate enrolling in PROPEL 3, the pivotal Phase 3 trial.
Following positive feedback on the regulatory path to approval from FDA and EMA, we initiated PROPEL 3, a phase 3 double-blinded, 2:1
randomized, placebo-controlled pivotal study of low-dose infigratinib at a dose level of 0.25 mg/kg/day in children with achondroplasia. The primary
endpoint is change from baseline in AHV and the secondary endpoints include safety, proportionality, and height for age z-score. On December 12, 2023,
we announced the first child randomized in PROPEL 3.
Key Competitors
Low-dose infigratinib is the only oral direct FGFR1-3 inhibitor that has been publicly disclosed in clinical development for the treatment of
achondroplasia. There are three other identified companies developing compounds for the treatment of achondroplasia using alternative mechanistic
approaches: Ascendis Pharma A/S (TransCon CNP), Sanofi S.A. (SAR442501), and Ribomic (RBM-007). In addition, BioMarin Pharmaceutical Inc. has
developed Voxzogo (vosoritide), a CNP analog, for the treatment of achondroplasia.
Low-dose Infigratinib: Hypochondroplasia
We are also developing low-dose infigratinib as a treatment option for children living with hypochondroplasia, a skeletal dysplasia closely related to
achondroplasia and similarly driven by FGFR3 gain-of-function variants. ACCEL, an observational study for infigratinib in hypochondroplasia, is expected
to initiate in the first half of 2024. We are also committed to exploring the potential of infigratinib on the wider medical and functional impacts of
hypochondroplasia, which hold significant unmet needs for families.
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Encaleret: Autosomal Dominant Hypocalcemia Type 1 and Hypoparathyroidism
Summary
Encaleret is an oral small molecule antagonist of the calcium sensing receptor, or CaSR, that we are developing for the treatment of Autosomal
Dominant Hypocalcemia Type 1, or ADH1. We are currently studying encaleret in an ongoing Phase 3 clinical trial as a potential treatment for patients
with ADH1. We reported results from the Phase 2b study in 2022 and published the results from the same study in the New England Journal of Medicine in
September 2023. In 13 participants in the Phase 2b trial, treatment with encaleret resulted in rapid and sustained restoration of normal mineral homeostasis,
with mean values of blood calcium, urinary calcium, and blood parathyroid hormone, or PTH within the normal range by day 5 of therapy and sustained at
24 weeks, and was well-tolerated without any reported serious adverse events. Encaleret has been granted orphan drug and fast track designations by the
FDA for the treatment of autosomal dominant hypocalcemia. Encaleret has also been granted orphan designation by the European Commission as a
treatment for hypoparathyroidism, inclusive of ADH1.
Market Opportunity
We believe that ADH1 is a serious medical condition with unmet needs and represents a market with significant commercial potential. ADH1 is
caused by gain-of-function variants of the CASR gene, and independent studies of general population genetic datasets estimate that there are 25,000
carriers of ADH1-causative variants in the EU and US. If approved, encaleret could be the first targeted therapy indicated for ADH1.
Design Criteria
Encaleret is an investigational, orally administered, small molecule antagonist of the CaSR. It has been studied in more than 1,200 human subjects in
its prior development and was observed to increase serum calcium in a dose-dependent manner. The rationale for developing encaleret as a potential
treatment for patients with ADH1 is based on both non-clinical and clinical evidence. Antagonists of the CaSR have been shown in vitro to shift the
aberrant CaSR “set-point” back towards a normal IC50 for calcium and in vivo to increase PTH secretion, elevate blood calcium concentrations, and reduce
urinary calcium excretion. By selectively antagonizing the CaSR, encaleret may restore normal CaSR function in individuals with ADH1 and may address
symptoms associated with hypocalcemia and hypercalciuria.
Clinical Data
On June 13, 2022, we reported positive data from our Phase 2b clinical trial of encaleret in patients with ADH1. Thirteen adults with ADH1 caused
by nine unique CASR variants participated in the three-period, Phase 2b, open-label, dose-ranging clinical trial. Oral calcium and activated vitamin D
supplements were discontinued prior to encaleret initiation. Periods 1 and 2 each evaluated encaleret over the course of five inpatient days and Period 3
included a 24-week outpatient evaluation. Based on 24-week outpatient data, we observed:
•
•
•
Mean values of blood calcium, urinary calcium, and blood parathyroid hormone, key biochemical parameters of mineral homeostasis, were
normalized by Period 2, Day 5 and were sustained through Period 3, Week 24 of the trial.
At Week 24 of encaleret treatment, 92% (12/13) of participants had achieved normal trough blood calcium levels in the absence of extra-
dietary calcium supplements and active vitamin D, and 77% (10/13) of participants had normal urinary calcium excretion.
Encaleret was well-tolerated with no serious adverse events reported; there were no treatment discontinuations or study withdrawals.
The participants who completed Period 3 of the Phase 2b study were eligible to continue in an open-label extension of up to 25 months. The results
of the study were published in the New England Journal of Medicine in September 2023.
We also announced the initiation of our Phase 3 registrational trial of encaleret in ADH1 in December 2022.
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Key Competitors
We believe encaleret is the only molecule that has been publicly disclosed to be in development specifically for the treatment of ADH1. There are
other identified companies developing compounds for the treatment of hypoparathyroidism using recombinant parathyroid hormone analogs or PTH
receptor agonists: Ascendis Pharma A/S (TransCon PTH), Amolyt Pharma (AZP-3601), EnteraBio Ltd. (EB612), Extend Biosciences Inc. (EXT607), and
MBX Biosciences (MBX 2109).
BBP-418: Limb Girdle Muscular Dystrophy Type 2I
BBP-418 is an investigational, orally administered, small molecule substrate supplementation therapy that we are developing for the treatment of
LGMD2I, also known as LGMDR9. In October 2023, we shared positive long-term data from our Phase 2 trial in patients with LGMD2I, including that
early assessment of increased glycosylated αDG predicted subsequent ambulatory improvements at later time points, supporting the use of glycosylated
αDG levels as a potential surrogate endpoint in LGMD2I. We are currently studying BBP-418 in FORTIFY, an ongoing global registrational Phase 3
clinical trial in patients with LGMD2I. We believe there is potential to pursue accelerated approval in the US for BBP-418 based on recent interactions with
the FDA on the use of glycosylated αDG as a surrogate endpoint.
Disease Overview
LGMD2I is an inherited neuromuscular disorder characterized by lower-limb weakness and loss of ambulation, and possible pulmonary and cardiac
dysfunction. BBP-418 has a potentially-addressable population of 7,000, including both LGMD2I and other potentially-addressable dystroglycanopathies,
in the United States and Europe. Currently, there is no disease-modifying treatment available. Standard of care is supportive care to alleviate end organ
dysfunction.
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Design Criteria
The rationale for developing BBP-418 as a potential treatment for LGMD2I is based on our understanding of the disease mechanism. In healthy
tissue, properly functioning Fukutin-Related Protein, or FKRP, glycosylates alpha-dystroglycan, or αDG. This glycosylation helps to stabilize muscle cells
by binding extracellular ligands. In LGMD2I, mutated FKRP does not function properly and results in dysfunctional, hypo-glycosylated αDG in muscle
cells, limiting αDG’s ability to function as a “shock absorber” for muscle fibers and increasing cellular susceptibility to damage.
BBP-418 is designed to target the disease mechanism of LGMD2I by supplying supra-physiological levels of BBP-418 upstream to drive residual
activity of the mutant FKRP enzyme and potentially increase glycosylated αDG levels.
Clinical Data
On October 9, 2023, we shared positive long-term results from our ongoing Phase 2 clinical trial of BBP-418 in patients with LGMD2I at the
Annual Congress of the World Muscle Society. The open-label, dose-ascending Phase 2 trial enrolled 14 participants, including both ambulatory and non-
ambulatory patients with LGMD2I, across three cohorts. The new long-term data remains consistent with earlier data from the Phase 2 study showing a
well-tolerated safety profile and encouraging preliminary efficacy. Additionally, early changes in glycosylated αDG levels at 3 months appear to be
associated with ambulatory improvements at 9 months, providing support for the possible use of glycosylated αDG levels as a surrogate endpoint in the
ongoing Phase 3 study for accelerated approval. Based on the data after 21 months of treatment, we observed:
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•
•
•
•
Increased glycosylated αDG levels from baseline observed as early as 3 months and sustained with treatment
Large (≥80%), sustained reduction in creatine kinase observed over an extended (up to 21-months) treatment period
Stabilization in NSAD scores and ambulatory measures observed over 21-months of BBP-418 treatment
BBP-418 continues to be well-tolerated with longer-term treatment
No treatment-related serious adverse events, or SAEs, or dose limiting toxicities observed with 21-months of BBP-418 dosing
Clinical Development Plan
Our Phase 2 clinical trial investigating BBP-418 in LGMD2I is ongoing. Following the release of top-line data from our Phase 2 trial, we have
engaged with regulatory authorities to align on a Phase 3 trial design. Our Phase 3 trial, FORTIFY, was initiated in the US, with the first patient enrolled in
June 2023.
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Key Competitors
We believe BBP-418 is the only late-stage oral therapy disclosed to be in clinical development for potentially disease-modifying treatment of
LGMD2I. Edgewise Therapeutics is developing an oral small molecule therapy (EDG-5506) for adults with LGMD2I. There are two other identified
companies developing gene therapies for the treatment of LGMD2I: Asklepios Biopharmaceutical, Inc. (LION-101) and Atamayo Therapeutics (ATA-001-
FKRP/ATA-100).
Manufacturing
We do not own or operate, and currently have no plans to establish, any manufacturing facilities. We currently depend on third-party contract
manufacturing organizations, or CMOs, for all required raw materials, drug substance and drug product for our preclinical research and our ongoing
clinical trials of our product candidates. In addition to a manufacturing agreement that we entered into in December 2019 and terminated by mutual
agreement in May 2022, we have secured long-term agreements with CMOs to produce and commercialize acoramidis if approved by the FDA. We intend
to continue to rely on CMOs for later-stage development and commercialization of our product candidates, including any additional product candidates that
we may identify. Although we rely on CMOs, we have personnel and third-party consultants with extensive manufacturing experience to oversee the
relationships with our contract manufacturers. Several of our development candidates have or are in the near term expected to have redundant and
overlapping drug substance and drug product supply chains.
Sales and Marketing
We intend to build a commercial infrastructure in the United States and selected other territories to support the commercialization of our current
product candidates when we believe a regulatory approval in a particular territory is likely. Because most of our target indications are rare diseases with a
concentrated prescribing audience and a small number of key opinion leaders who influence the treatments prescribed for the relevant patient population,
we currently believe that we can effectively address each market using our own targeted, specialty sales and marketing organization supported by internal
sales personnel, an internal marketing group and distribution support. To date, we have received regulatory approval for two products that we previously
developed, TRUSELTIQTM (infigratinib) for the treatment of patients with previously-treated locally advanced or metastatic cholangiocarcinoma, or CCA
harboring an FGFR2 fusion or rearrangement, and NULIBRY (fosdenopterin) for injection as the first therapy to reduce the risk of mortality in patients
with MoCD Type A. Sentynl Therapeutics, Inc., or Sentynl, acquired global rights to NULIBRY in the first quarter of 2022 and is now responsible for the
ongoing development and commercialization of NULIBRY in the United States and developing, manufacturing and commercializing fosdenopterin
globally. Following FDA approval of TRUSELTIQTM (infigratinib) in May 2021, we were the principal selling party of this product in the United States.
Commencing in January 2022, we sold the remaining transitional supply of TRUSELTIQTM to Helsinn Healthcare S.A. and Helsinn Therapeutics (U.S.),
Inc., or collectively, Helsinn, and Helsinn became the principal selling party. Helsinn permanently discontinued the distribution of TRUSELTIQTM and
requested a withdrawal of the NDA in May 2023, additionally, all clinical investigations under the associated IND are discontinued. In December 2022, we
entered into a mutual termination agreement with Helsinn concerning, among other things, steps to wind down the commercialization of infigratinib in
oncology indications. (See Note 11 to our consolidated financial statements.)
We evaluate our commercialization strategy as we advance each product candidate through clinical development and to regulatory approval. In any
core markets outside of the United States that we may identify, where appropriate, we may utilize strategic partners, distributors or contract sales forces to
expand the commercial availability of our product candidates, if approved. We currently do not expect that we will require large pharmaceutical partners
for the commercialization of any of our product candidates, if approved, although we may consider partnering in certain territories or indications or for
other strategic purposes.
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Intellectual Property
Overview
We strive to protect the proprietary technology that we believe is important to our business through a variety of methods, including seeking and
maintaining patents and patent applications intended to cover our product candidates and compositions, their methods of use and processes for their
manufacture, our platform technologies and any other aspects of inventions that are commercially important to the development of our business. We seek to
obtain domestic and international patent protection and, in addition to filing and prosecuting patent applications in the United States, we may file
counterpart patent applications in additional countries where we believe such foreign filing is likely to be beneficial, including Australia, Canada, Europe,
China, Japan, and Mexico. We have entered into various license agreements to obtain the rights to use certain patents for the development and
commercialization of our product candidates, as discussed further in the section titled, “Our Material Agreements.” We also rely on trade secrets to protect
aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.
Our success will depend on our ability to obtain and maintain patent and other proprietary rights protecting our commercially important technology,
inventions and know-how related to our business, defend and enforce our current and future issued patents, if any, preserve the confidentiality of our trade
secrets and operate without infringing the valid and enforceable patents and proprietary rights of third parties. We continually assess and refine our
intellectual property strategy in order to best fortify our position, and file additional patent applications when our intellectual property strategy warrants
such filings. We also rely on know-how, continuing technological innovation, and potential in-licensing opportunities to develop and maintain our
intellectual property portfolio. We seek to obtain domestic and international patent protection, and endeavor to promptly file patent applications for new
commercially valuable inventions.
The patent positions of biopharmaceutical companies like us are generally uncertain and involve complex legal, scientific, and factual questions. In
addition, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and patent scope can be reinterpreted by the
courts after issuance. Moreover, many jurisdictions permit third parties to challenge issued patents in administrative proceedings, which may result in
further narrowing or even cancellation of patent claims. We cannot predict whether the patent applications we are currently pursuing will issue as patents in
any particular jurisdiction or whether the claims of any patents, if issued, will provide sufficient protection from competitors.
Because patent applications in the United States and certain other jurisdictions are maintained in secrecy for 18 months or potentially even longer,
and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be certain of the priority of
inventions covered by pending patent applications. Moreover, we may have to participate in interference proceedings or derivation proceedings declared by
the United States Patent and Trademark Office, or USPTO, to determine priority of invention.
As of February 13, 2024, our intellectual property portfolio is composed of 133 issued patents and 108 patent applications that we license from
academic and research institutions and other third parties, and 56 issued patents and 424 pending patent applications that we own or co-own, including
through our subsidiaries. These patents and patent applications generally provide us with the rights to develop our product candidates in the United States
and worldwide. Our intellectual property portfolios for each of the programs that we consider to be our core value drivers are further described below.
For our subsidiary, QED Therapeutics, Inc. (“QED”), we license rights from Novartis to two issued U.S. patents, and related pending and issued
foreign patents and patent applications in Australia, Canada, China, Europe, Japan and Mexico, as well as in other countries in Asia and in South America,
that are directed to compositions of matter of infigratinib. The foreign patents and patent applications, if issued, are expected to expire between 2025 and
2030. The issued U.S. patents are expected to expire between 2028 and 2029, which takes into account patent term adjustments granted by the USPTO as
well as a terminal disclaimer of one issued patent to another U.S. patent. Upon the initial approval of infigratinib, QED applied for 1,516 days of patent
term extension, or PTE, for the U.S. patent covering the infigratinib compound; assuming grant of the PTE application, the term of this patent may be
extended from August 25, 2029, to October 19, 2033.
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We also license rights from Novartis to two issued U.S. patents and related pending and issued foreign patents and patent applications in Australia,
Canada, China, Europe, Japan and Mexico, as well as in other countries in Asia and in South America, that are directed to pharmaceutical formulations
containing infigratinib. The issued patents and patent applications, if issued, are expected to expire in 2034. In addition, we license rights from Novartis to
one issued U.S. patent, one pending U.S. patent application, and related pending and issued foreign patents and patent applications in Australia, Canada,
China, Europe, Japan and Mexico, as well as in other countries in Asia, that are directed to methods of treating hypophosphatemic disorders. The issued
patents and patent applications, if issued, are expected to expire in 2033.
We also license rights from Inserm Transfert ESA and Assistance Publique-Hôpitaux de Paris to two issued U.S. patents and one pending U.S.
patent application, and one granted patent in Europe, that are directed to methods of treating skeletal dysplasias using infigratinib. The issued U.S. patents,
granted patent in Europe, and the pending patent application, if issued, are expected to expire in 2032.
In addition, QED owns five pending U.S. patent applications, one pending Patent Cooperation Treaty, or PCT, patent application, and related
pending foreign patent applications in Australia, Canada, China, Europe, Japan and Mexico, as well as in other countries in Asia, that are directed to
methods of treating various cancers or skeletal disorders using infigratinib. If any patents issue from these patent applications, such patents would be
expected to expire between 2040 and 2044.
For our subsidiary Eidos Therapeutics, Inc., we license rights from the Board of Trustees of the Leland Stanford Junior University, or Stanford, to
ten issued U.S. patents, two pending U.S. patent applications, one issued European patent, and one issued Japanese patent with claims directed to
composition of matter and methods of use relating to acoramidis. These patents are expected to expire in 2031 or 2033.
In addition, we own five issued U.S. patents, six pending U.S. patent applications, and 67 related foreign patents issued or patent applications
pending in various jurisdictions, including Australia, Canada, Europe, China, Japan, and Mexico, with claims directed to salt and solid forms, methods of
manufacturing, dosing methods, and/or formulations relating to acoramidis. The issued U.S. and foreign patents are expected to expire in 2038 or 2039.
The pending U.S. and foreign patent applications, if issued, are also expected to expire between 2038 and 2044.
For our subsidiary, Calcilytix, Inc., we license rights from Japan Tobacco Company to one issued U.S. patent and two foreign patents in Europe and
Japan that are directed to compositions of matter of encaleret. The U.S. patent is expected to expire in 2025, and the foreign patents are expected to expire
in 2024. In addition, Calcilytix owns four pending U.S. patent applications, and thirty one related foreign patent applications pending in various
jurisdictions, including Australia, Canada, Europe, China, Japan, and Mexico with claims to formulations, dosing methods, and patient selection methods
relating to encaleret. The pending U.S. and foreign patent applications, if issued, are expected to expire between 2041 and 2044.
For our subsidiary, ML Bio Solutions, Inc., we license rights from the Charlotte-Mecklenburg Hospital Authority d/b/a Atrium Health to five issued
U.S. patents, three pending U.S. patent applications, and thirty three related foreign patent applications pending in various jurisdictions, including
Australia, Canada, Europe, China, Japan, and Mexico with claims to methods of treatment, dosing methods, and compositions relating to BBP-418. The
issued U.S. patents are expected to expire in 2037. The pending U.S. and foreign patent applications, if issued, are expected to expire in 2040 or 2041. In
addition, ML Bio owns two pending U.S. patent applications relating to assays. The pending U.S. patent applications, if issued, are expected to expire in
2042 or 2044.
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Our Material Agreements
Acoramidis
License Agreement with Alexion
In September 2019, through our subsidiary Eidos Therapeutics, Inc., or Eidos, we entered into a license agreement, or the Alexion License
Agreement, with Alexion Pharma International Operations Unlimited Company, a subsidiary of Alexion Pharmaceuticals, Inc., or together, Alexion, to
develop and commercialize acoramidis in Japan. Additionally, in September 2019, Eidos entered into a stock purchase agreement with Alexion, pursuant to
which Eidos sold to Alexion 556,173 shares of its common stock for aggregate cash proceeds of $25.0 million. Under the terms of the Alexion License
Agreement, Eidos granted Alexion an exclusive license to certain of our intellectual property rights to develop, manufacture and commercialize acoramidis
in Japan. In consideration for the license grant, Eidos received an upfront payment of $25.0 million, with the potential for an additional one-time payment
of $30.0 million subject to the achievement of a regulatory milestone. In addition, Eidos is entitled to receive royalties in the low double-digits on net sales
by Alexion of acoramidis in Japan. The royalty rate is subject to reduction if Alexion is required to obtain intellectual property rights from third parties to
develop, manufacture or commercialize acoramidis in Japan, or upon the introduction of generic competition into the market.
License Agreement with the Board of Trustees of the Leland Stanford Junior University
In April 2016, through Eidos, we entered into an exclusive license agreement with Stanford for rights relating to novel transthyretin aggregation
inhibitors. Under our agreement, Stanford has granted us an exclusive worldwide license to make, use and sell products that are covered by the licensed
patent rights. This license grant expires when the last licensed patent expires. The patent rights exclusively licensed to us under the license are described in
more detail above under the heading “Intellectual property— Eidos Therapeutics, Inc.” Stanford and Eidos agree in good faith to meet and discuss
performance of development milestones which are specified in amendments to the license agreement.
Stanford retains the right, on behalf of itself and all other non-profit academic research institutions, to practice under the patent rights for any non-
profit purpose, including sponsored research and collaborations. We may grant sublicenses to third parties so long as we are actively pursuing the
development or commercialization of products covered by the patent rights. We may also be required to sublicense our rights under the agreement at
Stanford’s request under certain conditions, including if we are unwilling or unable to serve a potential market or territory and there is a third party willing
to be a sublicensee in such market or territory.
We are obligated to pay to Stanford a yearly license maintenance fee during the term of the agreement, but we may offset the maintenance fee
against earned royalty payments due on net sales occurring in that year. Stanford is entitled to receive a royalty as a percentage of net sales of licensed
products, in the low single digits. We have agreed to pay Stanford a percentage of non-royalty revenue we receive from our sublicensees, with the amount
owed decreasing annually for three years based on when we enter into the applicable sublicense agreement. In addition, we are obligated to pay Stanford up
to approximately $1.0 million upon the achievement of specific intellectual property, clinical and regulatory milestone events. In the event of a change of
control transaction with respect to Eidos, we are obligated to pay Stanford a change of control fee of $250,000 in connection with the assignment of the
license agreement to the acquirer of Eidos.
Under the license agreement with Stanford, we are obligated to use commercially reasonable efforts to develop, manufacture, and commercialize at
least one licensed product; to develop markets for such licensed products; and to meet certain development milestones as agreed upon between us and
Stanford.
Subject to the expiration of the license grant described above, the agreement does not have a specified term. We may terminate the agreement by
providing prior written notice to Stanford, and Stanford has the right to terminate the agreement if we fail to achieve certain milestones or make payments
under the agreement, or are not actively pursuing development of a licensed product, or if we otherwise materially breach the agreement and fail to cure
such breach within a specified grace period.
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Infigratinib: License Agreement with Novartis International Pharmaceutical Ltd.
In January 2018, through our subsidiary QED, we entered into a license agreement with Novartis International Pharmaceutical Ltd., or Novartis, for
certain intellectual property rights, including patents and know-how, related to infigratinib for the treatment of patients with FGFR-driven diseases,
including CCA, UC and achondroplasia. We refer to this agreement as the Novartis License.
Pursuant to the Novartis License, we obtained a license to research, develop, make, have made, use, import, offer for sale, sell, have sold and
otherwise commercialize infigratinib, as well as therapeutic products incorporating infigratinib that would, but for the license grant, infringe Novartis’
license patent rights, or that were developed using or that incorporate or embody Novartis’ licensed know-how, in all fields of use worldwide. The license
grant to us includes the right to sublicense through multiple tiers. We also have certain rights to intellectual property licensed to Novartis’ affiliate under a
materials transfer agreement with a third party.
The Novartis License is subject to Novartis’ existing obligations to supply a third party with infigratinib to support the third party’s clinical trials,
and we have an ongoing obligation to inform Novartis of our or our sublicensees’ intent to seek regulatory approval for and commercialize infigratinib for
various indications, with potential reversionary rights to Novartis in the event of a subsequent decision not to seek regulatory approval and
commercialization, or a determination by Novartis that we have failed to sufficiently pursue regulatory approval and commercialization, for Novartis to
grant such third party limited rights to develop and commercialize infigratinib.
Under the terms of the Novartis License, we made a one-time payment of $15.0 million to Novartis and agreed to issue shares of Series A preferred
stock of QED valued at approximately $1.7 million in the aggregate to Novartis. In addition, we are obligated to make contingent milestone payments
totaling $60.0 million upon achievement of certain regulatory milestones. We are also obligated to make contingent milestone payments totaling $35.0
million upon achievement of certain sales milestones for therapeutic products incorporating infigratinib. QED also agreed to pay Novartis tiered low
double-digit royalties on net sales of therapeutic products incorporating infigratinib. Following the FDA’s approval of TRUSELTIQTM in May 2021, we
paid a one-time regulatory milestone payment to Novartis of $20.0 million.
Under the Novartis License, we are required to use commercially reasonable efforts to develop infigratinib, and to obtain regulatory approval for
and commercialize infigratinib in the United States and the European Union.
We may terminate the Novartis License in its entirety or on a product-by-product or country-by-country basis at any time with 60 days’ prior written
notice to Novartis. Novartis may terminate if QED ceases to function as a going concern, is the subject of certain bankruptcy or similar proceedings, or
otherwise winds down or discontinues its business. Either party may terminate for material breach that is not cured by the other party within a specified
time period of receiving notice of such material breach. Otherwise, the Novartis License terminates on a product-by-product and country-by-country basis
on the latest of the expiration of licensed patent rights, the expiration of regulatory exclusivity, or the tenth anniversary of the first commercial sale in such
country.
Fosdenopterin: Asset Purchase Agreement with Alexion Pharma Holding Unlimited Company
In June 2018, through our subsidiary Origin Biosciences, Inc., we entered into an asset purchase agreement with Alexion Pharma Holding Unlimited
Company, or Alexion Pharma, pursuant to which we acquired Alexion’s right, title and interest in certain assets relating to fosdenopterin, including patents
and other intellectual property rights.
In the event that a priority review voucher is granted to us by the FDA, we have agreed to pay Alexion Pharma a percentage in the mid-teens of any
proceeds received by us from our sale of the PRV to a third party. If we do not sell the PRV to a third party within 180 days after our receipt of the PRV, we
are obligated to pay Alexion Pharma $18.8 million, which amount is creditable against any amounts otherwise due to Alexion Pharma in accordance with
the preceding sentence upon any future sale by us of the PRV. We are obligated to make contingent milestone payments totaling $3.0 million upon
achievement of certain development milestones and $17.0 million upon achievement of certain sales milestones for products containing the fosdenopterin
molecule. We also agreed to pay Alexion Pharma tiered royalties ranging from the low-to mid-teens on net sales of products containing the fosdenopterin
molecule.
In 2021, we paid Alexion a $2.0 million regulatory milestone upon the FDA’s approval of NULIBRY, a $1.0 million sales-based milestone payment,
and $15.0 million as a result of the sale of the PRV to Eidos.
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BBP-398: License Development and Commercialization Agreement with Bristol-Myers Squibb Company
On May 12, 2022, BridgeBio and our subsidiary, Navire Pharma, Inc., or Navire, entered into an exclusive license development and
commercialization agreement with Bristol-Myers Squibb Company, or BMS, pursuant to which Navire granted BMS exclusive rights to develop and
commercialize Navire’s product candidate, BBP-398, in all indications worldwide, except for the People’s Republic of China, Macau, Hong Kong, Taiwan,
Thailand, Singapore, and South Korea, or collectively, the Asia Region. We refer to this agreement as the Navire-BMS License Agreement.
Under the terms of the Navire-BMS License Agreement, Navire was entitled to receive a non-refundable, upfront payment of $90.0 million, which
Navire collected in full in June 2022. Additionally, Navire is eligible to receive additional payments totaling up to approximately $815.0 million in the
aggregate, subject to the achievement of development, regulatory and commercial milestones, as well as tiered royalties in the low-to-mid teens as a
percentage of adjusted net sales by BMS of the licensed products sold worldwide, outside of the Asia Region. Navire will retain the option to acquire
higher royalties in the United States in connection with funding a portion of development costs upon the initiation of registrational studies. Based on the
terms of the Navire-BMS License Agreement, Navire will continue to lead its ongoing Phase 1 monotherapy and combination therapy trials and BMS will
lead and fund all other development and commercialization activities.
Government Regulation
Government authorities in the United States at the federal, state and local level and in other countries regulate, among other things, the research,
development, manufacture, testing, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-
approval monitoring and reporting, marketing and export and import of drug and biological products, including gene therapies, as well as diagnostics, and
any future product candidates. Generally, before a new drug, biologic or diagnostic can be marketed, considerable data demonstrating its quality, safety and
efficacy must be obtained, organized into a format specific for each regulatory authority, submitted for review and approved, authorized, or cleared by the
applicable regulatory authority.
U.S. Government Regulation of Drug and Biological Products
In the United States, the FDA regulates drugs under the Federal Food, Drug and Cosmetic Act, or FDCA, and its implementing regulations and
biologics under the FDCA and the Public Health Service Act, or PHSA, and their implementing regulations. Both drugs and biologics also are subject to
other federal, state and local statutes and regulations, such as those related to competition. The process of obtaining regulatory approvals and the
subsequent compliance with appropriate federal, state, and local statutes and regulations requires the expenditure of substantial time and financial
resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or following
approval may subject an applicant to administrative actions or judicial sanctions. These actions and sanctions could include, among other actions, the
FDA’s refusal to approve pending applications, withdrawal of an approval, license revocation, a clinical hold, untitled or warning letters, voluntary or
mandatory product recalls or market withdrawals, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of
government contracts, restitution, disgorgement and civil or criminal fines or penalties. Any agency or judicial enforcement action could have a material
adverse effect on our business, the market acceptance of our product candidates, if approved, and our reputation.
Our product candidates must be approved by the FDA through either a New Drug Application, or NDA or a Biologics License Application, or
BLA, process before they may be legally marketed in the United States. The process generally involves the following:
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completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with Good
Laboratory Practices, or GLP, requirements;
submission to the FDA of an IND, which must become effective before human clinical trials may begin;
approval by an Institutional Review Board, or IRB, or independent ethics committee at each clinical trial site before each human trial may be
initiated;
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performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, Good Clinical Practices, or
GCP, requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each
proposed indication;
submission to the FDA of an NDA or BLA;
a determination by the FDA within 60 days of its receipt of an NDA or BLA to accept the filing for review;
satisfactory completion of one or more FDA pre-approval inspections of the manufacturing facility or facilities where the drug or biologic
will be produced to assess compliance with Current Good Manufacturing Practices, or cGMP, requirements to assure that the facilities,
methods and controls are adequate to preserve the drug or biologic’s identity, strength, quality and purity;
potential FDA audit of the clinical trial sites that generated the data in support of the NDA or BLA;
payment of user fees for FDA review of the NDA or BLA; and
FDA review and approval of the NDA or BLA, including consideration of the views of any FDA advisory committee, prior to any
commercial marketing or sale of the drug or biologic in the United States.
The preclinical and clinical testing and approval process requires substantial time, effort and financial resources, and the regulatory scheme for
drugs and biologics is evolving and subject to change at any time. We cannot be certain that any approvals for our product candidates will be granted on a
timely basis, or at all.
Preclinical Studies
Before testing any drug, biological or gene therapy candidate in humans, the product candidate must undergo rigorous preclinical testing. Preclinical
studies include laboratory evaluation of product chemistry and formulation, as well as in vitro and animal studies to assess safety and in some cases to
establish a rationale for therapeutic use. The conduct of preclinical studies is subject to federal and state regulations and requirements, including GLP
regulations for safety/toxicology studies.
An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data
or literature and plans for clinical trials, among other things, to the FDA as part of an IND. An IND is a request for authorization from the FDA to
administer an investigational product to humans, and must become effective before human clinical trials may begin. Some long-term preclinical testing,
such as animal tests of reproductive AEs and carcinogenicity, may continue after the IND is submitted. An IND automatically becomes effective 30 days
after receipt by the FDA, unless before that time, the FDA raises concerns or questions related to one or more proposed clinical trials and places the trial on
clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. As a result,
submission of an IND may not result in the FDA allowing clinical trials to commence. Additionally, the review of information in an IND submission may
prompt FDA to, among other things, scrutinize existing INDs or any marketed products and could generate requests for information or clinical holds on
other product candidates or programs.
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Clinical Trials
The clinical stage of development involves the administration of the investigational product to healthy volunteers or patients under the supervision
of qualified investigators, generally physicians not employed by or under the trial sponsor’s control, in accordance with GCP requirements, which include
the requirement that all research subjects provide their informed consent for their participation in any clinical trial. Clinical trials are conducted under
protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria and the parameters to
be used to monitor subject safety and assess efficacy. Each protocol, and any subsequent amendments to the protocol, must be submitted to the FDA as part
of the IND. Furthermore, each clinical trial must be reviewed and approved by an IRB for each institution at which the clinical trial will be conducted to
ensure that the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also
approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative, and must monitor the clinical trial
until completed. There also are requirements governing the reporting of ongoing clinical trials and completed clinical trial results to public registries.
Information about certain clinical trials, including clinical trial results, must be submitted within specific timeframes for publication on the
www.clinicaltrials.gov website.
In addition to the submission of an IND to the FDA before initiation of a clinical trial in the United States, certain human clinical trials involving
recombinant or synthetic nucleic acid molecules are subject to oversight by institutional biosafety committees, or IBC’s, as set forth in the National
Institute of Health (“NIH”) Guidelines for Research Involving Recombinant or Synthetic Nucleic Acid Molecules, or NIH Guidelines. Under the NIH
Guidelines, recombinant and synthetic nucleic acids are defined as (i) molecules that are constructed by joining nucleic acid molecules and that can
replicate in a living cell (i.e., recombinant nucleic acids); (ii nucleic acid molecules that are chemically or by other means synthesized or amplified,
including those that are chemically or otherwise modified but can base pair with naturally occurring nucleic acid molecules (i.e., synthetic nucleic acids); or
(iii) molecules that result from the replication of those described in (i) or (ii). Specifically, under the NIH Guidelines, supervision of human gene transfer
trials includes evaluation and assessment by an IBC, a local institutional committee that reviews and oversees research utilizing recombinant or synthetic
nucleic acid molecules at that institution. The IBC assesses the safety of the research and identifies any potential risk to public health or the environment,
and such review may result in some delay before initiation of a clinical trial. While the NIH Guidelines are not mandatory unless the research in question is
being conducted at or sponsored by institutions receiving NIH funding of recombinant or synthetic nucleic acid molecule research, many companies and
other institutions not otherwise subject to the NIH Guidelines voluntarily follow them.
A sponsor who wishes to conduct a clinical trial outside of the United States may, but need not, obtain FDA authorization to conduct the clinical
trial under an IND. If a foreign clinical trial is not conducted under an IND, the sponsor may submit data from the clinical trial to the FDA in support of an
NDA or BLA. The FDA will accept a well-designed and well-conducted foreign clinical study not conducted under an IND if the study was conducted in
accordance with GCP requirements, and the FDA is able to validate the data through an onsite inspection if deemed necessary.
Clinical trials generally are conducted in three sequential phases, known as Phase 1, Phase 2 and Phase 3, and may overlap.
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Phase 1 clinical trials generally involve a small number of healthy volunteers or disease-affected patients who are initially exposed to a single
dose and then multiple doses of the product candidate. The primary purpose of these clinical trials is to assess the metabolism, pharmacologic
action, side effect tolerability and safety of the product candidate.
Phase 2 clinical trials involve studies in disease-affected patients to evaluate proof of concept and/or determine the dose required to produce
the desired benefits. At the same time, safety and further PK and PD information is collected, possible adverse effects and safety risks are
identified, and a preliminary evaluation of efficacy is conducted.
Phase 3 clinical trials generally involve a large number of patients at multiple sites and are designed to provide the data necessary to
demonstrate the effectiveness of the product for its intended use, its safety in use and to establish the overall benefit/risk relationship of the
product and provide an adequate basis for product labeling.
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Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These trials are used to
gain additional experience from the treatment of patients in the intended therapeutic indication and are commonly intended to generate additional safety
data regarding use of the product in a clinical setting. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition
of approval of an NDA or BLA.
Progress reports detailing the results of the clinical trials, among other information, must be submitted at least annually to the FDA and written IND
safety reports must be submitted to the FDA and the investigators 15 days after the trial sponsor determines the information qualifies for reporting for
serious and unexpected suspected AEs, findings from other studies or animal or in vitro testing that suggest a significant risk for human subjects and any
clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. The sponsor must
also notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction as soon as possible but in no case later than seven calendar days
after the sponsor’s initial receipt of the information.
Phase 1, Phase 2, Phase 3 and other types of clinical trials may not be completed successfully within any specified period, if at all. The FDA or the
sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed
to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being
conducted in accordance with the IRB’s requirements or if the drug or biologic has been associated with unexpected serious harm to patients. Additionally,
some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring
board or committee. This group provides authorization for whether a trial may move forward at designated check points based on access to certain data
from the trial. Concurrent with clinical trials, companies usually complete additional animal studies and also must develop additional information about the
chemistry and physical characteristics of the drug or biologic as well as finalize a process for manufacturing the product in commercial quantities in
accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product and, among
other things, companies must develop methods for testing the identity, strength, quality and purity of the final product. Additionally, appropriate packaging
must be selected and tested, and stability studies must be conducted to demonstrate that the product candidates do not undergo unacceptable deterioration
over their shelf life.
FDA Review Process
Following completion of the clinical trials, data are analyzed to assess whether the investigational product is safe and effective for the proposed
indicated use or uses. The results of preclinical studies and clinical trials are then submitted to the FDA as part of an NDA or BLA, along with proposed
labeling, chemistry and manufacturing information to ensure product quality and other relevant data. The NDA or BLA is a request for approval to market
the drug or biologic for one or more specified indications and must contain proof of safety and efficacy for a drug or safety, purity and potency for a
biologic. The application may include both negative and ambiguous results of preclinical studies and clinical trials, as well as positive findings. Data may
come from company-sponsored clinical trials intended to test the safety and efficacy of a product’s use or from a number of alternative sources, including
studies initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and
efficacy of the investigational product to the satisfaction of FDA. FDA approval of an NDA or BLA must be obtained before a drug or biologic may be
marketed in the United States.
Under the Prescription Drug User Fee Act, or PDUFA, as amended, each NDA or BLA must be accompanied by a user fee. FDA adjusts the
PDUFA user fees on an annual basis. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first
application filed by a small business. Additionally, no user fees are assessed on NDAs or BLAs for products designated as orphan drugs, unless the product
also includes a non-orphan indication.
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The FDA reviews all submitted NDAs and BLAs before it accepts them for filing, and may request additional information rather than accepting the
NDA or BLA for filing. The FDA must make a decision on accepting an NDA or BLA for filing within 60 days of receipt, and such decision could include
a refusal to file by the FDA. Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA or BLA. Under the goals and
policies agreed to by the FDA under PDUFA, the FDA targets ten months, from the filing date, in which to complete its initial review of a new molecular
entity NDA or original BLA and respond to the applicant, and six months from the filing date of a new molecular entity NDA or original BLA designated
for priority review. The FDA does not always meet its PDUFA goal dates for standard and priority NDAs or BLAs, and the review process is often
extended by FDA requests for additional information or clarification.
Before approving an NDA or BLA, the FDA will conduct a pre-approval inspection of the manufacturing facilities for the new product to determine
whether they comply with cGMP requirements. The FDA will not approve the product unless it determines that the manufacturing processes and facilities
are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. The FDA also may
audit data from clinical trials to ensure compliance with GCP requirements. Additionally, the FDA may refer applications for novel products or products
which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review,
evaluation and a recommendation as to whether the application should be approved and under what conditions, if any. The FDA is not bound by
recommendations of an advisory committee, but it considers such recommendations when making decisions on approval. The FDA likely will reanalyze
the clinical trial data, which could result in extensive discussions between the FDA and the applicant during the review process. After the FDA evaluates
an NDA or BLA, it will issue an approval letter or a Complete Response Letter. An approval letter authorizes commercial marketing of the drug or
biologic with specific prescribing information for specific indications. A Complete Response Letter indicates that the review cycle of the application is
complete, and the application will not be approved in its present form. A Complete Response Letter usually describes all of the specific deficiencies in the
NDA or BLA identified by the FDA. The Complete Response Letter may require the applicant to obtain additional clinical data, including the potential
requirement to conduct additional pivotal Phase 3 clinical trial(s) and/or to complete other significant and time-consuming requirements related to clinical
trials, or to conduct additional preclinical studies or manufacturing activities. If a Complete Response Letter is issued, the applicant may either resubmit
the NDA or BLA, addressing all of the deficiencies identified in the letter, or withdraw the application or request an opportunity for a hearing. Even if such
data and information are submitted, the FDA may decide that the NDA or BLA does not satisfy the criteria for approval. Data obtained from clinical trials
are not always conclusive and the FDA may interpret data differently than we interpret the same data.
Orphan Drug Designation and Exclusivity
Under the Orphan Drug Act, the FDA may grant orphan drug designation to a drug or biological product intended to treat a rare disease or
condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or 200,000 or more individuals
in the United States and for which there is no reasonable expectation that the cost of developing and making the product available in the United
States for this type of disease or condition will be recovered from sales of the product.
Orphan drug designation must be requested before submitting an NDA or BLA. After the FDA grants orphan drug designation, the identity of
the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in or
shorten the duration of the regulatory review and approval process.
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If a product that has orphan drug designation subsequently receives the first FDA approval for the disease or condition for which it has such
designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same drug
for the same indication for seven years from the date of such approval, except in limited circumstances, such as a showing of clinical superiority to the
product with orphan exclusivity by means of greater effectiveness, greater safety or providing a major contribution to patient care or in instances of drug
supply issues. Competitors, however, may receive approval of either a different product for the same indication or the same product for a different
indication but that could be used off-label in the orphan indication. Orphan drug exclusivity also could block the approval of our products for seven years
if a competitor obtains approval before we do for the same product, as defined by the FDA, for the same indication we are seeking approval, or if our
product is determined to be contained within the scope of the competitor’s product for the same indication or disease. If we pursue marketing approval for
an indication broader than the orphan drug designation we have received, we may not be entitled to orphan drug exclusivity. Orphan drug status in the
European Union has similar, but not identical, requirements and benefits.
Rare Pediatric Disease Designation and Priority Review Vouchers
Under the FDCA, as amended, the FDA incentivizes the development of drugs and biologics that meet the definition of a “rare pediatric disease,”
defined to mean a serious or life-threatening disease in which the serious of life-threatening manifestations primarily affect individuals aged from birth to
18 years and the disease affects fewer than 200,000 individuals in the United States or affects more than 200,000 in the United States and for which there is
no reasonable expectation that the cost of developing and making in the United States a drug for such disease or condition will be received from sales in the
United States of such drug. The sponsor of a product candidate for a rare pediatric disease may be eligible for a voucher that can be used to obtain a priority
review for a subsequent human drug or biologic application after the date of approval of the rare pediatric disease drug product, referred to as a priority
review voucher, or PRV. A sponsor may request rare pediatric disease designation from the FDA prior to the submission of its NDA or BLA. A rare
pediatric disease designation does not guarantee that a sponsor will receive a PRV upon approval of its NDA or BLA. Moreover, a sponsor who chooses
not to submit a rare pediatric disease designation request may nonetheless receive a PRV upon approval of their marketing application if they request such a
voucher in their original marketing application and meet all of the eligibility criteria. If a PRV is received, it may be sold or transferred an unlimited
number of times. Congress has extended the PRV program through September 30, 2024, with the potential for PRVs to be granted for eligible products
approved by September 30, 2026.
Expedited Development and Review Programs
A sponsor may seek to develop and obtain approval of its product candidates under programs designed to accelerate the development, FDA review
and approval of new drugs and biologics that meet certain criteria. For example, the FDA has a fast track program that is intended to expedite or facilitate
the process for reviewing new drugs and biologics that are intended to treat a serious or life threatening disease or condition and demonstrate the potential
to address unmet medical needs for the condition. Fast track designation applies to both the product and the specific indication for which it is being studied.
For a fast track-designated product, the FDA may consider sections of the NDA or BLA for review on a rolling basis before the complete application is
submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and
determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application. The sponsor
can request the FDA to designate the product for fast track status any time before receiving NDA or BLA approval, but ideally no later than the pre-NDA
or pre-BLA meeting.
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A product submitted to the FDA for marketing, including under a fast track program, may be eligible for other types of FDA programs intended to
expedite development or review, such as priority review and accelerated approval. Priority review means that, for a new molecular entity or original BLA,
the FDA sets a target date for FDA action on the marketing application at six months after accepting the application for filing as opposed to ten months. A
product is eligible for priority review if it is designed to treat a serious or life-threatening disease condition and, if approved, would provide a significant
improvement in safety and effectiveness compared to available therapies. The FDA will attempt to direct additional resources to the evaluation of an
application for a new drug or biologic designated for priority review in an effort to facilitate the review. If criteria are not met for priority review, the
application for a new molecular entity or original BLA is subject to the standard FDA review period of ten months after FDA accepts the application for
filing. Priority review designation does not change the scientific/medical standard for approval or the quality of evidence necessary to support approval.
Under the Food and Drug Omnibus Reform Act of 2022, or FDORA, a platform technology incorporated within or utilized by a drug or biologic is
eligible for designation as a designated platform technology if (1) the platform technology is incorporated in, or utilized by, a drug approved under an
NDA or BLA; (2) preliminary evidence submitted by the sponsor of the approved or licensed drug, or a sponsor that has been granted a right of reference
to data submitted in the application for such drug, demonstrates that the platform technology has the potential to be incorporated in, or utilized by, more
than one drug without an adverse effect on quality, manufacturing, or safety; and (3) data or information submitted by the applicable person indicates that
incorporation or utilization of the platform technology has a reasonable likelihood to bring significant efficiencies to the drug development or
manufacturing process and to the review process. A sponsor may request the FDA to designate a platform technology as a designated platform technology
concurrently with, or at any time after, submission of an IND application for a drug that incorporates or utilizes the platform technology that is the subject
of the request. If so designated, the FDA may expedite the development and review of any subsequent original NDA or BLA for a drug that uses or
incorporates the platform technology. Designated platform technology status does not ensure that a drug will be developed more quickly or receive a faster
FDA review process or ultimate FDA approval. In addition, the FDA may revoke a designation if the FDA determines that a designated platform
technology no longer meets the criteria for such designation.
A product may also be eligible for accelerated approval if it is designed to treat a serious or life-threatening disease or condition and generally
provides a meaningful advantage over available therapies upon a determination that the product has an effect on either a surrogate that is reasonably likely
to predict clinical benefit or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, or IMM, that is reasonably likely to
predict an effect on IMM or other clinical benefit, taking into account the severity, rarity, or prevalence of the disease or condition and the availability or
lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a drug or biologic receiving accelerated approval perform
adequate and well-controlled post-marketing confirmatory clinical trials with due diligence and, under FDORA, the FDA is permitted to require, as
appropriate, that such confirmatory studies be underway prior to approval or within a specified time period after accelerated approval is granted. In
addition, the FDA currently requires, unless otherwise informed by the agency, pre-approval of promotional materials, which could adversely impact the
timing of the commercial launch of the product. Under FDORA, the FDA has increased authority for expedited procedures to withdraw approval of a drug
or indication approved under accelerated approval if, for example, the confirmatory trial fails to verify the predicted clinical benefit of the product.
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Additionally, a drug or biologic may be eligible for designation as a breakthrough therapy if the product is intended, alone or in combination with
one or more other drugs or biologics, to treat a serious or life-threatening condition and preliminary clinical evidence indicates that the product may
demonstrate substantial improvement over currently approved therapies on one or more clinically significant endpoints, such as substantial treatment
effects observed early in clinical development. If the FDA designates a breakthrough therapy, it may take actions appropriate to expedite the development
and review of the application, which may include holding meetings with the sponsor and the review team throughout the development of the therapy;
providing timely advice to, and interactive communication with, the sponsor regarding the development of the drug to ensure that the development program
to gather the nonclinical and clinical data necessary for approval is as efficient as practicable; involving senior managers and experienced review staff, as
appropriate, in a collaborative, cross-disciplinary review; assigning a cross-disciplinary project lead for the FDA review team to facilitate an efficient
review of the development program and to serve as a scientific liaison between the review team and the sponsor; and considering alternative clinical trial
designs when scientifically appropriate, which may result in smaller trials or more efficient trials that require less time to complete and may minimize the
number of patients exposed to a potentially less efficacious treatment. Breakthrough therapy designation comes with all of the benefits of fast track
designation, which means that the sponsor may file sections of the BLA for review on a rolling basis if certain conditions are satisfied, including an
agreement with the FDA on the proposed schedule for submission of portions of the application and the payment of applicable user fees before the FDA
may initiate a review.
As part of the 21st Century Cures Act, Congress amended the FDCA to facilitate an efficient development program for, and expedite review of
regenerative medicine advanced therapies, or RMATs, which include cell and gene therapies, therapeutic tissue engineering products, human cell and tissue
products, and combination products using any such therapies or products. RMATs do not include those human cells, tissues, and cellular and tissue based
products regulated solely under section 361 of the PHSA and 21 CFR Part 1271. This program is intended to facilitate efficient development and expedite
review of regenerative medicine therapies, which are intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition and qualify
for RMAT designation. A sponsor may request that the FDA designate a product candidate as a RMAT concurrently with or at any time after submission of
an IND. The FDA has 60 calendar days to determine whether the product candidate meets the criteria, including whether there is preliminary clinical
evidence indicating that the product candidate has the potential to address unmet medical needs for a serious or life-threatening disease or condition. A
BLA for a product candidate that has received RMAT designation may be eligible for priority review or accelerated approval through use of surrogate or
intermediate endpoints reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites. Benefits of
RMAT designation also include early interactions with FDA to discuss any potential surrogate or intermediate endpoint to be used to support accelerated
approval. A product candidate with RMAT designation that is granted accelerated approval and is subject to post-approval requirements may fulfill such
requirements through the submission of clinical evidence from clinical studies, patient registries, or other sources of real world evidence, such as electronic
health records; the collection of larger confirmatory data sets; or post-approval monitoring of all patients treated with such therapy prior to its approval.
With respect to oncology products, the FDA may review applications under Real-Time Oncology Review, or RTOR, established by the FDA’s
Oncology Center of Excellence. RTOR, which allows an applicant to pre-submit components of the application to allow the FDA to review clinical data
before the complete filing is submitted, aims to facilitate a more efficient review process to ensure that safe and effective treatments are available to
patients as early as possible, while maintaining and improving review quality. Drugs considered for review under RTOR must, among other things, be
likely to demonstrate substantial improvements on a clinically relevant endpoint(s) over available therapy, and must have easily interpreted endpoints. In
addition, no aspect of the application should be likely to require a longer review time, such as, for example, a requirement for a new Risk Evaluation and
Mitigation Strategy, or REMS. To determine eligibility for RTOR, the FDA requires top-line efficacy and safety results from an applicant’s pivotal clinical
trial(s), as well as completion of database lock for the clinical trial(s). The FDA will generally make a decision regarding acceptance into RTOR within 20
business days of receipt of the request from the applicant. If an applicant is not accepted into RTOR, the applicant will follow routine application
submission procedures.
Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for
qualification or the time period for FDA review or approval may not be shortened. Furthermore, fast track designation, priority review, accelerated
approval, breakthrough therapy, RMAT and RTOR designation do not change the standards for approval.
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Pediatric Information and Pediatric Exclusivity
Under the Pediatric Research Equity Act, or PREA, certain NDAs and BLAs and certain supplements to an NDA or BLA must contain data to
assess the safety and efficacy of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for
each pediatric subpopulation for which the product is safe and effective. The FDA may grant deferrals for submission of pediatric data or full or partial
waivers. The Food and Drug Administration Safety and Innovation Act, or FDASIA, amended the FDCA to require that a sponsor who is planning to
submit a marketing application for a drug that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of
administration, unless the drug is for an indication for which orphan designation has been granted and is not for a molecularly targeted cancer indication,
submit an initial Pediatric Study Plan, or PSP, within 60 days of an end-of-Phase 2 meeting or, if there is no such meeting, as early as practicable before
the initiation of the Phase 3 or Phase 2/3 study. The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to conduct,
including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed
information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies
along with supporting information. The FDA and the sponsor must reach an agreement on the PSP. A sponsor can submit amendments to an agreed-upon
initial PSP at any time if changes to the pediatric plan need to be considered based on data collected from preclinical studies, early phase clinical trials
and/or other clinical development programs.
A drug or biologic product can also obtain pediatric market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months
to existing exclusivity periods, for drugs, and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection, for
drugs, or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request”
for such a study.
Post-Marketing Requirements
Following approval of a new product, the manufacturer and the approved product are subject to continuing regulation by the FDA, including,
among other things, monitoring and record-keeping activities, reporting of adverse experiences to applicable regulatory authorities, complying with
promotion and advertising requirements, which include, among other things, standards for direct-to-consumer advertising, requirements for promotional
activities on the internet, restrictions on promoting products for unapproved uses or in patient populations that are not described in the product’s approved
label (known as “off-label use”) and limitations on industry-sponsored scientific and educational activities. Although physicians may prescribe legally
available products for off-label uses, manufacturers may not market or promote such off-label uses. The FDA does not regulate the behavior of physicians
in their choice of treatment, but the FDA regulations do impose stringent restrictions on manufacturers’ communications regarding off-label uses. The
FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have
improperly promoted off-label uses may be subject to significant liability, including investigation by federal and state authorities. Prescription drug
promotional materials must be submitted to the FDA in conjunction with their first use or first publication, and may be required to be reviewed in advance
in certain circumstances such as for products that receive accelerated approval.
Further, if there are any modifications to the drug or biologic, including changes in indications, labeling or manufacturing processes or facilities,
the applicant may be required to submit and obtain FDA approval of a new NDA/BLA or NDA/BLA supplement, which may require the development of
additional data or preclinical studies and clinical trials. Such regulatory reviews can result in denial or modification of the planned changes, or
requirements to conduct additional tests or evaluations that can substantially delay or increase the cost of the planned changes.
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The FDA may also place other conditions on approvals including the requirement for a REMS, to assure the safe use of the product. If the FDA
concludes a REMS is needed, the sponsor of the NDA or BLA must submit a proposed REMS. The FDA will not approve the NDA or BLA without
an approved REMS, if required. A REMS could include medication guides, physician communication plans or elements to assure safe use, such as
restricted distribution methods, patient registries and other risk minimization tools. Any of these limitations on approval or marketing could restrict the
commercial promotion, distribution, prescription or dispensing of products. Product approvals may be withdrawn for non-compliance with regulatory
requirements, if problems occur following initial marketing or if the FDA determines that the product is no longer safe or effective.
FDA regulations require that products be manufactured in specific approved facilities and in accordance with cGMP regulations. We rely, and
expect to continue to rely, on third parties for the production of clinical and commercial quantities of any approved products in accordance with cGMP
regulations. NDA and BLA holders using contract manufacturers, laboratories or packagers are responsible for the selection and monitoring of qualified
firms, and, in certain circumstances, qualified suppliers to these firms. These manufacturers must comply with cGMP regulations that require, among other
things, quality control and quality assurance, the maintenance of records and documentation and the obligation to investigate and correct any deviations
from cGMP. Manufacturers and other entities involved in the manufacture and distribution of approved drugs or biologics are required to register their
establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for
compliance with cGMP requirements and other laws. Accordingly, manufacturers must continue to expend time, money and effort in the area of production
and quality control to maintain cGMP compliance. The discovery of violative conditions, including failure to conform to cGMP regulations, could result in
enforcement actions, and the discovery of problems with a product after approval may result in restrictions on a product, manufacturer or holder of an
approved NDA or BLA, including recall or withdrawal of the product from the market.
Any distribution of prescription drugs and biologics and pharmaceutical samples must comply with the U.S. Prescription Drug Marketing Act, or
PDMA, and the PHSA. In addition, the Drug Supply Chain Security Act, or DSCSA, was enacted in 2013 with the aim of building an electronic system to
identify and trace certain prescription drugs and biologics distributed in the United States. The DSCSA mandates phased-in and resource-intensive
obligations for pharmaceutical manufacturers, wholesale distributors, and dispensers over a 10-year period that culminated in November 2023. The FDA
established a one-year stabilization period from November 2023 to November 2024 for trading partners to continue to build and validate interoperable
systems and processes to meet certain requirements of the DSCSA. The law’s requirements include the quarantine and prompt investigation of a suspect
product, to determine if it is illegitimate, notifying trading partners and the FDA of any illegitimate product, and compliance with product tracking and
tracing requirements.
Once an approval is granted, the FDA may issue enforcement letters or withdraw the approval of the product if compliance with regulatory
requirements and standards is not maintained or if problems occur after the drug or biologic reaches the market. Corrective action could delay drug or
biologic distribution and require significant time and financial expenditures. Later discovery of previously unknown problems with a drug or biologic,
including AEs of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may require
revisions to the approved labeling to add new safety information, including the addition of new warning and contraindications; imposition of post-market
studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential
consequences include, among other things:
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mandated corrective advertising or communications with doctors;
restrictions on the marketing or manufacturing of the drug or biologic, suspension of the approval, complete withdrawal of the drug from the
market or product recalls;
fines, warning letters or holds on post-approval clinical trials;
refusal of the FDA to approve applications or supplements to approved applications, or suspension or revocation of drug or biologic
approvals;
drug or biologic seizure or detention, or refusal to permit the import or export of drugs; or
injunctions or the imposition of civil or criminal penalties.
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Regulation of Companion Diagnostics
We believe that the success of certain of our product candidates may depend, in part, on the development and commercialization of a
companion diagnostic. Companion diagnostics identify patients who are most likely to benefit from a particular therapeutic product; identify patients
likely to be at increased risk for serious side effects as a result of treatment with a particular therapeutic product; or monitor response to treatment
with a particular therapeutic product for the purpose of adjusting treatment to achieve improved safety or effectiveness. Companion diagnostics are
regulated as medical devices by the FDA. In the United States, the FDCA and its implementing regulations, and other federal and state statutes and
regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval,
registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post-market
surveillance. Unless an exemption or FDA exercise of enforcement discretion applies, diagnostic tests generally require marketing clearance or
approval from the FDA prior to commercialization. The two primary types of FDA marketing authorization applicable to a medical device are
premarket notification, also called 510(k) clearance, and approval of a premarket approval, or PMA, application.
To obtain 510(k) clearance for a medical device, or for certain modifications to devices that have received 510(k) clearance, a manufacturer must
submit a premarket notification demonstrating that the proposed device is substantially equivalent to a previously cleared 510(k) device or to a
preamendment device that was in commercial distribution before May 28, 1976, or a predicate device, for which the FDA has not yet called for the
submission of a PMA application. In making a determination that the device is substantially equivalent to a predicate device, the FDA compares the
proposed device to the predicate device or predicate devices and assesses whether the subject device is comparable to the predicate device or predicate
devices with respect to intended use, technology, design and other features which could affect safety and effectiveness. If the FDA determines that the
subject device is substantially equivalent to the predicate device or predicate devices, the subject device may be cleared for marketing. The 510(k)
premarket notification pathway generally takes from three to twelve months from the date the application is completed, but can take significantly longer.
PMA applications must be supported by valid scientific evidence, which typically requires extensive data, including technical, preclinical, clinical
and manufacturing data, to demonstrate to the FDA’s satisfaction the safety and effectiveness of the device. For diagnostic tests, a PMA application
typically includes data regarding analytical and clinical validation studies. As part of its review of the PMA application, the FDA will conduct a pre-
approval inspection of the manufacturing facility or facilities to ensure compliance with the Quality System Regulation, or QSR, which requires
manufacturers to follow design, testing, control, documentation and other quality assurance procedures. The FDA’s review of an initial PMA application is
required by statute to take between six to ten months, although the process typically takes longer, and may require several years to complete. If the FDA
evaluations of both the PMA application and the manufacturing facilities are favorable, the FDA will either issue an approval letter or an approvable letter,
which usually contains a number of conditions that must be met in order to secure the final approval of the PMA application. If the FDA’s evaluation of the
PMA application or manufacturing facilities is not favorable, the FDA will deny the approval of the PMA application or issue a not approvable letter. A not
approvable letter will outline the deficiencies in the application and, where practical, will identify what is necessary to make the PMA application
approvable. Once granted, PMA application approval may be withdrawn by the FDA if compliance with post-approval requirements, conditions of
approval or other regulatory standards is not maintained or problems are identified following initial marketing.
On July 31, 2014, the FDA issued a final guidance document addressing the development and approval process for “In Vitro Companion
Diagnostic Devices.” According to the guidance document, for novel therapeutic products that depend on the use of a diagnostic test and where the
diagnostic device could be essential for the safe and effective use of the corresponding therapeutic product, the premarket application for the companion
diagnostic device should be developed and approved or cleared contemporaneously with the therapeutic, although the FDA recognizes that there may be
cases when contemporaneous development may not be possible. However, in cases where a drug cannot be used safely or effectively without the
companion diagnostic, the FDA’s guidance indicates it will generally not approve the drug without the approval or clearance of the diagnostic device. The
FDA also issued a draft guidance in July 2016 setting forth the principles for co-development of an in vitro companion diagnostic device with a
therapeutic product. The draft guidance describes principles to guide the development and contemporaneous marketing authorization for the therapeutic
product and its corresponding in vitro companion diagnostic.
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Once cleared or approved, the companion diagnostic device must adhere to post-marketing requirements including the requirements of FDA’s
quality system regulation, adverse event reporting, recalls and corrections along with product marketing requirements and limitations. Like drug and
biologic makers, companion diagnostic makers are subject to unannounced FDA inspections at any time during which the FDA will conduct an audit of the
product(s) and the Company’s facilities for compliance with its authorities.
Biosimilars and Exclusivity
Certain of our product candidates are regulated as biologics. An abbreviated approval pathway for biological products shown to be similar to, or
interchangeable with, an FDA-licensed reference biological product was created by the Biologics Price Competition and Innovation Act of 2009, or BPCI
Act, as part of the ACA. This amendment to the PHSA, in part, attempts to minimize duplicative testing. Biosimilarity, which requires that the biological
product be highly similar to the reference product notwithstanding minor differences in clinically inactive components and that there be no clinically
meaningful differences between the product and the reference product in terms of safety, purity and potency, can be shown through analytical studies,
animal studies and a clinical trial or trials. Interchangeability requires that a biological product be biosimilar to the reference product and that the product
can be expected to produce the same clinical results as the reference product in any given patient and, for products administered multiple times to an
individual, that the product and the reference product may be alternated or switched after one has been previously administered without increasing safety
risks or risks of diminished efficacy relative to exclusive use of the reference biological product without such alternation or switch. Complexities
associated with the larger, and often more complex, structure of biological products as compared to small molecule drugs, as well as the processes by
which such products are manufactured, pose significant hurdles to implementation that are still being worked out by the FDA.
A reference biological product is granted four and twelve year exclusivity periods from the time of first licensure of the product. The FDA will not
accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure of
the reference product, and the FDA will not approve an application for a biosimilar or interchangeable product based on the reference biological product
until twelve years after the date of first licensure of the reference product. During this 12-year period of exclusivity, another company may still market a
competing version of the reference product if the FDA approves a BLA for the competing product containing the sponsor’s own preclinical data and data
from adequate and well-controlled clinical trials to demonstrate the safety, purity, and potency of the other company’s product. “First licensure” typically
means the initial date the particular product at issue was licensed in the United States. Date of first licensure does not include the date of licensure of (and a
new period of exclusivity is not available for) a biological product if the licensure is for a supplement for the biological product or for a subsequent
application by the same sponsor or manufacturer of the biological product (or licensor, predecessor in interest, or other related entity) for a change (not
including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form,
delivery system, delivery device or strength, or for a modification to the structure of the biological product that does not result in a change in safety, purity,
or potency. Therefore, one must determine whether a new product includes a modification to the structure of a previously licensed product that results in a
change in safety, purity, or potency to assess whether the licensure of the new product is a first licensure that triggers its own period of exclusivity. Whether
a subsequent application, if approved, warrants exclusivity as the “first licensure” of a biological product is determined on a case-by-case basis with data
submitted by the sponsor. The law is complex and is still being interpreted and implemented by the FDA.
Other Regulatory Matters
Manufacturing, sales, promotion and other activities following product approval are also subject to regulation by numerous regulatory authorities in
the United States in addition to the FDA, including the Centers for Medicare and Medicaid Services, or CMS, including the Office of Inspector General and
Office for Civil Rights, other divisions of the Department of HHS, the Department of Justice, the Drug Enforcement Administration, the Consumer Product
Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and
local governments.
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Healthcare providers, physicians, and third party payors will play a primary role in the recommendation and prescription of any products for which
we obtain marketing approval. Our current and future arrangements with healthcare providers and physicians and any future arrangements with third party
payers, may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial
arrangements and relationships through which we market, sell and distribute any drugs for which we obtain marketing approval. In the United States, these
laws include: the federal Anti-Kickback Statute, the False Claims Act, and the federal Health Insurance Portability and Accountability Act of 1996
(HIPAA).
The Anti-Kickback Statute makes it illegal for any person, including a prescription drug manufacturer (or a party acting on its behalf), to knowingly
and willfully solicit, receive, offer or pay any remuneration, directly or indirectly, in cash or in kind, that is intended to induce or reward referrals, including
the purchase, recommendation, order or prescription of a particular drug, for which payment may be made under a federal healthcare program, such as
Medicare or Medicaid. Violations of this law are punishable by imprisonment, criminal fines, administrative civil money penalties and exclusion from
participation in federal healthcare programs. In addition, a person or entity does not need to have actual knowledge of the statute or specific intent to violate
it. Moreover, the ACA provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-
Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act or federal civil money penalties.
Although we would not submit claims directly to payors, drug manufacturers can be held liable under federal civil and criminal false claims laws
and civil monetary penalty laws, such as the federal civil False Claims Act, which imposes criminal and civil penalties, including through civil
whistleblower or qui tam actions, against individuals or entities (including manufacturers) for, among other things, knowingly presenting, or causing to be
presented to federal programs (including Medicare and Medicaid) claims for items or services, including drugs, that are false or fraudulent, claims for items
or services not provided as claimed, or claims for medically unnecessary items or services. Penalties for a False Claims Act violation include three times
the actual damages sustained by the government, plus mandatory civil penalties for each separate false claim, the potential for exclusion from participation
in federal healthcare programs and, although the federal False Claims Act is a civil statute, conduct that results in a False Claims Act violation may also
implicate various federal criminal statutes. The government may deem manufacturers to have “caused” the submission of false or fraudulent claims by, for
example, providing inaccurate billing or coding information to customers or promoting a product off-label. Claims which include items or services
resulting from a violation of the federal Anti-Kickback Statute are false or fraudulent claims for purposes of the False Claims Act. The federal False Claims
Act also permits a private individual acting as a “whistleblower” to bring actions on behalf of the federal government alleging violations of the federal
False Claims Act and to share in any monetary recovery. Our future marketing and activities relating to the reporting of wholesaler or estimated retail
prices for our products, if approved, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state and
third-party reimbursement for our products, if approved, and the sale and marketing of our product candidates, are subject to scrutiny under this law.
HIPAA created federal criminal statutes that prohibit among other things, knowingly and willfully executing, or attempting to execute, a scheme to
defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or
custody of, any healthcare benefit program, including private third party payors, knowingly and willfully embezzling or stealing from a healthcare benefit
program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up by trick,
scheme or device, a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for
healthcare benefits, items or services. Like the federal Anti-Kickback Statute a person or entity does not need to have actual knowledge of the statute or
specific intent to violate it in order to have committed a violation.
The civil monetary penalties statute imposes penalties against any person or entity that, among other things, is determined to have presented or
caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed
or is false or fraudulent.
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We may be subject to data privacy and security regulations by both the federal government and the states in which we conduct our business. HIPAA,
as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their implementing regulations,
including the Final Omnibus Rule published in January 2013, which imposes requirements on certain covered healthcare providers, health plans, and
healthcare clearinghouses, as well as their respective business associates, independent contractors, or agents of health covered entities, that perform
services for them that involve the creation, maintenance, receipt, use, or disclosure of, individually identifiable health information relating to the privacy,
security, and transmission of individual identifiable health information. Among other things, HITECH makes HIPAA’s security standards directly
applicable to business associates, defined as independent contractors or agents of covered entities, which include certain health care providers, health plans,
and healthcare clearinghouses, that create, receive or obtain protected health information in connection with providing a service for or on behalf of a
covered entity. HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to
business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal
HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions. In addition, there may be additional federal, state, and non-
U.S. laws which govern the privacy and security of health and other personal information in certain circumstances, many of which differ from each other in
significant ways and may not have the same effect, thus complicating compliance efforts. Failure to comply with these laws, where applicable, can result in
the imposition of significant civil and criminal penalties.
States are also active in creating specific rules relating to the processing of personal information. In 2018, California passed into law the California
Consumer Privacy Act, or CCPA, which took effect on January 1, 2020 and imposed many requirements on businesses that process the personal
information of California residents. Many of the CCPA’s requirements are similar to those found in the General Data Protection Regulation (the “GDPR”),
including requiring businesses to provide notice to data subjects regarding the information collected about them and how such information is used and
shared, and providing data subjects the right to request access to such personal information and, in certain cases, request the erasure of such personal
information. The CCPA also affords California residents the right to opt-out of “sales” of their personal information. The CCPA contains significant
penalties for companies that violate its requirements. In November 2020, California voters passed a ballot initiative for the California Privacy Rights Act,
or CPRA, which went into effect on January 1, 2023, and significantly expanded the CCPA to incorporate additional GDPR-like provisions including
requiring that the use, retention, and sharing of personal information of California residents be reasonably necessary and proportionate to the purposes of
collection or processing, granting additional protections for sensitive personal information, and requiring greater disclosures related to notice to residents
regarding retention of information. The CPRA also created a new enforcement agent—the California Privacy Protection Agency—whose sole
responsibility is to enforce the CPRA, which will further increase compliance risk. The provisions in the CPRA may apply to some of our business
activities.
In addition to California, at least twelve other states have passed comprehensive privacy laws similar to the CCPA. Certain of these laws are in effect
and others will enter in effect in the coming years. Like the CCPA, these laws create obligations related to the processing of personal information, as well
as special obligations for the processing of “sensitive” data (which includes health data in some cases). Some of the provisions of these laws may apply to
our business activities. There are also states that are strongly considering comprehensive privacy laws and it is anticipated that other states will be
considering these laws in the future. Further, Congress has also been debating passing a federal privacy law. There are also states that are specifically
regulating health information that may affect our business. For example, Washington state recently passed a health privacy law that will regulate the
collection and sharing of health information, and the law also has a private right of action, which further increases the relevant compliance risk.
Connecticut and Nevada have also passed similar laws regulating consumer health data. In addition, other states have proposed and/or passed legislation
that regulates the privacy and/or security of certain specific types of information. For example, a small number of states have passed laws that regulate
biometric data specifically. These various privacy and security laws may impact our business activities, including our identification of research subjects,
relationships with business partners and ultimately the marketing and distribution of our products.
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Additionally, the federal Physician Payments Sunshine Act, or the Sunshine Act, within the ACA, and its implementing regulations, require that
certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health
Insurance Program (with certain exceptions) report annually to CMS information related to certain payments or other transfers of value made or distributed
to physicians, certain other licensed health care practitioners and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of,
physicians, certain other healthcare professionals, and teaching hospitals and to report annually certain ownership and investment interests held by
physicians, certain other healthcare professionals, and their immediate family members.
We may also be subject to federal price reporting laws, which require manufacturers to calculate and report complex pricing metrics to government
programs, where such reported prices may be used in the calculation of reimbursement and/or discounts on approved products. Further, we may face
obligations under federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially
harm consumers.
Similar federal, state and foreign fraud and abuse laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or
marketing arrangements and claims involving healthcare items or services. Such laws are generally broad and are enforced by various state agencies and
private actions. Many U.S. states have adopted laws similar to the federal Anti-Kickback Statute and False Claims Act, and may apply to our business
practices, including, but not limited to, research, distribution, sales or marketing arrangements and claims involving healthcare items or services reimbursed
by non-governmental payors, including private insurers. In addition, some states have passed laws that require us to comply with the April 2003 Office of
Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and/or the Pharmaceutical Research and Manufacturers of America’s
Code on Interactions with Healthcare Professionals. Additionally, we are subject to state and foreign equivalents of each of the healthcare laws and
regulations described above, some of which may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under
Medicaid and other state programs. Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance
guidelines and the relevant federal government compliance guidance, and require drug manufacturers to report information related to payments and other
transfers of value to physicians and other healthcare providers or marketing expenditures. Several states also impose other marketing restrictions or require
pharmaceutical companies to make marketing or price disclosures to the state and require the registration of pharmaceutical sales representatives. State and
foreign laws, including, for example, the European Union General Data Protection Regulation, which became effective May 2018 also govern the privacy
and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA,
thus complicating compliance efforts. There are ambiguities as to what is required to comply with these state requirements and if we fail to comply with an
applicable state law requirement we could be subject to penalties. Finally, there are state and foreign laws governing the privacy and security of health
information, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
In order to distribute products commercially, we must comply with state laws that require the registration of manufacturers and wholesale
distributors of drug and biological products in a state, including, in certain states, manufacturers and distributors who ship products into the state even if
such manufacturers or distributors have no place of business within the state. Several states have enacted legislation requiring pharmaceutical and
biotechnology companies to establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales,
marketing, pricing, clinical trials and other activities, and/or register their sales representatives, as well as to prohibit pharmacies and other healthcare
entities from providing certain physician prescribing data to pharmaceutical and biotechnology companies for use in sales and marketing, and to prohibit
certain other sales and marketing practices. We must also comply with federal government price reporting laws, which require us to calculate and report
complex pricing metrics in an accurate and timely manner to government programs. All of our activities are potentially subject to federal and state
consumer protection and unfair competition laws.
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The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially
in light of the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions
between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the
healthcare industry. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes,
regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any
of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties,
damages, fines, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, individual imprisonment, exclusion of drugs
from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations, any of which could
adversely affect our ability to operate our business and our financial results. Further, defending against any such actions can be costly and time consuming,
and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be
brought against us, our business may be impaired. If any of the physicians or other healthcare providers or entities with whom we expect to do business is
found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from
government funded healthcare programs. Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible
investigations by government authorities, can be time- and resource-consuming and can divert a Company’s attention from the business.
In the U.S., to help patients afford our approved product, we may utilize programs to assist them, including patient assistance programs and co-pay
coupon programs for eligible patients. PAPs are regulated by and subject to guidance from CMS OIG. In addition, at least one insurer has directed its
network pharmacies to no longer accept co-pay coupons for certain specialty drugs the insurer identified. Our co-pay coupon programs could become the
target of similar insurer actions. In addition, in November 2013, the CMS issued guidance to the issuers of qualified health plans sold through the ACA’s
marketplaces encouraging such plans to reject patient cost-sharing support from third parties and indicating that the CMS intends to monitor the provision
of such support and may take regulatory action to limit it in the future. The CMS subsequently issued a rule requiring individual market qualified health
plans to accept third-party premium and cost-sharing payments from certain government-related entities. In September 2014, the OIG of the HHS issued a
Special Advisory Bulletin warning manufacturers that they may be subject to sanctions under the federal anti-kickback statute and/or civil monetary
penalty laws if they do not take appropriate steps to exclude Part D beneficiaries from using co-pay coupons. Accordingly, companies exclude these Part D
beneficiaries from using co-pay coupons.
Current and Future Legislation
In the United States and some foreign jurisdictions, there have been, and likely will continue to be, a number of legislative and regulatory changes
and proposed changes regarding the healthcare system directed at broadening the availability of healthcare, improving the quality of healthcare, and
containing or lowering the cost of healthcare.
For example, in 2010, the ACA was enacted in the United States. The ACA includes measures that have significantly changed, and are expected to
continue to significantly change, the way healthcare is financed by both governmental and private insurers. Among the provisions of the ACA of greatest
importance to the pharmaceutical industry are that the ACA:
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made several changes to the Medicaid Drug Rebate Program, including increasing pharmaceutical manufacturers’ rebate liability by raising
the minimum basic Medicaid rebate on most branded prescription drugs and adding a new rebate calculation for “line extensions” (i.e., new
formulations, such as extended release formulations) of solid oral dosage forms of branded products.
imposed a requirement on manufacturers of branded drugs to provide a 70% point-of-sale discount off the negotiated price of branded drugs
dispensed to Medicare Part D beneficiaries in the coverage gap (i.e., “donut hole”) as a condition for a manufacturer’s outpatient drugs being
covered under Medicare Part D.
extended a manufacturer’s Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care
organizations.
expanded the entities eligible for discounts under the 340B Drug Discount Program.
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imposed an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs.
established a Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness
research, along with funding for such research. The research conducted by the Patient-Centered Outcomes Research Institute may affect the
market for certain pharmaceutical products. The ACA established the Center for Medicare and Medicaid Innovation within CMS to test
innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
In addition, other legislative and regulatory changes have also been proposed and adopted in the United States since the ACA was enacted:
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On August 2, 2011, the U.S. Budget Control Act of 2011, among other things, included aggregate reductions of Medicare payments to
providers of 2% per fiscal year. These reductions went into effect on April 1, 2013 and, due to subsequent legislative amendments to the
statute, will remain in effect through 2031.
On January 2, 2013, the U.S. American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced
Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments
to providers from three to five years.
On April 13, 2017, CMS published a final rule that gives states greater flexibility in setting benchmarks for insurers in the individual and
small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through
such marketplaces.
On May 23, 2019, CMS published a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning
January 1, 2020.
On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug
rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning
January 1, 2024. Due to the Statutory Pay-As-You-Go Act of 2010, estimated budget deficit increases resulting from the American Rescue
Plan Act of 2021, and subsequent legislation, Medicare payments to providers will be further reduced starting in 2025 absent further
legislation. These laws and regulations may result in additional reductions in Medicare and other healthcare funding and otherwise affect the
prices we may obtain for any of our product candidates for which we may obtain regulatory approval or the frequency with which any such
product candidate is prescribed or used.
In August 2022, the Inflation Reduction Act of 2022, or IRA was signed into law. The IRA includes several provisions that will impact our
business to varying degrees, including provisions that reduce the out-of-pocket cap for Medicare Part D beneficiaries to $2,000 starting in
2025; impose new manufacturer financial liability on certain drugs in Medicare Part D, allow the U.S. government to negotiate Medicare Part
B and Part D price caps for certain high-cost drugs and biologics without generic or biosimilar competition, require companies to pay rebates
to Medicare for certain drug prices that increase faster than inflation, and delay the rebate rule that would limit the fees that pharmacy benefit
managers can charge. Further under the IRA, orphan drugs are exempted from the Medicare drug price negotiation program, but only if they
have one orphan designation and for which the only approved indication is for that disease or condition. If a product receives multiple orphan
designations or has multiple approved indications, it will not qualify for the orphan drug exemption. The implementation of the IRA is
currently subject to ongoing litigation challenging the constitutionality of the IRA’s Medicare drug price negotiation program. The effects of
the IRA on our business and the healthcare industry in general is not yet known.
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Additionally, there has been increasing legislative and enforcement interest in the United States with respect to drug pricing practices. Specifically,
there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in
several U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to
drug pricing, reduce the cost of prescription drugs under Medicare, and review the relationship between pricing and manufacturer patient programs.
President Biden has also issued multiple executive orders that have sought to reduce prescription drug costs. In February 2023, HHS also issued a proposal
in response to an October 2022 executive order from President Biden that includes a proposed prescription drug pricing model that will test whether
targeted Medicare payment adjustments will sufficiently incentivize manufacturers to complete confirmatory trials for drugs approved through FDA’s
accelerated approval pathway. Although a number of these and other proposed measures may require authorization through additional legislation to become
effective, and the Biden administration may reverse or otherwise change these measures, both the Biden administration and Congress have indicated that
they will continue to seek new legislative measures to control drug costs.
We expect that additional U.S. federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that the U.S.
Federal Government will pay for healthcare drugs and services, which could result in reduced demand for our drug candidates or additional pricing
pressures.
Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control
pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain drug access and
marketing cost disclosure and transparency measures, and designed to encourage importation from other countries and bulk purchasing. Legally mandated
price controls on payment amounts by third-party payors or other restrictions could harm our business, financial condition, results of operations and
prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical
products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our
drugs or put pressure on our drug pricing, which could negatively affect our business, financial condition, results of operations and prospects.
We cannot predict what healthcare reform initiatives may be adopted in the future. Further federal, state and foreign legislative and regulatory
developments are likely, and we expect ongoing initiatives to increase pressure on drug pricing. Such reforms could have an adverse effect on anticipated
revenues from product candidates and may affect our overall financial condition and ability to develop product candidates.
Packaging and Distribution in the United States
If our products, once approved, are made available to authorized users of the Federal Supply Schedule of the General Services Administration,
additional laws and requirements apply. Products must meet applicable child-resistant packaging requirements under the U.S. Poison Prevention Packaging
Act. Manufacturing, sales, promotion and other activities also are potentially subject to federal and state consumer protection and unfair competition laws.
The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing,
storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products.
The failure to comply with any of these laws or regulatory requirements subjects firms to possible legal or regulatory action. Depending on the
circumstances, failure to meet applicable regulatory requirements can result in criminal prosecution, fines or other penalties, injunctions, exclusion from
federal healthcare programs, requests for recall, seizure of products, total or partial suspension of production, denial or withdrawal of product approvals, or
refusal to allow a firm to enter into supply contracts, including government contracts. Any action against us for violation of these laws, even if we
successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.
Prohibitions or restrictions on sales or withdrawal of future products marketed by us could materially affect our business in an adverse way.
Changes in regulations, statutes or the interpretation of existing regulations could impact our business in the future by requiring, for example: (i)
changes to our manufacturing arrangements; (ii) additions or modifications to product labeling; (iii) the recall or discontinuation of our potential products;
or (iv) additional record-keeping requirements. If any such changes were to be imposed, they could adversely affect the operation of our business.
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Other U.S. Environmental, Health and Safety Laws and Regulations
We may be subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the
handling, use, storage, treatment and disposal of hazardous materials and wastes. From time to time and in the future, our operations may involve the use of
hazardous and flammable materials, including chemicals and biological materials, and may also produce hazardous waste products. Even if we contract
with third parties for the disposal of these materials and waste products, we cannot completely eliminate the risk of contamination or injury resulting from
these materials. In the event of contamination or injury resulting from the use or disposal of our hazardous materials, we could be held liable for any
resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties
for failure to comply with such laws and regulations.
We maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees, but this insurance
may not provide adequate coverage against potential liabilities. However, we do not maintain insurance for environmental liability or toxic tort claims that
may be asserted against us.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. Current
or future environmental laws and regulations may impair our research, development or production efforts. In addition, failure to comply with these laws
and regulations may result in substantial fines, penalties or other sanctions.
U.S. Patent Term Extension and Marketing Exclusivity
Depending upon the timing, duration and specifics of FDA approval of a drug or biologic, some U.S. patents may be eligible for limited patent term
extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act. The Hatch-
Waxman Act permits extension of a patent term of up to five years beyond the normal expiration date of the patent as compensation for patent term lost
during the FDA regulatory review process. Patent term extension, however, cannot extend the remaining term of a patent beyond a total of 14 years from
the product’s approval date and only those claims covering such approved drug product, a method for using it or a method for manufacturing it may be
extended. Only one patent applicable to an approved drug is eligible for the extension and the application for the extension must be submitted prior to the
expiration of the patent. The USPTO, in consultation with the FDA, reviews and approves the application for any patent term extension. An NDA or BLA
applicant may apply for extension of patent term for its currently owned or licensed patents to add patent life beyond its current expiration date, depending
on the expected length of the clinical trials and other factors involved in the filing of the relevant NDA or BLA.
Marketing exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications. The FDCA provides a five-
year period of non-patent marketing exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity. A drug
is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion
responsible for the action of the drug substance. During the exclusivity period, the FDA may not accept for review an ANDA, or a 505(b)(2) NDA
submitted by another Company for another version of such drug where the applicant does not own or have a legal right of reference to all the data required
for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement. The FDCA
also provides three years of marketing exclusivity for an NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations, other than
bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for
example, new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the conditions of use associated with the new
clinical investigations and does not prohibit the FDA from approving ANDAs for drugs containing the original active agent. Five-year and three-year
exclusivity will not delay the submission or approval of a full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a
right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.
European Union Drug Development
In the European Union or EU, our future products also may be subject to extensive regulatory requirements. As in the United States, medicinal
products can be marketed only if a marketing authorization from the competent regulatory agencies has been obtained.
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Similar to the United States, the various phases of preclinical and clinical research in the European Union are subject to significant regulatory
controls.
In April 2014, the EU adopted the new Clinical Trials Regulation (EU) No 536/2014, or EU Clinical Trials Regulation, which replaced the Clinical
Trials Directive 2001/20/EC, or Directive, on January 31, 2022. The transitory provisions of the new EU Clinical Trials Regulation provided that, by
January 31, 2025, all ongoing clinical trials must have transitioned to the new EU Clinical Trials Regulation.
The new EU Clinical Trials Regulation overhauled the previous system of approvals for clinical trials in the EU. Specifically, the new EU Clinical
Trials Regulation, which is directly applicable in all Member States (meaning no national implementing legislation in each EU Member State is required),
aims at simplifying and streamlining the approval of clinical trials in the EU. For instance, it provides for a streamlined application procedure via a single
entry point (through the Clinical Trials Information Systems) and strictly defined deadlines for the assessment of clinical trial applications. Since January
31, 2023, all initial clinical trial applications in the EU must be made under the new EU Clinical Trials Regulation. Compliance with the more complex
procedural requirements of the EU Clinical Trials Regulation could result in some delay in the initiation of clinical trials.
European Union Drug Review and Approval
In the EU, medicinal products can only be commercialized after obtaining a marketing authorization, or MA. There are two types of MAs.
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The centralized MA is issued by the European Commission through the centralized procedure, based on the opinion of the Committee for
Medicinal Products for Human Use, or CHMP, of the EMA, and is valid throughout the entire territory of the EU, and in the additional
Member States of the European Economic Area (Iceland, Liechtenstein and Norway). The centralized procedure is mandatory for certain
types of products, including medicines produced by biotechnological processes, products designated as orphan medicinal products, advanced-
therapy medicinal products (gene-therapy, somatic cell-therapy or tissue-engineered medicines) and medicinal products containing a new
active substance indicated for the treatment of HIV, AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and other immune
dysfunctions and viral diseases. The centralized procedure is optional for products containing a new active substance not yet authorized in the
EU, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in
the EU.
Under the centralized procedure, the CHMP is responsible for conducting the initial assessment of a product and for several post-
authorization and maintenance activities, such as the assessment of modifications or extensions to an existing MA. Under the centralized
procedure in the EU, the maximum timeframe for the evaluation of a marketing authorization application, or MAA, by the EMA is 210 days,
excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the
CHMP. Clock stops may extend the timeframe of evaluation of an MAA considerably beyond 210 days. Where the CHMP gives a positive
opinion, it provides the opinion together with supporting documentation to the European Commission, who makes the final decision to grant
an MA, which is issued within 67 days of receipt of the EMA’s recommendation. Accelerated assessment might be granted by the CHMP in
exceptional cases, when a medicinal product is expected to be of major public health interest, particularly from the point of view of
therapeutic innovation. If the CHMP accepts such request, the time limit of 210 days will be reduced to 150 days, excluding clock stops, but
it is possible that the CHMP may revert to the standard time limit for the centralized procedure if it determines that the application is no
longer appropriate to conduct an accelerated assessment.
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National MAs, which are issued by the competent authorities of the Member States of the EU and only cover their respective territory, are
available for products not falling within the mandatory scope of the centralized procedure. Where a product has already been authorized for
marketing in a Member State of the EU, this national MA can be recognized in another Member State through the mutual recognition
procedure. If the product has not received a national MA in any Member State at the time of application, it can be approved simultaneously
in various Member States through the decentralized procedure. Under the decentralized procedure an identical dossier is submitted to the
competent authorities of each of the Member States in which the MA is sought, one of which is selected by the applicant as the Reference
Member State, or RMS. The competent authority of the RMS prepares a draft assessment report, a draft summary of the product
characteristics, or SmPC, and a draft of the labeling and package leaflet, which are sent to the other Member States (referred to as the
Concerned Member States) for their approval. If the Concerned Member States raise no objections, based on a potential serious risk to
public health, to the assessment, SmPC, labeling, or packaging proposed by the RMS, the product is subsequently granted a national MA in
all the Member States (i.e., in the RMS and the Concerned Member States).
Under the above described procedures, before granting the MA, the EMA or the competent authorities of the Member States of the EU make an
assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.
Now that the United Kingdom (which comprises Great Britain and Northern Ireland) has left the European Union, Great Britain is no longer covered
by centralized MAs (under the Northern Ireland Protocol, centralized MAs continue to be recognized in Northern Ireland). All medicinal products with a
current centralized MA were automatically converted to Great Britain MAs on January, 1 2021. For a period of three years from January 1, 2021, the
Medicines and Healthcare products Regulatory Agency, or MHRA, the UK medicines regulator, may rely on a decision taken by the European Commission
on the approval of a new MA in the centralized procedure, in order to more quickly grant a new Great Britain MA. A separate application is, however, still
required. The MHRA has announced that a new international recognition framework will be put in place from January 1, 2024, which will have regard to
decisions on the approval of MAs made by the European Medicines Agency and certain other regulators. The MHRA also has the power to have regard to
MAs approved in EU Member States through decentralized or mutual recognition procedures with a view to more quickly granting an MA in the United
Kingdom or Great Britain.
European Union New Chemical Entity Exclusivity
In the EU, innovative medicinal products approved on the basis of a complete and independent data package qualify for eight years of data
exclusivity upon marketing authorization and an additional two years of market exclusivity. The data exclusivity, if granted, prevents generic or biosimilar
applicants from referencing the innovator’s preclinical and clinical trial data contained in the dossier of the reference product when applying for a generic
or biosimilar MA in the EU, during a period of eight years from the date on which the reference product was first authorized in the EU. During the
additional two-year period of market exclusivity, a generic or biosimilar MAA can be submitted, and the innovator’s data may be referenced, but no generic
or biosimilar product can be placed on the EU market until the expiration of the market exclusivity. The overall ten-year period will be extended to a
maximum of 11 years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new
therapeutic indications which, during the scientific evaluation prior to their authorization, are determined to bring a significant clinical benefit in
comparison with currently approved therapies. There is no guarantee that a product will be considered by the EMA to be an innovative medicinal product,
and products may not qualify for data exclusivity. Even if a product is considered to be an innovative medicinal product so that the innovator gains the
prescribed period of data exclusivity, however, another company could nevertheless also market another version of the product if such company obtained
an MA based on an MAA with a complete and independent data package of pharmaceutical tests, preclinical tests and clinical trials.
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European Union Orphan Designation and Exclusivity
In the EU, the EMA’s Committee for Orphan Medicinal Products grants an orphan designation in respect of a product if its sponsor can establish
that: (1) the product is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; (2) either (i) such
condition affects no more than five in 10,000 persons in the EU when the application is made, or (ii) it is unlikely that the product, without the benefits
derived from orphan status, would generate sufficient return in the EU to justify the necessary investment in its development; and (3) there must be no
satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or, if such a method exists, the product
would be of significant benefit to those affected by that condition.
In the EU, orphan designation entitles a party to financial incentives such as reduction of fees or fee waivers and ten years of market exclusivity is
granted following grant of a marketing authorization. During this market exclusivity period, neither the EMA nor the European Commission nor any of the
competent authorities in the EU Members States can accept an application or grant a marketing authorization for a “similar medicinal product.” A “similar
medicinal product” is defined as a medicinal product containing a similar active substance or substances as contained in an authorized orphan medicinal
product, and which is intended for the same therapeutic indication. This period may be reduced to six years if the orphan designation criteria are no longer
met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity. Market exclusivity may also be
revoked in very select cases, such as if (i) it is established that a similar medicinal product is safer, more effective or otherwise clinically superior to the
authorized product; (ii) the marketing authorization holder for the authorized orphan product consents to such revocation; or (iii) the marketing
authorization holder for the authorized orphan product cannot supply enough orphan medicinal product. Orphan designation must be requested before
submitting an application for marketing approval. Orphan designation does not convey any advantage in, or shorten the duration of, the regulatory review
and approval process.
Since January 1, 2021, a separate process for orphan designation has applied in Great Britain. There is now no pre-marketing authorization orphan
designation (as there is in the EU) in Great Britain and the application for orphan designation will be reviewed by the MHRA at the time of an MAA for a
UK or Great Britain MA. The criteria for orphan designation are the same as in the EU, save that they apply to Great Britain only (e.g., there must be no
satisfactory method of diagnosis, prevention or treatment of the condition concerned in Great Britain, as opposed to the EU).
European Pediatric Investigation Plan
In the EU, MAAs for new medicinal products have to include the results of studies conducted in the pediatric population, in compliance with a
pediatric investigation plan, or PIP, agreed with the EMA’s Pediatric Committee, or PDCO, unless the EMA has granted a product-specific waiver, a class
waiver, or a deferral for one or more of the measures included in the PIP. This requirement also applies when a Company wants to add a new indication,
pharmaceutical form or route of administration for a medicine that is already authorized. The PIP sets out the timing and measures proposed to generate
data to support a pediatric indication of the drug for which marketing authorization is being sought. The PDCO can grant a deferral of the obligation to
implement some or all of the measures of the PIP until there are sufficient data to demonstrate the efficacy and safety of the product in adults. Further, the
obligation to provide pediatric clinical trial data can be waived by the PDCO when this data is not needed or appropriate because the product is likely to be
ineffective or unsafe in children, the disease or condition for which the product is intended occurs only in adult populations, or when the product does not
represent a significant therapeutic benefit over existing treatments for pediatric patients. If an MA is obtained and trial results are included in the product
information, even when negative, the product is eligible for six months’ supplementary protection certificate extension. In the case of orphan medicinal
products, a two year extension of the orphan market exclusivity may be available. This pediatric reward is subject to specific conditions and is not
automatically available when data in compliance with the PIP are developed and submitted.
Regulatory Requirements After a Marketing Authorization has been Obtained
If authorization for a medicinal product in the EU is obtained, the holder of the MA is required to comply with a range of requirements applicable to
the manufacturing, marketing, promotion, and sale of medicinal products. These include:
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Compliance with the EU’s stringent pharmacovigilance or safety reporting rules must be ensured. These rules can impose post-authorization
studies and additional monitoring obligations.
The manufacturing of authorized medicinal products, for which a separate manufacturer’s license is mandatory, must also be conducted in
strict compliance with the applicable EU laws, regulations and guidance, including Directive 2001/83/EC, Directive 2003/94/EC, Regulation
(EC) No 726/2004 and the European Commission Guidelines for Good Manufacturing Practice. These requirements include compliance with
EU cGMP standards when manufacturing medicinal products and active pharmaceutical ingredients, including the manufacture of active
pharmaceutical ingredients outside of the EU with the intention to import the active pharmaceutical ingredients into the EU.
Much like the Anti-Kickback Statue prohibition in the United States, the provision of benefits or advantages to physicians to induce or
encourage the prescription, recommendation, endorsement, purchase, supply, order or use of medicinal products is also prohibited in the
European Union. The provision of benefits or advantages to induce or reward improper performance generally is governed by the national
anti-bribery laws of the European Union Member States, and the Bribery Act 2010 in the UK. Infringement of these laws could result in
substantial fines and imprisonment. EU Directive 2001/83/EC, which is the EU Directive governing medicinal products for human use,
further provides that, where medicinal products are being promoted to persons qualified to prescribe or supply them, no gifts, pecuniary
advantages or benefits in kind may be supplied, offered or promised to such persons unless they are inexpensive and relevant to the practice
of medicine or pharmacy. This provision has been transposed into the Human Medicines Regulations 2012 and so remains applicable in the
UK despite its departure from the EU. Payments made to physicians in certain EU Member States must be publicly disclosed. Moreover,
agreements with physicians often must be the subject of prior notification and approval by the physician’s employer, his or her competent
professional organization and/or the regulatory authorities of the individual EU Member States. These requirements are provided in the
national laws, industry codes or professional codes of conduct, applicable in the EU Member States. Failure to comply with these
requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.
The aforementioned EU rules are generally applicable in the European Economic Area, or EEA, which consists of the EU Member States, plus
Norway, Liechtenstein, and Iceland.
Reform of the Regulatory Framework in the EU
The European Commission introduced legislative proposals in April 2023 that, if implemented, will replace the current regulatory framework in the
EU for all medicines (including those for rare diseases and for children). The European Commission has provided the legislative proposals to the European
Parliament and the European Council for their review and approval. In October 2023, the European Parliament published draft reports proposing
amendments to the legislative proposals, which will be debated by the European Parliament. Once the European Commission’s legislative proposals are
approved (with or without amendment), they will be adopted into EU law.
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Brexit and the Regulatory Framework in the United Kingdom
The UK formally left the EU on January 31, 2020, and the EU and the UK have concluded a trade and cooperation agreement, or TCA, which was
provisionally applicable since January 1, 2021 and has been formally applicable since May 1, 2021. The TCA includes specific provisions concerning
pharmaceuticals, which include the mutual recognition of GMP, inspections of manufacturing facilities for medicinal products and GMP documents issued,
but does not provide for wholesale mutual recognition of UK and EU pharmaceutical regulations. At present, Great Britain has implemented EU legislation
on the marketing, promotion and sale of medicinal products through the Human Medicines Regulations 2012 (as amended) (under the Northern Ireland
Protocol, the EU regulatory framework will continue to apply in Northern Ireland at present). Except in respect of the new EU Clinical Trials Regulation,
the regulatory regime in Great Britain therefore in many ways aligns with current EU medicines regulations, however it is possible that these regimes will
diverge more significantly in the future now that Great Britain’s regulatory system is independent from the EU. For example, the EU Clinical Trials
Regulation has not been implemented into UK law, and a separate application must be submitted for clinical trial authorization in the UK. However,
notwithstanding that there is no wholesale recognition of EU pharmaceutical legislation under the TCA, under a new framework mentioned above which
were put in place by the MHRA beginning January 1, 2024, the MHRA has stated that it will take into account decisions on the approval of MAs from the
EMA (and certain other regulators) when considering an application for a Great Britain MA.
On February 27, 2023, the UK government and the European Commission announced a political agreement in principle to replace the Northern
Ireland Protocol with a new set of arrangements, known as the “Windsor Framework”. This new framework fundamentally changes the existing system
under the Northern Ireland Protocol, including with respect to the regulation of medicinal products in the UK. In particular, the MHRA will be responsible
for approving all medicinal products destined for the UK market (i.e., Great Britain and Northern Ireland), and the EMA will no longer have any role in
approving medicinal products destined for Northern Ireland. A single UK-wide MA will be granted by the MHRA for all medicinal products to be sold in
the UK, enabling products to be sold in a single pack and under a single authorization throughout the UK. The Windsor Framework was approved by the
EU-UK Joint Committee on March 24, 2023, so the UK government and the EU will enact legislative measures to bring it into law. On June 9, 2023, the
MHRA announced that the medicines aspects of the Windsor Framework will apply from January 1, 2025.
European Data Collection
The collection and processing of personal data (including health data) in the European Economic Area (EEA) is governed by the General Data
Protection Regulation, or EU GDPR. Similarly, the collection and use of personal data (including health data) in the United Kingdom (UK) is governed by
the UK General Data Protection Regulation and the UK Data Protection Act 2018, collectively the UK GDPR, and together with the EU GDPR, “GDPR”.
Currently, the EU GDPR and UK GDPR remain largely aligned. The GDPR applies to any company established in the EEA/UK and to companies
established outside the EEA that process personal data in connection with the offering of goods or services to data subjects in the EEA or the monitoring of
the behavior of data subjects in the EEA. The GDPR imposes numerous stringent requirements on companies that process personal data, including
requirements relating to processing health and other sensitive data, obtaining consent of data subjects, providing detailed information to data subjects about
how personal data is used, conducting privacy impact assessments for “high risk” processing, implementing safeguards to protect the security and
confidentiality of personal data, implementing limitations on the retention of personal data, providing mandatory data breach notification, implementing
“privacy by design” requirements, and taking certain measures when engaging service providers acting as data processors. The GDPR also imposes strict
rules on the transfer of personal data outside of the EEA/UK to countries that do not ensure an adequate level of protection, like the United States in certain
circumstances unless derogation exists or a valid GDPR transfer mechanism (for example, the European Commission approved Standard Contractual
Clauses, or SCCs, and the UK International Data Transfer Agreement/Addendum, or UK IDTA) have been put in place. Where relying on the SCCs /UK
IDTA for data transfers, we may also be required to carry out transfer impact assessments to assess whether the recipient is subject to local laws which
allow public authority access to personal data. Failure to comply with the requirements of the GDPR and the related national data protection laws of the
EEA Member States may result in fines up to €20 million or 4% of a company’s global annual revenues for the preceding financial year, whichever is
higher. Moreover, the GDPR grants data subjects and consumer associations the right to claim material and non-material damages resulting from
infringement of the GDPR. Although the UK is regarded as a third country under the European
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Union’s GDPR, the European Commission has now issued a decision recognizing the UK as providing adequate protection under the EU GDPR and,
therefore, transfers of personal data originating in the EU to the UK remain unrestricted.
The UK Government has introduced a Data Protection and Digital Information Bill, or Data Reform Bill into the UK legislative process to reform
the UK data protection legal framework.
Rest of the World Regulation
For other countries outside of the European Union and the United States, such as countries in Eastern Europe, Latin America or Asia, the
requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. Additionally, the clinical
trials must be conducted in accordance with GCP requirements and the applicable regulatory requirements and the ethical principles that have their origin
in the Declaration of Helsinki.
If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of
regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
Additional Laws and Regulations Governing International Operations
If we further expand our operations outside of the United States, we must dedicate additional resources to comply with numerous laws and
regulations in each jurisdiction in which we plan to operate. The Foreign Corrupt Practices Act, or FCPA, prohibits any U.S. individual or business from
paying, offering, authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the
purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA
also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring the company to maintain
books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an
adequate system of internal accounting controls for international operations.
Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPA
presents particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors and other
hospital employees are considered foreign officials. Certain payments to hospitals in connection with clinical trials and other work have been deemed to be
improper payments to government officials and have led to FCPA enforcement actions.
Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-
U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products. If we
expand our presence outside of the United States, it will require us to dedicate additional resources to comply with these laws, and these laws may preclude
us from developing, manufacturing, or selling certain product candidates outside of the United States, which could limit our growth potential and increase
our development costs.
The failure to comply with laws governing international business practices may result in substantial civil and criminal penalties and suspension or
debarment from government contracting. The U.S. Securities and Exchange Commission, or the SEC, also may suspend or bar issuers from trading
securities on U.S. exchanges for violations of the FCPA’s accounting provisions.
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Coverage and Reimbursement
Successful commercialization of new drug products depends in part on the extent to which reimbursement for those drug products will be available
from government health administration authorities, private health insurers, and other organizations. In the United States and markets in other countries,
patients generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Adequate coverage and reimbursement
from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to new product acceptance. Our ability to
successfully commercialize our product candidates will depend in part on the extent to which coverage and adequate reimbursement for these products and
related treatments will be available from government health administration authorities, private health insurers and other organizations. Even if coverage is
provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return
on our investment. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which drug
products they will pay for and establish reimbursement levels. The availability and extent of reimbursement by governmental and private payors is essential
for most patients to be able to afford a drug product. Sales of drug products depend substantially, both domestically and abroad, on the extent to which the
costs of drugs products are paid for by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or
reimbursed by government health administration authorities, private health coverage insurers and other third-party payors.
A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to
control costs by limiting coverage and the amount of reimbursement for particular drug products. In many countries, the prices of drug products are subject
to varying price control mechanisms as part of national health systems. In general, the prices of drug products under such systems are substantially lower
than in the United States. Other countries allow companies to fix their own prices for drug products, but monitor and control company profits. Accordingly,
in markets outside the United States, the reimbursement for drug products may be reduced compared with the United States.
There is also significant uncertainty related to the insurance coverage and reimbursement of newly approved products and coverage may be more
limited than the purposes for which the medicine is approved by the FDA or comparable foreign regulatory authorities. In the United States, the principal
decisions about reimbursement for new drug products are typically made by CMS, an agency within the HHS. CMS decides whether and to what extent a
new drug product will be covered and reimbursed under Medicare, and private payors tend to follow CMS to a substantial degree. However, no uniform
policy of coverage and reimbursement for drug products exists among third-party payors and coverage and reimbursement levels for drug products can
differ significantly from payor to payor. Factors payors consider in determining reimbursement are based on whether the product is:
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a covered benefit under its health plan;
safe, effective and medically necessary;
appropriate for the specific patient;
cost-effective; and
neither experimental nor investigational.
Third-party payors may limit coverage to specific products on an approved list or formulary, which might not include all of the FDA-approved
products for a particular indication. Also, third-party payors may refuse to include a particular branded drug on their formularies or otherwise restrict
patient access to a branded drug when a less costly generic equivalent or another alternative is available. Net prices for drugs may be reduced by mandatory
discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of
drugs from countries where they may be sold at lower prices than in the United States. Third-party payors are increasingly challenging the prices charged
for medical products and services, examining the medical necessity, and reviewing the cost-effectiveness of medical products and services and imposing
controls to manage costs. We cannot be sure that reimbursement will be available for any product candidate that we commercialize and, if reimbursement is
available, the level of reimbursement. In addition, many pharmaceutical manufacturers must calculate and report certain price reporting metrics to the
government, such as average sales price, or ASP, and best price. Penalties may apply in some cases when such metrics are not submitted accurately and
timely. Further, these prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs.
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The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or the MMA, established the Medicare Part D program to provide a
voluntary prescription drug benefit to Medicare beneficiaries. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private
entities that provide coverage of outpatient prescription drugs. Unlike Medicare Parts A and B, Part D coverage is not standardized. Part D prescription
drug plan sponsors are not required to pay for all covered Part D drugs, and each drug plan can develop its own drug formulary that identifies which drugs
it will cover and at what tier or level. While all Medicare drug plans must give at least a standard level of coverage set by Medicare, Part D prescription
drug plan sponsors are not required to pay for all covered Part D drugs, and each drug plan can develop its own drug formulary that identifies which drugs
it will cover and at what tier or level. However, Part D prescription drug formularies must include drugs within each therapeutic category and class of
covered Part D drugs, though not necessarily all the drugs in each category or class. Any formulary used by a Part D prescription drug plan must be
developed and reviewed by a pharmacy and therapeutic committee. Government payment for some of the costs of prescription drugs may increase demand
for drugs for which we obtain marketing approval. Any negotiated prices for any of our future products covered by a Part D prescription drug plan will
likely be lower than the prices we might otherwise obtain. Moreover, while the MMA applies only to drug benefits for Medicare beneficiaries, private
payors often follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment that results from the
MMA may result in a similar reduction in payments from non-governmental payors.
For a drug product to receive federal reimbursement under the Medicaid or Medicare Part B programs or to be sold directly to U.S. government
agencies, the manufacturer must extend discounts to entities eligible to participate in the 340B drug pricing program. The required 340B discount on a
given product is calculated based on the average manufacturer price, or AMP, and Medicaid rebate amounts reported by the manufacturer. As of 2010, the
ACA expanded the types of entities eligible to receive discounted 340B pricing, although under the current state of the law these newly eligible entities
(with the exception of children’s hospitals) will not be eligible to receive discounted 340B pricing on orphan drugs. As 340B drug pricing is determined
based on AMP and Medicaid rebate data, the revisions to the Medicaid rebate formula and AMP definition described above could cause the required 340B
discount to increase.
These laws, and future state and federal healthcare reform measures may be adopted in the future, and may result in additional reductions in
Medicare and other healthcare funding and otherwise affect the prices we may obtain for any product candidates for which we may obtain regulatory
approval or the frequency with which any such product candidate is prescribed or used. If third-party payors do not consider our drugs to be cost-effective
compared to other available therapies, they may not cover our drugs after approval as a benefit under their plans or, if they do, the level of payment may not
be sufficient to allow us to sell our drugs on a profitable basis.
Outside of the United States, the pricing of pharmaceutical products and medical devices is subject to governmental control in many countries. For
example, in the European Union, pricing and reimbursement schemes vary widely from country to country. Some Member States provide that products may
be marketed only after the proposed pricing has been approved. Some Member States may require the completion of additional studies that compare the
cost effectiveness of a particular therapy to currently available therapies or so-called health technology assessments, in order to obtain reimbursement or
pricing approval. A Member State may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on
the profitability of the company placing the medicinal product on the market. Member States may allow companies to fix their own prices for products, but
monitor and control product volumes and issue guidance to physicians to limit prescriptions. Efforts to control prices and utilization of pharmaceutical
products and medical devices will likely continue as countries attempt to manage healthcare expenditures. There can be no assurance that any country that
has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our
product candidates. Historically, products launched in the European Union do not follow price structures of the U.S. and generally prices tend to be
significantly lower.
Human Capital Management
Our human capital philosophy relies on attracting and retaining team members who consistently demonstrate top performance. Our culture and our
approach to talent reinforces this philosophy, including recruiting, professional development, performance management and total rewards. We have
provided below additional details on some of our core human resources processes.
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As of December 31, 2023, we had 550 full-time employees and six part-time employees. Of these, 388 focus on driving forward research and
development programs and 38 focus on our commercialization efforts, either directly or through our affiliates, and 130 work across our affiliates to provide
strategic business development, finance and executive leadership expertise, as well as general and administrative services generally across our affiliates.
We have never had a work stoppage, and none of our employees is represented by a labor organization or under any collective-bargaining arrangements.
We consider our employee relations to be good.
Recruiting
We have a dedicated talent acquisition capability to support our affiliates in hiring the right talent at the right time. Our team of experienced talent
acquisition professionals works closely with hiring managers to understand the required skills and capabilities for an open role, and then supports the
interview process and evaluation of candidates. We strive to hire top talent, and therefore need a high-quality recruiting process and candidate experience.
We endeavor to fill every role with the most qualified candidate possible, which sometimes requires partnership with an external recruitment agency. We
are consistently looking at new opportunities and avenues to recruit talented individuals to work at BridgeBio.
The talent acquisition team’s focus in 2024 is to meet the hiring needs across BridgeBio and our affiliates. We recognize that our current and
potential future team members have options for employment opportunities, including with other biotech and pharma companies, research and academic
institutions, government entities, and consulting and investment firms. To attract and retain top performing team members, we focus on creating an
environment that allows for autonomy, professional growth, and impact while also offering a competitive total rewards package.
Professional Development and Performance Management
We invest in the professional development of our team members through regular feedback and guidance, as well as targeted learning and
development opportunities to meet demonstrated needs. We established a set of five core attributes that we expect every BridgeBio team member to
demonstrate while performing in their roles: Patient Champion, Entrepreneurial Operator, Truth Seeker, Inspires Excellence and High-Quality Executor.
BridgeBio conducts semi-annual performance review processes for all team members to evaluate performance and provide feedback against these
attributes. The feedback focuses on strengths and opportunities for improvement to enable the professional development of all team members. At the end of
the year, the performance review includes self, peer, and manager feedback and also includes a formal rating and informs compensation decisions,
including performance bonus, salary adjustments, and promotions.
Core Values and Ethics
Millions worldwide are afflicted with genetic diseases, but small patient populations and industry reluctance to conduct early-stage development
means that for many, treatments have not been forthcoming. We are committed to bridging this gap: between business case and scientific possibility,
between patient and hope. This starts with our first core value: to put patients first. We also strive to think independently. Our goal is to not simply
accept the ideas and opinions of others as fact, but instead to ask “why?” and “why not?” We endeavor to bring a rigorous, first-principles mindset to each
problem that we take on. We encourage all our team members to speak up when they have an idea or feedback to share, taking pride in a culture that is
radically transparent when it comes to debating ideas. A commitment to independent thinking requires us to consider the ideas of others and to adopt
them if they prove best. We strive to maintain a culture where any idea is worthy of both consideration and testing. We know that every minute counts.
Our decentralized model strives to deliver treatments from discovery to patients as fast as humanly possible by utilizing focused teams of experts for each
asset. Big decisions can be taken by people best-equipped to understand them, without wasting time on unnecessary cycles. And we let Science speak. Our
model was designed to promote the rational assessment of our programs. Decisions about a program’s fate are driven by its performance against a set of
objective criteria, giving each potential medicine’s scientific merits the last word. All employees are responsible for upholding these values and the
BridgeBio Code of Business Conduct and Ethics, which forms the foundation of our policies and practices.
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Total Rewards
To attract and retain top talent, we offer a competitive total rewards package. We peg total direct compensation at the upper end of market. We link a
portion of every employee’s compensation to performance through a performance bonus program. To create a sense of ownership and align employee
incentives with our long-term success, we offer eligible employees equity ownership in the company through stock option or restricted stock unit grants
and our employee stock purchase plan. We also designed a program to incentivize affiliate-level employees to achieve specific milestones at core value-
inflection points, such as IND or NDA approval.
We focus our benefits offering on areas critical to keeping our employees and their immediate families healthy and productive. We offer physical
and mental health benefits to all employees who work at least 30 hours per week, on average. We have a flexible paid time off policy to empower team
members to take the time they need, when they need it.
Community
We believe that building a strong sense of community at BridgeBio is critical to our success. Team members can only live up to our values of
thinking independently, letting science speak, and being radically transparent when they feel a sense of belonging. This is also important to our ability to
bring together team members from diverse backgrounds and experiences. We are proud to promote unique voices within and outside our organization, and
are eager to learn from others’ experiences, as we know that a diverse and inclusive workforce is a business imperative and key to our long-term success.
To build community, we make targeted investments at the BridgeBio level. We offer a robust onboarding program for each new hire to ensure they
understand the BridgeBio history and culture and are set up for success in their roles. We work closely with people managers to ensure they understand the
expectations for the critical role of leading teams. Understanding that communications is essential for a community to thrive, we have regular Town Halls
to update the organization on important progress across our scientific and clinical programs. In addition to these large gatherings, we have implemented a
number of communications tools to help employees stay informed and connected. Finally, our community is anchored by our commitment to patients,
underscored by our commitment to bring the entire company together multiple times a year for Patient Days. On these impactful days, we hear stories from
the people who are living with rare genetic diseases, their caregivers and advocates.
Corporate and Other Information
We were incorporated as a Delaware corporation in 2019 under the name BridgeBio Pharma, Inc. Our principal executive offices are located at 3160
Porter Drive, Suite 250, Palo Alto, CA 94304. Our telephone number is (650) 391-9740.
Our web page address is https://bridgebio.com. Our investor relations website is located at https://investor.bridgebio.com. We make available free of
charge on our investor relations website under “SEC Filings” our Annual Reports on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on
Form 8‑K, including exhibits, our directors’ and officers’ Section 16 Reports and any amendments to those reports after filing or furnishing such materials
to the SEC. References to our website address do not constitute incorporation by reference of the information contained on the website, and the information
contained on the website is not part of this document or any other document that we file with or furnish to the SEC.
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ITEM 1A. RISK FACTORS
Our business involves significant risks, some of which are described below. You should carefully consider the risks and uncertainties described
below, together with all of the other information contained in this Annual Report on Form 10-K, including “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and the consolidated financial statements and the related notes. If any of the following risks actually
occur, it could harm our business, prospects, operating results and financial condition and future prospects. In such event, the market price of our common
stock could decline, and you could lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently
deem immaterial may also impair our business operations. This Annual Report on Form 10-K also contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of factors that are
described below and elsewhere in this Annual Report.
Risks Related to Our Financial Position and Growth Strategy
Drug development is a highly uncertain undertaking and involves a substantial degree of risk. We have incurred significant losses since our inception
and anticipate that we will continue to incur significant losses for the foreseeable future. We have not generated significant revenue since inception,
which, together with our limited operating history, may make it difficult for you to assess our future viability.
Pharmaceutical and biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. We are a
newly commercial-stage biopharmaceutical company with a limited operating history upon which you can evaluate our business and prospects. Our
subsidiaries, on whose success we largely rely, are primarily early-stage biopharmaceutical companies. To date, we have focused principally on identifying,
acquiring or in-licensing and developing our product candidates at the subsidiary level, almost all of which are in discovery, lead optimization, preclinical
or clinical development. Our pipeline of product candidates will require substantial additional development time, including extensive clinical research, and
resources before we would be able to apply for or receive additional regulatory approvals and begin generating revenue from sales of those product
candidates, if approved.
We are not profitable and have incurred losses in each year since our inception in April 2015. Our net losses for the years ended December 31, 2023,
2022 and 2021 were $653.3 million, $484.7 million and $586.5 million, respectively. As of December 31, 2023, we had an accumulated deficit of $2.6
billion. We had two products approved for commercial sale, NULIBRY and TRUSELTIQTM, but did not generate any significant revenues from product
sales, and have financed operations solely through the sale of equity securities, debt financings and sale of certain assets. Sentynl purchased the global
rights to NULIBRY in March 2022 and Helsinn, who is the principal selling party of TRUSELTIQTM, discontinued selling TRUSELTIQTM in March 31,
2023. We continue to incur significant research and development, or R&D, and other expenses related to ongoing operations and expect to incur losses for
the foreseeable future. In addition, we believe that potential delays in our ongoing and planned clinical trials and adjustments to certain of our study
procedures for various reasons, such as challenges in enrollment, additional requirements imposed by regulatory authorities or investigative sites, or supply
chain issues, could increase our expenditures or draw out our expenditures over a longer period of time than originally estimated. Additionally, changes to
our selection of contract research organizations, or CROs, for non-clinical laboratory activities and engagement with CMOs, to mitigate any potential
impacts to our supply chain may increase our expenditures relative to initial expectations. We anticipate these losses will increase substantially in future
periods.
Because of the numerous risks and uncertainties associated with drug development and commercialization, we are unable to predict the timing or
amount of our expenses, or when we will be able to generate any meaningful revenue or achieve or maintain profitability, if ever. In addition, our expenses
could increase beyond our current expectations if we are required by the FDA, or comparable foreign regulatory authorities, to conduct nonclinical or
preclinical studies or clinical trials in addition to those that we currently anticipate or to otherwise provide data beyond that which we currently believe is
necessary to support an application for marketing approval or to continue clinical development, or if there are any delays in any of our or our future
collaborators’ clinical trials or the development of our product candidates, that we may identify. We anticipate incurring significant costs associated with
commercializing any future product candidates, if approved, and ongoing compliance efforts.
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We may never be able to successfully commercialize a marketable drug or achieve profitability. Revenue from the sale of any product will be
dependent, in part, upon the size of the markets in the territories for which we have or may gain regulatory approval, the accepted price for the product, the
ability to obtain reimbursement at any price and whether we own the commercial rights for that territory. Our growth strategy depends on our ability to
generate revenue. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our failure to achieve
sustained profitability would depress our stock price and could impair our ability to raise capital, expand our business, diversify our research and
development pipeline, market our product candidates, if approved, that we may identify and pursue, or continue our operations. Our prior losses, combined
with expected future losses, have had and will continue to have an adverse effect on our stockholders’ deficit and working capital.
If we obtain a controlling interest in additional companies in the future, it could adversely affect our operating results and the value of our common
stock, thereby disrupting our business.
As part of our strategy, we expect to form and invest in additional wholly-owned subsidiaries and variable interest entities, or VIEs. Investments in
our existing and any future subsidiaries involve numerous risks, including, but not necessarily limited to:
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risk of conducting research and development activities in new therapeutic areas or treatment modalities in which we have little to no
experience;
diversion of financial and managerial resources from existing operations;
our ability to negotiate a proposed acquisition, in-license or investment in a timely manner or at a price or on terms and conditions favorable
to us;
our ability to combine and integrate a potential acquisition into our existing business to fully realize the benefits of such acquisition;
the impact of regulatory reviews on a proposed acquisition, in-license or investment; and
the outcome of any legal proceedings that may be instituted with respect to a potential acquisition, in-license or investment.
If we fail to properly evaluate potential acquisitions, in-licenses, investments or other transactions associated with the creation of new research and
development programs or the maintenance of existing ones, we might not achieve the anticipated benefits of any such transaction, we might incur costs in
excess of what we anticipate, and management resources and attention might be diverted from other necessary or valuable activities. For instance, in
January 2021, we completed our acquisition of all of the outstanding shares of common stock of Eidos that were not previously owned by us or our
subsidiaries, to which we refer as the Eidos Merger. In connection with the Eidos Merger and our integration of Eidos’ historical operations into our
business, the attention of certain members of each company’s management and each company’s resources were diverted from day-to-day business
operations. Additionally, the interests of our stockholders were diluted as a result of our issuance of shares of our common stock to Eidos’ stockholders and
our assumption of certain equity awards of Eidos in connection with the transaction. We may engage in similar discussions in the future with respect to
other potential transactions that may divert our time and resources from our ongoing operations. In addition, from time to time we have pursued, and may
in the future pursue, research and development programs through our wholly-owned subsidiaries and VIEs that we may ultimately determine not to
advance, based on our ongoing assessment of the likelihood of success relative to the costs and risks associated with the program.
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Risks Related to the Development of Our Product Candidates
We may encounter substantial delays in clinical trials, or may not be able to conduct or complete clinical trials on the expected timelines, if at all.
Clinical testing is expensive, time consuming and subject to uncertainty. We cannot guarantee that any of our ongoing and planned clinical trials will
be conducted as planned or completed on schedule, if at all. Moreover, even if these trials are initiated or conducted on a timely basis, issues may arise that
could result in the suspension or termination of such clinical trials. A failure of one or more clinical trials can occur at any stage of testing, and our ongoing
and future clinical trials may not be successful. Events that may prevent successful or timely initiation or completion of clinical trials include:
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inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation or continuation of clinical trials;
delays in confirming target engagement, patient selection or other relevant biomarkers to be utilized in preclinical and clinical product
candidate development;
delays in reaching a consensus with regulatory agencies as to the design or implementation of our clinical trials;
delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to
extensive negotiation and may vary significantly among different CROs and clinical trial sites;
delays in identifying, recruiting and training suitable clinical investigators;
delays in obtaining required Institutional Review Board, or IRB, approval at each clinical trial site;
imposition of a temporary or permanent clinical hold by regulatory agencies for a number of reasons, including after review of an
Investigational New Drug application, or IND, or IND amendment, clinical trial application, or CTA, or CTA amendment, or equivalent
application or amendment; or as a result of a new safety finding that presents unreasonable risk to clinical trial participants or a negative
finding from an inspection of our clinical trial operations or study sites;
developments in trials for other product candidates with the same targets or related modalities as our product candidates conducted by third
parties that raise regulatory or safety concerns about risk to patients of the treatment, or if the FDA or other governmental authority finds that
the investigational protocol or plan is clearly deficient to meet its stated objectives;
difficulties in securing access to materials for the comparator arm of certain of our clinical trials;
delays in identifying, recruiting and enrolling suitable patients to participate in clinical trials, and delays caused by patients withdrawing from
clinical trials or failing to return for post-treatment follow-up;
difficulty collaborating with patient groups and investigators;
failure by CROs, other third parties or us to adhere to clinical trial requirements;
failure to perform in accordance with the FDA’s or any other regulatory authority’s current good clinical practices, or GCP, requirements, or
regulatory guidelines in other countries;
occurrence of adverse events, or AEs, associated with the product candidate that are viewed to outweigh its potential benefits;
changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;
changes in the standard of care on which a clinical development plan was based, which may require new or additional trials;
the cost of clinical trials of any product candidates that we may identify and pursue being greater than we anticipate;
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clinical trials of any product candidates that we may identify and pursue producing negative or inconclusive results or failing to meet a
specified endpoint, which may result in our deciding, or regulators requiring us, to conduct additional clinical trials or to abandon product
development programs;
delays in clinical trial enrollment or clinical trial initiation resulting from any global health emergency, such as the COVID-19 pandemic;
transfer of manufacturing processes to larger-scale facilities operated by a CMO, or by us, and delays or failure by our CMOs or us to make
any necessary changes to such manufacturing process; and
delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of product candidates that we may
identify for use in clinical trials, or the inability to do any of the foregoing.
Any inability to successfully initiate, conduct or complete clinical trials could result in additional costs to us or impair our ability to generate
revenue. In addition, if we make manufacturing or formulation changes to our product candidates, we may be required to or we may elect to conduct
additional nonclinical studies or clinical trials to bridge data obtained from our modified product candidates to data obtained from nonclinical and clinical
research conducted using earlier versions of these product candidates. Clinical trial delays could also shorten any periods during which our product
candidates have patent protection and may allow our competitors to bring products to market before we do, which could impair our ability to successfully
commercialize product candidates and may harm our business and results of operations.
We could also encounter delays if an ongoing or planned clinical trial is suspended or terminated by us, by the data safety monitoring board, or
DSMB, including for our ongoing Phase 3 clinical trial of low-dose infigratinib, our ongoing Phase 2 and planned Phase 3 clinical trials of BBP-418, and
our ongoing Phase 3 clinical trial of encaleret, or by the FDA or other regulatory authority, or if the IRBs of the institutions in which such trials are being
conducted suspend or terminate the participation of their clinical investigators and sites subject to their review. Such authorities may suspend or terminate a
clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols,
inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen
safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative
actions or lack of adequate funding to continue the clinical trial. For instance, although acoramidis failed to meet its primary endpoint at Month 12 in the
ATTRibute-CM Study, the ATTRibute-CM independent data monitoring committee recommended continuing the study through the Month 30 endpoint
based on unblinded data reviews and achieved positive results at the Month 30 endpoint. We have in the past received, and may receive in the future, partial
or full clinical hold notices from the FDA or other regulatory authorities, which have required, and may in the future require, us to conduct additional
studies, generate additional data, amend our clinical trial protocols and/or delay or halt the initiation or continuation of our clinical trials. We may be
required or may voluntarily determine to place one or more of our product candidates on clinical hold in the future for various reasons, which could delay
or otherwise impair our clinical development efforts and ability to obtain regulatory approval for any such product candidate. Additionally, the FDA may
determine, upon review of an IND submission, that we have not provided sufficient information needed to assess the risks to subjects of the proposed
studies, or that our IND submission is otherwise insufficient to support initiation of a clinical trial. There is no guarantee that the FDA will agree that our
responses are sufficient, and we may be required to conduct additional preclinical studies or manufacturing steps before the FDA allows our proposed
clinical trials to proceed.
Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive
compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA or
comparable foreign regulatory authorities. The FDA or comparable foreign regulatory authority may conclude that a financial relationship between us and a
principal investigator has created a conflict of interest or otherwise affected interpretation of the study. The FDA or comparable foreign regulatory authority
may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized.
This could result in a delay in approval, or rejection, of our marketing applications by the FDA or comparable foreign regulatory authority, as the case may
be, and may ultimately lead to the denial of marketing approval of one or more of our product candidates.
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Delays in the initiation, conduct or completion of any clinical trial of our product candidates will increase our costs, slow down the product
candidate development and approval process and delay or potentially jeopardize our ability to commence product sales and generate revenue from such
product candidates, if approved. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may
also ultimately lead to the denial of regulatory approval of our product candidates. In the event we identify any additional product candidates to pursue, we
cannot be sure that submission of an IND or a CTA will result in the FDA or comparable foreign regulatory authority allowing clinical trials to begin in a
timely manner, if at all. Any of these events could have a material adverse effect on our business, prospects, financial condition and results of operations.
Results of earlier studies or clinical trials may not be predictive of future clinical trial results, and initial studies or clinical trials may not establish an
adequate safety or efficacy profile for our product candidates to justify proceeding to advanced clinical trials or an application for regulatory approval.
The results of nonclinical and preclinical studies and clinical trials may not be predictive of the results of later-stage clinical trials, and interim
results of a clinical trial do not necessarily predict final results. In addition, for certain of our product candidates that we acquired, we did not undertake the
preclinical studies and clinical trials ourselves. The results of preclinical studies and clinical trials in one set of patients or disease indications, or from
preclinical studies or clinical trials that we did not lead, may not be predictive of those obtained in another. In some instances, there can be significant
variability in safety or efficacy results between different clinical trials of the same product candidate due to numerous factors, including changes in trial
procedures set forth in protocols, differences in the size and type of the patient populations, changes in and adherence to the dosing regimen and other
clinical trial protocols and the rate of dropout among clinical trial participants. In addition, preclinical and clinical data are often susceptible to various
interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical
trials have nonetheless failed to obtain marketing approval. Product candidates in later stages of clinical trials may fail to show the desired safety and
efficacy profile despite having progressed through nonclinical studies and initial clinical trials. For instance, acoramidis failed to meet its primary endpoint
at Month 12 in the ATTRibute-CM Study as mean observed six-minute walk distance, or 6MWD, decline for the acoramidis and placebo arms were 9
meters and 7 meters, respectively, both of which declines are similar to healthy elderly adults and less than prior untreated ATTR-CM cohorts; however,
acoramidis met the primary endpoint at Month 30 endpoint (a hierarchical analysis inclusive of all-cause mortality and frequency of cardiovascular-related
hospitalizations). A number of companies in the pharmaceutical and biopharmaceutical industry have suffered significant setbacks in advanced clinical
trials due to lack of efficacy or adverse safety profiles, despite promising results in earlier studies, and we cannot be certain that we will not face similar
setbacks. Even if early-stage clinical trials are successful, we may need to conduct additional clinical trials of our product candidates in additional patient
populations or under different treatment conditions before we are able to seek approvals from the FDA and regulatory authorities outside the United States
to market and sell these product candidates. Our failure to obtain marketing approval for our product candidates for commercially viable indications, or at
all, would substantially harm our business, prospects, financial condition and results of operations.
Additionally, some clinical trials of our product candidates performed to date were designed as open-label studies and were conducted at a limited
number of clinical sites on a limited number of patients. An “open-label” clinical trial is one where both the patient and investigator know whether the
patient is receiving the investigational product candidate or either an existing approved drug or placebo. Most typically, open-label clinical trials test only
the investigational product candidate and sometimes may do so at different dose levels. Open-label clinical trials are subject to various limitations that may
exaggerate any therapeutic effect as patients in open-label clinical trials are aware when they are receiving treatment. Open-label clinical trials may be
subject to a “patient bias” where patients perceive their symptoms to have improved merely due to their awareness of receiving an experimental treatment.
Moreover, patients selected for early clinical trials often include the most severe sufferers and their symptoms may have been bound to improve
notwithstanding the new treatment. In addition, open-label clinical trials may be subject to an “investigator bias” where those assessing and reviewing the
physiological outcomes of the clinical trials are aware of which patients have received treatment and may interpret the information of the treated group
more favorably given this knowledge. Given that our Phase 2 dose-escalation and expansion study of low-dose infigratinib in children with achondroplasia,
or PROPEL 2, was designed as an open-label trial, the results from this clinical trial may not be predictive of future clinical trial results with this or other
product candidates for which we include an open-label clinical trial when studied in a controlled environment with a placebo or active control.
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We may encounter difficulties enrolling patients in clinical trials, and clinical development activities could thereby be delayed or otherwise adversely
affected.
The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number
of patients who remain in the trial until its conclusion. The indications for which we plan to evaluate our current product candidates each represent a rare
disease or condition with limited patient populations from which to draw participants in clinical trials. Due to our focus on the development of product
candidates for the treatment of Mendelian diseases and genetically driven cancers, many of which are rare conditions, we may not be able to identify and
enroll a sufficient number of patients, or those with required or desired characteristics and criteria, in a timely manner.
We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons, including:
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the size and nature of a patient population;
the patient eligibility criteria defined in the applicable clinical trial protocols, which may limit the patient populations eligible for clinical
trials to a greater extent than competing clinical trials for the same indication;
the size of the study population required for analysis of the trial’s primary endpoints;
the severity of the disease under investigation;
the proximity of patients to a trial site;
the design of the trial;
the ability to recruit clinical trial investigators with the appropriate competencies and experience;
the approval or concurrent enrollment of clinical trials involving competing product candidates currently under development for Mendelian
diseases or genetically driven cancers, or competing clinical trials for similar therapies or targeting patient populations meeting our patient
eligibility criteria;
clinicians’ and patients’ perceptions as to the potential advantages and side effects of the product candidate being studied in relation to other
available therapies and product candidates;
the ability to obtain and maintain patient consents; and
the risk that patients enrolled in clinical trials will not complete such trials for any reason.
If we have difficulty enrolling sufficient numbers of patients to conduct clinical trials as planned, we may need to delay or terminate ongoing or
planned clinical trials, either of which would have an adverse effect on our business.
Use of our product candidates could be associated with side effects, adverse events or other properties or safety risks, which could delay or halt their
clinical development, prevent their regulatory approval, cause us to suspend or discontinue clinical trials, abandon a product or product candidate,
limit the commercial potential of a product candidate, if approved, or result in other significant negative consequences that could harm our business,
prospects, operating results and financial condition.
As is the case with pharmaceuticals generally, it is likely that there may be side effects and adverse events, or AEs, associated with use of our
product candidates. Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics.
Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials, and could result
in a more restrictive label or the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities. The drug-related side
effects of our product candidates could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product
liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly.
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Moreover, if our product candidates are associated with undesirable side effects in preclinical studies or clinical trials or have characteristics that are
unexpected, we may elect to abandon their development or limit their development to more narrow uses or subpopulations in which the undesirable side
effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial
expectations for the product candidate if approved. We may also be required to modify or terminate our study plans based on findings in our preclinical
studies or clinical trials. AEs that we may observe in our ongoing and future preclinical studies and clinical trials of our product candidates could require us
to delay, modify or abandon our development plans for the affected product candidate or other product candidates that share properties of the affected
product candidate. Many product candidates that initially show promise in early-stage testing may later be found to cause side effects that prevent further
development. As we work to advance existing product candidates and to identify new product candidates, we cannot be certain that later testing or trials of
product candidates that initially showed promise in early testing will not be found to cause similar or different unacceptable side effects that prevent their
further development.
It is possible that as we test our product candidates in larger, longer and more extensive clinical trials, or as the use of our product candidates, if they
receive regulatory approval, becomes more widespread, illnesses, injuries, discomforts and other AEs that were observed in earlier trials, as well as
conditions that did not occur or went undetected in previous trials, will be reported by subjects. If such side effects become known later in development or
upon approval, such findings may harm our business, financial condition and prospects significantly.
Additionally, adverse developments in clinical trials of pharmaceutical and biopharmaceutical products conducted by others may cause the FDA or
other regulatory oversight bodies to suspend or terminate our clinical trials, to change the requirements for approval of any of our product candidates.
In addition to side effects caused by a product candidate, the administration process or related procedures also can cause adverse side effects. If any
such AEs occur, our clinical trials of a product candidate could be suspended or terminated. If we are unable to demonstrate that any AEs were caused by
the administration process or related procedures, the FDA, the European Commission, the EMA, or other regulatory authorities could order us to cease
further development of, or deny approval of, a product candidate for any or all targeted indications. Even if we can demonstrate that all future SAEs are not
product-related, such occurrences could affect patient recruitment, or the ability of enrolled patients to complete the trial. Moreover, if we elect, or are
required, to not initiate, delay, suspend or terminate any future clinical trial of any of our product candidates, the commercial prospects of such product
candidates may be harmed and our ability to generate product revenues from any of these product candidates may be delayed or eliminated. Any of these
occurrences may harm our ability to develop other product candidates, and may harm our business, financial condition and prospects significantly.
Additionally, if any of our product candidates receives marketing approval, the FDA could impose a boxed warning in the labeling of our product
and could require us to adopt a risk evaluation and mitigation strategy, or REMS, and could apply elements to assure safe use to ensure that the benefits of
the product outweigh its risks, which may include, among other things, a Medication Guide outlining the risks of the product for distribution to patients and
a communication plan to health care practitioners. Furthermore, if we or others later identify undesirable side effects caused by our product candidates once
approved, several potentially significant negative consequences could result, including:
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regulatory authorities may suspend or withdraw approvals of such product or product candidate;
regulatory authorities may require additional warnings or statements on the label;
regulatory authorities may refuse to approve label expansion for additional indications of such product or product candidate;
we may be required by the FDA to implement a REMS;
we may be required to change the way a product or product candidate is distributed, administered or conduct additional clinical trials;
we may be subject to regulatory investigations and enforcement actions;
we may decide to remove such product or product candidate from the marketplace;
we could be sued and held liable for harm caused to patients; and
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our reputation may suffer.
Any of these occurrences could prevent us from achieving or maintaining market acceptance of the particular product or product candidate, if
approved, and may harm our business, financial condition and prospects significantly.
Certain of our product candidates are under development for the treatment of patient populations with significant comorbidities that may result in
deaths or serious adverse or unacceptable side effects and require us to abandon or limit our clinical development activities.
Patients in certain of our ongoing and planned clinical trials of product candidates in genetically driven cancers, as well as patients who may
undergo treatment with other product candidates that we may develop, may also receive chemotherapy, radiation, and/or other high dose or myeloablative
treatments in the course of treatment of their disease, and may therefore experience side effects or AEs, including death, that are unrelated to our product
candidates. While these side effects or AEs may be unrelated to our product candidates, they may still affect the success of our clinical trials. The inclusion
of critically ill patients in our clinical trials may also result in deaths or other adverse medical events due to underlying disease or to other therapies or
medications that such patients may receive. Any of these events could prevent us from advancing our product candidates through clinical development, and
from obtaining regulatory approval, and would impair our ability to commercialize our product candidates. Any inability to advance our product candidates
through clinical development may harm our business, financial condition, results of operations and prospects.
Interim, “top-line,” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data
become available or as additional analyses are conducted, and as the data are subject to audit and verification procedures that could result in material
changes in the final data.
From time to time, we may publish interim, “top-line” or preliminary data from our clinical trials. Interim data from clinical trials that we may
complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data
become available. Preliminary or “top-line” data also remain subject to audit and verification procedures that may result in the final data being materially
different from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the final data are
available. Material adverse changes between preliminary, “top-line” or interim data and final data could significantly harm our business, financial
condition, results of operations and prospects.
Risks Related to Regulatory Review and Approval of our Product Candidates
Our product candidates are in preclinical or clinical development, which is a lengthy and expensive process with uncertain outcomes and the potential
for substantial delays. We cannot give any assurance that any of our product candidates will receive regulatory approval, which is necessary before they
can be commercialized.
Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical trials to
demonstrate the safety and efficacy of the product candidates in humans. To date, we have focused substantially all of our efforts and financial resources on
identifying, acquiring, and developing our product candidates, including conducting lead optimization, nonclinical studies, preclinical studies and clinical
trials, and providing general and administrative support for these operations. We cannot be certain that any clinical trials will be conducted as planned or
completed on schedule, if at all. Our inability to successfully complete preclinical and clinical development could result in additional costs to us and
negatively impact our ability to generate revenue. Our future success is dependent on our ability to successfully develop, obtain regulatory approval for,
and then successfully commercialize product candidates. While we previously had two products approved for sale, we have not generated significant
revenue from sales of drugs, and we may never be able to successfully commercialize a marketable drug.
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All of our product candidates require additional development; management of preclinical, clinical and manufacturing activities; and regulatory
approval. In addition, we will need to obtain adequate manufacturing supply; complete the build-out of a commercial organization; commence product
candidate-specific marketing efforts; and obtain reimbursement before we generate any significant revenue from commercial product sales from such
product candidates, if ever. Many of our product candidates are in early-stage research or translational phases of development, and the risk of failure for
these programs is high. We cannot be certain that our product candidates will be successful in clinical trials or receive regulatory approval. Further, our
product candidates may not receive regulatory approval even if they are successful in clinical trials. If we do not receive regulatory approvals for our
product candidates, we and our subsidiaries may not be able to continue operations, which may result in us winding down and dissolving the subsidiary,
selling or out-licensing the technology or pursuing an alternative strategy.
If we are unable to obtain regulatory approval in one or more jurisdictions for any product candidates that we may identify and develop, our business
will be substantially harmed.
We cannot commercialize a product until the appropriate regulatory authorities have reviewed and approved the product candidate. Approval by the
FDA and comparable foreign regulatory authorities is lengthy and unpredictable, and depends upon numerous factors, including substantial discretion of
the regulatory authorities. Approval policies, regulations or the type and amount of nonclinical or clinical data necessary to gain approval may change
during the course of a product candidate’s development and may vary among jurisdictions, which may cause delays in the approval or the decision not to
approve an application. It is possible that our current product candidates and any other product candidates which we may seek to develop in the future will
not ever obtain regulatory approval. We cannot be certain that any of our product candidates will receive regulatory approval or that if approved, any of our
product candidates, will be successfully commercialized.
Obtaining marketing approval is an extensive, lengthy, expensive and inherently uncertain process, and regulatory authorities may delay, limit or
deny approval of our product candidates for many reasons, including, but not limited to:
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the inability to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that the applicable product candidate
is safe and effective as a treatment for our targeted indications;
the FDA or comparable foreign regulatory authorities may disagree with the design, endpoints or implementation of our clinical trials;
the population studied in the clinical program may not be sufficiently broad or representative to assure safety or efficacy in the full
population for which we seek approval;
the FDA or comparable foreign regulatory authorities may require additional preclinical studies or clinical trials beyond those that we
currently anticipate;
the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from nonclinical studies or clinical trials;
the data collected from clinical trials of product candidates that we may identify and pursue may not be sufficient to support the submission
of a new drug application, or NDA, biologics license application, or BLA, or other submission for regulatory approval in the United States or
elsewhere;
we may be unable to demonstrate to the FDA or comparable foreign regulatory authorities that a product candidate’s risk-benefit ratio for its
proposed indication is acceptable;
the FDA or comparable foreign regulatory authorities may identify deficiencies in the manufacturing processes, test procedures and
specifications, or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and
the approval policies or regulations of the FDA or comparable foreign regulatory authorities may change in a manner that renders the clinical
trial design or data insufficient for approval.
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In addition, even if an NDA, BLA, or other submission for regulatory approval, is filed and accepted for review, the FDA or comparable regulatory
authorities may delay their review or approval process or may decline to grant regulatory approval for a variety of reasons. For example, on December 5,
2023 we submitted an application for approval with the FDA for acoramidis but cannot predict when, or if, we will receive a decision on approval from the
FDA. The lengthy approval process, as well as the unpredictability of the results of clinical trials and evolving regulatory requirements, may result in our
failure to obtain regulatory approval to market product candidates that we may pursue in the United States or elsewhere, which would significantly harm
our business, prospects, financial condition and results of operations.
Our clinical trials may fail to demonstrate substantial evidence of the safety and efficacy of product candidates that we may identify and pursue for
their intended uses, which would prevent, delay or limit the scope of regulatory approval and commercialization.
Before obtaining regulatory approvals for the commercial sale of our product candidates, we must demonstrate through lengthy, complex and
expensive nonclinical studies, preclinical studies and clinical trials that the applicable product candidate is both safe and effective for use in each target
indication, and in the case of our product candidates regulated as biological products, that the product candidate is safe, pure, and potent for use in its
targeted indication. Each product candidate must demonstrate an adequate risk versus benefit profile in its intended patient population and for its intended
use.
Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the
clinical development process. Most product candidates that begin clinical trials are never approved by regulatory authorities for commercialization. We
have limited experience in designing clinical trials and may be unable to design and execute a clinical trial to support future marketing approvals.
We cannot be certain that our current clinical trials or any other future clinical trials will be successful. Additionally, any safety concerns observed in
any one of our clinical trials in our targeted indications could limit the prospects for regulatory approval of our product candidates in those and other
indications, which could have a material adverse effect on our business, financial condition and results of operations. In addition, even if such clinical trials
are successfully completed, we cannot guarantee that the FDA or comparable foreign regulatory authorities will interpret the results as we do, and more
trials could be required before we submit our product candidates for approval. Success in clinical trials in a particular indication does not ensure that a
product candidate will be successful in other indications. Similarly, approval of a product candidate in a particular indication does not ensure that that the
product candidate will be successful in other indications. Moreover, results acceptable to support approval in one jurisdiction may be deemed inadequate by
another regulatory authority to support regulatory approval in that other jurisdiction. To the extent that the results of the trials are not satisfactory to the
FDA or comparable foreign regulatory authorities for support of a marketing application, we may be required to expend significant resources, which may
not be available to us, to conduct additional trials in support of potential approval of our product candidates. Even if regulatory approval is secured for a
product candidate, the terms of such approval may limit the scope and use of the specific product candidate, which may also limit its commercial potential.
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We conduct clinical trials for product candidates outside the United States, and the FDA and comparable foreign regulatory authorities may not accept
data from such trials.
We currently conduct clinical trials outside the United States, including in Europe. For instance, our Phase 3 clinical trials of acoramidis included
patients outside of the United States. The acceptance by the FDA or comparable foreign regulatory authority of study data from clinical trials conducted
outside the United States or another jurisdiction may be subject to certain conditions or may not be accepted at all. In cases where data from foreign clinical
trials are intended to serve as the basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of
foreign data alone unless (i) the data are applicable to the U.S. population and U.S. medical practice; (ii) the trials were performed by clinical investigators
of recognized competence and pursuant to GCP regulations; and (iii) the data may be considered valid without the need for an on-site inspection by the
FDA or, if the FDA considers such as inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate
means. Additionally, the FDA’s clinical trial requirements, including sufficient size of patient populations and statistical powering, must be met. Many
foreign regulatory authorities have similar approval requirements. In addition, such foreign trials would be subject to the applicable local laws of the
foreign jurisdictions where the trials are conducted. There can be no assurance that the FDA or any comparable foreign regulatory authority will accept data
from trials conducted outside of the United States or the applicable jurisdiction, including from our previous Phase 3 clinical trials of acoramidis, for which
we have enrolled cohorts outside the United States. If the FDA or any comparable foreign regulatory authority does not accept such data, it would result in
the need for additional trials, which would be costly and time-consuming and delay aspects of our business plan, and which may result in product
candidates that we may develop not receiving approval or clearance for commercialization in the applicable jurisdiction.
Even if we obtain FDA approval for any of our current product candidates in the United States, we may never obtain approval to commercialize any of
these product candidates outside of the United States, which would limit our ability to realize their full market potential.
In order to market any products outside of the United States, we must establish and comply with numerous and varying regulatory requirements of
other countries regarding safety and effectiveness. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries,
and regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval processes vary among
countries and can involve additional product testing and validation and additional or different administrative review periods from those in the United States,
including additional preclinical studies or clinical trials, as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in
other jurisdictions. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for
sale in that jurisdiction. In some cases, the price that we intend to charge for our products, once approved is also subject to approval.
Seeking foreign regulatory approval could result in difficulties and costs and require additional nonclinical studies or clinical trials which could be
costly and time-consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our product
candidates in those countries. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. While we
previously had two products approved for sale in the United States, we do not have any product candidates approved for sale in international markets, and
we have only limited experience in obtaining regulatory approval in international markets. If we fail to comply with regulatory requirements in
international markets or to obtain and maintain required approvals, or if regulatory approval in international markets is delayed, our target market will be
reduced and our ability to realize the full market potential of any approved products will be harmed.
Even though we may apply for orphan drug designation for our product candidates, we may not be able to obtain such designations or maintain the
benefits associated with orphan drug status, including orphan drug marketing exclusivity.
Our business strategy focuses on the development of product candidates for the treatment of genetic diseases, which may be eligible for FDA or
EMA orphan drug designation. Regulatory authorities in some jurisdictions, including the United States and European Union, may designate drugs or
biologics for relatively small patient populations as orphan drugs. After the FDA grants orphan drug designation, the generic identity of the drug and its
potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the
regulatory review and approval process.
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Even if one of our product candidates receives orphan exclusivity, the FDA can still approve other drugs or biologics for use in treating the same
indication or disease or the same biologic for a different indication or disease during the exclusivity period. Furthermore, the FDA can waive orphan
exclusivity if we are unable to manufacture sufficient supply of our product or orphan drug exclusivity can be overcome if a subsequent applicant
demonstrates clinical superiority over our product. See the section titled, “Business — Government Regulation — Orphan Drug Designation and
Exclusivity.”
We have obtained from the FDA orphan drug designations, including for: acoramidis for the treatment of transthyretin amyloidosis; low-dose
infigratinib for the treatment of achondroplasia; encaleret for the treatment of autosomal dominant hypocalcemia (including ADH type 1 and ADH type 2);
BBP-812 for the treatment of Canavan Disease; and BBP-671 for the treatment of PKAN and PA. We have obtained from the EMA and European
Commission, orphan drug designation for: acoramidis for the treatment of ATTR amyloidosis; low-dose infigratinib for the treatment of achondroplasia;
BBP-418 for the treatment of limb-girdle muscular dystrophy; BBP-812 for the treatment of Canavan Disease; BBP-671 for the treatment of PKAN and
PA; and encaleret as a treatment for hypoparathyroidism (inclusive of ADH1). We may seek orphan drug designation for other product candidates. Even if
we obtain orphan drug designation, exclusive marketing rights in the United States may be limited if we seek approval for an indication broader than the
orphan designated indication and may be lost if the FDA later determines that the request for designation was materially defective, if we are unable to
assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition, or if a subsequent applicant demonstrates clinical
superiority over our products. In addition, although we may seek orphan drug designation for other product candidates, we may never receive such
designations. Any failure to obtain, maintain or otherwise recognize the benefits of orphan drug designation for our product candidates could have a
material adverse effect on our prospects.
On August 3, 2017, Congress passed the FDA Reauthorization Act of 2017, or FDARA. FDARA, among other things, codified the FDA’s pre-
existing regulatory interpretation to require that a sponsor demonstrate the clinical superiority of an orphan drug that is otherwise the same as a previously
approved drug for the same rare disease in order to receive orphan drug exclusivity. The legislation reverses prior precedent holding that the Orphan Drug
Act unambiguously requires that the FDA recognize the orphan exclusivity period regardless of a showing of clinical superiority. Moreover, in the
Consolidated Appropriations Act of 2021, Congress did not further change this interpretation when it clarified that the interpretation codified in FDARA
would apply in cases where FDA issued an orphan designation before the enactment of FDARA but where product approval came after the enactment of
FDARA. The FDA may further reevaluate the Orphan Drug Act and its regulations and policies. We do not know if, when, or how the FDA may change
the orphan drug regulations and policies in the future, and it is uncertain how any changes might affect our business. Depending on what changes the FDA
may make to its orphan drug regulations and policies, our business could be adversely impacted.
The FDA has granted rare pediatric disease designation to BBP-671 for the treatment of PKAN and PA, low-dose infigratinib for the treatment of
achondroplasia, and BBP-812 for the treatment of Canavan Disease. However, a marketing application for BBP-671 or any other product candidate, if
approved, may not meet the eligibility criteria for a priority review voucher.
The FDA has granted rare pediatric disease designation to BBP-671 for the treatment of PKAN and PA, low-dose infigratinib for the treatment of
achondroplasia, and BBP-812 for the treatment of Canavan Disease. Designation of a drug as a drug for a rare pediatric disease does not guarantee that an
NDA for such drug will meet the eligibility criteria for a rare pediatric disease priority review voucher at the time the application is approved. Under the
Federal Food, Drugs, and Cosmetic Act, or FDCA, we will need to request a rare pediatric disease priority review voucher in our original NDA for BBP-
671. The FDA may determine that an NDA for any of BBP-671, low-dose infigratinib, or BBP-812, if approved, does not meet the eligibility criteria for a
priority review voucher, including for the following reasons:
•
•
•
achondroplasia, Canavan Disease, PKAN or PA no longer meets the definition of a rare pediatric disease;
the NDA contains an active ingredient (including any ester or salt of the active ingredient) that has been previously approved in an NDA;
the NDA is not deemed eligible for priority review;
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•
•
the NDA does not rely on clinical data derived from studies examining a pediatric population and dosages of the drug intended for that
population (that is, if the NDA does not contain sufficient clinical data to allow for adequate labeling for use by the full range of affected
pediatric patients); or
the NDA is approved for a different adult indication than the rare pediatric disease for which BBP-671, low-dose infigratinib, or BBP-812 is
designated (for example, if BBP-671 is approved for an indication based on specific genetic alterations that would be inclusive of, but not
limited to, BBP-671).
The authority for the FDA to award rare pediatric disease priority review vouchers for drugs and biologics that receive rare pediatric disease
designation on or prior to September 30, 2024 is currently limited to those candidates that receive rare pediatric disease designation on or prior to
September 30, 2024, and the FDA may only award rare pediatric disease priority review vouchers through September 30, 2026. However, it is possible the
FDA’s authority to award rare pediatric disease priority review vouchers will be further extended by Congress. Absent any such extension, if an NDA for
BBP-671, low-dose infigratinib or BBP-812 is not approved prior to September 30, 2026 for any reason, regardless of whether it meets the criteria for a
rare pediatric disease priority review voucher, it will not be eligible for a priority review voucher.
Accelerated approval by the FDA, even if granted for any of our product candidates, may not lead to a faster development or regulatory review or
approval process and it does not increase the likelihood that our product candidates will receive marketing approval.
We may seek approval of our product candidates using the FDA’s accelerated approval pathway. We may seek approval of additional product
candidates, where applicable, under the FDA’s accelerated approval pathway. This pathway may not lead to a faster development, regulatory review or
approval process and does not increase the likelihood that our product candidates will receive marketing approval. A product may be eligible for
accelerated approval if it treats a serious or life-threatening condition, generally provides a meaningful advantage over available therapies, and
demonstrates an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. As a condition of approval, the FDA may require that a
sponsor of a product receiving accelerated approval perform adequate and well-controlled post-marketing confirmatory clinical trials. These confirmatory
trials must be completed with due diligence. Under the Food and Drug Omnibus Reform Act of 2022, or FDORA, the FDA is permitted to require, as
appropriate, that a post-approval confirmatory trial or trials be underway prior to approval or within a specified time period after the date accelerated
approval was granted. FDORA also requires sponsors to send updates to the FDA every 180 days on the status of such studies, including progress toward
enrollment targets, and the FDA must promptly post this information publicly. Furthermore, under FDORA, the FDA is empowered to take action, such as
issuing fines, against companies that fail to conduct with due diligence any post-approval confirmatory trial or submit timely reports to the agency on their
progress. In addition, for products under consideration for accelerated approval, the FDA currently requires, unless otherwise requested by the agency, pre-
approval of promotional materials prior to dissemination or publication, which could adversely impact the timing of the commercial launch of the product.
Thus, even if we seek to utilize the accelerated approval pathway, we may not be able to obtain accelerated approval and, even if we do, we may not
experience a faster development, regulatory review or approval process for that product. In addition, receiving accelerated approval does not assure that the
product’s accelerated approval will eventually be converted to a traditional approval.
We may not elect or be able to take advantage of any expedited development or regulatory review and approval processes available to product
candidates granted breakthrough therapy, fast track or regenerative medicine advanced therapy designation by the FDA.
We intend to evaluate and continue ongoing discussions with the FDA on regulatory strategies that could enable us to take advantage of expedited
development pathways for certain of our product candidates, although we cannot be certain that our product candidates will qualify for any expedited
development pathways or that regulatory authorities will grant, or allow us to maintain, the relevant qualifying designations. Potential expedited
development pathways that we could pursue include breakthrough therapy, fast track designation and/or regenerative medicine advanced therapy, or RMAT.
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Breakthrough therapy designation is intended to expedite the development and review of product candidates that are designed to treat serious or life-
threatening diseases when “preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one
or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.” The designation of a product
candidate as a breakthrough therapy provides potential benefits that include more frequent meetings with the FDA to discuss the development plan for the
product candidate and ensure collection of appropriate data needed to support approval; more frequent written correspondence from the FDA about matters
such as the design of the proposed clinical trials and use of biomarkers; intensive guidance on an efficient drug development program, beginning as early as
Phase 1; organizational commitment involving senior managers; and eligibility for rolling review and priority review.
Fast track designation is designed for product candidates intended for the treatment of a serious or life-threatening disease or condition, where
nonclinical or clinical data demonstrate the potential to address an unmet medical need for this disease or condition.
We may also seek RMAT designation for one or more of our product candidates. See the section titled, “Business — Government Regulation —
Expedited Development and Review Programs” for additional information regarding RMAT designation.
Although some of our product candidates, including the following, were granted fast track designation by the FDA, we may elect not to pursue any
of breakthrough therapy, fast track or RMAT designations for our other product candidates, and the FDA has broad discretion whether or not to grant these
designations:
•
•
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BBP-418 for the treatment of LGMD2I,
encaleret for the treatment of ADH1, and
BBP-812 for the treatment of Canavan Disease.
Even if we believe a particular product candidate is eligible for breakthrough therapy, fast track designation or RMAT, there can be no assurance that
the FDA would decide to grant it. Breakthrough therapy designation, fast track and RMAT designation do not change the standards for product approval,
and there is no assurance that such designation or eligibility will result in expedited review or approval or that the approved indication will not be narrower
than the indication covered by the breakthrough therapy, fast track or RMAT designation. Thus, even if we do receive breakthrough therapy, fast track or
RMAT designation, we may not experience a faster development process, review or approval compared to conventional FDA procedures. The FDA may
withdraw breakthrough therapy, fast track or RMAT designation if it believes that the product no longer meets the qualifying criteria. Our business may be
harmed if we are unable to avail ourselves of these or any other expedited development and regulatory pathways.
Additionally, certain oncology product candidates may be eligible for review under the Real-Time Oncology Review, or RTOR, which is an
initiative of the FDA’s Oncology Center of Excellence designed to expedite the delivery of safe and effective cancer treatments to patients. Although this
program allows the FDA to review data earlier, before an applicant formally submits a complete application, acceptance into the RTOR pilot does not
guarantee or influence approvability of the application, which is subject to the usual benefit-risk evaluation by FDA reviewers, and it does not affect the
FDA’s Prescription Drug User Fee Act timelines. Although early approvals have occurred with applications selected for RTOR, this may not be the case for
our application even if it is selected for RTOR. If at any time the FDA determines our participation in RTOR, if selected, is no longer appropriate, the FDA
may rescind our acceptance and instruct us to follow routine submission procedures for marketing approval.
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We may seek designation for our platform technology as a designated platform technology, but we might not receive such designation, and even if we
do, such designation may not lead to a faster development or regulatory review or approval process.
We may seek designation for our platform technology as a designated platform technology. A sponsor may request the FDA to designate a platform
technology as a designated platform technology concurrently with, or at any time after, submission of an IND application for a drug that incorporates or
utilizes the platform technology that is the subject of the request. If so designated, the FDA may expedite the development and review of any subsequent
original NDA or BLA for a drug that uses or incorporates the platform technology. Even if we believe our platform technology meets the criteria for such
designation, the FDA may disagree and instead determine not to grant such designation. In addition, the receipt of such designation for a platform
technology does not ensure that a drug will be developed more quickly or receive a faster FDA review process or ultimate FDA approval. Moreover, the
FDA may revoke a designation if the FDA determines that a designated platform technology no longer meets the criteria for such designation. See the
section titled, “Business — Government Regulation — Expedited Development and Review Programs.”
If we are unable to successfully validate, develop and obtain regulatory approval for companion diagnostic tests for our drug candidates that require or
would commercially benefit from such tests, or experience significant delays in doing so, we may not realize the full commercial potential of these
product candidates.
In connection with the clinical development of our product candidates for certain indications, we may work with collaborators to develop or obtain
access to in vitro companion diagnostic tests to identify patient subsets within a disease category who may derive selective and meaningful benefit from our
drug candidates. Such companion diagnostics would be used during our clinical trials as well as in connection with the commercialization of our product
candidates. To be successful, we or our collaborators will need to address a number of scientific, technical, regulatory and logistical challenges. The FDA
and comparable foreign regulatory authorities regulate in vitro companion diagnostics as medical devices and, under that regulatory framework, will likely
require the conduct of clinical trials to demonstrate the safety and effectiveness of any diagnostics we may develop, which we expect will require separate
regulatory clearance or approval prior to commercialization.
We may rely on third parties for the design, development and manufacture of companion diagnostic tests for our therapeutic product candidates that
may require such tests. If we enter into such collaborative agreements, we will be dependent on the sustained cooperation and effort of our future
collaborators in developing and obtaining approval for these companion diagnostics. It may be necessary to resolve issues such as selectivity/specificity,
analytical validation, reproducibility, or clinical validation of companion diagnostics during the development and regulatory approval processes. Moreover,
even if data from preclinical studies and early clinical trials appear to support development of a companion diagnostic for a product candidate, data
generated in later clinical trials may fail to support the analytical and clinical validation of the companion diagnostic. We and our future collaborators may
encounter difficulties in developing, obtaining regulatory approval for, manufacturing and commercializing companion diagnostics similar to those we face
with respect to our therapeutic candidates and therapeutics themselves, including issues with achieving regulatory clearance or approval, production of
sufficient quantities at commercial scale and with appropriate quality standards, and in gaining market acceptance. If we are unable to successfully develop
companion diagnostics for these therapeutic product candidates, or experience delays in doing so, the development of these therapeutic product candidates
may be adversely affected, these therapeutic product candidates may not obtain marketing approval, and we may not realize the full commercial potential
of any of these therapeutics that have or may obtain marketing approval. As a result, our business, results of operations and financial condition could be
materially harmed. In addition, a diagnostic company with whom we contract may decide to discontinue selling or manufacturing the companion diagnostic
test that we anticipate using in connection with development and commercialization of our product candidates or our relationship with such diagnostic
company may otherwise terminate. We may not be able to enter into arrangements with another diagnostic company to obtain supplies of an alternative
diagnostic test for use in connection with the development and commercialization of our product candidates or do so on commercially reasonable terms,
which could adversely affect and/or delay the development or commercialization of our therapeutic candidates.
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If approved, our investigational products regulated as biologics may face competition from biosimilars approved through an abbreviated regulatory
pathway.
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively the ACA,
includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which created an abbreviated approval pathway for
biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Under the BPCIA, an application for a
biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In
addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first
licensed. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a
BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the
safety, purity, and potency of the other company’s product. The law is complex and is still being interpreted and implemented by the FDA. As a result, its
ultimate impact, implementation, and meaning are subject to uncertainty.
We believe that any of our product candidates approved as a biological product under a BLA should qualify for the 12-year period of exclusivity.
However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our
investigational medicines to be reference products for competing products, potentially creating the opportunity for generic competition sooner than
anticipated. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation.
Moreover, the extent to which a biosimilar, once licensed, will be substituted for any one of our reference products in a way that is similar to traditional
generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.
If competitors are able to obtain marketing approval for biosimilars referencing any of our product candidates, our products may become subject to
competition from such biosimilars, which would impair our ability to successfully commercialize and generate revenues from sales of such products.
Our product candidates, if approved, will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant
additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our
product candidates.
Our product candidates, if approved, will be subject to ongoing regulatory requirements and review by the FDA and other applicable regulatory
authorities for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-marketing studies, and
submission of safety, efficacy, and other post-market information, including both federal and state requirements in the United States and requirements of
comparable foreign regulatory authorities.
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Manufacturers and manufacturers’ facilities are required to comply with extensive requirements imposed by the FDA and comparable foreign
regulatory authorities, including ensuring that quality control and manufacturing procedures conform to current good manufacturing practices, or cGMP,
regulations. As such, we and our CMOs will be subject to continual review and inspections to assess compliance with cGMP and adherence to
commitments made in any NDA, BLA or marketing authorization application, or MAA. Accordingly, we and others with whom we work must continue to
expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production and quality control. Furthermore, under the Drug
Supply Chain Security Act, for certain commercial prescription drug products, manufacturers and other parties involved in the supply chain must also meet
chain of distribution requirements and build electronic, interoperable systems for product tracking and tracing and for notifying the FDA of counterfeit,
diverted, stolen, and intentionally adulterated products or other products that are otherwise unfit for distribution in the U.S. In addition, the distribution of
prescription pharmaceutical products, including samples, is subject to the Prescription Drug Marketing Act, or PDMA, which regulates the distribution of
drugs and drug samples at the federal level, and sets minimum standards for the registration and regulation of drug distributors by the states. Both the
PDMA and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountability in
distribution. Prescription drug products must also meet applicable child-resistant packaging requirements under the U.S. Poison Prevention Packaging Act.
If we are not able to comply with post-approval regulatory requirements, we could have the marketing approvals for any approved products withdrawn by
regulatory authorities and our ability to market such products could be limited, which could adversely affect our ability to achieve or sustain profitability
and we could be subject to substantial penalties. As a result, the cost of compliance with post-approval regulations may have a negative effect on our
operating results and financial condition.
Any regulatory approvals that we may receive for our product candidates, are or will be subject to limitations on the approved indicated uses for
which the product may be marketed and promoted or to the conditions of approval, or contain requirements for potentially costly post-marketing testing,
including Phase 4 clinical trials and surveillance to monitor the safety and efficacy of the product. We will be required to report certain adverse reactions
and production problems, if any, to the FDA and comparable foreign regulatory authorities. Any new legislation addressing drug safety issues could result
in delays in product development or commercialization, or increased costs to assure compliance. Additionally, under FDORA, sponsors of approved drugs
and biologics must provide six months’ notice to the FDA of any changes in marketing status, such as the withdrawal of a drug, and failure to do so could
result in the FDA placing the product on a list of discontinued products, which would revoke the product’s ability to be marketed.
The FDA and other agencies, including the Department of Justice, closely regulate and monitor the post-approval marketing, labeling, advertising
and promotion of products to ensure that they are manufactured, marketed and distributed only for the approved indications and in accordance with the
provisions of the approved label. We are required to comply with requirements concerning advertising and promotion for products that may be approved.
Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the
information in the product’s approved label. As such, we may not promote those products for indications or uses for which they do not have approval.
The holder of an approved NDA, BLA or MAA must submit new or supplemental applications and obtain approval for certain changes to the
approved product, product labeling, or manufacturing process. We could also be asked to conduct post-marketing clinical trials to verify the safety and
efficacy of our products, if approved in general or in specific patient subsets. If original marketing approval was obtained via the accelerated approval
pathway, we could be required to conduct a successful post-marketing clinical trial to confirm clinical benefit for those products.
If a regulatory agency discovers previously unknown problems with a product, such as AEs of unanticipated severity or frequency, or problems with
the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of a product, such regulatory agency may impose
restrictions on that product or us, including requiring withdrawal of the product from the market. If we fail to comply with applicable regulatory
requirements, a regulatory agency or enforcement authority may, among other things:
•
•
•
issue warning or untitled letters that would result in adverse publicity;
impose civil or criminal penalties;
suspend or withdraw regulatory approvals;
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•
•
•
•
•
•
•
suspend any of our ongoing clinical trials;
refuse to approve pending applications or supplements to approved applications submitted by us;
impose restrictions on our operations, including closing our CMOs’ facilities;
impose restrictions on the labeling of products;
impose restrictions on product distribution or use, such as a REMS;
seize or detain products; or
require a product recall.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response, and could generate
negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and
generate revenue from our products. If regulatory sanctions are applied or if regulatory approval is withdrawn, our operating results will be adversely
affected and our stock price may decline. The FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be
enacted that could prevent, limit or delay regulatory approval of our product candidates or suspend, withdraw or modify regulatory approval of our
products.
The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.
If any of our current product candidates are approved and we are found to have improperly promoted off-label uses of our products, we may become
subject to significant liability. The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription
products. In particular, while the FDA permits the dissemination of truthful and non-misleading information about an approved product, a sponsor may not
promote a product for uses that are not approved by the FDA or such other regulatory agencies as reflected in the product’s approved labeling. If we are
found to have promoted such off-label uses, we may become subject to significant liability. The federal government has levied large civil and criminal fines
against companies for alleged improper promotion of off-label use and has enjoined several companies from engaging in off-label promotion. The FDA has
also requested that companies enter into consent decrees, corporate integrity agreements or permanent injunctions under which specified promotional
conduct must be changed or curtailed. If we cannot successfully manage the promotion of our product candidates, if approved, we could become subject to
significant liability, which would materially adversely affect our business and financial condition.
Notwithstanding regulations related to product promotion, the FDA and other regulatory authorities allow companies to engage in truthful, non-
misleading, and non-promotional scientific exchange concerning their products. We intend to engage in medical education activities and communicate with
healthcare providers in compliance with all applicable laws and regulatory guidance.
Risks Related to the Novel Nature of our Product Candidates
Certain of our product candidates, including our protein therapeutic and gene therapy product candidates, are novel, complex and difficult to
manufacture. We could experience manufacturing problems that result in delays in our development or commercialization programs or otherwise harm
our business.
The manufacturing processes our CMOs use to produce our product candidates, including our protein therapeutic and gene therapy product
candidates, are complex, novel and have not been validated for commercial use. Several factors have caused and may cause future production interruptions,
including restrictions on certain manufacturing operations and shortages in on-site personnel at our CMOs’ manufacturing facilities, equipment
malfunctions, facility contamination, raw material shortages or contamination, natural disasters, disruption in utility services, human error or disruptions in
the operations of our suppliers, including historical disruptions related to the COVID-19 pandemic, which could reoccur in connection with any future
global pandemic or health emergency.
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Several of our small molecule product candidates are particularly complex and difficult to manufacture, in some cases due to the number of steps
required, the process complexity and the toxicity of end or intermediate-stage products. Our protein therapeutic and gene therapy product candidates
require processing steps that are more complex than those required for most small molecule drugs. Moreover, unlike small molecules, the physical and
chemical properties of certain of our biologic product candidates generally cannot be fully characterized. As a result, assays of the finished product may not
be sufficient to ensure that the product is consistent from lot-to-lot or will perform in the intended manner. Accordingly, our CMOs must employ multiple
steps to control the manufacturing process to assure that the process is reproducible and the product candidate is made strictly and consistently in
compliance with the process. Problems with the manufacturing process, even minor deviations from the normal process, could result in product defects or
manufacturing failures that result in lot failures, product recalls, product liability claims or insufficient inventory to conduct clinical trials or supply
commercial markets. We may encounter problems achieving adequate quantities and quality of clinical-grade materials that meet the FDA, the EMA or
other applicable standards or specifications with consistent and acceptable production yields and costs.
In addition, the FDA, the EMA and other foreign regulatory authorities may require us to submit samples of any lot of any approved product
together with the protocols showing the results of applicable tests at any time. Under some circumstances, the FDA, the EMA or other foreign regulatory
authorities may require that we not distribute a lot until the agency authorizes its release. Slight deviations in the manufacturing process, including those
affecting quality attributes and stability, may result in unacceptable changes in the product that could result in lot failures or product recalls. Lot failures or
product recalls could cause us to delay product launches or clinical trials, which could be costly to us and otherwise harm our business, financial condition,
results of operations and prospects.
Our CMOs also may encounter problems hiring and retaining the experienced scientific, quality assurance, quality-control and manufacturing
personnel needed to operate our manufacturing processes, which could result in delays in production or difficulties in maintaining compliance with
applicable regulatory requirements.
Any problems in our CMOs’ manufacturing process or facilities could result in delays in planned clinical trials and increased costs, and could make
us a less attractive collaborator for potential partners, including larger biotechnology companies and academic research institutions, which could limit
access to additional attractive development programs. Problems in our manufacturing process could also restrict our ability to meet potential future market
demand for any products that may be approved.
Certain of our product candidates are based on a novel adeno-associated virus, or AAV, gene therapy technology with which there is limited clinical or
regulatory experience to date, which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining
regulatory approval.
Certain of our product candidates are based on gene therapy technology and our future success depends on the successful development of this novel
therapeutic approach. We cannot assure you that any development problems we or other gene therapy companies experience in the future related to gene
therapy technology will not cause significant delays or unanticipated costs in the development of our product candidates, or that such development
problems can be solved. In addition, the clinical study requirements of the FDA, the EMA and other regulatory agencies and the criteria these regulators
use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of
the potential products. The regulatory approval process for novel product candidates such as ours can be more expensive and take longer than for other,
better known or extensively studied therapeutic modalities. Further, as we are developing novel treatments for diseases in which there is limited clinical
experience with new endpoints and methodologies, there is heightened risk that the FDA, the EMA or comparable foreign regulatory bodies may not
consider the clinical trial endpoints to provide clinically meaningful results, and the resulting clinical data and results may be more difficult to analyze. To
date, few gene therapy products have been approved by the FDA or comparable foreign regulatory authorities, which makes it difficult to determine how
long it will take or how much it will cost to obtain regulatory approvals for our product candidates in the United States, the European Union or other
jurisdictions. Further, approvals by one regulatory agency may not be indicative of what other regulatory agencies may require for approval.
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Regulatory requirements governing the development of gene therapy products have changed frequently and may continue to change in the future. In
2016, the FDA established the Office of Tissues and Advanced Therapies, or OTAT, within its Center for Biologics Evaluation and Research, or CBER, to
consolidate the review of gene therapy and related products, and to advise CBER on its review. In September 2022, the FDA announced retitling of OTAT
to the Office of Therapeutic Products, or OTP, and elevation of OTP to a “Super Office” to meet its growing cell and gene therapy workload. In addition,
under guidelines issued by the National Institutes of Health, or NIH, gene therapy clinical trials are also subject to review and oversight by an institutional
biosafety committee, or IBC, a local institutional committee that reviews and oversees research utilizing recombinant or synthetic nucleic acid molecules at
that institution. Before a clinical trial can begin at any institution, that institution’s institutional review board, or IRB, and its IBC assesses the safety of the
research and identifies any potential risk to public health or the environment. While the NIH guidelines are not mandatory unless the research in question is
being conducted at or sponsored by institutions receiving NIH funding of recombinant or synthetic nucleic acid molecule research, many companies and
other institutions not otherwise subject to the NIH Guidelines voluntarily follow them. Moreover, serious adverse events or developments in clinical trials
of gene therapy product candidates conducted by others may cause the FDA or other regulatory bodies to initiate a clinical hold on our clinical trials or
otherwise change the requirements for approval of any of our product candidates. Although the FDA decides whether individual cell and gene therapy
protocols may proceed, the review process and determinations of other reviewing bodies can impede or delay the initiation of a clinical trial, even if the
FDA has reviewed the trial and approved its initiation.
Similarly, the EMA governs the approval of gene therapies in the European Union and may issue new guidelines concerning the development and
marketing authorization for gene therapy products and require that we comply with these new guidelines.
These regulatory review committees and advisory groups and the new guidelines they promulgate may lengthen the regulatory review process,
require us to perform additional studies or trials, increase our development costs, lead to changes in regulatory positions and interpretations, delay or
prevent approval and commercialization of our product candidates or lead to significant post-approval limitations or restrictions. As we advance our
product candidates, we will be required to consult with these regulatory and advisory groups and comply with applicable guidelines. If we fail to do so, we
may be required to delay or discontinue development of such product candidates. These additional processes may result in a review and approval process
that is longer than we otherwise would have expected. Delays as a result of an increased or lengthier regulatory approval process or further restrictions on
the development of our product candidates can be costly and could negatively impact our ability to complete clinical trials and commercialize our current
and future product candidates, if approved, in a timely manner, if at all.
Our product candidates based on gene therapy technology may cause undesirable and unforeseen side effects or be perceived by the public as unsafe,
which could delay or prevent their advancement into clinical trials or regulatory approval, the imposition of a clinical hold, limit the commercial
potential or result in significant negative consequences.
Public attitudes may be influenced by claims that gene therapy as a novel technology is unsafe, unethical, or immoral, and, consequently, our
product candidates may not gain the acceptance of the public or the medical community. Adverse public attitudes may adversely impact our ability to enroll
clinical trials. In addition, the FDA has imposed an increased number of clinical holds on gene therapy candidates in recent years. Moreover, our success
will depend upon physicians prescribing, and their patients being willing to receive, treatments that involve the use of product candidates we may develop
in lieu of, or in addition to, existing treatments with which they are already familiar and for which greater clinical data may be available. For example, there
have been several significant adverse side effects in prior clinical trials of gene therapy product candidates, including reported cases of leukemia and death
seen in other trials using other vectors. While new AAV vectors have been developed to reduce these side effects, gene therapy is still a relatively new
approach to disease treatment and additional adverse side effects could develop. There also is the potential risk of delayed AEs following exposure to gene
therapy products due to persistent biologic activity of the genetic material or other components of products used to carry the genetic material.
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Possible adverse side effects that could occur with treatment with gene therapy products include an immunologic reaction early after administration
which could be detrimental to the patient’s health or substantially limit the effectiveness and durability of the treatment. For example, an increasingly
anticipated side effect of AAV gene therapy is the development of a T-cell immunological response, most often seen affecting the liver. Any actual or
perceived negative effects of our AAV gene therapy product candidates or those under development by third parties could impair our ability to continue the
development of these product candidates and have an adverse effect on our prospects.
Risks Related to Our Reliance on Third Parties
We expect to rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, and those third parties may not
perform satisfactorily, including failing to meet deadlines for the completion of such trials, research or testing.
We currently rely and expect to continue to rely on third parties, such as CROs, clinical data management organizations, medical institutions and
clinical investigators, to conduct some aspects of research and preclinical testing and clinical trials. Any of these third parties may terminate their
engagements with us or be unable to fulfill their contractual obligations. If any of our relationships with these third parties terminate, we may not be able to
enter into arrangements with alternative third parties on commercially reasonable terms, or at all. If we need to enter into alternative arrangements, it will
delay our product development activities.
Our reliance on these third parties for research and development activities reduces control over these activities but does not relieve us of our
responsibilities. For example, we remain responsible for ensuring that each of our respective clinical trials is conducted in accordance with the general
investigational plan and protocols for the trial and applicable legal, regulatory, and scientific standards, and our reliance on third parties does not relieve us
of our regulatory responsibilities. In addition, the FDA and comparable foreign regulatory authorities require compliance with GCPs for conducting,
recording and reporting the results of clinical trials to assure that data and reported results are credible, reproducible and accurate and that the rights,
integrity and confidentiality of trial participants are protected. Regulatory authorities enforce these GCPs through periodic inspections of trial sponsors,
principal investigators and trial sites. If we or any of these third parties fail to comply with applicable GCP regulations, some or all of the clinical data
generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional
nonclinical or clinical trials or to enroll additional patients before approving our marketing applications. We cannot be certain that, upon inspection, such
regulatory authorities will determine that any of our clinical trials complies with the GCP regulations. For any violations of laws and regulations during the
conduct of clinical trials, we could be subject to untitled and warning letters or enforcement action that may include civil penalties up to and including
criminal prosecution. We also are required to register ongoing clinical trials and post the results of completed clinical trials on a government-sponsored
database within certain timeframes. Failure to do so can result in fines, adverse publicity, and civil and criminal sanctions.
If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct clinical trials in accordance with
regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for any product
candidates we may develop and will not be able to, or may be delayed in our efforts to, successfully commercialize our medicines. Our failure or the failure
of these third parties to comply applicable regulatory requirements or our stated protocols could also subject us to enforcement action.
We also expect to rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our
distributors could delay clinical development or marketing approval of any product candidates we may develop or commercialization of our medicines,
producing additional losses and depriving us of potential product revenue.
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We rely entirely on third parties for the manufacturing of our current product candidates or other product candidates that we may develop for
preclinical studies and clinical trials. Our business could be harmed if those third parties fail to provide us with sufficient quantities of drug product, or
fail to do so at acceptable quality levels or prices.
We do not currently have, nor do we plan to acquire, the infrastructure or capability internally to manufacture drug supplies for our ongoing clinical
trials or any future clinical trials that we may conduct, and we lack the resources to manufacture our product candidates, if approved, on a commercial
scale. We rely, and expect to continue to rely, on third-party manufacturers to produce our current product candidates or other product candidates that we
may identify for clinical trials, as well as for commercial manufacture of any product candidates that may receive marketing approval. Although we
generally do not begin a clinical trial unless we believe we have a sufficient supply of a product candidate to complete the trial, any significant delay or
discontinuity in the supply of a product candidate, or the raw material components thereof, for an ongoing clinical trial due to the need to replace a third-
party manufacturer could considerably delay the clinical development and potential regulatory approval of our product candidates, which could harm our
business and results of operations. We also expect to rely primarily on third parties for the manufacturing of commercial supply of our product candidates,
if approved.
We may be unable to identify and appropriately qualify third-party manufacturers or establish agreements with third-party manufacturers or do so on
acceptable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks,
including:
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reliance on the third party for sourcing of raw materials, components, and such other goods as may be required for execution of its
manufacturing processes and the oversight by the third party of its suppliers;
reliance on the third party for regulatory compliance and quality assurance for the manufacturing activities each performs;
the possible breach of the manufacturing agreement by the third party;
the possible misappropriation of proprietary information, including trade secrets and know-how; and
the possible termination or non-renewal of the agreement by the third party at a time that is costly or inconvenient for us.
Furthermore, all of our CMOs are engaged with other companies to supply and/or manufacture materials or products for such companies, which
exposes our manufacturers to regulatory risks for the production of such materials and products. The facilities used by our contract manufacturers to
manufacture our product candidates are subject to review by the FDA pursuant to inspections that will be conducted after we submit an NDA or BLA to the
FDA. We do not control the manufacturing process of, and are completely dependent on, our contract manufacturing partners for compliance with the
regulatory requirements, known as cGMP, requirements for manufacture of drug and biologic products. If our contract manufacturers cannot successfully
manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or others, we will not be able to secure or
maintain regulatory approval for our product candidates manufactured at these manufacturing facilities. In addition, we have no control over the ability of
our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a comparable foreign regulatory
agency does not approve these facilities for the manufacture of our product candidates or if any agency withdraws its approval in the future, we may need
to find alternative manufacturing facilities, which would negatively impact the ability to develop, obtain regulatory approval for or market, if approved, our
product candidates.
On March 27, 2020, in response to the COVID-19 pandemic, former President Trump signed into law the CARES Act, which enhanced the FDA’s
authority with respect to drug shortage measures. Under the CARES Act, we must have in place a risk management plan that identifies and evaluates the
risks to the supply of approved drugs for certain serious diseases or conditions for each establishment where the drug or active pharmaceutical ingredient is
manufactured. The risk management plan will be subject to FDA review during an inspection. If we experience shortages in the supply of our product
candidates that receive marketing approval, our results could be materially impacted.
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Our product candidates may compete with other product candidates and marketed drugs for access to manufacturing facilities. In addition, any
performance failure on the part of our existing or future manufacturers could delay clinical development, marketing approval or commercialization. Our
current and anticipated future dependence upon others for the manufacturing of our product candidates may adversely affect our future profit margins and
our ability to commercialize any product candidates that receive marketing approval on a timely and competitive basis.
The drug substance and drug product for certain of our product candidates are currently acquired from single-source suppliers. The loss of these
suppliers, or their failure to supply us with the drug substance or drug product, could materially and adversely affect our business.
The drug substance and drug product for certain of our product candidates are manufactured by single-source suppliers or CMOs under development
and manufacturing contracts and services and quality agreements and purchase orders. We do not currently have any other suppliers for the drug substance
or drug product of these product candidates and, although we believe that there are alternate sources of supply that could satisfy our clinical and
commercial requirements, we cannot assure you that identifying alternate sources and establishing relationships with such sources would not result in
significant delay in the development of our product candidates.
Our dependence on single-source suppliers exposes us to certain risks, including the following:
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our suppliers may cease or reduce production or deliveries, raise prices or renegotiate terms;
delays caused by supply issues may harm our reputation; and
our ability to progress our business could be materially and adversely impacted if our single-source suppliers upon which we rely were to
experience a significant business challenges, disruption or failures due to issues such as financial difficulties or bankruptcy, issues relating
regulatory or quality compliance issues, or other legal or reputational issues.
Additionally, we may not be able to enter into supply arrangements with alternative suppliers on commercially reasonable terms, or at all. A delay in
the development of our product candidates or having to enter into a new agreement with a different third party on less favorable terms than we have with
our current suppliers could have a material adverse impact upon on our business.
If the contract manufacturing facilities on which we rely do not continue to meet regulatory requirements or are unable to meet our supply demands,
our business will be harmed.
All entities involved in the preparation of product candidates for clinical trials or commercial sale, including our existing CMOs for all of our
product candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in late-stage
clinical trials must be manufactured in accordance with cGMP, or similar regulatory requirements outside the United States. These regulations govern
manufacturing processes and procedures, including recordkeeping, and the implementation and operation of quality systems to control and assure the
quality of investigational products and products approved for sale. Poor control of production processes can lead to the introduction of contaminants or to
inadvertent changes in the properties or stability of our product candidates. Our failure, or the failure of third-party manufacturers, to comply with
applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or
withdrawal of approvals, license revocation, suspension of production, seizures or recalls of product candidates or marketed drugs, operating restrictions
and criminal prosecutions, any of which could significantly and adversely affect clinical or commercial supplies of our product candidates.
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We or our CMOs must supply all necessary documentation in support of an NDA, BLA or MAA on a timely basis, and must adhere to regulations
enforced by the FDA and other regulatory agencies through their facilities inspection program. Some of our CMOs have never produced a commercially
approved pharmaceutical product and therefore have not obtained the requisite regulatory authority approvals to do so. The facilities and quality systems of
some or all of our third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition of regulatory
approval of our product candidates or any of our other potential products. In addition, the regulatory authorities may, at any time, audit or inspect a
manufacturing facility involved with the preparation of our product candidates or our other potential products or the associated quality systems for
compliance with the regulations applicable to the activities being conducted. Although we oversee the CMOs, we cannot control the manufacturing process
of, and are completely dependent on, our CMO partners for compliance with the regulatory requirements. If these facilities do not pass a pre-approval plant
inspection, regulatory approval of the applicable product candidates may not be granted or may be substantially delayed until any violations are corrected
to the satisfaction of the regulatory authority, if ever.
The regulatory authorities also may, at any time following approval of a product for sale, audit the manufacturing facilities of our third-party
contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product specifications or
applicable regulations occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may
be costly and/or time consuming for us or a third party to implement, and that may include the temporary or permanent suspension of a clinical trial or
commercial sales or the temporary or permanent closure of a facility. Any such remedial measures imposed upon us or third parties with whom we contract
could materially harm our business.
Additionally, if supply from one approved manufacturer is interrupted, an alternative manufacturer would need to be qualified through an NDA,
BLA supplement or MAA variation, or equivalent foreign regulatory filing, which could result in further delay. The regulatory agencies may also require
additional studies if a new manufacturer is relied upon for commercial production. In some cases, the technical skills required to manufacture our product
candidates may be unique or proprietary to the original CMO and we may have difficulty, or there may be contractual restrictions prohibiting us from,
transferring such skills to a back-up or alternate supplier, or we may be unable to transfer such skills at all. In addition, if we are required to change CMOs
for any reason, we will be required to verify that the new CMO maintains facilities and procedures that comply with quality standards and with all
applicable regulations. We will also need to verify, such as through a manufacturing comparability study, that any new manufacturing process will produce
our product or product candidate according to the specifications previously submitted to or approved by the FDA or another regulatory authority. The
delays associated with the verification of a new CMO could negatively affect our ability to develop product candidates or once approved, to commercialize
those product candidates in a timely manner or within budget. In addition, changes in manufacturers often involve changes in manufacturing procedures
and processes, which could require that we conduct bridging studies between our prior clinical supply used in our clinical trials and that of any new
manufacturer. We may be unsuccessful in demonstrating the comparability of clinical supplies, which could require the conduct of additional clinical trials.
Accordingly, switching manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines.
These factors could cause us to incur higher costs and could cause the delay or termination of clinical trials, regulatory submissions, required
approvals, or commercialization of our product candidates. Furthermore, if our suppliers fail to meet contractual requirements and we are unable to secure
one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical trials may be delayed or we could lose potential
revenue.
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Collaborative relationships with third parties could cause us to expend significant resources and incur substantial business risk with no assurance of
financial return.
We anticipate relying upon strategic collaborations for marketing and commercializing our existing product candidates. For example, Eidos is party
to a license agreement with Alexion Pharma International Operations Unlimited Company, or Alexion, pursuant to which we depend on Alexion for the
clinical development and commercialization of acoramidis in Japan, and QED was previously party to a license and collaboration agreement with Helsinn
Healthcare S.A. and Helsinn Therapeutics (U.S.), Inc., to which we refer collectively as Helsinn, pursuant to which QED granted to Helsinn exclusive
licenses to develop, manufacture and commercialize QED’s product candidate, infigratinib, in selected indications and geographic territories. The
collaboration with Helsinn, was terminated effective in March 2023 pursuant to a mutual termination agreement. In addition, we may rely even more on
strategic collaborations for R&D of other product candidates, and we may sell or license other product offerings through strategic partnerships with
pharmaceutical and biotechnology companies.
If we enter into R&D collaborations during the early phases of product development, success will in part depend on the performance of research
collaborators. We will not directly control the amount or timing of resources devoted by research collaborators to activities related to product candidates.
Research collaborators may not commit sufficient resources to our R&D programs. If any research collaborator fails to commit sufficient resources, the
preclinical or clinical development programs related to the collaboration could be delayed or terminated. Also, collaborators may pursue existing or other
development-stage products or alternative technologies in preference to those being developed in collaboration with us. Finally, if we fail to make required
milestone or royalty payments to collaborators or to observe other obligations in agreements with them, the collaborators may have the right to terminate or
stop performance of those agreements.
Establishing strategic collaborations is difficult and time-consuming. Our discussions with potential collaborators may not lead to the establishment
of collaborations on favorable terms, if at all. Potential collaborators may reject collaborations based upon their assessment of our financial, regulatory or
intellectual property position. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies
that have resulted in a reduced number of potential future collaborators. Even if we successfully establish collaborations, these relationships may never
result in the successful development or commercialization of product candidates or the generation of sales revenue. To the extent that we enter into
collaborative arrangements, the related product revenues are likely to be lower than if we directly marketed and sold such products. Such collaborators may
also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration
could be more attractive than the one with us for any future product candidate.
Management of our relationships with collaborators will require:
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significant time and effort from our management team;
coordination of our marketing and R&D programs with the marketing and R&D priorities of our collaborators; and
effective allocation of our resources to multiple projects.
If we are unable to establish or maintain such strategic collaborations on terms favorable to us in the future, our R&D efforts and potential to
generate revenue may be limited.
We are parties to and may seek to enter into additional collaborations, licenses and other similar arrangements, and may not be successful in
maintaining existing arrangements or entering into new ones, and even if we are, we may not realize the benefits of such relationships.
The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Collaborations are subject to
numerous risks, which may include risks that:
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collaborators may have significant discretion in determining the efforts and resources that they will apply to collaborations;
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collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew
development or commercialization programs based on clinical trial results, changes in their strategic focus due to their acquisition of
competitive products or their internal development of competitive products, availability of funding or other external factors, such as a
business combination that diverts resources or creates competing priorities;
collaborators may delay clinical trials, provide insufficient funding for a development program, stop a clinical trial, abandon a product
candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;
collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or
product candidates;
a collaborator with marketing, manufacturing and distribution rights to one or more products may not commit sufficient resources to or
otherwise not perform satisfactorily in carrying out these activities;
we could grant exclusive rights to our collaborators that would prevent us from collaborating with others;
collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary
information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or
proprietary information or expose us to potential liability;
disputes may arise between us and a collaborator that cause the delay or termination of the research, development or commercialization of
our current or future product candidates or that results in costly litigation or arbitration that diverts management attention and resources;
collaborations may be terminated, which may result in a need for additional capital to pursue further development or commercialization of
the applicable current or future products or product candidates;
collaborators may own or co-own intellectual property covering products that result from our collaboration with them, and in such cases, we
would not have the exclusive right to develop or commercialize such intellectual property;
disputes may arise with respect to the ownership of any intellectual property developed pursuant to our collaborations; and
a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal
proceedings.
Additionally, we may seek to enter into additional collaborations, joint ventures, licenses and other similar arrangements for the development or
commercialization of our product candidates, due to capital costs required to develop or commercialize the product candidate or manufacturing constraints.
We may not be successful in our efforts to establish such collaborations for our product candidates because our research and development pipeline may be
insufficient, our product candidates may be deemed to be at too early of a stage of development for collaborative effort or third parties may not view our
product candidates as having the requisite potential to demonstrate safety and efficacy or significant commercial opportunity. In addition, we face
significant competition in seeking appropriate strategic partners, and the negotiation process can be time consuming and complex. Further, any future
collaboration agreements may restrict us from entering into additional agreements with potential collaborators. We cannot be certain that, following a
strategic transaction or license, we will achieve an economic benefit that justifies such transaction.
Even if we are successful in our efforts to establish such collaborations, the terms that we agree upon may not be favorable to us, and we may not be
able to maintain such collaborations if, for example, development or approval of a product candidate is delayed, the safety of a product candidate is
questioned or actual or projected sales of an approved product candidate are unsatisfactory. For example, our license and collaboration agreement with
Helsinn for the development and commercialization of QED’s product candidate, infigratinib, in selected indications and geographic territories was
terminated for convenience by Helsinn effective in March 2023, citing commercial considerations.
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In addition, any potential future collaborations may be terminable by our strategic partners, and we may not be able to adequately protect our rights
under these agreements. Furthermore, strategic partners may negotiate for certain rights to control decisions regarding the development and
commercialization of our product candidates, if approved, and may not conduct those activities in the same manner as we do. Any termination of
collaborations we enter into in the future, or any delay in entering into collaborations related to our product candidates, could delay the development and
commercialization of our product candidates and reduce their competitiveness if they reach the market, which could have a material adverse effect on our
business, financial condition and results of operations.
Risks Related to Our Intellectual Property
If we are unable to obtain and maintain sufficient intellectual property protection for our product candidates, including acoramidis, low-dose
infigratinib, BBP-418, and encaleret, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could
develop and commercialize products or product candidates similar or identical to ours, and our ability to successfully commercialize our product
candidates may be impaired.
As is the case with other pharmaceutical and biopharmaceutical companies, our success depends in large part on our ability to obtain and maintain
protection of the intellectual property we may own solely and jointly with others, particularly patents, in the United States and other countries with respect
to our product candidates and technology. We seek to protect our proprietary position by filing patent applications in the United States and abroad related to
our product candidates.
Obtaining and enforcing pharmaceutical and biopharmaceutical patents is costly, time consuming and complex, and we may not be able to file and
prosecute all necessary or desirable patent applications, or maintain, enforce and license any patents that may issue from such patent applications, at a
reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is
too late to obtain patent protection. We may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the
rights to patents licensed to third parties. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best
interests of our business.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal, technological and factual
questions and has in recent years been the subject of much litigation. In addition, the laws of foreign countries may not protect our rights to the same extent
as the laws of the United States, or vice versa. Further, we may not be aware of all third-party intellectual property rights potentially relating to our product
candidates. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and
other jurisdictions are typically not published until 18 months after filing or, in some cases, not at all. Therefore, we cannot know with certainty whether we
were the first to make the inventions claimed in our patents or pending patent applications, or that we were the first to file for patent protection of such
inventions. Furthermore, the scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s
prosecution history and can involve other factors such as expert opinion. Our analysis of these issues, including interpreting the relevance or the scope of
claims in a patent or a pending application, determining applicability of such claims to our proprietary technologies, product candidates, predicting whether
a third party’s pending patent application will issue with claims of relevant scope, and determining the expiration date of any patent in the United States or
abroad that we consider relevant may be incorrect, which may negatively impact our ability to develop and market our product candidates. We do not
always conduct independent reviews of pending patent applications of and patents issued to third parties. As a result, the issuance, scope, validity,
enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being
issued that protect our product candidates, in whole or in part, or which effectively prevent others from commercializing competitive products. Even if our
patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing
with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our patents by developing similar or
alternative product candidates in a non-infringing manner.
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Our ability to enforce patent rights also depends on our ability to detect infringement. It may be difficult to detect infringers who do not advertise the
components or methods that are used in connection with their products and services. Moreover, it may be difficult or impossible to obtain evidence of
infringement in a competitor’s or potential competitor’s product or service. We may not prevail in any lawsuits that we initiate and the damages or other
remedies awarded if we were to prevail may not be commercially meaningful. If we initiate lawsuits to protect or enforce our patents, or litigate against
third-party claims, such proceedings would be expensive and would divert the attention of our management and technical personnel. Such proceedings
could also provoke third parties to assert claims against us, including that some or all of the claims in one or more of our patents are invalid or otherwise
unenforceable.
Moreover, we may be subject to a third-party preissuance submission of prior art to the United States Patent and Trademark Office, or the USPTO,
or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent
rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our
patent rights, allow third parties to commercialize our product candidates and compete directly with us, without payment to us, or result in our inability to
manufacture or commercialize drugs without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by our patents
and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or
commercialize current or future product candidates.
In addition, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be challenged in
the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being
narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or
identical product candidates to ours, or limit the duration of the patent protection of our product candidates. Given the amount of time required for the
development, testing and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such
product candidates are commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing
drugs similar or identical to ours.
Furthermore, our intellectual property rights may be subject to a reservation of rights by one or more third parties. For example, the research
resulting in certain of our patent rights and technology was funded in part by the U.S. government. As a result, the government has certain rights, including
march-in rights, to such patent rights and technology. When new technologies are developed with government funding, the government generally obtains
certain rights in any resulting patents, including a non-exclusive license authorizing the government to use the invention or to have others use the invention
on its behalf. These rights may permit the government to disclose our information to third parties and to exercise march-in rights to use or allow third
parties to use our technology under certain circumstances. For example, the government may exercise its march-in rights if it determines that action is
necessary because we fail to achieve practical application of the government-funded technology, because action is necessary to alleviate health or safety
needs, to meet requirements of federal regulations, or to give preference to U.S. industry. In addition, our rights in such inventions may be subject to certain
requirements to manufacture products embodying such inventions in the United States. Any exercise by the government of such rights or by any third party
of its reserved rights could harm our competitive position, business, financial condition, results of operations, and prospects.
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Our rights to develop and commercialize our product candidates are subject in part to the terms and conditions of licenses granted to us by others, and
the patent protection, prosecution and enforcement for some of our product candidates may be dependent on our licensors.
We currently are reliant upon licenses of certain intellectual property rights and proprietary technology from third parties that are important or
necessary to the development of our proprietary technology, including technology related to product candidates. These licenses, and other licenses we may
enter into in the future, may not provide adequate rights to use such intellectual property rights and proprietary technology in all relevant fields of use or in
all territories in which we may wish to develop or commercialize technology, and product candidates in the future. Licenses to additional third-party
proprietary technology or intellectual property rights that may be required for our development programs may not be available in the future or may not be
available on commercially reasonable terms. In that event, we may be required to expend significant time and resources to redesign our proprietary
technology or product candidates or to develop or license replacement technology, which may not be feasible on a technical or commercial basis. If we are
unable to do so, we may not be able to develop and commercialize technology, and product candidates in fields of use and territories for which we are not
granted rights pursuant to such licenses, which could harm our competitive position, business, financial condition, results of operations and prospects
significantly.
In some circumstances, we may not have the right to control the preparation, filing, prosecution and enforcement of patent applications, or to
maintain the patents, covering technology that we license from third parties. In addition, some of our agreements with our licensors require us to obtain
consent from the licensor before we can enforce patent rights, and our licensor may withhold such consent or may not provide it on a timely basis.
Therefore, we cannot be certain that our licensors or collaborators will prosecute, maintain, enforce and defend such intellectual property rights in a manner
consistent with the best interests of our business, including by taking reasonable measures to protect the confidentiality of know-how and trade secrets, or
by paying all applicable prosecution and maintenance fees related to intellectual property registrations for any of our product candidates. We also cannot be
certain that our licensors have drafted or prosecuted the patents and patent applications licensed to us in compliance with applicable laws and regulations,
which may affect the validity and enforceability of such patents or any patents that may issue from such applications. This could cause us to lose rights in
any applicable intellectual property that we in-license, and as a result our ability to develop and commercialize product candidates may be adversely
affected and we may be unable to prevent competitors from making, using and selling competing products.
In addition, our licensors may own or control intellectual property that has not been licensed to us and, as a result, we may be subject to claims,
regardless of their merit, that we are infringing or otherwise violating the licensor’s rights. In addition, while we cannot currently determine the amount of
the royalty obligations we would be required to pay on sales of future products, if any, the amounts may be significant. The amount of our future royalty
obligations will depend on the technology and intellectual property we use in our product candidates that we successfully develop and commercialize. In
addition, we may seek to obtain additional licenses from our licensors and, in connection with obtaining such licenses, we may agree to amend our existing
licenses in a manner that may be more favorable to the licensors, including by agreeing to terms that could enable third parties (potentially including our
competitors) to receive licenses to a portion of the intellectual property rights that are subject to our existing licenses. Any of these events could have a
material adverse effect on our competitive position, business, financial condition, results of operations, and prospects.
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If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties, or these agreements
are terminated or we otherwise experience disruptions to our business relationships with our licensors, we could lose intellectual property rights that
are important to our business.
We are party to various agreements that we depend on to operate our business, and our rights to use currently licensed intellectual property, or
intellectual property to be licensed in the future, are or will be subject to the continuation of and our compliance with the terms of these agreements. For
example, we are a party to an exclusive license agreement with the Board of Trustees of the Leland Stanford Junior University, or Stanford, and may need
to obtain additional licenses from others to advance our research and development activities to allow the commercialization of acoramidis or any other
product candidates we may identify and pursue. Our license agreement with Stanford imposes, and we expect that future license agreements will impose,
various development, diligence, commercialization, and other obligations on us. In particular, under our license agreement with Stanford, we are required
to use commercially reasonable efforts to engage in various development and commercialization activities with respect to licensed products, and must
satisfy specified milestone and royalty payment obligations. We are also a party to a license agreement with Novartis International Pharmaceutical Ltd. for
infigratinib under which we are required to use commercially reasonable efforts to develop infigratinib, and to obtain regulatory approval for and
commercialize at least one therapeutic product incorporating infigratinib in the United States and the European Union.
In spite of our efforts, our licensors might conclude that we have materially breached our obligations under such license agreements and might
therefore terminate the license agreements, thereby removing or limiting our ability to develop and commercialize products and technology covered by
these license agreements. For example, if our license agreement with Stanford is terminated, competitors or other third parties would have the freedom to
seek regulatory approval of, and to market, products identical to acoramidis and we may be required to cease our development and commercialization of
acoramidis. Any of the foregoing could have a material adverse effect on our competitive position, business, financial condition, results of operations and
prospects.
Moreover, disputes may arise regarding intellectual property subject to a licensing agreement, including:
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the scope of rights granted under the license agreement and other interpretation-related issues;
the extent to which our product candidates, technology and processes infringe on intellectual property of the licensor that is not subject to the
licensing agreement;
the sublicensing of patent and other rights under our collaborative development relationships;
our diligence obligations under the license agreement and what activities satisfy those diligence obligations;
the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors
and us and our partners; and
the priority of invention of patented technology.
In addition, certain provisions in our license agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation
disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what
we believe to be our financial or other obligations under the agreement, either of which could have a material adverse effect on our business, financial
condition, results of operations and prospects. Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to
maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected
product candidates, which could have a material adverse effect on our competitive position, business, financial condition, results of operations and
prospects.
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Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.
Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. However, our research,
development and commercialization activities may be subject to claims that we infringe or otherwise violate patents or other intellectual property rights
owned or controlled by third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other
intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits in the courts, and interferences,
oppositions, inter partes review, and other proceedings before the USPTO, and corresponding foreign patent offices. Numerous U.S. and foreign issued
patents and pending patent applications, which are owned by third parties, exist in the fields in which we are pursuing development candidates. As the
biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that acoramidis, low-dose infigratinib, BBP-418,
encaleret or other product candidates that we may identify may be subject to claims of infringement of the patent rights of third parties.
Other third parties may assert that we are employing their proprietary technology without authorization. There may be other third-party patents or
patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our
product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in
issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies
infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of our product
candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our
ability to commercialize such product or product candidate unless we obtained a license under the applicable patents, or until such patents expire.
Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or
methods of use, including combination therapy, the holders of any such patents may be able to block our ability to develop and commercialize the
applicable product or product candidate unless we obtained a license or until such patent expires. In either case, such a license may not be available on
commercially reasonable terms or at all, or it may be non-exclusive, which could result in our competitors gaining access to the same intellectual property
rights.
Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and
commercialize our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a
substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay
substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or
more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.
Parties making claims against us may be able to sustain the costs of complex patent litigation more effectively than we can because they have
substantially greater resources. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or
administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure. In addition, any uncertainties
resulting from the initiation and continuation of any litigation could have material adverse effect on ability to raise additional funds or otherwise have a
material adverse effect on our business, results of operations, financial condition and prospects.
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Patent terms may be inadequate to protect our competitive position on product candidates for an adequate amount of time.
Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years
from its earliest U.S. non-provisional or international patent application filing date. Various extensions may be available, but the life of a patent, and the
protection it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired, we may be open to
competition from competitive products, including generics or biosimilars. Given the amount of time required for the development, testing and regulatory
review of products or new product candidates, patents protecting such products or candidates might expire before or shortly after such products or
candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from
commercializing products similar or identical to ours.
If we are not able to obtain, or in applicable cases maintain, patent term extension or non-patent exclusivity in the United States under the Hatch-
Waxman Act and in foreign countries under similar legislation, thereby potentially extending the marketing exclusivity term of our product candidates,
our business may be materially harmed.
Depending upon the timing, duration and specifics of FDA marketing approval of our product candidates, one of the U.S. patents covering each of
such products or product candidates or the use thereof may be eligible for up to five years of patent term extension under the Hatch-Waxman Act. The
Hatch-Waxman Act allows a maximum of one patent to be extended per FDA approved product as compensation for the patent term lost during the FDA
regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product
approval and only those claims covering such approved drug product, a method for using it or a method for manufacturing it may be extended. Patent term
extension also may be available in certain foreign countries upon regulatory approval of our product candidates. Nevertheless, we may not be granted
patent term extension either in the United States or in any foreign country because of, for example, failing to exercise due diligence during the testing phase
or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to
satisfy applicable requirements. Moreover, the term of extension, as well as the scope of patent protection during any such extension, afforded by the
governmental authority could be less than we request.
If we are unable to obtain patent term extension, or the term of any such extension is less than we request, the period during which we will have the
right to exclusively market any products that may be approved, may be shortened and our competitors may obtain approval of competing products
following our patent expiration sooner, and our revenue could be reduced, possibly materially.
It is possible that we will not obtain patent term extension under the Hatch-Waxman Act for a U.S. patent covering a product candidate even where
that patent is eligible for patent term extension, or if we obtain such an extension, it may be for a shorter period than we had sought. Further, for certain of
our licensed patents, we do not have the right to control prosecution, including filing with the USPTO, an application for patent term extension under the
Hatch-Waxman Act. Thus, if one of our licensed patents is eligible for patent term extension under the Hatch-Waxman Act, we may not be able to control
whether an application to obtain a patent term extension is filed, or an extension obtained, from the USPTO.
Also, there are detailed rules and requirements regarding the patents that may be submitted to the FDA for listing in the Approved Drug Products
with Therapeutic Equivalence Evaluations, or the Orange Book. We may be unable to obtain patents covering our product candidates that contain one or
more claims that satisfy the requirements for listing in the Orange Book. Even if we submit a patent for listing in the Orange Book, the FDA may decline to
list the patent, or a manufacturer of generic drugs may challenge the listing. If one of our current product candidates is approved and a patent covering that
product candidate is not listed in the Orange Book, a manufacturer of generic drugs would not have to provide advance notice to us of any abbreviated new
drug application, or ANDA, filed with the FDA to obtain permission to sell a generic version of such product.
Depending upon the timing and specifics of marketing approval of our products, the FDA and other applicable regulatory authorities may grant
certain non-patent exclusivities. Although we intend to seek new chemical entity exclusivity, and potentially other exclusivities, for product candidates we
are developing, we may not be successful in doing so. Moreover, these non-patent exclusivities, if granted, are limited and other companies may be able to
submit marketing applications and receive approval earlier than we anticipate.
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If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected and our business
would be harmed.
We seek to protect our confidential proprietary information, in part, by confidentiality agreements and invention assignment agreements with our
employees, consultants, scientific advisors, contractors and collaborators. These agreements are designed to protect our proprietary information. However,
we cannot be certain that such agreements have been entered into with all relevant parties, and we cannot be certain that our trade secrets and other
confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop
substantially equivalent information and techniques. For example, any of these parties may breach the agreements and disclose proprietary information,
including trade secrets, and we may not be able to obtain adequate remedies for such breaches. We also seek to preserve the integrity and confidentiality of
our confidential proprietary information by maintaining physical security of our premises and physical and electronic security of our information
technology systems, but it is possible that these security measures could be breached. If any of our confidential proprietary information were to be lawfully
obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to
compete with us, which could harm our competitive position.
Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our product candidates that we consider proprietary. We may
not be able to obtain adequate remedies in the event of such unauthorized use. Enforcing a claim that a party illegally disclosed or misappropriated a trade
secret can be difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are
less willing or unwilling to protect trade secrets. Trade secrets will also over time be disseminated within the industry through independent development,
the publication of journal articles and the movement of personnel skilled in the art from company to company or academic to industry scientific positions.
Though our agreements with third parties typically restrict the ability of our advisors, employees, collaborators, licensors, suppliers, third-party contractors
and consultants to publish data potentially relating to our trade secrets, our agreements may contain certain limited publication rights. In addition, if any of
our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using
that technology or information to compete with us, which could harm our competitive position. Despite employing the contractual and other security
precautions described above, the need to share trade secrets increases the risk that such trade secrets become known by our competitors, are inadvertently
incorporated into the technology of others, or are disclosed or used in violation of these agreements. If any of these events occurs or if we otherwise lose
protection for our trade secrets, the value of this information may be greatly reduced and our competitive position, business, financial condition, results of
operations, and prospects would be harmed.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our
business may be adversely affected.
Our registered or unregistered trademarks or trade names, may be challenged, infringed, circumvented or declared generic or determined to be
infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among
potential collaborators or customers in our markets of interest. At times, competitors may adopt trade names or trademarks similar to ours, thereby
impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark
infringement claims brought by owners of other trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade
names. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete
effectively and our business may be adversely affected. We may license our trademarks and trade names to third parties, such as distributors. Though these
license agreements may provide guidelines for how our trademarks and trade names may be used, a breach of these agreements or misuse of our trademarks
and tradenames by our licensees may jeopardize our rights in or diminish the goodwill associated with our trademarks and trade names. Our efforts to
enforce or protect our proprietary rights related to trademarks, trade names, trade secrets, domain names, copyrights or other intellectual property may be
ineffective and could result in substantial costs and diversion of resources and could adversely affect our competitive position, business, financial condition,
results of operations and prospects.
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We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and
unsuccessful.
Competitors may infringe our patents or other intellectual property. If we were to initiate legal proceedings against a third party to enforce a patent
covering one or more of our product candidates, the defendant could counterclaim that the patent covering our product candidate is invalid and/or
unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for
a validity challenge could be an alleged failure to meet any of several statutory requirements, including novelty, nonobviousness, written description or
enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant
information from the USPTO, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and
unenforceability is unpredictable. Interference or derivation proceedings provoked by third parties or brought by us or declared by the USPTO may be
necessary to determine the priority of inventions with respect to our patents or patent applications. An unfavorable outcome could require us to cease using
the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a
license on commercially reasonable terms or at all, or if a non-exclusive license is offered and our competitors gain access to the same technology. Our
defense of litigation or interference or derivation proceedings may fail and, even if successful, may result in substantial costs and distract our management
and other employees. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary
to continue clinical trials, continue research programs, license necessary technology from third parties, enter into development partnerships that would help
us bring product candidates to market. Furthermore, because of the substantial amount of discovery required in connection with intellectual property
litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be
public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these
results to be negative, it could have a material adverse effect on the price of our common stock.
We may be subject to claims challenging the inventorship of our patents and other intellectual property.
Our agreements with employees and our personnel policies provide that any inventions conceived by an individual in the course of rendering
services to us shall be our exclusive property. Although our policy is to have all such individuals enter into these agreements, we may not obtain these
agreements in all circumstances, and individuals with whom we have these agreements may not comply with their terms. The assignment of intellectual
property may not be automatic upon the creation of an invention and despite such agreement, such inventions may become assigned to third parties. In the
event of unauthorized use or disclosure of our trade secrets or proprietary information, these agreements, even if obtained, may not provide meaningful
protection, particularly for our trade secrets or other confidential information.
We or our licensors may be subject to claims that former employees, collaborators or other third parties have an interest in our owned or in-licensed
patents, trade secrets, or other intellectual property as an inventor or co-inventor. For example, we or our licensors may have inventorship disputes arise
from conflicting obligations of employees, consultants or others who are involved in developing our product candidates. Litigation may be necessary to
defend against these and other claims challenging inventorship or our or our licensors’ ownership of our owned or in-licensed patents, trade secrets or other
intellectual property. If we or our licensors fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual
property rights, such as exclusive ownership of, or right to use, intellectual property that is important to our product candidates. Even if we are successful in
defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
Any of the foregoing could have a material adverse effect on our competitive position, business, financial condition, results of operations and
prospects.
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Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court.
If we or one of our licensing partners initiated legal proceedings against a third party to enforce a patent covering one or more of our product
candidates, the defendant could counterclaim that the patent covering the relevant product candidate is invalid and/or unenforceable. In patent litigation in
the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an
alleged failure to meet any of several statutory requirements, including novelty, nonobviousness, written description or enablement. Grounds for an
unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or
made a misleading statement, during prosecution. Third parties may also raise similar claims before administrative bodies in the United States or abroad,
even outside the context of litigation. Such mechanisms include re-examination, post grant review, and equivalent proceedings in foreign jurisdictions (e.g.,
opposition proceedings). Such proceedings could result in revocation or amendment to our patents in such a way that they no longer cover our products or
product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for
example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant
were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product
candidates. Such a loss of patent protection would have a material adverse impact on our business.
We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of
third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
As is common in the biotechnology and pharmaceutical industry, we employ individuals who were previously employed at universities or other
biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants
and independent contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our
employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other
proprietary information, of any of our employee’s former employer or other third parties. Litigation may be necessary to defend against these claims. If we
fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could
adversely impact our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to
management and other employees.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other
requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these
requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to
the USPTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications. We
have systems in place to remind us to pay these fees, and we employ an outside entity and rely on outside counsel to pay these fees due to non-U.S. patent
agencies. However, we cannot guarantee that our licensors have similar systems and procedures in place to pay such fees. The USPTO and various non-
U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the
patent application process. We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured
by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which non-compliance can result in
abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event,
our competitors might be able to enter the market and this circumstance would have a material adverse effect on our business.
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We may not be able to protect our intellectual property rights throughout the world.
Filing, prosecuting and defending patents on our product candidates in all countries throughout the world would be prohibitively expensive, and our
intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some
foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be
able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our
inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent
protection to develop their own products and may also export infringing products to territories where we have patent protection, but enforcement is not as
strong as that in the United States. These products may compete with our products, and our patents or other intellectual property rights may not be effective
or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal
systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property
protection, particularly those relating to biotechnology and pharmaceutical products, which could make it difficult for us to stop the infringement of our
patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions,
whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at
risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us.
We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly,
our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual
property that we develop or license.
Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.
Changes in either the patent laws or interpretation of the patent laws in the United States could increase the uncertainties and costs surrounding the
prosecution of patent applications and the enforcement or defense of issued patents. Assuming that other requirements for patentability are met, prior to
March 2013, in the United States, the first to invent the claimed invention was entitled to a patent, while outside the United States, the first to file a patent
application was entitled to the patent. After March 2013, under the Leahy-Smith America Invents Act, or the America Invents Act, enacted in September
2011, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor
to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention. A
third party that files a patent application in the USPTO after March 2013, but before us could therefore be awarded a patent covering an invention of ours
even if we had made the invention before it was made by such third party. This will require us to be cognizant of the time from invention to filing of a
patent application. Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance,
we cannot be certain that we or our licensors were the first to either (i) file any patent application related to our product candidates or (ii) invent any of the
inventions claimed in our or our licensor’s patents or patent applications.
The America Invents Act also includes a number of significant changes that affect the way patent applications are prosecuted and also may affect
patent litigation. These include allowing third party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the
validity of a patent by USPTO administered post-grant proceedings, including post-grant review, inter partes review, and derivation proceedings. Because
of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent
claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same
evidence would be insufficient to invalidate the claim if first presented in a federal district court action. Accordingly, a third party may attempt to use the
USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a federal
district court action. Therefore, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of
our owned or in-licensed patent applications and the enforcement or defense of our owned or in-licensed issued patents, all of which
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could have a material adverse effect on our competitive position, business, financial condition, results of operations, and prospects.
In addition, the patent positions of companies in the development and commercialization of pharmaceuticals are particularly uncertain. Recent U.S.
Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain
situations. This combination of events has created uncertainty with respect to the validity and enforceability of patents, once obtained. Depending on future
actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could
have a material adverse effect on our existing patent portfolio and our ability to protect and enforce our intellectual property rights in the future.
Risks Related to Commercialization
Our product candidates, if approved, may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors, and others in the
medical community necessary for commercial success.
The commercial success of our product candidates, if approved, will depend upon their degree of market acceptance by physicians, patients, third-
party payors, and others in the medical community. Our product candidates, if approved, may nonetheless fail to gain sufficient market acceptance by
physicians, patients, healthcare payors, and others in the medical community. The degree of market acceptance of our product candidates we may develop,
if approved for commercial sale, will depend on a number of factors, including:
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the efficacy and safety of such product candidates as demonstrated in pivotal clinical trials and published in peer-reviewed journals;
the potential and perceived advantages compared to alternative treatments, including any similar generic treatments;
the ability to offer these products for sale at competitive prices;
the ability to offer appropriate patient access programs, such as co-pay assistance;
convenience and ease of dosing and administration compared to alternative treatments;
the clinical indications for which the product candidate is approved by the FDA or comparable regulatory authorities;
product labeling or product insert requirements of the FDA or other comparable foreign regulatory authorities, including any limitations,
contraindications or warnings contained in a product’s approved labeling;
restrictions on how the product is distributed;
the timing of market introduction of competitive products;
publicity concerning these products or competing products and treatments;
the strength of marketing and distribution support;
favorable third-party coverage and sufficient reimbursement or other assistance for patients who are uninsured or underinsured; and
the prevalence and severity of any side effects or AEs.
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Sales of medical products also depend on the willingness of physicians to prescribe the treatment, which is likely to be based on a determination by
these physicians that the products are safe, therapeutically effective and cost effective. In addition, the inclusion or exclusion of products from treatment
guidelines established by various physician groups and the viewpoints of influential physicians can affect the willingness of other physicians to prescribe
the treatment. We cannot predict whether physicians, physicians’ organizations, hospitals, other healthcare providers, government agencies or private
insurers will determine that our products are safe, therapeutically effective and cost effective as compared with competing treatments. If any product
candidates we develop do not achieve an adequate level of acceptance, we may not generate significant product revenue, and we may not become
profitable.
If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market any product candidates we
may develop, we may not be successful in commercializing those product candidates if and when they are approved.
To achieve commercial success for any approved product for which we retain sales and marketing responsibilities, we must continue to develop a
sales and marketing organization or outsource these functions to third parties. In the future, we may choose to grow our focused sales, marketing, and
commercial support infrastructure to market and sell our product candidates, if and when they are approved. We may also elect to enter into collaborations
or strategic partnerships with third parties to engage in commercialization activities with respect to selected product candidates, indications or geographic
territories, including territories outside the United States, as we did with Helsinn in the case of TRUSELTIQTM once it was approved, although there is no
guarantee we will be able to enter into similar arrangements in the future even if the intent is to do so.
There are risks involved with both establishing our own commercial capabilities and entering into arrangements with third parties to perform these
services. For example, recruiting and training a sales force or reimbursement specialists is expensive and time consuming and could delay any product
launch. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing and other commercialization capabilities
is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly,
and our investment would be lost if we cannot retain or reposition commercialization personnel.
Factors that may inhibit our efforts to commercialize any approved product on our own include:
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the inability to recruit and retain adequate numbers of effective sales, marketing, reimbursement, customer service, medical affairs, and other
support personnel;
the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any future approved
products;
the inability of reimbursement professionals to negotiate arrangements for formulary access, reimbursement, and other acceptance by payors;
the inability to price products at a sufficient price point to ensure an adequate and attractive level of profitability;
manufacturing disruptions that delay or prevent the launch of any approved products;
the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies
with more extensive product lines; and
unforeseen costs and expenses associated with creating an independent commercialization organization.
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If we enter into arrangements with third parties to perform sales, marketing, commercial support, and distribution services, our product revenue or
the profitability of product revenue may be lower than if we were to market and sell any products we may develop internally. In addition, we may not be
successful in entering into arrangements with third parties to commercialize, if approved, our product candidates or may be unable to do so on terms that
are favorable to us or them. We may have little control over such third parties, and any of them may fail to devote the necessary resources and attention to
sell and market our products effectively or may expose us to legal and regulatory risk by not adhering to regulatory requirements and restrictions governing
the sale and promotion of prescription drug products, including those restricting off-label promotion. If we do not continue to build on our
commercialization capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our
product candidates, if approved.
The insurance coverage and reimbursement status of newly-approved products is uncertain. Our product candidates may become subject to
unfavorable pricing regulations, third-party coverage and reimbursement practices, or healthcare reform initiatives, which would harm our business.
Failure to obtain or maintain adequate coverage and reimbursement for new or current products could limit our ability to market those products and
decrease our ability to generate revenue.
The regulations that govern marketing approvals, pricing, coverage, and reimbursement for new drugs vary widely from country to country. In the
United States, recently enacted legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays
in obtaining approvals. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period
begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing
governmental control even after initial approval is granted. As a result, we might obtain marketing approval for a product in a particular country, but then
be subject to price regulations that delay our commercial launch of the product, possibly for lengthy time periods, and negatively impact the revenue we are
able to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more
product candidates even if those product candidates may obtain marketing approval. See the section titled, “Business — Government Regulation —
Coverage and Reimbursement.”
Our ability to successfully commercialize our product candidates also will depend in part on the extent to which coverage and adequate
reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers, and
other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which
medications they will pay for and establish reimbursement levels. The availability of coverage and extent of reimbursement by governmental and private
payors is essential for most patients to be able to afford treatments such as gene therapy products. Sales of these product candidates or other product
candidates, if approved, that we may identify will depend substantially, both domestically and abroad, on the extent to which the costs of our product
candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by
government health administration authorities, private health coverage insurers and other third-party payors. If coverage and adequate reimbursement is not
available, or is available only to limited levels, we may not be able to successfully commercialize our product candidates. Even if coverage is provided, the
approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our
investment.
Additionally, we may develop companion diagnostic tests for use with our product candidates. We, or our collaborators, may be required to obtain
coverage and reimbursement for these tests separate and apart from the coverage and reimbursement we seek for our product candidates, once approved.
Even if we obtain regulatory approval or clearance for such companion diagnostics, there is significant uncertainty regarding our ability to obtain coverage
and adequate reimbursement for the same reasons applicable to our product candidates. Medicare reimbursement methodologies, whether under Part A,
Part B, or clinical laboratory fee schedule may be amended from time to time, and we cannot predict what effect any change to these methodologies would
have on any product or product candidate or companion diagnostic for which we receive approval. Our inability to promptly obtain coverage and adequate
reimbursement from both third-party payors for the companion diagnostic tests that we develop and for which we obtain regulatory approval could have a
material and adverse effect on our business, financial condition, results of operations and prospects.
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If we fail to comply with healthcare laws, we could face substantial penalties and our business, operations and financial conditions could be adversely
affected.
Healthcare providers, physicians and third-party payors in the United States and elsewhere play a primary role in the recommendation and
prescription of pharmaceutical products. Arrangements with third-party payors and customers can expose pharmaceutical manufacturers to broadly
applicable fraud and abuse and other healthcare laws and regulations, which may constrain the business or financial arrangements and relationships through
which such companies sell, market and distribute pharmaceutical products. In particular, the promotion, sales and marketing of healthcare items and
services, as well as certain business arrangements in the healthcare industry, are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing
and other abusive practices. These laws and regulations may restrict or prohibit a wide range of ownership, pricing, discounting, marketing and promotion,
structuring and commission(s), certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve
the improper use of information obtained in the course of patient recruitment for clinical trials. See the section titled, “Business — Government Regulation
— Other Regulatory Matters.”
Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available, it is possible that some of
our business activities, including compensation of physicians with stock or stock options, could, despite efforts to comply, be subject to challenge under
one or more of such laws. Additionally, the FDA or foreign regulators may not agree that we have mitigated any risk of bias in our clinical trials due to
payments or equity interests provided to investigators or institutions which could limit a regulator’s acceptance of those clinical trial data in support of a
marketing application. Moreover, efforts to ensure that our business arrangements will comply with applicable healthcare laws may involve substantial
costs. It is possible that governmental and enforcement authorities will conclude that our business practices may not comply with current or future statutes,
regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against us, and we
are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of
significant civil, criminal and administrative penalties, damages, disgorgement, monetary fines, exclusion from participation in Medicare, Medicaid and
other federal healthcare programs, integrity and oversight agreements to resolve allegations of non-compliance, contractual damages, reputational harm,
diminished profits and future earnings, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our
business and our results of operations. In addition, the approval and commercialization of any of our product candidates outside the United States will also
likely subject us to foreign equivalents of the healthcare laws mentioned above, among other foreign laws.
Third party patient assistance programs that receive financial support from companies have become the subject of enhanced government and
regulatory scrutiny. Government enforcement agencies have shown increased interest in pharmaceutical companies’ product and patient assistance
programs, including reimbursement support services, and a number of investigations into these programs have resulted in significant civil and criminal
settlements. The U.S. government has established guidelines that suggest that it is lawful for pharmaceutical manufacturers to make donations to charitable
organizations who provide co-pay assistance to Medicare patients, provided that such organizations, among other things, are bona fide charities, are entirely
independent of and not controlled by the manufacturer, provide aid to applicants on a first-come basis according to consistent financial criteria and do not
link aid to use of a donor’s product. However, donations to patient assistance programs have received some negative publicity and have been the subject of
multiple government enforcement actions, related to allegations regarding their use to promote branded pharmaceutical products over other less costly
alternatives. Specifically, in recent years, there have been multiple settlements resulting out of government claims challenging the legality of their patient
assistance programs under a variety of federal and state laws. It is possible that we may make grants to independent charitable foundations that help
financially needy patients with their premium, co-pay, and co-insurance obligations. If we choose to do so, and if we or our vendors or donation recipients
are deemed to fail to comply with relevant laws, regulations or evolving government guidance in the operation of these programs, we could be subject to
damages, fines, penalties, or other criminal, civil, or administrative sanctions or enforcement actions. We cannot ensure that our compliance controls,
policies, and procedures will be sufficient to protect against acts of our employees, business partners, or vendors that may violate the laws or regulations of
the jurisdictions in which we operate. Regardless of whether we have complied with the law, a government investigation could impact our business
practices, harm our reputation, divert the attention of management, increase our expenses, and reduce the availability of foundation support for our patients
who need assistance. Further, it is possible that changes in
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insurer policies regarding co-pay coupons and/or the introduction and enactment of new legislation or regulatory action could restrict or otherwise
negatively affect these patient support programs, which could result in fewer patients using affected products, and therefore could have a material adverse
effect on our sales, business, and financial condition. Although a number of these and other proposed measures may require authorization through
additional legislation to become effective, and the current U.S. presidential administration may reverse or otherwise change these measures, both the
current U.S. presidential administration and Congress have indicated that they will continue to seek new legislative measures to control drug costs. We
cannot predict how the implementation of and any further changes to this rule will affect our business.
Failure to comply with health and data protection laws and regulations could lead to government enforcement actions (which could include civil or
criminal penalties), private litigation and/or adverse publicity, and could negatively affect our operating results and business.
We and any potential collaborators may be subject to federal, state, and foreign data protection laws and regulations (i.e., laws and regulations that
address privacy and data security). In the United States, numerous federal and state laws and regulations, including federal health information privacy laws,
state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws (e.g., Section 5 of the Federal
Trade Commission Act), that govern the collection, use, disclosure and protection of health-related and other personal information could apply to our
operations or the operations of our collaborators. In addition, we may obtain health information from third parties (including research institutions from
which we obtain clinical trial data) that are subject to privacy and security requirements under HIPAA, as amended by the Health Information Technology
for Economic and Clinical Health Act of 2009, or HITECH. Depending on the facts and circumstances, we could be subject to civil, criminal, and
administrative penalties if we knowingly obtain, use, or disclose individually identifiable health information maintained by a HIPAA-covered entity in a
manner that is not authorized or permitted by HIPAA.
In addition, as discussed further in the section titled, “Business — Government Regulation — Other Regulatory Matters,” a number of U.S. states
have passed or are considering comprehensive privacy laws that may impact our business.
The uncertainty surrounding the implementation of recent and emerging state privacy laws, regulations and standards that may be adopted in other
jurisdictions exemplifies the vulnerability of our business to the evolving regulatory environment related to personal data and protected health information.
Compliance with U.S. and international data protection laws and regulations could require us to take on more onerous obligations in our contracts, restrict
our ability to collect, use and disclose data, or in some cases, impact our ability to operate in certain jurisdictions. Failure to comply with these laws and
regulations could result in government enforcement actions (which could include civil, criminal and administrative penalties), private litigation, and/or
adverse publicity and could negatively affect our operating results and business. Moreover, clinical trial subjects, employees and other individuals about
whom we or our potential collaborators obtain personal information, as well as the providers who share this information with us, may limit our ability to
collect, use and disclose the information. Claims that we have violated individuals’ privacy rights, failed to comply with data protection laws, or breached
our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that
could harm our business.
Artificial intelligence presents risks and challenges that can impact our business including by posing security risks to our confidential information,
proprietary information, and personal data.
Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result in reputational harm,
liability, or other adverse consequences to our business operations. As with many technological innovations, artificial intelligence presents risks and
challenges that could impact our business. We may adopt and integrate generative artificial intelligence tools into our systems for specific use cases
reviewed by legal and information security. Our vendors may incorporate generative artificial intelligence tools into their offerings without disclosing this
use to us, and the providers of these generative artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards with
respect to privacy and data protection and may inhibit our or our vendors’ ability to maintain an adequate level of service and experience. If we, our
vendors, or our third-party partners experience an actual or perceived breach or privacy or security incident because of the use of generative artificial
intelligence, we may lose valuable intellectual property rights and confidential information and our reputation and the public perception of the effectiveness
of our security measures could be
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harmed. Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal
activities involving the theft and misuse of personal information, confidential information, and intellectual property. Any of these outcomes could damage
our reputation, result in the loss of valuable property and information, and adversely impact our business.
European data collection is governed by restrictive regulations governing the use, processing and cross-border transfer of personal information.
Where we conduct clinical trials and enroll subjects in our clinical trials in the European Economic Area (the “EEA”) or in the United Kingdom (the
“UK”), we are subject to European data protection regulations which include additional privacy restrictions. The collection and use of data (including
personal health data) in the EEA and UK are governed by the provisions of the EU GDPR and UK GDPR (together “GDPR” and each as defined in the
section titled, “Business — Government Regulation — European Data Collection”). The GDPR imposes several stringent requirements on companies that
process personal data, including requirements relating to the processing of health and other sensitive data, obtaining consent of data subjects to whom the
personal data relates, providing detailed information to data subjects about how their personal data is used, notification of data breaches to the competent
national data protection authorities and implementing safeguards to protect the security and confidentiality of personal data. The GDPR also imposes strict
rules on the transfer of personal data out of the EEA and UK to non-adequate territories such as the United States; any inability to transfer personal data
from the EEA and UK to the United States in compliance with data protection laws may impede our ability to conduct trials and may adversely affect our
business and financial position. Failure to comply with the requirements of the GDPR, and the related national data protection laws of the UK and EEA
Member States may result in significant fines, other administrative penalties and private rights of action from data subjects and consumer associations.
Compliance with the GDPR and any other data privacy and data security laws and regulations is a rigorous and time-intensive process and requires
significant resources and an ongoing review of our technologies, systems and practices, as well as those of any third-party collaborators, service providers,
contractors or consultants that process or transfer personal data. The GDPR and other changes in laws or regulations associated with the enhanced
protection of certain types of sensitive data, such as healthcare data or other personal information from our clinical trials, could require us to change our
business practices and put in place additional compliance mechanisms, may interrupt or delay our development, regulatory and commercialization activities
and increase our cost of doing business, and could lead to government enforcement actions, private litigation and significant fines and penalties against us
and could have a material adverse effect on our business, financial condition or results of operations.
Although the EU GDPR and the UK GDPR currently impose substantially similar obligations, it is possible that over time the UK GDPR could
become less aligned with the EU GDPR, particularly with the introduction of the new Data Reform Bill into the UK legislative process. In addition, EEA
Member States have adopted national laws to supplement the EU GDPR, which may partially deviate from the EU GDPR, and the competent authorities in
the EEA Member States may interpret EU GDPR obligations slightly differently from country to country, such that we do not expect to operate in a
uniform legal landscape in the EEA and UK with respect to data protection regulations. The potential of the respective provisions and enforcement of the
EU GDPR and UK GDPR further diverging in the future creates additional regulatory challenges and uncertainties for us. The lack of clarity on future UK
laws and regulations and their interaction with EU laws and regulations could add legal risk, uncertainty, complexity and compliance cost to the handling of
European personal data and our privacy and data security compliance, and could require us to amend our processes and procedures to implement different
compliance measures for the UK and the EEA.
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Healthcare legislative measures aimed at reducing healthcare costs may have a material adverse effect on our business and results of operations.
The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that
could prevent or delay marketing approval of our product candidates or any future product candidates, restrict or regulate post-approval activities and affect
our ability to profitably sell any product for which we obtain marketing approval. Changes in regulations, statutes or the interpretation of existing
regulations could impact our business in the future by requiring, for example: (i) changes to our manufacturing arrangements; (ii) additions or
modifications to product labeling; (iii) the recall or discontinuation of any products; or (iv) additional record-keeping requirements. If any such changes
were to be imposed, they could adversely affect the operation of our business. See the section titled, “Business — Government Regulation — Current and
Future Legislation.”
In addition, the Creating and Restoring Equal Access to Equivalent Samples Act, or CREATES Act, was enacted in 2019 requiring sponsors of
approved NDAs and BLAs to provide sufficient quantities of product samples on commercially reasonable, market-based terms to entities developing
generic drugs and biosimilar biological products. The law establishes a private right of action allowing developers to sue application holders that refuse to
sell them product samples needed to support their applications. If we are required to provide product samples or allocate additional resources to responding
to such requests or any legal challenges under this law, our business could be adversely impacted.
There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at containing or
lowering the cost of healthcare. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate
revenue, attain profitability, or commercialize our product candidates, if approved. Such reforms could have an adverse effect on anticipated revenue from
product candidates that we may successfully develop and for which we may obtain regulatory approval and may affect our overall financial condition and
ability to develop product candidates. We cannot predict the initiatives that may be adopted in the future. The continuing efforts of the government,
insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price
controls may adversely affect:
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the demand for our product candidates, if approved;
our ability to receive or set a price that we believe is fair for our future products;
our ability to generate revenue and achieve or maintain profitability;
the amount of taxes that we are required to pay; and
the availability of capital.
We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in
Medicare and other healthcare funding, more rigorous coverage criteria, lower reimbursement, and new payment methodologies. This could lower the price
that we receive for any approved product. Any denial in coverage or reduction in reimbursement from Medicare or other government-funded programs may
result in a similar denial or reduction in payments from private payors, which may prevent us from being able to generate sufficient revenue, attain
profitability or commercialize our product candidates, if approved.
If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate program or other governmental pricing programs, we
could be subject to additional reimbursement requirements, penalties, sanctions and fines, which could have a material adverse effect on our business,
financial condition, results of operations and growth prospects.
We participate in the Medicaid Drug Rebate program, the 340B drug pricing program, and the VA’s FSS pricing program. Under the Medicaid Drug
Rebate program, we are required to pay a rebate to each state Medicaid program for our covered outpatient drugs that are dispensed to Medicaid
beneficiaries and paid for by a state Medicaid program as a condition of having federal funds being made available to the states for our drugs under
Medicaid and Medicare Part B. Those rebates are based on pricing data reported by us on a monthly and quarterly basis to CMS, the federal agency that
administers the Medicaid Drug Rebate program. These data include the average manufacturer price and, in the case of innovator products, the best price for
each drug which, in general,
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represents the lowest price available from the manufacturer to any entity in the U.S. in any pricing structure, calculated to include all sales and associated
rebates, discounts and other price concessions. Our failure to comply with these price reporting and rebate payment obligations could negatively impact our
financial results.
The ACA made significant changes to the Medicaid Drug Rebate program. CMS issued a final regulation, which became effective on April 1, 2016,
to implement the changes to the Medicaid Drug Rebate program under the ACA. The issuance of the final regulation has increased and will continue to
increase our costs and the complexity of compliance, has been and will continue to be time-consuming to implement, and could have a material adverse
effect on our results of operations, particularly if CMS challenges the approach we take in our implementation of the final regulation.
Federal law requires that any company that participates in the Medicaid Drug Rebate program also participate in the Public Health Service’s 340B
drug pricing program in order for federal funds to be available for the manufacturer’s drugs under Medicaid and Medicare Part B. The 340B program
requires participating manufacturers to agree to charge statutorily defined covered entities no more than the 340B “ceiling price” for the manufacturer’s
covered outpatient drugs. These 340B covered entities include a variety of community health clinics and other entities that receive health services grants
from the Public Health Service, as well as hospitals that serve a disproportionate share of low-income patients. The 340B ceiling price is calculated using a
statutory formula based on the average manufacturer price and Medicaid rebate amount for the covered outpatient drug as calculated under the Medicaid
Drug Rebate program, and in general, products subject to Medicaid price reporting and rebate liability are also subject to the 340B ceiling price calculation
and discount requirement. Any additional future changes to the definition of average manufacturer price and the Medicaid rebate amount under the ACA,
other legislation, or in regulation could affect our 340B ceiling price calculations and negatively impact our results of operations.
The Health Resources and Services Administration, or HRSA, which administers the 340B program, issued a final regulation regarding the
calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers that knowingly and intentionally overcharge covered
entities, which became effective on January 1, 2019. We also are required to report our 340B ceiling prices to HRSA on a quarterly basis. Implementation
of the civil monetary penalties regulation and the issuance of any other final regulations and guidance could affect our obligations under the 340B program
in ways we cannot anticipate. In addition, legislation may be introduced that, if passed, would further expand the 340B program to additional covered
entities or would require participating manufacturers to agree to provide 340B discounted pricing on drugs used in the inpatient setting.
Pricing and rebate calculations vary across products and programs, are complex, and are often subject to interpretation by us, governmental or
regulatory agencies and the courts. In the case of our Medicaid pricing data, if we become aware that our reporting for a prior quarter was incorrect, or has
changed as a result of recalculation of the pricing data, we are obligated to resubmit the corrected data for up to three years after those data originally were
due. Such restatements and recalculations increase our costs for complying with the laws and regulations governing the Medicaid Drug Rebate program and
could result in an overage or underage in our rebate liability for past
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quarters. Price recalculations also may affect the ceiling price at which we are required to offer our products under the 340B program or could require us to
issue refunds to 340B covered entities.
Significant civil monetary penalties can be applied if we are found to have knowingly submitted any false pricing information to CMS, or if we fail
to submit the required price data on a timely basis. Such conduct also could be grounds for CMS to terminate our Medicaid drug rebate agreement, in
which case federal payments may not be available under Medicaid or Medicare Part B for our covered outpatient drugs. Significant civil monetary penalties
also can be applied if we are found to have knowingly and intentionally charged 340B covered entities more than the statutorily mandated ceiling price. We
cannot assure you that our submissions will not be found by CMS or HRSA to be incomplete or incorrect.
In order to be eligible to have our products paid for with federal funds under the Medicaid and Medicare Part B programs and purchased by certain
federal agencies and grantees, as noted above, we participate in the VA’s FSS pricing program. As part of this program, we are obligated to make our
products available for procurement on an FSS contract under which we must comply with standard government terms and conditions and charge a price
that is no higher than the statutory Federal Ceiling Price, or FCP, to four federal agencies (the VA, U.S. Department of Defense, or DOD, Public Health
Service, and the U.S. Coast Guard). The FCP is based on the Non-Federal Average Manufacturer Price, or Non-FAMP, which we calculate and report to the
VA on a quarterly and annual basis. Pursuant to applicable law, knowing provision of false information in connection with a Non-FAMP filing can subject a
manufacturer to significant penalties for each item of false information. These obligations also contain extensive disclosure and certification requirements.
We also participate in the Tricare Retail Pharmacy program, under which we pay quarterly rebates on utilization of innovator products that are
dispensed through the Tricare Retail Pharmacy network to Tricare beneficiaries. The rebates are calculated as the difference between the annual Non-
FAMP and FCP. We are required to list our covered products on a Tricare Agreement in order for these products to be eligible for DOD formulary
inclusion. If we overcharge the government in connection with our FSS contract or Tricare Agreement, whether due to a misstated FCP or otherwise, we
are required to refund the difference to the government. Failure to make necessary disclosures and/or to identify contract overcharges can result in
allegations against us under the FCA and other laws and regulations. Unexpected refunds to the government, and responding to a government investigation
or enforcement action, would be expensive and time-consuming, and could have a material adverse effect on our business, financial condition, results of
operations and growth prospects.
Recent federal legislation and actions by state and local governments may permit reimportation of drugs from foreign countries into the United States,
including foreign countries where the drugs are sold at lower prices than in the United States, which could materially adversely affect our operating
results.
We may face competition in the United States for our product candidates if approved, from therapies sourced from foreign countries that have placed
price controls on pharmaceutical products. In the United States, the Medicare Modernization Act contains provisions that may change U.S. importation
laws and expand pharmacists’ and wholesalers’ ability to import cheaper versions of an approved drug and competing products from Canada, where there
are government price controls. The FDA also issued a final guidance document outlining a pathway for manufacturers to obtain an additional National
Drug Code, or NDC, for an FDA-approved drug that was originally intended to be marketed in a foreign country and that was authorized for sale in that
foreign country. See the section titled, “Business—Government Regulation—Current and Future Legislation” for more information regarding legislative
and regulatory changes and proposed changes regarding the healthcare system directed at broadening the availability of healthcare, improving the quality of
healthcare, and containing or lowering the cost of healthcare. If certain of these changes are implemented, importation of drugs from Canada may
materially and adversely affect the price we receive for any of our product candidates. The regulatory and market implications of the final rule and
guidance are unknown at this time. Proponents of drug reimportation may attempt to pass legislation that would directly allow reimportation under certain
circumstances. Legislation or regulations allowing the reimportation of drugs, if enacted, could decrease the price we receive for any products that we may
develop and adversely affect our future revenues and prospects for profitability. We will continue to monitor developments and their potential effect on our
business.
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We face significant competition in an environment of rapid technological and scientific change, and there is a possibility that our competitors may
achieve regulatory approval before us or develop therapies that are safer, more advanced or more effective than ours, which may negatively impact our
ability to successfully market or commercialize any product candidates we may develop and ultimately harm our financial condition.
The development and commercialization of new drug products is highly competitive. We may face competition with respect to any product
candidates that we seek to develop or commercialize in the future from major pharmaceutical companies, specialty pharmaceutical companies, and
biotechnology companies worldwide. Potential competitors also include academic institutions, government agencies, and other public and private research
organizations that conduct research, seek patent protection, and establish collaborative arrangements for research, development, manufacturing, and
commercialization.
There are a number of large pharmaceutical and biotechnology companies that are currently pursuing the development and commercialization of
products for the treatment of the indications that our core value drivers are pursuing. If any competitors for our product candidates receive FDA approval
before we do, our product candidates would not be the first treatment on the market, and our market share may be limited. In addition to competition from
other companies targeting our target indications, any products we may develop may also face competition from other types of therapies.
Many of our current or potential competitors, either alone or with their strategic partners, have significantly greater financial resources and expertise
in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved
products than we do.
Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller
number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements
with large and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel
and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our
programs. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more
effective, have fewer or less severe side effects, are more convenient, or are less expensive than any products that we may develop. Furthermore, currently
approved products could be discovered to have application for treatment of our targeted disease indications or similar indications, which could give such
products significant regulatory and market timing advantages over our product candidates. Our competitors also may obtain FDA or other regulatory
approval for their products more rapidly than we may obtain approval for ours and may obtain orphan product exclusivity from the FDA for indications
that we are targeting, which could result in our competitors establishing a strong market position before we are able to enter the market. Additionally,
products or technologies developed by our competitors may render our product candidates uneconomical or obsolete and we may not be successful in
marketing those product candidates, once approved, against competitors.
In addition, we could face litigation or other proceedings with respect to the scope, ownership, validity and/or enforceability of our patents relating
to our competitors’ products and our competitors may allege that our products infringe, misappropriate or otherwise violate their intellectual property. The
availability of our competitors’ products could limit the demand, and the price we are able to charge, for any products that we may develop and
commercialize. See the section titled, “Risks Related to Our Intellectual Property.”
If the market opportunities for our product candidates are smaller than we believe they are, our revenue may be adversely affected, and our business
may suffer. Our ability to successfully identify patients and acquire a significant market share will be necessary for us to achieve profitability and
growth.
We focus research and product development on treatments for Mendelian diseases and genetically driven cancers, many of which are rare or orphan
indications. Our projections of both the number of individuals who are affected by our target disease indications and have the potential to benefit from
treatment with our product candidates, are based on our beliefs and estimates. These estimates have been derived from a variety of sources, including the
scientific literature, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these diseases. The number of
patients may turn out to be lower than expected. The effort to identify patients with diseases we seek to treat is in early stages, and we cannot accurately
predict the number of patients for whom treatment might be possible. Additionally, the potentially addressable patient population for our product candidates
may be limited or may not be amenable to treatment with our products or product candidates, and
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new patients may become increasingly difficult to identify or gain access to, which would adversely affect our results of operations and our business.
Further, even if we obtain significant market share for our product candidates under development in our key value driver programs, because the potential
target populations are small, we may never achieve profitability despite obtaining such significant market share. In addition, market share could be limited
by the availability of other treatments. As a result, even if approved, acoramidis will not be the first treatment on the market for ATTR-CM, and its market
share and potential to generate revenues may be limited.
Risks Related to Our Business and Industry
Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by
financial institutions or transactional counterparties, could adversely affect our current and projected business operations, financial condition and
results of operations.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional
counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of
these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon
Valley Bank, or SVB, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance
Corporation, or FDIC, as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership and
thereafter, First Republic Bank on May 1, 2023. In these cases, borrowers under credit agreements, letters of credit and certain other financial instruments
with SVB, Signature Bank or any other financial institution that is placed into receivership by the FDIC may be unable to access undrawn amounts
thereunder. If any of our lenders or counterparties to any such instruments were to be placed into receivership, we may be unable to access such funds,
which could result in liquidity constraints or failures. In addition, if any of our collaboration partners, suppliers or other parties with whom we conduct
business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to pay their
obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected. In this regard,
counterparties to SVB credit agreements and arrangements, and third parties such as beneficiaries of letters of credit (among others), may experience direct
impacts from the closure of SVB, or the sale of its assets, and uncertainty remains over liquidity concerns in the broader financial services industry. Similar
impacts have occurred in the past, such as during the 2008-2010 financial crisis.
Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates
below current market interest rates. Although the U.S. Department of Treasury, FDIC and Federal Reserve Board have announced a program to provide up
to $25 billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of potential
losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of financial institutions for immediate
liquidity may exceed the capacity of such program. Additionally, there is no guarantee that the U.S. Department of Treasury, FDIC and Federal Reserve
Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a
timely fashion.
Although we assess our banking and other business relationships as we believe necessary or appropriate, our access to funding sources and other
credit arrangements in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by
factors that affect us, the financial institutions with which we have credit agreements or arrangements directly, or the financial services industry or economy
in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types
of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or
negative expectations about the prospects for companies in the financial services industry or the supervision thereof. These factors could involve financial
institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving
financial markets or the financial services industry generally.
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The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on our current and
projected business operations and our financial condition and results of operations. These could include, but may not be limited to, the following:
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Delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets;
Delayed or lost access to, or reductions in borrowings available under revolving existing credit facilities or other working capital sources
and/or delays, inability or reductions in our ability to refund, roll over or extend the maturity of, or enter into new credit facilities or other
working capital resources;
Potential or actual breach of contractual obligations that require us to maintain letters of credit or other credit support arrangements;
Potential or actual breach of financial covenants in our credit agreements or credit arrangements;
Potential or actual cross-defaults in other credit agreements, credit arrangements or operating or financing agreements; or
Termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements.
In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms,
including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources,
thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and
liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other
obligations, result in breaches of our financial and/or contractual obligations or result in violations of federal or state wage and hour laws. Any of these
impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse
impacts on our liquidity and our current and/or projected business operations and financial condition and results of operations.
In addition, any further deterioration in the macroeconomic economy or financial services industry could lead to losses or defaults by our
collaboration partners, suppliers or other parties with whom we do business, which in turn, could have a material adverse effect on our current and/or
projected business operations and results of operations and financial condition. Any bankruptcy or insolvency of a collaboration partner, supplier or other
party with whom we do business, or the failure of any such party to make payments when due, or any breach or default by any such party, or the loss of any
significant business relationships, could result in material losses to us and may have a material adverse impact on our business.
Our corporate restructuring initiatives, including any associated workforce reductions or reorganizations, may not result in the full anticipated savings
and may disrupt operations.
In January 2022, we committed to a restructuring initiative designed to drive operational changes in our business processes, efficiencies, and cost
savings to advance our corporate strategy and development programs. The restructuring initiative included, among other components, consolidation and
rationalization of our facilities, reprioritization of development programs and the reduction in our workforce. We may not fully realize the anticipated
benefits, savings and improvements in our cost structure from this restructuring initiative or other restructuring efforts that we may undertake in the future,
due to unforeseen difficulties, delays or unexpected costs and the expenses of restructuring may be greater than anticipated. If we are unable to realize
anticipated cost savings from our restructuring initiatives, our operating results and financial condition may be adversely affected. Furthermore, our
reprioritization of development programs may be disruptive to our operations. For example, our workforce reductions could yield unanticipated
consequences, such as turnover beyond planned reductions or increased difficulties in conducting our day-to-day operations. Our workforce reductions
could also harm our ability to attract and retain qualified personnel who are critical to our business and make it difficult for us to pursue, or prevent us from
pursuing, new opportunities and initiatives due to insufficient personnel, or require us to incur additional and unanticipated costs to hire new personnel to
pursue such opportunities or initiatives. Any failure to
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attract or retain qualified personnel could prevent us from successfully executing key business initiatives and adversely impact our business, financial
condition, and results of operations.
Our future success depends on our ability to retain key employees, directors, consultants and advisors and to attract, retain and motivate qualified
personnel.
We are highly dependent on the management, research and development, clinical, financial and business development expertise of our executive
officers, our directors, our Management Committee as well as the other members of our scientific and clinical teams.
If we were to lose Dr. Neil Kumar, our founder and Chief Executive Officer, or any of our other executives or key personnel, we may not be able to
find appropriate replacements on a timely basis. In addition, because certain of our employees provide a centralized source of support across multiple
subsidiaries, the loss of any of these employees could negatively affect the operations of the affected subsidiaries, and our financial condition and results of
operations could be materially adversely affected.
Furthermore, each of our executive officers may terminate their employment with us at any time. We do not maintain “key person” insurance for any
of our executives or employees. Recruiting and retaining qualified personnel will be critical to our success as we continue to scale up our organization for
commercialization. The loss of the services of our executive officers or other key employees could impede the achievement of research, development and
commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and
key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of
skills and experience required to successfully develop, gain regulatory approval for and commercialize our product candidates. Competition to hire
qualified personnel in our industry is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the
competition among numerous pharmaceutical and biotechnology companies for similar personnel. Furthermore, to the extent we hire personnel from
competitors, we may be subject to allegations that they have been improperly solicited or that they have divulged proprietary or other confidential
information, or that their former employers own their research output. We also experience competition for the hiring of scientific and clinical personnel
from universities and research institutions.
In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development
and commercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting
or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high quality personnel, our
ability to pursue our growth strategy will be limited.
Our reliance on a central team consisting of a limited number of employees who provide various administrative, research and development and other
services across our organization, and on dedicated teams at the subsidiary level presents operational challenges that may adversely affect our business.
As of December 31, 2023, we had 556 employees. While we believe our structure enables us to reduce certain infrastructure costs, the small size of
our central team, consisting of employees engaged in providing administrative, research and development and other services across our entire organization,
may cause us to be unable to devote adequate personnel, time and resources to support the operations of all of our subsidiaries, including their research and
development activities, employee recruiting and retention efforts and the management of financial and accounting and reporting matters. From time to time,
members of our central team may not have access to adequate information regarding aspects of the business and operations of our subsidiaries to
sufficiently manage these affairs. Additionally, because our dedicated subsidiary-level employees and management are primarily incentivized at the
subsidiary level, these employees and management team members may not be sufficiently incentivized to maximize the overall value of our entire
organization. If our central team fails to provide adequate administrative, research and development or other services across our entire organization, or our
subsidiary-level employees and management do not perform in a manner that aligns with the interests of our entire organization, our business, financial
condition and results of operations could be harmed.
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Changes in funding for, or disruptions to the operations of, the FDA, the SEC and other government agencies could hinder their ability to hire and
retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise
prevent those agencies from performing normal functions on which the operation of our business may rely, which could negatively impact our
business.
Inadequate funding for the FDA, the SEC and other government agencies, including from government shut downs, or other disruptions to these
agencies’ operations, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being
developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of
our business may rely, which could negatively impact our business.
The ability of the FDA to review and approve new products or take action with respect to other regulatory matters can be affected by a variety of
factors, including government budget and funding levels, ability to hire and retain key personnel and accept payment of user fees, the availability of
personnel and other resources, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result.
In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and
development activities is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved, or for other actions to
be taken, by relevant government agencies, which would adversely affect our business. For example, over the last several years, including for 35 days
beginning on December 22, 2018, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have
had to furlough critical FDA, SEC and other government employees and stop critical activities. If a prolonged government shutdown or disruption to the
operations of the FDA or other regulatory authorities occurs, it could significantly impact the ability of the FDA or such other regulatory authorities to
timely review and process our regulatory submissions, which could have a material adverse effect on our business. Similarly, a prolonged government
shutdown or disruption to the operations of the USPTO could prevent the timely review of our patent applications, which could delay the issuance of any
U.S. patents to which we might otherwise be entitled. Future government shutdowns and similar events could impact our ability to access the public
markets and obtain necessary capital in order to properly capitalize and continue our operations.
We will need to expand our organization and we may experience difficulties in managing this growth, which could disrupt our operations.
As of December 31, 2023, we had 550 full-time employees and six part-time employees across all of our companies. As we mature, we expect to
expand our full-time employee base and to hire more consultants and contractors. Our management may need to divert a disproportionate amount of its
attention away from our day-to-day activities and devote a substantial amount of time toward managing these growth activities. We may not be able to
effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, operational mistakes, loss of business
opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could require significant capital expenditures
and may divert financial resources from other projects, such as the commercialization of our product candidates, if approved and development of additional
product candidates. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate
and/or grow revenues could be reduced, and we may not be able to implement our business strategy. Our future financial performance and our ability to
commercialize product
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candidates if approved, and compete effectively will depend, in part, on our ability to effectively manage any future growth.
Because we have multiple programs and product candidates in our development pipeline and are pursuing a variety of target indications and treatment
modalities, we may expend our limited resources to pursue a particular product candidate and fail to capitalize on development opportunities or
product candidates that may be more profitable or for which there is a greater likelihood of success.
We focus on the development of product candidates to address Mendelian diseases and genetically driven cancers, regardless of the treatment
modality or the particular target indication within this space. Because we have limited financial and personnel resources, we may forego or delay pursuit of
opportunities with potential target indications or product candidates that later prove to have greater commercial potential than our current and planned
development programs and product candidates. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or
profitable market opportunities. Our spending on current and future research and development programs and other future product candidates for specific
indications may not yield any commercially viable future product candidates. If we do not accurately evaluate the commercial potential or target market for
a particular product candidate, we may be required to relinquish valuable rights to that product candidate through collaboration, licensing or other royalty
arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such future
product candidates.
Additionally, we may pursue additional in-licenses or acquisitions of development-stage assets or programs, which entails additional risk to us.
Identifying, selecting and acquiring promising product candidates requires substantial technical, financial and human resources expertise. Efforts to do so
may not result in the actual acquisition or license of a successful product candidate, potentially resulting in a diversion of our management’s time and the
expenditure of our resources with no resulting benefit. For example, if we are unable to identify programs that ultimately result in approved products, we
may spend material amounts of our capital and other resources evaluating, acquiring and developing products that ultimately do not provide a return on our
investment.
Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any product candidates that we
may develop.
We face an inherent risk of product liability exposure related to the testing of product candidates in human clinical trials in the commercial sales of
approved medicines. If we cannot successfully defend ourselves against claims that our product candidates or medicines caused injuries, we could incur
substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
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injury to our reputation and significant negative media attention;
withdrawal of clinical trial participants;
significant costs to defend the related litigation;
substantial monetary awards to trial participants or patients;
loss of revenue; and
the inability to successfully commercialize our product candidates or medicines.
Although we maintain product liability insurance, including coverage for clinical trials that we sponsor and for our commercial product sales, it may
not be adequate to cover all liabilities that we may incur. We anticipate that we will need to increase our insurance coverage as we commence additional
clinical trials and as we commercialize product candidates that may be approved. The market for insurance coverage is increasingly expensive, and the
costs of insurance coverage will increase as our clinical programs and commercialization efforts increase in size. We may not be able to maintain insurance
coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
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Our employees, independent contractors, consultants, commercial partners and vendors may engage in misconduct or other improper activities,
including noncompliance with regulatory standards and requirements.
We are exposed to the risk of fraud, misconduct or other illegal activity by our employees, independent contractors, consultants, commercial
partners and vendors. Misconduct by these parties could include intentional, reckless and negligent conduct that fails to: comply with the laws of the FDA
and comparable foreign regulatory authorities; provide true, complete and accurate information to the FDA and comparable foreign regulatory authorities;
comply with manufacturing standards we have established; comply with healthcare fraud and abuse laws in the United States and similar foreign fraudulent
misconduct laws; or report financial information or data accurately or to disclose unauthorized activities. If we obtain FDA approval of our product
candidates and begin commercializing those products in the United States, we believe that our potential exposure under such laws will increase
significantly, and our costs associated with compliance with such laws are also likely to increase. In particular, research, sales, marketing, education and
other business arrangements in the healthcare industry are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive
practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, educating, marketing and promotion, sales and
commission, certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use
of information obtained in the course of patient recruitment for clinical trials, which could result in regulatory sanctions and cause serious harm to our
reputation. We have adopted a code of business conduct and ethics applicable to our employees and directors, but it is not always possible to identify and
deter misconduct by employees and third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling
unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in
compliance with such laws. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those
actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.
Our international operations may expose us to business, regulatory, political, operational, financial, tax, pricing and reimbursement and economic
risks associated with doing business outside of the United States.
We are conducting clinical trials internationally through a global CRO, and our business strategy incorporates potential international expansion to
target patient populations outside the United States. If we receive regulatory approval for and commercialize any of our product candidates in patient
populations outside the United States, we may hire sales representatives and conduct physician and patient association outreach activities outside of the
United States. Doing business internationally involves a number of risks, including, but not limited to:
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multiple, conflicting, and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment
laws, regulatory requirements, and other governmental approvals, permits, and licenses;
failure by us to obtain and maintain regulatory approvals for the use of our products in various countries;
additional potentially relevant third-party patent rights;
complexities and difficulties in obtaining protection and enforcing our intellectual property;
difficulties in staffing and managing foreign operations;
complexities associated with managing multiple payor reimbursement regimes, government payors, or patient self-pay systems;
limits in our ability to penetrate international markets;
financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on
demand and payment for our products, and exposure to foreign currency exchange rate fluctuations;
natural disasters, political and economic instability, including wars, terrorism, and political unrest, global or widespread health emergencies
(such as the COVID-19 pandemic), boycotts, curtailment of trade, and other business restrictions;
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certain expenses including, among others, expenses for travel, translation, and insurance; and
regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the
purview of the U.S. Foreign Corrupt Practices Act, its books and records provisions, or its anti-bribery provisions.
Any of these factors could significantly harm our potential international expansion and operations and, consequently, our results of operations.
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate
financial statements or comply with applicable regulations could be impaired, which could negatively affect the price of our common stock.
As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal
controls. The Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires that we evaluate and determine the effectiveness of our internal control
over financial reporting and, pursuant to Section 404(b) of the Sarbanes Oxley Act, or Section 404, provide a management report on internal control over
financial reporting. In addition, we are required to include an attestation report on internal control over financial reporting issued by our independent
registered public accounting firm. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or
improvement, could harm our results of operations, cause us to fail to meet our reporting obligations, result in a restatement of our financial statements for
prior periods, or adversely affect the results of management evaluations and independent registered public accounting firm audits of our internal control
over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.
If we are unable to assert that our internal control over financial reporting is effective or if our independent registered public accounting firm issues
an adverse opinion on the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of
our financial reports, the market price of our common stock could be adversely affected and we could become subject to investigations or sanctions by the
stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management
resources.
We do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud.
A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon
certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or
procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may
not be detected.
Risks Related to Our Indebtedness
We have incurred a significant amount of debt and may in the future incur additional indebtedness. Servicing our debt requires a significant amount of
cash, and we may not have sufficient cash flow from our business to pay our substantial debt.
As of December 31, 2023, we and our subsidiaries had total consolidated indebtedness of $1.7 billion, including $550.0 million of indebtedness
outstanding under our unsecured 2.50% Convertible Senior Notes due 2027, or the 2027 Notes, $747.5 million of indebtedness outstanding under our
2.25% Convertible Senior Notes due
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2029, or the 2029 Notes, and $455.4 million of indebtedness under our loan agreement by and among U.S. Bank National Association, certain lenders, we
as borrower, and certain of our subsidiaries as guarantors, or the Loan Agreement. On January 17, 2024, we incurred $450.0 million of gross initial
principal indebtedness under our financing agreement by and among Blue Owl Capital Corporation as administrative agent, certain lenders, we as
borrower, and certain of our subsidiaries as guarantors, which together with a first amendment dated February 12, 2024 are referred to as the Financing
Agreement, and fully repaid the indebtedness outstanding under the Loan Agreement. Subject to the limitations in the terms of our existing and future
indebtedness, we and our subsidiaries may incur additional indebtedness, secure existing or future indebtedness, or refinance our indebtedness. We may be
required to use a substantial portion of our cash to pay interest and principal on our indebtedness. Our ability to make scheduled payments of the principal
of, to pay interest on or to refinance our indebtedness, depends on our future performance and our ability to generate sufficient cash flow from our
operations, which are subject to economic, financial, competitive and other factors beyond our control. Such payments will reduce the funds available to us
for working capital, capital expenditures, and other corporate purposes and limit our ability to obtain additional financing for working capital, capital
expenditures, expansion plans, and other investments, which may in turn limit our ability to implement our business strategy, heighten our vulnerability to
downturns in our business, the industry, or in the general economy, limit our flexibility in planning for, or reacting to, changes in our business and the
industry, and prevent us from taking advantage of business opportunities as they arise. Additionally, if we are unable to generate sufficient cash flow to
service our indebtedness and fund our operations, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or
obtaining additional equity capital on terms that may be onerous or highly dilutive. We may not be able to engage in any of these activities or engage in
these activities on desirable terms, which could result in a default on our debt obligations.
We have incurred indebtedness under our convertible senior notes and are party to a financing agreement that contain operating and financial
covenants that may restrict our business and financing activities.
In March 2020, we issued the 2027 Notes, pursuant to which we pay interest semiannually in arrears at a rate of 2.50% per year. The 2027 Notes
will mature on March 15, 2027 unless earlier converted or repurchased, at which time we will settle any conversions of the 2027 Notes in cash, shares of
our common stock or a combination thereof, at our election. In January and February 2021, we issued the 2029 Notes, pursuant to which we pay interest
semiannually in arrears at a rate of 2.25% per year. The 2029 Notes will mature on February 1, 2029 unless earlier converted or repurchased, at which time
we will settle any conversions of the 2029 Notes in cash, shares of our common stock or a combination thereof, at our election. Under certain
circumstances, the holders of the 2027 Notes and the 2029 Notes, or collectively, the Notes, may require us to repay all or a portion of the principal and
interest outstanding under the Notes in cash prior to their respective maturity dates, which could have an adverse effect on our financial results.
In January 2024, we entered into the Financing Agreement, pursuant to which the lenders thereunder agreed to extend a senior secured credit facility
to us in an aggregate principal amount of up to $750.0 million, comprised of (i) an initial term loan of $450.0 million, or the Initial Term Loan, and (ii)
subject to the satisfaction of certain terms and conditions set forth in the Financing Agreement, one or more incremental term loans in an aggregate
principal amount not to exceed $300.0 million. The Initial Term Loan was funded on January 17, 2024. We are required to make principal payments of
$22.5 million on the outstanding balance of the term loans commencing on June 30, 2027 in quarterly installments in amounts and subject to conditions as
set forth in the Financing Agreement, including variable interest rates and additional quarterly installments of $10.0 million if our market capitalization is
at any time after January 17, 2024 less than $1.5 billion. The stated maturity date of the term loans is January 17, 2029, with two springing earlier maturity
dates at 91 days prior to the stated maturity dates of the 2027 Notes and the 2029 Notes, respectively, in each case to the extent there is an aggregate
outstanding amount of such notes of more than $50 million on such dates. The Financing Agreement restricts our ability, among other things and subject to
certain limited exceptions, to:
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sell, transfer or otherwise dispose of any of our business or property;
make material changes to our business;
enter into transactions resulting in significant changes to the voting control of our stock;
make certain changes to our organizational structure;
consolidate or merge with other entities or acquire other entities;
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incur additional indebtedness or create encumbrances on our assets;
pay dividends, or make distributions on or repurchase our stock;
enter into transactions with our affiliates;
make payments in respect of subordinated indebtedness or royalty monetization transactions; or
make certain investments.
In addition, we are required to maintain, under the Financing Agreement, a minimum unrestricted cash balance of $70,000,000 at all times and to
comply with various operating covenants and default clauses that may restrict our ability to finance our operations, engage in business activities or expand
or fully pursue our business strategies. As security for the obligations under the Financing Agreement, we and our subsidiaries that are party to the
Financing Agreement as guarantors are required to grant to the administrative agent, for the benefit of the lenders and secured parties, a continuing first
priority security interest in substantially all of our assets and the assets of our subsidiaries that are party to the Financing Agreement as guarantors
(including all equity interests owned or hereafter acquired by us or such subsidiaries), subject to certain exceptions. A breach of any of these covenants or
clauses could result in a default under the Financing Agreement, which could cause all of the outstanding indebtedness under the facility to become
immediately due and payable and cause us to incur additional fees related to an early repayment, or result in a material adverse effect on our business,
financial condition and operating results.
The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.
In the event the conditional conversion feature of the Notes is triggered, holders of the Notes will be entitled to convert the notes at any time during
specified periods at their option. If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely
shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our
conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their
Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than
long-term liability, which would result in a material reduction of our net working capital.
Risks Related to Our Need for Additional Capital
We may require substantial additional funding to achieve our business goals. If we are unable to obtain this funding when needed and on acceptable
terms, we could be forced to delay, limit or terminate our product development and commercialization efforts.
Developing and commercializing biopharmaceutical products is expensive and time-consuming, and we may require substantial additional capital to
conduct research, preclinical testing and human studies, may establish pilot scale and commercial scale manufacturing processes and facilities, and
establish and develop quality control, regulatory, marketing, sales and administrative capabilities to support our existing programs and pursue potential
additional programs. We are also responsible for the payments to third parties of expenses that may include milestone payments, license maintenance fees
and royalties, including in the case of certain of our agreements with academic institutions or other companies from whom intellectual property rights
underlying their respective programs have been in-licensed or acquired. Because the outcome of any preclinical or clinical development and regulatory
approval process is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development, regulatory
approval process and commercialization of any future product candidates we may identify.
As of December 31, 2023, we had working capital of $333.7 million, of which cash, cash equivalents amounted to $375.9 million, restricted cash
amounted to $16.7 million, and investment in equity securities amounted to $58.9 million. We expect that our cash and cash equivalents, restricted cash and
investment in equity securities will be sufficient to fund our operations through at least the next 12 months from the date of this report. However, our
operating plan may change as a result of many factors currently unknown to us, including our need for, and ability to raise, capital to support our research,
development and commercialization plans, and we may need to seek
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additional funds sooner than planned, through public or private equity or debt financings or other sources, such as royalty financings, strategic
collaborations or license and development agreements. Any additional fundraising efforts for us may divert our management from their day-to-day
activities, which may adversely affect our ability to develop and commercialize product candidates that we may identify and pursue. Moreover, such
financing may result in dilution to stockholders, imposition of debt covenants and repayment obligations, or other restrictions that may affect our business.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for
our current or future operating plans.
Our future funding requirements will depend on many factors, including, but not limited to:
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the time and cost necessary to establish internal commercialization capabilities or enter into collaborations with third parties for the
commercialization of acoramidis or any other product candidate, if approved;
our ability to satisfy the conditions required by the funding of the Investment Amount (as defined below) under the Funding Agreement;
the time and cost necessary to complete ongoing and planned clinical trials, including our ongoing Phase 3 clinical trials of low-dose
infigratinib, and our ongoing Phase 3 clinical trial of encaleret;
the time and cost necessary to pursue regulatory approvals for our product candidates, and the costs of post-marketing studies that could be
required by regulatory authorities;
the progress, timing, scope and costs of our nonclinical studies, preclinical studies, clinical trials and other related activities, including the
ability to enroll patients in a timely manner, for the ongoing and planned clinical trials set forth above, and potential future clinical trials;
the costs of obtaining adequate clinical and commercial supplies of raw materials and drug products for our product candidates, including
gene therapies such as BBP-812 and any other product candidates we may identify and develop;
our ability to successfully identify and negotiate acceptable terms for third-party supply and contract manufacturing agreements with CMOs;
our ability to successfully commercialize any product candidates that may be approved;
the manufacturing, selling and marketing costs associated with any product candidates that may be approved, including the cost and timing of
expanding our internal sales and marketing capabilities or entering into strategic collaborations with third parties to leverage or access these
capabilities;
the amount and timing of sales and other revenues from any approved products, including the sales price and the availability of adequate
third-party reimbursement;
the cash requirements of any future acquisitions or discovery of product candidates;
the time and cost necessary to respond to technological and market developments;
the costs of acquiring, licensing or investing in intellectual property rights, products, product candidates and businesses;
our ability to continue to discover and develop additional product candidates, and the time and costs associated with identifying additional
product candidates;
our ability to attract, hire and retain qualified personnel; and
the costs of maintaining, expanding and protecting our intellectual property portfolio.
Additional funds may not be available when we need them, on terms that are acceptable, or at all. If adequate funds are not available to us on a
timely basis, we may be required to delay, limit or terminate one or more research or development programs or the commercialization of any product
candidates or be unable to expand operations or otherwise capitalize on business opportunities, as desired, which could materially affect our business,
prospects, financial condition and results of operations.
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The sale or issuance of our securities, including the sale or issuance of common stock to, or through, Goldman Sachs & Co. LLC, or Goldman Sachs,
and SVB Securities LLC, or SVB, pursuant to our Equity Distribution Agreement, dated May 4, 2023, or the ATM Agreement, may cause significant
dilution and the sale of such securities, or the perception that such sales may occur, could cause the price of our common stock to fall.
In May 2023, we entered into the ATM Agreement with Goldman Sachs and SVB, pursuant to which we may offer and sell our common stock,
having aggregate sales proceeds of up to $450.0 million, to or through Goldman Sachs and SVB, from time to time, in an “at-the-market” offering program.
In connection with the ATM Agreement, we filed a registration statement on Form S-3/ASR (File No. 333-271650) pursuant to which we may issue the
shares of common stock subject to the ATM Agreement, and, so long as we qualify as a “well-known seasoned issuer” as defined in Rule 405 of the
Securities Act of 1933, as amended, or the Securities Act, an unlimited amount of shares of our common stock, preferred stock, debt securities, warrants
and/or units. Sales to, or through, Goldman Sachs and SVB by us under the ATM Agreement or otherwise pursuant to the registration statement could
result in substantial dilution to the interests of other holders of our common stock. Additionally, the sale of a substantial number of shares of our common
stock or other securities, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time
and at a price that we might otherwise wish to effect sales.
The Funding Agreement contains certain conditions to the Purchasers’ funding obligations and various covenants and restrictions on our operations
that, if violated, may adversely affect our financial condition and operating results. An increase of the royalty rate on the net sales of acoramidis under
the Funding Agreement could harm our financial condition and operating results.
In January 2024, we and our subsidiaries Eidos Therapeutics, Inc., BridgeBio Europe B.V. and BridgeBio International GmbH (together, the “Seller
Parties”) entered into a Funding Agreement (the “Funding Agreement”) with LSI Financing 1 Designated Activity Company and CPPIB Credit Europe S.à
r.l. (together, the “Purchasers”), and Alter Domus (US) LLC, as the collateral agent, to help support a future commercial launch of acoramidis. Under the
Funding Agreement, the Purchasers’ obligation to pay us $500.0 million (in the aggregate, net of certain transaction expenses) (the “Investment Amount”)
is conditioned upon the first FDA approval of acoramidis, subject to certain conditions relating to the FDA approval and other customary conditions. We
cannot guarantee that we will obtain FDA approval of acoramidis or that the FDA approval will satisfy all applicable conditions under the Funding
Agreement. Other conditions may be beyond our control or dependent on factors that we cannot predict. If we fail to satisfy all the conditions for the
Purchasers’ funding obligations under the Funding Agreement (and the Purchasers refuse to waive unsatisfied conditions), the Purchasers will not be
required to fulfill their obligation to pay us the Investment Amount, and we may be unable to find alternative sources of funding on acceptable terms, or at
all. If we lack sufficient funds, our ability to successfully commercialize acoramidis may be materially adversely affected.
Under the Funding Agreement, the Seller Parties are required to comply with various covenants, including using commercially reasonable efforts to
obtain regulatory approval for and commercialize acoramidis, providing the Purchasers with certain clinical, commercial, regulatory and intellectual
property updates and certain financial statements, and providing notices upon the occurrence of certain events, each as agreed under the Funding
Agreement. Compliance with these covenants may limit our flexibility in operating our business and our ability to take actions that might otherwise be
advantageous to us and our stockholders. Pursuant to the Funding Agreement, the Seller Parties have granted to the collateral agent, for the benefit of the
Purchasers, a security interest in specific assets related to acoramidis. If the Seller Parties are unable to comply with applicable obligations, the Purchasers
may be entitled to take possession of such assets, which could have a material adverse effect on our business, financial condition and results of operations.
Under the Funding Agreement, following the Purchasers’ payment of the Investment Amount to us, the Purchasers will have the right to receive
payments (the “Royalty Interest Payments”) equal to 5% of the global net sales of acoramidis (“Net Sales”). However, under certain conditions, including
conditions relating to sales performance of acoramidis by or on behalf of us, the rate of the Royalty Interest Payments may adjust to a maximum rate of
10% in 2027. Such increase(s) could result in additional payments by us to the Purchasers and materially harm our liquidity and profitability or otherwise
affect our financial condition and operating results.
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Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to current product
candidates or to any future product candidates on unfavorable terms.
We may seek additional capital through any number of available sources, including, but not limited to, public and private equity offerings, debt
financings, royalty financings, strategic partnerships and alliances and licensing arrangements. We, and indirectly, our stockholders, will bear the cost of
issuing and servicing any such securities and of entering into and maintaining any such strategic partnerships or other arrangements. Because any decision
by us to issue debt or equity securities in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate
the amount, timing or nature of any future financing transactions. To the extent that we raise additional capital through the sale of additional equity or debt
securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a
stockholder. The incurrence of additional indebtedness would result in increased fixed payment obligations and could involve additional restrictive
covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and
other operating restrictions that could adversely impact our ability to conduct our business. Additionally, any future collaborations we enter into with third
parties may provide capital in the near term, but limit our potential cash flow and revenue in the future. If we raise additional funds through strategic
partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product
candidates, or grant licenses or other rights on unfavorable terms.
In addition, if one of our subsidiaries raises funds through the issuance of equity securities to third parties, our stockholders’ deficit interests in such
subsidiary could be substantially diminished. If one of our subsidiaries raises additional funds through collaboration and licensing arrangements, it may be
necessary to relinquish some rights to our intellectual property rights, technologies or product candidates, or grant licenses on terms that are not favorable
to us.
If we engage in other acquisitions or strategic partnerships, this may increase our capital requirements, dilute our stockholders, cause us to incur debt
or assume contingent liabilities, and subject us to other risks.
We may engage in various acquisitions and strategic partnerships in the future, including licensing or acquiring complementary products, intellectual
property rights, technologies, or businesses. Any acquisition or strategic partnership may entail numerous risks, including:
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increased operating expenses and cash requirements;
the assumption of indebtedness or contingent liabilities;
the issuance of our equity securities which would result in dilution to our stockholders;
assimilation of operations, intellectual property, product candidates of an acquired company, including difficulties associated with integrating
new personnel;
the diversion of our management’s attention from our existing product programs and initiatives in pursuing such an acquisition or strategic
partnership;
difficulties in retaining key employees and personnel and uncertainties in our ability to maintain key business relationships;
risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or
product candidates and regulatory approvals; and
our inability to generate revenue from acquired intellectual property, technology and/or products sufficient to meet our objectives or even to
offset the associated transaction and maintenance costs.
In addition, if we undertake such a transaction, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses and
acquire intangible assets that could result in significant future amortization expense, any of which could have a material adverse effect on our business,
prospects, financial condition and results of operations. For example, the Eidos Merger resulted in a reduction of our cash and dilutive issuances of our
equity securities to the former Eidos stockholders. Any similar transactions in the future that require us to provide cash or stock consideration could harm
our financial condition and negatively impact our existing stockholders.
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Recent volatility in capital markets and lower market prices for our securities may affect our ability to access new capital through sales of shares of our
common stock or issuance of indebtedness, which may harm our liquidity, increase our cost of capital, limit our ability to grow our business, pursue
acquisitions or improve our operating infrastructure and restrict our ability to compete in our markets.
Our operations consume substantial amounts of cash, and we intend to continue to make significant investments to support our business growth,
respond to business challenges or opportunities, develop new product candidates, retain or expand our current levels of personnel, improve our existing
product candidates, enhance our operating infrastructure, and potentially acquire complementary businesses and technologies. Our future capital
requirements may be significantly different from our current estimates and will depend on many factors, including the need to:
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finance unanticipated working capital requirements;
continue the research and development of our existing product candidates and develop or enhance our technological infrastructure;
pursue acquisitions, in-licenses or other strategic relationships; and
respond to competitive pressures.
Accordingly, we may need to pursue additional equity, debt or other financings to meet our capital needs. With uncertainty in the capital markets and
other factors, such financing may not be available on terms favorable to us or at all. If we raise additional funds through further issuances of equity or
convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences,
and privileges superior to those of holders of our common stock. In addition, any additional debt financing secured by us may also subject us to increased
fixed payment obligations and covenants limiting or restricting our ability to take specific actions such as capital-raising activities, incurring additional
debt, making capital expenditures or declaring dividends, and could involve additional restrictive covenants relating to our capital-raising activities and
other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including
potential acquisitions. If we raise additional capital through marketing and distribution arrangements or other collaborations, other royalty financings, or
strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies,
future revenue streams or research programs or grant licenses on terms that may not be favorable to us. To meet our liquidity needs, we have previously
relied, in part, on borrowed funds, and may do so again in the future. Recent and continued increases in interest rates could affect our ability to obtain
working capital through borrowings such as bank credit lines and public or private sales of debt securities, which may result in lower liquidity, reduced
working capital and other adverse impacts on our business. If we are unable to obtain adequate financing or financing on terms satisfactory to us, we could
face significant limitations on our ability to invest in our operations and otherwise suffer harm to our business.
Risks Related to Our Common Stock
The market price of our common stock has been and may be highly volatile, and purchasers of our common stock could incur substantial losses.
The market price of our common stock has been and is likely to continue to be volatile. Our stock price has been and may be subject to wide
fluctuations in response to a variety of factors, including the following:
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adverse results or delays in our preclinical studies or clinical trials;
reports of AEs or other negative results in clinical trials of third parties’ product candidates that target our product candidates’ target
indications;
inability for us to obtain additional funding, or to service our existing debt obligations, on reasonable terms or at all;
any delay in filing an IND, BLA or NDA for our product candidates and any adverse development or perceived adverse development with
respect to the FDA’s review of that IND, BLA or NDA;
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failure to develop successfully and commercialize our product candidates;
the termination of, or any other failure to develop successfully and commercialize our product candidates;
announcements we make regarding our current product candidates, acquisition of potential new product candidates and companies and/or in-
licensing;
the termination of, or any other failure to maintain our existing license arrangements or enter into new licensing and collaboration
agreements;
failure by us or our licensors to prosecute, maintain or enforce our intellectual property rights;
changes in laws or regulations applicable to future products;
inability to obtain adequate clinical or commercial supply for our product candidates or the inability to do so at acceptable prices;
adverse regulatory decisions, including failure to reach agreement with applicable regulatory authorities on the design or scope of our
planned clinical trials;
failure to obtain and maintain regulatory exclusivity for our product candidates;
regulatory approval or commercialization of new products or other methods of treating our target disease indications by our competitors;
failure to meet or exceed financial projections we may provide to the public or to the investment community;
the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community;
announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us, our strategic collaboration
partners or our competitors;
disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection
for our technologies;
additions or departures of our key scientific or management personnel;
significant lawsuits, including patent or stockholder litigation, against us;
changes in the market valuations of similar companies;
sales or potential sales of substantial amounts of our common stock;
trading volume of our common stock;
acts of war or periods of widespread civil unrest, including the increasingly volatile global economic conditions resulting from the conflicts
in Ukraine and in Israel and the Gaza Strip;
general economic and market conditions, including inflationary pressures and stock market volatility; and
continued increases in interest rates that increase the cost of our existing indebtedness any potential new indebtedness.
In addition, companies trading in the stock market in general, and The Nasdaq Global Market, or Nasdaq, in particular, have experienced extreme
price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and
industry factors, including the effects of the ongoing conflicts in Ukraine and in Israel and the Gaza Strip, widespread inflationary pressures and interest
rate increases, any global health emergency such as the COVID-19 pandemic, and global economic conditions on the global economy, may negatively
affect the market price of our common stock, regardless of our actual operating performance.
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We have in the past been, and could be subject to securities class action litigation and other types of stockholder litigation.
The stock market in general, and Nasdaq and biotechnology companies in particular, have experienced extreme price and volume fluctuations that
have often been unrelated or disproportionate to the operating performance of these companies. In the past, we have been subject to stockholder litigation
related to the Eidos Merger, and securities class action litigation has often been instituted against companies following periods of volatility in the market
price of a company’s securities. We could also be subject to other types of litigation, which may involve claims of breach of fiduciary duties by our
directors or officers for misuse/mismanagement of company assets/resources or conflicts of interest. Any such litigation, if instituted, could result in
substantial costs and a diversion of management’s attention and resources, which would harm our business, operating results, or financial condition.
Additionally, the dramatic increase in the cost of directors’ and officers’ liability insurance may cause us to opt for lower overall policy limits or to forgo
insurance that we may otherwise rely on to cover significant defense costs, settlements, and damages awarded to plaintiffs.
Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, would result in
additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.
We will need additional capital in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities,
our stockholders may experience substantial dilution. We may sell common stock, convertible securities or other equity securities in one or more
transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities in more
than one transaction, investors may be materially diluted by subsequent sales. These sales may also result in material dilution to our existing stockholders,
and new investors could gain rights superior to our existing stockholders.
Pursuant to our 2021 Amended and Restated Stock Option and Incentive Plan, or the A&R 2021 Plan, we are authorized to grant stock options and
other stock-based awards to our employees, directors and consultants. In addition, pursuant to our Amended and Restated 2019 Inducement Equity Plan,
we are authorized to grant stock options and other stock-based awards to prospective officers and employees who are not currently employed by us or one
of our subsidiaries. If our board of directors, elects in the future to increase the number of shares available for future grant and, in the case of the A&R 2021
Plan, if our stockholders approve of any such further increase, our stockholders may experience additional dilution, and our stock price may fall.
Any sales of a significant portion of our total outstanding shares, including shares of common stock underlying resale registration statements filed on
behalf of certain of our stockholders, into the market could cause the market price of our common stock to decline significantly.
Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales or the perception in the
market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market price of our common stock.
Shares of unvested restricted stock and common stock issued and outstanding as of our corporate reorganization in connection with our initial public
offering in 2019 will become available for sale immediately upon the vesting of such shares. Shares issued upon the exercise of stock options or the vesting
of restricted stock units outstanding under our equity incentive plans or pursuant to future awards granted under those plans will become available for sale
in the public market to the extent permitted by the provisions of applicable vesting schedules, any applicable market standoff agreements, and Rule 144 and
Rule 701 under the Securities Act.
Certain holders of our common stock have rights, subject to conditions, to require us to file registration statements covering their shares or to
include their shares in registration statements that we may file for ourselves or other stockholders. Sales of a substantial number of shares of our common
stock underlying the resale registration statements on Form S-3/ASR filed on July 26, 2023 and November 2, 2023 in the public market by the selling
stockholders named in these registration statements, or the perception that these sales might occur, could depress the market price of our common stock and
could impair our ability to raise capital through the sale of additional equity securities or other securities convertible into or exchangeable for equity
securities, regardless of whether there is any relationship between such sales and the performance of our business. We may also file registration statements
in the future that register a substantial number of shares of our common stock where if any additional shares are sold pursuant to these registration
statements, or if it is perceived that they will be sold, in the public market, the market
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price of our common stock could decline. We have also filed registration statements on Form S-8 registering the issuance of shares of common stock issued
or reserved for future issuance under our equity compensation and equity inducement plans. Shares registered under these registration statements on Form
S-8 can be freely sold in the public market upon issuance and once vested, subject to volume limitations applicable to affiliates. In addition, certain of our
executive officers, employees and affiliates have established or may in the future establish programmed selling plans under Rule 10b5-1 of the Securities
Exchange Act of 1934, as amended, for the purpose of effecting sales of our common stock. If any of these additional shares are sold, or if it is perceived
that they will be sold, in the public market, the market price of our common stock could decline.
If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our stock
could decline.
The trading market for our common stock relies in part on the research and reports that industry or financial analysts publish about us or our
business. If one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our stock could decline. If one or more
of these analysts cease to cover our stock, we could lose visibility in the market for our stock, which in turn could cause our stock price to decline.
Our principal stockholders and certain members of our management own a significant percentage of our stock and will be able to exert significant
control over matters subject to stockholder approval.
Based upon our common stock outstanding as of December 31, 2023, our beneficial stockholders, directors, and executive officers beneficially own
56.1% of our outstanding common stock. These stockholders will have the ability to influence us through their ownership positions. These stockholders
may be able to determine all matters requiring stockholder approval. For example, these stockholders, acting together, may be able to control elections of
directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. In turn, this may
have an adverse effect on the market price of our common stock. This may prevent or discourage unsolicited acquisition proposals or offers for our
common stock that you may believe are in your best interest as one of our stockholders. In certain circumstances, these stockholders’ interests as
stockholders may differ or even conflict with the interests of our other stockholders.
Provisions in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could
make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders or remove our
current management.
Our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law contain provisions that may have the
effect of delaying or preventing a change in control of us or changes in our management. Our amended and restated certificate of incorporation and
amended and restated bylaws include provisions that:
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authorize “blank check” preferred stock, which could be issued by our Board of Directors without stockholder approval and may contain
voting, liquidation, dividend and other rights superior to our common stock;
create a classified Board of Directors whose members serve staggered three-year terms;
specify that special meetings of our stockholders can be called only by our Board of Directors or stockholders holding at least 25% of our
outstanding voting stock;
prohibit stockholder action by written consent;
establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including
proposed nominations of persons for election to our Board of Directors;
provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even if less than a quorum, or by
the holders of a majority of the outstanding shares of capital stock then entitled to vote at an election of directors;
specify that no stockholder is permitted to cumulate votes at any election of directors;
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expressly authorize our Board of Directors to modify, alter or repeal our amended and restated bylaws; and
require supermajority votes of the holders of our common stock to amend specified provisions of our amended and restated certificate of
incorporation and amended and restated bylaws.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law,
which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us. Any provision of our
amended and restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in
control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that
some investors are willing to pay for our common stock.
Our amended and restated bylaws designate specific courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which
could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.
Pursuant to our amended and restated bylaws, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the
State of Delaware will be the sole and exclusive forum for any state law claim for (i) any derivative action or proceeding brought on our behalf; (ii) any
action asserting a claim of breach of or based on a fiduciary duty owed by any of our current or former directors, officers or employees to us or our
stockholders; (iii) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law or our amended and
restated certificate of incorporation or amended and restated bylaws; (iv) any action to interpret, apply, enforce or determine the validity of our amended
and restated certificate of incorporation or amended and restated bylaws; or (v) any action asserting a claim governed by the internal affairs doctrine of the
State of Delaware. Our amended and restated bylaws further provide that, unless we consent in writing to the selection of an alternative forum, the federal
district courts of the United States will be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities
Act. The forum selection clauses in our amended and restated bylaws may limit our stockholders’ ability to obtain a favorable judicial forum for disputes
with us.
Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to
fall below expectations or our guidance.
Our quarterly and annual operating results may fluctuate significantly in the future, which makes it difficult for us to predict our future operating
results. Our operating results may fluctuate due to a variety of factors, many of which are outside of our control and may be difficult to predict, including
but not limited to the following:
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the timing, results and cost of, and level of investment in, our clinical development activities for our current product candidates and any other
product candidates we may identify and pursue, which may change from time to time;
the cost of manufacturing our current product candidates and the related materials or other product candidates that we may identify, which
may vary depending on the quantity of production and the terms of agreements with manufacturers;
our ability to conduct our ongoing and planned clinical trials in accordance with our current plans and to obtain regulatory approval for our
current product candidates or other product candidates that we may identify, and the timing and scope of any such approvals we may receive;
the timing and success or failure of clinical trials for competing product candidates, or any other change in the competitive landscape of our
industry, including consolidation among our competitors or partners;
expenditures that we or will or may incur to acquire or develop additional product candidates and technologies;
our ability to attract, hire and retain qualified personnel;
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the level of demand for our current product candidates or other product candidates that we may identify, should they receive approval, which
may vary significantly;
future accounting pronouncements or changes in our accounting policies;
future tax regulation changes that impact effective tax rates;
the success of our restructuring initiatives;
the risk/benefit profile, cost and reimbursement policies with respect to our current product candidates or other product candidates that we
may identify, if approved, and existing and potential future drugs that compete with our product candidates;
changes in global economic and market conditions, including inflationary pressures, interest rate increases, supply chain shortages and stock
market volatility; and
acts of war, armed conflicts and political or civil unrest, including volatile global economic conditions resulting from the conflict in Ukraine
and the Israel/Hamas conflict.
The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a
result, comparing our operating results on a period-to-period basis may not be meaningful. This variability and unpredictability could also result in our
failing to meet the expectations of industry or financial analysts or investors for any period. If our operating results fall below the expectations of analysts
or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or
investors, the price of our common stock could decline substantially.
Our future ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
We have incurred substantial losses during our history and we do not expect to become profitable in the near future and we may never achieve
profitability. To the extent that we continue to generate taxable losses, unused losses will carry forward indefinitely if not utilized, subject to expiration of
such carryforwards in the case of federal net operating loss carryforwards generated prior to 2018. In addition, under Sections 382 and 383 of the Internal
Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” generally
defined as a greater than 50 percentage point change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-
change net operating loss carryforwards, or NOLs, and other pre-change tax attributes to offset its post-change income or taxes may be limited. Our
existing net operating losses or credits may be subject to limitations arising from previous ownership changes and if we undergo future ownership changes,
many of which may be outside of our control, our ability to utilize our net operating losses or credits could be further limited by Sections 382 and 383 of
the Code. Accordingly, we may not be able to utilize a material portion of our net operating losses or credits. In addition, the amount of post-2017 NOLs
that we are permitted to deduct in taxable years beginning after December 31, 2023 is limited to 80% of our taxable income in such year.
Changes in tax laws or regulations may adversely affect our financial condition and results of operations.
Changes in tax laws or regulations, or changes in interpretations of existing tax laws and regulations, could adversely affect our financial condition
and results of operations, possibly with retroactive effect. For example, the Biden administration and members of Congress have proposed, and future U.S.
presidential administrations may propose, various U.S. federal tax law changes, which, if enacted, may have an adverse effect on our business operations
and financial performance. Outside of the U.S., various governments and organizations are increasingly focused on tax reform and other legislative or
regulatory action to increase tax revenue, including the base erosion and profit shifting, or BEPS, project that is being led by the Organization for
Economic Co-operation and Development, or OECD, and other initiatives led by the OECD or the European Commission. With our international
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operations and potential expansion, these types of changes to the taxation of our activities could increase the amount of taxes imposed on our business, and
adversely affect our financial condition and results of operations.
We have never and do not currently intend to pay dividends on our common stock, and, consequently, our stockholders’ ability to achieve a return on
their investment will depend on appreciation in the price of our common stock.
We have never paid cash dividends on any of our capital stock and do not currently intend to pay any cash dividends on our common stock for the
foreseeable future. In addition, pursuant to the Financing Agreement, we are not permitted to declare or pay any cash dividends or make cash distributions
on any class of our capital stock or any other equity interest, except in limited circumstances. We currently intend to invest our future earnings, if any, to
fund our growth. Therefore, you are not likely to receive any dividends on your common stock for the foreseeable future. Since we do not intend to pay
dividends, your ability to receive a return on your investment will depend on any future appreciation in the market value of our common stock. There is no
guarantee that our common stock will appreciate or even maintain the price at which our holders have purchased it.
We have incurred and will continue to incur significant costs as a result of operating as a public company, and our management is required to devote
substantial time to new compliance initiatives.
As a public company, we incur significant legal, tax, accounting and other expenses which are greater than those for private companies. We are
subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the Nasdaq and other
applicable securities laws and regulations. For example, the Exchange Act requires, among other things, that we file with the SEC, annual, quarterly and
current reports with respect to our business and financial condition and that of our consolidated subsidiaries. These reporting requirements also continue to
change, which has created uncertainty for public companies like us, and accommodating the evolving standards may require additional legal and financial
compliance costs.
Additionally, there continues to be public interest and increased legislative pressure related to environmental, social and governance, or ESG,
activities of public companies. We risk negative stockholder reaction, including from proxy advisory services, as well as damage to our brand and
reputation, if we do not act responsibly in a number of key areas, including diversity and inclusion, environmental stewardship, support for local
communities, corporate governance and transparency and considering ESG and human capital factors in our operations. There is a growing number of
states requiring organizations to report their board composition as well or mandating gender diversity and representation from underrepresented
communities, including New York and California.
If these requirements divert the attention of our management and personnel from other business concerns, they could have a material adverse effect
on our business, financial condition and results of operations. The compliance costs also decrease our net income or increase our net loss, and may require
us to reduce costs in other areas of our business, including our subsidiaries. For example, our status as a public Company makes it more difficult and more
expensive for us to obtain director and officer liability insurance and we may be required to continue incurring substantial costs to maintain the level of
coverage that we believe is appropriate for a public Company. We cannot predict or estimate the amount or timing of additional costs we may incur to
comply with ongoing requirements or respond to any changes of these requirements. The impact of these requirements could also make it more difficult for
us to attract and retain qualified persons to serve on our Board of Directors, our board committees or as executive officers.
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Our business could be negatively impacted by corporate citizenship and environmental, social and corporate governance, or ESG, matters and/or our
reporting of such matters.
There is an increasing focus from certain investors, consumers, and other stakeholders concerning corporate citizenship and sustainability matters.
We could be perceived as not acting responsibly in connection with these matters. Our business could be negatively impacted by such matters. Any such
matters, or related corporate citizenship and sustainability matters, could have a material adverse effect on our business.
General Risk Factors
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could
harm our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the
handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials,
including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the
disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury
resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also
could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations.
Although we maintain workers’ compensation insurance to cover us for costs and expenses that we may incur due to injuries to our employees
resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance
for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or
radioactive materials.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These
current or future laws and regulations may impair our research, development or production efforts. Our failure to comply with these laws and regulations
also may result in substantial fines, penalties or other sanctions.
Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.
Our ability to invest in and expand our business and meet our financial obligations, to attract and retain third-party contractors and collaboration
partners and to raise additional capital depends on our operating and financial performance, which, in turn, is subject to numerous factors, including the
prevailing economic and political conditions and financial, business and other factors beyond our control, such as the rate of unemployment, the number of
uninsured persons in the United States, political influences and inflationary pressures. For example, an overall decrease in or loss of insurance coverage
among individuals in the United States due to high levels of unemployment, underemployment or the repeal of certain provisions of the ACA, may
decrease the demand for healthcare services and pharmaceuticals. Additionally, the availability of healthcare services and resources can be constrained due
to a public health emergency, such as during the COVID-19 pandemic. If fewer patients are seeking medical care because they do not have insurance
coverage or are unable to obtain medical care for their conditions due to resource constraints on the healthcare system, we may experience difficulties in
any eventual commercialization of our product candidates and our business, results of operations, financial condition and cash flows could be adversely
affected.
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In addition, our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets
upon which pharmaceutical and biopharmaceutical companies such as us are dependent for sources of capital. In the past, global financial crises have
caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn could result in a variety of risks to
our business, including a reduced ability to raise additional capital when needed on acceptable terms, if at all, and weakened demand for our product
candidates. A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption. Any of the foregoing could harm our
business, and we cannot anticipate all of the ways in which a public health emergency, such as the COVID-19 pandemic, or similar outbreaks, the current
economic climate, and financial market conditions could adversely impact our business.
Further, military conflicts or wars (such as Russia’s invasion of Ukraine or the armed conflict in Israel and the Gaza Strip) can damage or disrupt
international commerce and the global economy. It is not possible to predict the broader or longer-term consequences of such conflicts, or the sanctions
imposed to date, which could include further sanctions and counter-sanctions, embargoes, regional instability, retaliatory cyber-attacks, geopolitical shifts
and adverse effects on macroeconomic conditions, security conditions, currency exchange rates and financial markets. The potential effects of such
conflicts include but are not limited to changes in laws and regulations affecting our business, fluctuations in foreign currency markets, potential supply
chain disruptions, inflationary pressures, and increased market volatility and uncertainty that could have an adverse impact on macroeconomic factors that
affect our business, financial condition, stock price and results of operations.
Our internal computer systems, or those used by our third-party collaborators, contractors or consultants, may fail or suffer security breaches, which
could result in a material disruption of our development programs and business operations.
Despite the implementation of security measures, our internal computer systems and those of our CROs, CMOs, third-party logistics providers,
third-party collaboration and commercialization partners, and other contractors and consultants may be vulnerable to damage from computer viruses,
unauthorized access, natural disasters, terrorism, cybersecurity threats, war, and telecommunication and electrical failures. Although to our knowledge we
have not experienced any such material system failure or security breach to date, if such an event were to occur and cause interruptions in our operations, it
could result in a material disruption of development programs and business operations. For example, the loss of clinical trial data from completed, ongoing
or future clinical trials or commercialization information could result in delays in our regulatory approval or commercialization efforts and significantly
increase our costs to recover or reproduce the data. Likewise, we rely on third parties for research and development, the manufacture and supply of drug
product and drug substance and to conduct clinical trials and commercialization activities. We depend on these third parties to implement adequate controls
and safeguards to protect against and report cyber incidents. If they fail to do so, we may suffer financial and other harm, including to our information,
operations, performance, and reputation. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or systems,
or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our
product candidates could be delayed. We also rely on third-party service providers for aspects of our internal control over financial reporting, and such
service providers may experience a material system failure or fail to carry out their obligations in other respects, which may impact our ability to produce
accurate and timely financial statements, thus harming our operating results, our ability to operate our business, and our investors’ view of us.
Cybersecurity threats, both on premises and in the cloud, are evolving and include, but are not limited to: malicious software, destructive malware,
ransomware, attempts to gain unauthorized access to systems or data, disruption to operations, critical systems or denial of service attacks; unauthorized
release of confidential, personal or otherwise protected information; corruption of data, networks or systems; harm to individuals; and loss of assets. In
addition, we could be impacted by cybersecurity threats or other disruptions or vulnerabilities found in products or services we use that are provided to us
by third-parties. The techniques used by criminal elements to attack computer systems are sophisticated, change frequently and may originate from less
regulated and remote areas of the world. As a result, we may not be able to address these techniques proactively or implement adequate preventative
measures. These events, if not prevented or effectively mitigated, could damage our reputation, require remedial actions and lead to loss of business,
regulatory actions, potential liability and other financial losses.
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Certain data breaches must also be reported to affected individuals and various government and/or regulatory agencies, and in some cases to the
media, under provisions of HIPAA, as amended by HITECH, other U.S. federal and state law, and requirements of non-U.S. jurisdictions, including the EU
GDPR and relevant member state law in the EU and other foreign laws, and financial penalties may also apply.
Our insurance policies may not be adequate to compensate us for the potential losses arising from breaches, failures or disruptions of our
infrastructure, catastrophic events and disasters or otherwise. In addition, such insurance may not be available to us in the future on economically
reasonable terms, or at all. Further, our insurance may not cover all claims made against us and defending a suit, regardless of its merit, could be costly and
divert management’s attention.
We or the third parties upon whom we depend may be adversely affected by climate change, earthquakes, outbreak of disease, or other natural disasters
and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.
Climate change, earthquakes, outbreak of disease, or other natural disasters, including extreme weather events and changing weather patterns such as
storms, flooding, droughts, fires and temperature changes, which have become more common, could severely disrupt our operations, and have a material
adverse effect on our business, results of operations, financial condition and prospects. If a natural disaster, extreme weather risk, power outage,
cybersecurity attack or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical
infrastructure, such as the manufacturing facilities of our third-party CMOs, or that otherwise disrupted operations, it may be difficult or, in certain cases,
impossible for us to continue our business for a substantial period of time. For example, we may experience delays in the supply of drug product for our
clinical trials as a result of disruptions to the operations of the manufacturing facilities of some of our third-party CMOs. The disaster recovery and
business continuity plans we have in place currently are limited and are unlikely to prove adequate in the event of a serious disaster or similar event. In
addition, cybersecurity liability insurance is difficult to obtain and may not cover any damages we would sustain based on any breach of our computer
security protocols or other cybersecurity attack. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business
continuity plans, which, particularly when taken together with our lack of earthquake insurance, could have a material adverse effect on our business.
Climate change or legal, regulatory or market measures to address climate change may negatively affect our business and results of operations.
Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere could present risks to our
operations, including an adverse impact on global temperatures, weather patterns and the frequency and severity of extreme weather and natural disasters.
Natural disasters and extreme weather conditions, such as a hurricane, tornado, earthquake, wildfire or flooding, may pose physical risks to our facilities
and disrupt the operation of our supply chain. The impacts of the changing climate on water resources may result in water scarcity, limiting our ability to
access sufficient high-quality water in certain locations, which may increase operational costs. Concern over climate change may also result in new or
additional legal or regulatory requirements designed to reduce greenhouse gas emissions and/or mitigate the effects of climate change on the environment.
If such laws or regulations are more stringent than current legal or regulatory obligations, we may experience disruption in, or an increase in the costs
associated with sourcing, manufacturing and distribution of our product candidates, which may adversely affect our business, results of operations or
financial condition. Further, the impacts of climate change have an influence on customer preferences, and failure to provide climate-friendly products
could potentially result in loss of market share.
The increasing use of social media platforms presents new risks and challenges.
Social media is increasingly being used to communicate about our research, product candidates, investigational medicines, and the diseases our
product candidates and investigational medicines are being developed to treat. Social media practices in the biopharmaceutical industry continue to evolve
and regulations relating to such use are not always clear. This evolution creates uncertainty and risk of noncompliance with regulations applicable to our
business, resulting in potential regulatory actions against us. For example, patients may use social media channels to comment on their experience in an
ongoing blinded clinical study or to report an alleged adverse event. When such disclosures occur, there is a risk that we fail to monitor and comply with
applicable adverse event reporting obligations or we may not be able to defend our business or the public’s legitimate interests in the face of the
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political and market pressures generated by social media due to restrictions on what we may say about our development candidates, investigational
medicines and approved products. There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments
about us on any social networking website. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur
liability, face regulatory actions, or incur other harm to our business.
Our business operations may subject us to disputes, claims and lawsuits, which may be costly and time-consuming and could materially and adversely
impact our financial position and results of operations.
From time to time, we may become involved in disputes, claims and lawsuits relating to our business operations. For example, we may, from time to
time, face or initiate claims related to intellectual property matters, employment matters, or commercial disputes. Any dispute, claim or lawsuit may divert
management’s attention away from our business, we may incur significant expenses in addressing or defending any dispute, claim or lawsuit, and we may
be required to pay damage awards or settlements or become subject to equitable remedies that could adversely affect our operations and financial results.
Litigation related to these disputes may be costly and time-consuming and could materially and adversely impact our financial position and results of
operations if resolved against us. In addition, the uncertainty associated with litigation could lead to increased volatility in our stock price.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurity Risk Management
We have implemented an information security program that is informed by, and incorporates elements of, industry standards and frameworks,
including those issued by NIST (National Institute of Standards and Technology), ISO (International Organization for Standardization), and CIS (Center for
Internet Security). Our security program is designed to identify, assess, manage, mitigate, and respond to cybersecurity threats.
Our cybersecurity risk management program includes a number of components, such as information security program assessments and ongoing
monitoring of critical risks from cybersecurity threats using automated tools. We periodically engage third parties to conduct risk assessments and testing of
our systems, including penetration testing and other vulnerability analyses. Additionally, we have implemented an employee education program that is
designed to raise awareness of cybersecurity threats, including risks posed by phishing attempts. We have implemented a process for this training to be
included during the employee onboarding process and periodically thereafter.
As part of our cybersecurity risk management program, we maintain processes to assess and review the cybersecurity practices of third-party vendors
and service providers. Our process includes a security assessment informed by vendor questionnaires and contractual security requirements related to data
privacy for certain vendors.
We, like other companies in our industry, face a number of cybersecurity risks in connection with our business. Although our business strategy,
results of operations, and financial condition have not, to date, been materially affected by risks from cybersecurity threats, including as a result of
previously identified cybersecurity incidents, we have, from time to time, experienced threats to and security incidents related to our data and systems,
including phishing attacks and attacks to the security of the systems of our third-party vendors and service providers. For more information on our
cybersecurity related risks, see “Our internal computer systems, or those used by our third-party collaborators, contractors or consultants, may fail or
suffer security breaches, which could result in a material disruption of our development programs and business operations” in Item 1A- Risk Factors.
Governance
Our internal information security team is responsible for day-to-day operations related to our cybersecurity risk management strategy, including
identifying, assessing, and managing cybersecurity threats and risks. We established a process that intends for our Incident Response Team to respond to
and address incidents as they arise. The Incident Response Team is multidisciplinary and comprised of members of our information technology and security
function,
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accounting and finance department, and legal department. This team is led by our Director of Security and Network Infrastructure. The Director of Security
and Network Infrastructure role is currently held by an individual who has approximately twenty (20) years of information technology and ten (10) years of
information security related experience.
The Incident Response Team provides periodic reports to our Data Privacy and Security Committee, as well as our Chief Executive Officer and other
members of our senior management, as appropriate. These reports include updates on the Company’s cybersecurity risk management program, assessments
of current cybersecurity risks, and status updates for projects designed to enhance our information security systems. Our Data Privacy and Security
Committee meets to further discuss such items on a monthly basis and reports periodically to the Audit Committee of the Board of Directors.
Our Board of Directors, as a whole and through its committees, has oversight responsibility over the Company’s strategy and risk management,
including our response to critical risks related to cybersecurity threats. The Audit Committee of the Board of Directors specifically oversees the
management of enterprise risks, including risks associated with privacy and data security (including cybersecurity), in accordance with its charter. The
Audit Committee engages in periodic discussions, on at least a bi-annual basis, with a member of the Data Privacy and Security Committee as well as
members of legal and executive leadership as appropriate regarding the Company’s significant financial risk exposures and the measures implemented to
monitor and control these risks, including those that may result from critical cybersecurity threats. Executive leadership periodically reports on critical
cybersecurity risks and risk management to the full Board of Directors.
ITEM 2. PROPERTIES
As of December 31, 2023, the following are the material properties that we occupy:
Property
Description
Office space and laboratory facility
Office space and laboratory facility
Office space
Laboratory facility
Location
Raleigh, NC
Palo Alto, CA
San Francisco, CA
Montreal, Québec
Square
Footage
Owned or
Leased
17,631
9,789
52,604
20,039
Leased
Leased
Leased
Leased
Initial
Lease
Term End
Date
Lease Extension
Options
2024
2024
2026
2033
Option to extend of up to five-years
One-year option to extend
Two-year option to extend
Five-year option to extend
ITEM 3. LEGAL PROCEEDINGS
As of the date of this Annual Report on Form 10-K, we were not party to any material legal proceedings. In the future, we may become party to
legal proceedings and claims arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we
do not believe we are party to any claim or litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be
reasonably expected to have a material adverse impact on our financial position, results of operations or cash flows. Regardless of the outcome, litigation
can have an adverse effect on us because of defense and settlement costs, diversion of management resources and other factors.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Market Information
Our common stock began trading on The Nasdaq Global Select Market, or the Nasdaq, under the symbol “BBIO” on June 27, 2019. Prior to that
date, there was no public trading market for shares of our common stock.
Holders
As of February 15, 2024, there were 72 stockholders of record of our common stock. As many of our shares of common stock are held by brokers
and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Dividend Policy
We have never declared or paid any dividends and do not anticipate paying any dividends on our common stock in the foreseeable future. In
addition, pursuant to the Financing Agreement, we are not permitted to declare or pay any cash dividends or make cash distributions on any class of our
capital stock or any other equity interest, except in limited circumstances.
Securities Authorized for Issuance Under Equity Compensation Plans
Information about our equity compensation plans in Item 12 of Part III of this Annual Report on Form 10-K is incorporated herein by reference.
Stock Performance Graph
The graph set forth below compares the cumulative total stockholder return on our common stock for the period commencing on June 27, 2019, the
date our common stock began trading on the Nasdaq, and ending on December 31, 2023, with the cumulative total return of the Nasdaq Composite Index
and the Nasdaq Biotechnology Index over the same period. This graph assumes the investment of $100.00 on June 27, 2019 in each share of our common
stock at the initial public offering price of $17.00, the Nasdaq Composite Index, and the Nasdaq Biotechnology Index, and assumes the reinvestment of
dividends.
The comparisons shown in the graph below are based upon historical data. We caution that the stock price performance shown in the graph below is
not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock. Information used in the graph was
obtained from sources believed to be reliable including Nasdaq, Bloomberg and Reuters, but we are not responsible for any errors or omissions in such
information.
Notwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate this Annual Report on Form 10‑K or future filings made by us under those statutes,
this Stock Performance Graph section is not “soliciting material,” shall not be deemed filed with the U.S. Securities and Exchange Commission and shall
not be deemed incorporated by reference into any of those prior filings or into any future filings made by us under those statutes.
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Among BridgeBio Pharma, Inc., the Nasdaq Composite Index and the Nasdaq Biotechnology Index:
COMPARISON OF CUMULATIVE TOTAL RETURN*
*
$100 invested on June 27, 2019 in shares of our common stock or index, including reinvestment of dividends.
Sales of Unregistered Securities
During the year ended December 31, 2023, we did not issue or sell any unregistered securities, except as previously reported on our Current Report
on Form 8-K filed on September 25, 2023.
Issuer Purchases of Equity Securities
During the year ended December 31, 2023, we did not repurchase any Company equity securities.
ITEM 6. [Reserved]
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with the financial statements and
related notes included elsewhere in this Annual Report on Form 10-K.
This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. In some cases, you can identify
these statements by forward-looking words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “should,” “estimate,” or
“continue,” and similar expressions or variations. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause
actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that
could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors”
included in this Annual Report on Form 10-K. The forward-looking statements in this Annual Report on Form 10-K represent our views as of the date of
this Annual Report on Form 10-K. Except as may be required by law, we assume no obligation to update these forward-looking statements or the reasons
that results could differ from these forward-looking statements. You should, therefore, not rely on these forward-looking statements as representing our
views as of any date subsequent to the date of this Annual Report on Form 10-K.
Overview
BridgeBio Pharma, Inc. (“we” or the “Company”) is a commercial-stage biopharmaceutical company founded to discover, create, test and deliver
transformative medicines to treat patients who suffer from genetic diseases and cancers with clear genetic drivers. BridgeBio’s pipeline of development
programs ranges from early science to advanced clinical trials. BridgeBio was founded in 2015 and its team of experienced drug discoverers, developers
and innovators are committed to applying advances in genetic medicine to help patients as quickly as possible. Since inception, BridgeBio has created 17
Investigational New Drug applications, or INDs, and had two products approved by the U.S. Food and Drug Administration. We work across over 20
disease states at various stages of development. Several of our programs target indications that we believe present the potential for our product candidates,
if approved, to target portions of market opportunities of at least $1.0 billion in annual sales.
We focus on genetic diseases because they exist at the intersection of high unmet patient need and tractable biology. Our approach is to translate
research pioneered at academic laboratories and leading medical institutions into products that we hope will ultimately reach patients. We are able to realize
this opportunity through a confluence of scientific advances: (i) identification of the genetic underpinnings of disease as more cost-efficient genome and
exome sequencing becomes available; (ii) progress in molecular biology; and (iii) the development and maturation of longitudinal data and retrospective
studies that enable the linkage of genes to diseases. We believe that this early-stage innovation represents one of the greatest practical sources for new drug
creation.
Since our inception in 2015, we have focused substantially all of our efforts and financial resources on acquiring and developing product and
technology rights, building our intellectual property portfolio and conducting research and development activities for our product candidates within our
wholly-owned subsidiaries and controlled entities, including partially-owned subsidiaries and subsidiaries we consolidate based on our deemed majority
control of such entities as determined using either the variable interest entity, or VIE model, or the voting interest entity, or VOE model. To support these
activities, we and our wholly-owned subsidiary, BridgeBio Services, Inc., (i) identify and secure new programs, (ii) set up new wholly-owned subsidiaries
or controlled entities, (iii) recruit key management team members, (iv) raise and allocate capital across the portfolio and (v) provide certain shared services,
including accounting, legal, information technology, administrative, and human resources, as well as workspaces. We have not generated any significant
revenue from product sales. To date, we have funded our operations with proceeds from the sale of our equity securities, issuance of convertible notes, debt
borrowings, sale of certain assets and, to a lesser extent, upfront and milestone payments from licensing arrangements.
We have incurred significant operating losses since our inception. For the years ended December 31, 2023, 2022 and 2021, we incurred net losses of
$653.3 million, $484.7 million and $586.5 million, respectively. Our ability to generate product revenue sufficient to achieve profitability will depend
heavily on the successful development and eventual commercialization of our product candidates at our wholly-owned subsidiaries and controlled entities.
We expect to continue to incur operating and net losses for at least the next several years.
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On January 17, 2024, we and our subsidiaries entered into a Funding Agreement with LSI Financing 1 Designated Activity Company and CPPIB
Credit Europe S.à r.l. together, the (“Purchasers”). Pursuant to the Funding Agreement, the Purchasers agreed to pay to the Company $500.0 million (net of
certain transaction expenses) upon the first FDA approval of acoramidis, subject to certain conditions relating to the FDA approval and other customary
conditions (such date of payment, “Funding Date”). In return, we granted the Purchasers the right to receive payments (the “Royalty Interest Payments”)
equal to 5% of the global net sales of acoramidis (“Net Sales”), which under certain conditions may adjust to a maximum rate of 10% in 2027. Each
Royalty Interest Payment will become payable to the Purchasers on a quarterly basis after the Funding Date. In addition, the Seller Parties granted the
collateral agent, for the benefit of the Purchasers, a security interest in specific assets related to acoramidis. The Funding Agreement will terminate upon
customary events, and also in the event the Funding Date does not occur on or prior to May 15, 2025 (in which case either party may terminate the Funding
Agreement at no charge and without premium or penalty). Refer to Liquidity and Capital Resources section for additional details regarding this agreement.
On January 17, 2024, we entered into a Financing Agreement (the “Financing Agreement”) with certain of our subsidiaries party thereto as
guarantors, the lenders party thereto (the “Lenders”) and Blue Owl Capital Corporation, as administrative agent for the Lenders (the “Administrative
Agent”), which was amended on February 12, 2024. Pursuant to the terms and conditions of the Financing Agreement, the Lenders have agreed to extend a
senior secured credit facility to the Company in an aggregate principal amount of up to $750.0 million comprised of (i) an initial term loan in an aggregate
principal amount of $450.0 million (the “Initial Term Loan”) and (ii) one or more incremental term loans in an aggregate amount not to exceed $300.0
million (collectively, the “Incremental Term Loan,” and together with the Initial Term Loan, collectively, the “Term Loans”), subject to the satisfaction of
certain terms and conditions set forth in the Financing Agreement. The Initial Term Loan was funded on January 17, 2024. Incremental Term Loans are
available at the Company’s and the Lenders’ mutual consent from time to time after January 17, 2024. Refer to Liquidity and Capital Resources section for
additional details regarding this agreement.
On February 7, 2024, our subsidiary, QED, and Kyowa Kirin Co., Ltd (“Kyowa Kirin”) entered into a partnership wherein QED granted Kyowa
Kirin an exclusive license to develop, manufacture, and commercialize infigratinib for achondroplasia, hypochondroplasia, and other skeletal dysplasias in
Japan in accordance with the terms therein. In exchange, QED will receive an upfront payment of $100.0 million and will be eligible to receive royalties up
to the high-twenties percent on sales of infigratinib in Japan, with the potential to receive additional development and sales-based milestone payments.
Due to the inherently unpredictable nature of preclinical and clinical development, and given our novel therapeutic approaches and the stage of
development of our product candidates, we cannot determine and are unable to estimate with certainty the timelines we will require and the costs we will
incur for the development of our product candidates. Clinical and preclinical development timelines and costs, and the potential of development success,
can differ materially from expectations due to a variety of factors. For example, in light of the COVID-19 pandemic, we have experienced delays in or
temporary suspensions of the enrollment of patients in our subsidiaries’ clinical trials in the past. While we have not had any recent concerns, we may
continue to experience delays in certain ongoing activities, including commencement of planned clinical trials, non-clinical experiments and IND-enabling
good laboratory practice toxicology studies. In response to the COVID-19 pandemic, we implemented safety measures to protect our patient community,
employees, partners, suppliers and stockholders. In May 2023, the World Health Organization declared that COVID-19 is no longer a global health
emergency. However, we cannot predict the impact COVID-19 or any future public health emergency or pandemic may have on our business or strategy,
including the effects on our ongoing and planned clinical development activities and prospects, or on our financial and operating results.
In January 2022, we committed to a restructuring initiative designed to drive operational changes in our business processes, efficiencies and cost
savings to advance our corporate strategy and development programs. The restructuring initiative included, among other components, consolidation and
rationalization of our facilities, reprioritization of development programs and the reduction in our workforce. During the years ended December 31, 2023
and 2022, our restructuring, impairment and related charges amounted to $7.9 million and $43.8 million, respectively, which consisted primarily of winding
down costs, exit and other related costs, impairments and write-offs of long-lived assets, and severance and employee-related costs. We may also incur
additional costs that are not currently foreseeable as we continue to evaluate our restructuring alternatives to drive operational changes in business
processes, efficiencies and cost savings.
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Effective December 21, 2022, our subsidiary, QED, and Helsinn, or the Helsinn Parties, entered into a Mutual Termination Agreement or MTA,
which terminated the Amended QED-Helsinn License and Collaboration Agreement and all rights and obligations thereunder. The Helsinn Parties agreed
to perform certain close-out services to enable QED to pursue the development, manufacture and commercialization of infigratinib as a potential treatment
of non-oncology indications, such as in achondroplasia worldwide, excluding China, Hong Kong, and Macau. As a result of the termination, QED is no
longer entitled to any future regulatory or sales-based milestone payments. QED was subject to royalties on net sales of TRUSELTIQTM through March 31,
2023, at which date Helsinn no longer sold the licensed product. Helsinn permanently discontinued TRUSELTIQTM and requested a withdrawal of the
NDA in May 2023, additionally, all clinical investigations under the associated IND are discontinued. Helsinn completed sales of the licensed product
during the three months ended March 31, 2023, and the associated revenue recognized was immaterial. The Helsinn Parties have developed a Close-Out
Plan, as defined within the MTA. Activities within the Close-Out Plan are to be shared equally subsequent to the first $11.0 million of costs, which are the
responsibility of QED. The activities within the Close-Out Plan were completed in 2023.
Basis of Presentation and Consolidation
Since our inception, we have created wholly-owned subsidiaries or made investments in certain controlled entities, including partially-owned
subsidiaries for which we have majority voting interest under the VOE model or for which we are the primary beneficiary under the VIE model, which we
refer to collectively as our consolidated entities. Ownership interests in consolidated entities that are held by entities other than us are reported as
redeemable convertible noncontrolling interests and noncontrolling interests in our consolidated balance sheets. Losses attributed to redeemable convertible
noncontrolling interests and noncontrolling interests are reported separately in our consolidated statements of operations.
Results of Operations
Comparison of the years ended December 31, 2023 and 2022
We have included our financial results for 2023 compared to 2022. Our financial results for 2022 compared to 2021 can be found in Item 7 of our
Annual Report on Form 10-K for the year ended December 31, 2022, filed with the U.S. Securities and Exchange Commission, or the SEC, on February
23, 2023 and is incorporated herein by reference.
The following table summarizes the results of our operations for the periods indicated:
Revenue
Cost of revenue
Research and development
Selling, general and administrative
Restructuring, impairment and related charges
Loss from operations
Interest income
Interest expense
Gain from sale of priority review voucher, net
Other income (expense), net
Net loss
Net loss attributable to redeemable convertible noncontrolling
interests and noncontrolling interests
Net loss attributable to common stockholders of BridgeBio
120
$
Year Ended December 31,
2023
2022
(in thousands)
9,303 $
2,446
455,711
150,590
7,926
(607,370 )
18,038
(81,289 )
—
17,370
(653,251 )
10,049
(643,202 )
77,648
3,434
399,462
143,189
43,765
(512,202 )
7,542
(80,438 )
107,946
(7,500 )
(484,652 )
3,469
(481,183 )
Cash, cash equivalents and marketable securities
Restricted cash
Investment in equity securities
$
December 31, 2023
December 31, 2022
(in thousands)
375,935 $
16,653
58,949
428,269
37,930
43,653
The results of operations for the years ended December 31, 2023 and 2022 are not necessarily indicative of the results to be expected for the year
ending December 31, 2024 or for any other future annual or interim period.
Cash, Cash Equivalents, Marketable Securities, Restricted Cash and Investment in Equity Securities
As of December 31, 2023, we had cash and cash equivalents of $375.9 million, restricted cash of $16.7 million and investment in equity securities
of $58.9 million, compared to cash, cash equivalents and marketable securities of $428.3 million, restricted cash of $37.9 million and investment in equity
securities of $43.7 million as of December 31, 2022. Restricted cash primarily represents funds in a controlled account that was established in connection
with the Second Amendment of the Company’s Loan and Security Agreement that is described in Note 10. The use of such non-interest-bearing cash is
restricted per the terms of the underlying amended loan agreement and is to be used solely for certain research and development expenses directly
attributable to the performance of obligations associated with the Navire-BMS License Agreement, which is further described in Note 11.
We consider our investment in equity securities as a source of our liquidity as we may liquidate these investments to fund current operations, should
the need arise. Refer to the Sources of Liquidity and Cash Flow sections for discussions on key transactions which impacted cash, cash equivalents,
marketable securities, restricted cash and investment in equity securities.
Revenue
Year Ended December 31,
2023
2022
(in thousands)
Change
Revenue
$
9,303 $
77,648 $
(68,345 )
Revenue decreased by $68.3 million for the year ended December 31, 2023, compared to the prior year, primarily due to license revenue recognized
in 2022 upon the transfer of the license in accordance with the Navire-BMS License Agreement.
The level of revenue, including license and service revenue, that we recognize depends in part upon the estimated recognition period of the upfront
payments allocated to continuing performance obligations, the achievement of milestones and other contingent events, the level of effort incurred for
research and development contracted services, the timing of delivery of clinical supplies and the impact of entering into new collaboration agreements, if
any.
Operating Costs and Expenses
Research and Development Expenses
Year Ended December 31,
2023
2022
(in thousands)
Change
Research and development
$
455,711
$
399,462 $
56,249
Research and development expenses increased by $56.2 million in 2023 compared to 2022. This change was primarily due to an increase in stock-
based compensation of $23.7 million, an increase in personnel related expenses of $14.1 million, an increase in external costs to support the advancement
of research and development for our key programs of $13.1 million, and an increase in licensing fees of $5.3 million.
Pursuant to the QED-Helsinn License and Collaboration Agreement that was dated as of March 29, 2021, Helsinn shared 60% of our research and
development costs for infigratinib for certain indications as stipulated under the agreement. Upon March 1, 2022, the effective date of the Amended QED-
Helsinn License and Collaboration
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Agreement, Helsinn became solely responsible for the development costs for infigratinib for certain indications and our incurred costs during the
transitional period became fully reimbursable. As discussed in the Overview section in Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations, effective December 21, 2022, QED and Helsinn, or the Helsinn Parties, entered into a MTA which terminated the
Amended QED-Helsinn License and Collaboration Agreement and all rights and obligations thereunder. The Helsinn Parties agreed to perform certain
close-out services to enable QED to pursue the development, manufacture and commercialization of infigratinib as a potential treatment of non-oncology
indications, such as in achondroplasia worldwide, excluding China, Hong Kong, and Macau. All close-out costs are presented as part of “Restructuring,
impairment and related charges” in our consolidated statements of operations.
For the year ended December 31, 2023 we recognized Helsinn’s share of research and development expenses of $3.0 million as a reduction to
restructuring, impairment and related charges; whereas for the year ended December 31, 2022, Helsinn’s share of research and development expenses of
$21.5 million was recognized as a reduction of research and development expenses.
Refer to Note 11 to our consolidated financial statements for more information on the QED-Helsinn License and Collaboration Agreement, the
Amended QED-Helsinn License and Collaboration Agreement and the termination of the Amended QED-Helsinn License and Collaboration Agreement.
Research and development costs consist primarily of external costs, such as fees paid to consultants, contractors, contract manufacturing
organizations, or CMOs, and contract research organizations, or CROs, in connection with our preclinical, contract manufacturing and clinical development
activities and are tracked on a program-by-program basis. License fees and other costs incurred after a product candidate has been designated and that are
directly related to the product candidate are included in the specific program expense. License fees and other costs incurred prior to designating a product
candidate are included in early-stage research programs, which are presented in the following table in “Other research programs”.
The following table summarizes our research and development expenses by program incurred for the following periods:
ATTR Amyloidosis - TTR stabilizer (acoramidis)
Achondroplasia - low-dose FGFRi (infigratinib)
LGMD2I/R9 - Glycosylation substrate (BBP-418)
ADH1 - CaSR antagonist (encaleret)
Other development programs
Other research programs
Total
Selling, General and Administrative Expenses
Year Ended December 31,
2023
2022
(in thousands)
101,041 $
63,239
33,903
44,773
82,165
130,590
455,711 $
91,901
32,387
22,372
27,485
124,501
100,816
399,462
$
$
Selling, general and administrative
$
150,590
$
143,189
$
7,401
Selling, general and administrative expenses increased by $7.4 million in 2023 compared to 2022, mainly due to an increase in costs related to
commercialization readiness efforts of $13.5 million, which were partially offset by a decrease in legal costs of $3.3 million, a decrease in personnel related
expenses of $1.5 million, and a decrease in stock-based compensation expense of $1.3 million.
Year Ended December 31,
2023
2022
(in thousands)
Change
Restructuring, Impairment and Related Charges
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Year Ended December 31,
2023
2022
(in thousands)
Change
Restructuring, impairment and related charges
$
7,926
$
43,765
$
(35,839 )
As discussed in Note 17 to our consolidated financial statements, in January 2022, we committed to a restructuring initiative designed to drive
operational changes in our business processes, efficiencies and cost savings to advance our corporate strategy and development programs. The restructuring
initiative included, among other components, consolidation and rationalization of our facilities, reprioritization of development programs and the reduction
in our workforce. We may also incur additional costs that are not currently foreseeable as we continue to evaluate our restructuring alternatives to drive
operational changes in business processes, efficiencies and cost savings.
Other Income (Expense), Net
Interest Income
Interest income
$
18,038
$
7,542
$
10,496
Interest income consists of interest income earned on our cash equivalents and marketable securities. The increase in interest income is primarily
due to higher interest rates and higher cash equivalents and marketable securities balances as a result of proceeds received from the equity offerings during
2023. Generally, increases and decreases in interest income are attributable to changes in the interest-bearing average balances of our cash equivalents and
marketable securities and fluctuations in interest rates.
Year Ended December 31,
2023
2022
(in thousands)
Change
Interest Expense
Year Ended December 31,
2023
2022
(in thousands)
Change
Interest expense
$
(81,289 )
$
(80,438 )
$
(851 )
Interest expense consists primarily of interest expense incurred under our 2029 Notes issued in January 2021, our 2027 Notes issued in March 2020
and our term loan with various lenders under the Loan Agreement dated November 17, 2021, as amended. Generally, increases and decreases in interest
expense are attributable to changes in the principal amounts of our debt as our debt-related interests are fixed.
Subsequently on January 17, 2024, our outstanding term loan principal balance under our Loan Agreement was fully repaid upon receiving proceeds
from the Financing Agreement plus additional cash from our operations, for which we were extended a senior secured credit facility of $450.0 million in an
aggregate principal amount for the Initial Term Loan, which is subject to variable interest rates (refer to the Liquidity and Capital Resources section below
and Notes 10 and 20 for details regarding the Term Loan and the Financing Agreement). As a result of the variable interest rates under our Financing
Agreement we expect our interest expense to fluctuate in the future.
Gain From Sale of Priority Review Voucher, net
Gain from sale of priority review voucher, net
$
—
$
107,946
$
(107,946 )
Year Ended December 31,
2023
2022
(in thousands)
Change
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In May 2022, we announced that we entered into a definitive agreement to sell our PRV for $110.0 million. We received the PRV in February 2021
under a U.S. Food and Drug Administration program intended to encourage the development of treatments for rare pediatric diseases. We were awarded the
PRV when our subsidiary Origin received approval of NULIBRY. The PRV sale was subject to customary closing conditions and was completed in June
2022 following the expiration of applicable U.S. antitrust clearance requirements. We received the gross proceeds of $110.0 million and recognized a net
gain of $107.9 million, net of transaction costs in 2022.
Other Income (Expense), net
Year Ended December 31,
2023
2022
(in thousands)
Change
Other income (expense), net
$
17,370
$
(7,500 )
$
24,870
Other income (expense), net in 2023 consists mainly of net realized and unrealized gains from changes in the fair value of our equity security
investments of $18.3 million, offset by a $1.2 million loss from the deconsolidation of PellePharm. Other income (expense), net in 2022 consists mainly of
net realized and unrealized losses from changes in the fair value of our equity security investments of $8.2 million, loss from disposal of Origin’s assets of
$6.3 million, and the expense associated with the Origin regulatory milestone of $3.5 million, partially offset by a gain from the recognition of a receivable
of $12.5 million from Helsinn under the Amended QED-Helsinn License and Collaboration Agreement.
Income Taxes
We are subject to U.S. federal, state and foreign income taxes as a corporation. For U.S. federal income tax purposes, we are required to file a
consolidated U.S. federal income tax return for the consolidated entities that meet the requirements as prescribed by the consolidated regulations. Those
entities that do not meet the threshold to be included in the consolidated filing continue to file separate U.S. federal income tax returns. To the extent we
incur operating losses in the periods in which we are treated as a corporation for tax purposes, net operating loss carryforwards may generally be used by us
to offset cash taxes on future taxable income, subject to applicable tax laws.
Beginning in 2022, the 2017 Tax Cuts and Jobs Act amended Section 174 to eliminate current-year deductibility of research and experimentation
(R&E) expenditures and software development costs (collectively, R&E expenditures) and instead require taxpayers to charge their R&E expenditures to a
capital account amortized over five years (15 years for expenditures attributable to R&E activity performed outside the United States). We realized a
deferred tax asset for capitalized R&E expenditures for the year ended December 31, 2023 which is fully offset with a valuation allowance.
As of December 31, 2023, we had net operating losses of approximately $1.6 billion and $280.8 million for federal and state income tax purposes,
respectively, available to reduce future taxable income, if any. The federal net operating losses generated prior to 2018 in the amount of $28.8 million will
begin to expire in 2036 and losses generated after 2018 in the amount of $1.5 billion will carry over indefinitely and would be subject to an 80% taxable
income limitation in the year utilized. State net operating losses will generally begin to expire in 2036. We also have foreign net operating loss
carryforwards of $86.1 million available to reduce future taxable income, if any, which will begin to expire in 2030. As of December 31, 2023, we had
federal research and development and orphan drug credit carryforwards of $102.2 million, which will expire beginning in 2036 if not utilized. As of
December 31, 2023, we had state research and development credit carryforwards of $22.4 million. The state research and development tax credits will
expire at various dates while the California research and development tax credits will carry over indefinitely.
A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a
valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize
the deferred tax assets. Based on the weight of the available evidence, which includes our consolidated entities’ historical operating losses and forecast of
future losses, we have provided a valuation allowance against the U.S. federal, state, and foreign deferred tax assets resulting from the tax loss and credits
carried forward. The valuation allowance increased by $138.2 million and $110.0 million for the years ended December 31, 2023 and 2022, respectively.
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Utilization of the net operating loss and credit carryforwards may be subject to a substantial annual limitation due to an ownership change limitation
as provided by section 382 of the Internal Revenue Code of 1986, as amended, or the Code, and similar state provisions. The annual limitation may result
in the expiration of net operating losses and credits before utilization. In the event that we have a change of ownership, utilization of the net operating loss
and tax credit carryforwards may be restricted.
Net Loss Attributable to Redeemable Convertible Noncontrolling Interests and Noncontrolling Interests
The following table summarizes our net loss attributable to redeemable convertible noncontrolling interests and noncontrolling interests during the
periods indicated:
Year Ended December 31,
2023
2022
(in thousands)
Change
Net loss attributable to redeemable convertible noncontrolling interests and
noncontrolling interests
$
10,049
$
3,469
$
6,580
Net loss attributable to redeemable convertible noncontrolling interests and noncontrolling interests in our consolidated statements of operations
consists of the portion of the net loss of those consolidated entities that is not allocated to us. Changes in the amount of net loss attributable to
noncontrolling interests are directly impacted by changes in the net loss of our consolidated entities and are the result of ownership percentage changes.
Refer to Note 6 to our consolidated financial statements.
Liquidity and Capital Resources
We have historically financed our operations primarily through the sale of our equity securities, issuance of convertible notes, debt borrowings, sale
of certain assets and, to a lesser extent, upfront and milestone payments received from licensing arrangements. As of December 31, 2023, we had cash and
cash equivalents of $375.9 million, restricted cash of $16.7 million and investment in equity securities of $58.9 million. We consider our investment in
equity securities as a source of our liquidity as we may liquidate these investments to fund current operations, should the need arise. Restricted cash related
to the Navire-BMS License Agreement under the Loan agreement was $16.5 million, which is presented as part of “Restricted cash” on the consolidated
balance sheets. The funds that were held by our wholly-owned subsidiaries and controlled entities are available for specific entity usage, except in limited
circumstances. As of December 31, 2023, our outstanding debt was $1.7 billion, net of debt issuance costs and accretion.
Since our inception, we have incurred significant operating losses. For the years ended December 31, 2023, 2022 and 2021, we incurred net losses
of $653.3 million, $484.7 million and $586.5 million, respectively. We incurred net cash outflow from operations of $527.7 million, $419.5 million, and
$497.9 million for the same periods, respectively. We had an accumulated deficit as of December 31, 2023 of $2.6 billion. While we have undertaken a
restructuring initiative to drive operational change in business processes, efficiencies and cost savings, we expect to continue to incur operating and net
losses over the next several years as we continue to fund our drug development and discovery efforts, as well as costs related to commercial launch
readiness for our late-stage programs. In particular, to the extent we advance our programs into and through later-stage clinical trials without a partner, we
will incur substantial expenses. Our current business plan is also subject to significant uncertainties and risks as a result of, among other factors, our ability
to generate product sales sufficient to achieve profitability, which will depend heavily on the successful development and eventual commercialization of
our product candidates at our consolidated entities as well as our ability to partner in the development of certain clinical programs.
Our short-term and long-term liquidity requirements include contractual payments related to our 2029 Notes, 2027 Notes and term loan (see Note 10
to our consolidated financial statements), as well as obligations under our real estate leases (see Note 14 to our consolidated financial statements) and the
remaining liabilities under our restructuring initiative (see Note 17 to our consolidated financial statements).
We also have performance-based milestone compensation arrangements with certain employees and consultants, whose vesting is contingent upon
meeting various regulatory and development milestones, with fixed monetary amounts known at inception that can be settled in the form of cash or equity
at our sole election, upon achievement of each contingent milestone (see Note 9 to our consolidated financial statements).
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Additionally, we have certain contingent payment obligations under various license and collaboration agreements in which we are required to make
milestone payments upon successful completion and achievement of certain intellectual property, clinical, regulatory and sales milestones. We also enter
into agreements in the normal course of business with CROs and other vendors for clinical trials and with vendors for preclinical studies and other services
and products for operating purposes, which are generally cancelable upon written notice with potential termination charges.
We expect our cash and cash equivalents, restricted cash, and investment in equity securities will fund our operations for at least the next 12 months
based on current operating plans and financial forecasts. If our current operating plans or financial forecasts change, as a result of general market and
economic conditions, inflationary pressures, supply chain issues, and timing of our commercialization activities we may require additional funding sooner
in the form of public or private equity offerings, debt financings or additional collaborations and licensing arrangements. However, future financing may
not be available in amounts or on terms acceptable to us, if at all.
In addition, we are closely monitoring ongoing developments in connection with economic conditions, inflationary pressures, supply chain issues,
and timing of our commercialization activities which may negatively impact our financial and operating results. We will continue to assess our operating
costs and expenses and our cash and cash equivalents and, if circumstances warrant, we will make appropriate adjustments to our operating plan.
Sources of Liquidity
Public and private placement offerings
In March 2023, we completed a Follow-on public offering of our common stock. Pursuant to the Follow-on public offering we issued and sold
8,823,530 shares of our common stock at a public offering price of $17.00 per share. We received net proceeds of $143.0 million from the Follow-on public
offering, after deducting underwriters’ discounts and commissions of $6.5 million and offering costs of $0.5 million. We used the net proceeds from this
offering to fund clinical and pre-clinical development of our current and future product candidates, conduct research activities, and for working capital and
other general corporate purposes. We granted the underwriters a 30-day option to purchase, at the public offering price less underwriting discounts and
commissions, up to an additional 1,323,529 shares of our common stock. In April 2023, the underwriters partially exercised their 30-day option to purchase
additional shares, for which 63,470 shares were issued for net proceeds of $1.0 million, after deducting underwriting fees and commissions of less than
$0.1 million.
In May 2023, we filed a shelf registration statement on Form S-3ASR, or the 2023 Shelf, with the SEC in relation to the registration of common
stock, preferred stock, debt securities, warrants and units or any combination thereof. We also concurrently entered into the ATM Agreement, with
Goldman Sachs & Co. LLC and SVB Securities LLC or collectively, the ATM Sales Agents, with respect to an “at-the-market” offering program under
which we may issue and sell, from time to time at our sole discretion and pursuant to a prospectus supplement, shares of our common stock, par value
$0.001 per share, having an aggregate offering price of up to $450.0 million through the ATM Sales Agents. We will pay the ATM Sales Agents a
commission of up to 3.0% of the aggregate gross proceeds received from all sales of the common stock under the ATM Agreement. As of December 31,
2023, 2,171,217 shares were issued under the ATM Agreement, for net proceeds of $65.0 million, after deducting sales agent commissions of $1.0 million.
As of December 31, 2023, we are still eligible to sell up to $384.0 million of our common stock pursuant to the ATM Agreement under the 2023 Shelf. In
February 2024, 678,110 shares were issued under the ATM Agreement, for net proceeds of $24.8 million, after deducting sales agent fees and commissions
of $0.4 million. As of February 22, 2024 we are still eligible to sell up to $358.8 million of our common stock pursuant to the ATM Agreement under the
2023 Shelf.
In September 2023, we and certain accredited investors (each an “Investor” and collectively, the “Investors”) entered into a securities purchase
agreement pursuant to which we sold and issued to the Investors in the Private Placement an aggregate of 9,167,723 shares of our common stock, par value
$0.001 per share, at a purchase price of $27.27 per share. We paid certain placement agents a commission based on the aggregate gross proceeds received
from all sales of the common stock under the Private Placement. During the year ended December 31, 2023 we received net proceeds of $240.8 million
under the Private Placement offering, after deducting placement agent commissions of $8.7 million and offering costs of $0.5 million.
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Debt
As of December 31, 2023 and 2022, we have borrowings under the 2029 Notes, the 2027 Notes and the Loan Agreement, which are discussed
below.
2029 Notes
In January 2021, we issued an aggregate principal amount of $747.5 million of our 2029 Notes, pursuant to an Indenture dated January 28, 2021, or
the 2029 Notes Indenture, between us and U.S. Bank National Association, as trustee, or the 2029 Notes Trustee, in a private offering to qualified
institutional buyers, or the 2021 Note Offering, pursuant to Rule 144A under the Securities Act.
The 2029 Notes accrue interest payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2021, at a rate of
2.25% per year. The 2029 Notes will mature on February 1, 2029, unless earlier converted, redeemed or repurchased. The 2029 Notes are convertible into
cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.
We received net proceeds from the 2021 Note Offering of approximately $731.4 million, after deducting the 2029 Notes Initial Purchasers’ discount.
There were no direct offering expenses borne by us for the 2029 Notes. We used approximately $61.3 million of the net proceeds from the 2021 Note
Offering to pay for the cost of the 2021 Capped Call Transactions and approximately $50.0 million to pay for the repurchase of shares of our common
stock.
A holder of 2029 Notes may convert all or any portion of its 2029 Notes at its option at any time prior to the close of business on the business day
immediately preceding November 1, 2028 only under certain circumstances.
On or after November 1, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder
may convert all or any portion of its 2029 Notes at any time.
We may not redeem the 2029 Notes prior to February 6, 2026. We may redeem for cash all or any portion of the 2029 Notes, at our option, on a
redemption date occurring on or after February 6, 2026, and on or before the 41st scheduled trading day immediately before the maturity date, under certain
circumstances. No sinking fund is provided for the 2029 Notes. If we undergo a fundamental change (as defined in the 2029 Notes Indenture), holders may
require us to repurchase for cash all or any portion of their 2029 Notes at a fundamental change repurchase price equal to 100% of the principal amount of
the 2029 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2029 Notes
Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the 2029 Notes Trustee or
the holders of not less than 25% in aggregate principal amount of the 2029 Notes then outstanding may declare the entire principal amount of all the Notes
plus accrued special interest, if any, to be immediately due and payable. The 2029 Notes are our general unsecured obligations and rank senior in right of
payment to all of our indebtedness that is expressly subordinated in right of payment to the 2029 Notes; equal in right of payment with all of our liabilities
that are not so subordinated, including our 2027 Notes; effectively junior to any of our secured indebtedness to the extent of the value of the assets securing
such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.
Refer to Note 10 in our consolidated financial statements for other details, including our future minimum payments under the 2029 Notes.
2027 Notes
In March 2020, we issued an aggregate principal amount of $550.0 million of our 2027 Notes, pursuant to an Indenture dated March 9, 2020, or the
Indenture, between BridgeBio and U.S. Bank National Association, as trustee, or the Trustee, in a private offering to qualified institutional buyers, or the
2020 Note Offering, pursuant to Rule 144A under the Securities Act.
The 2027 Notes are senior, unsecured obligations of BridgeBio and accrue interest payable semiannually in arrears on March 15 and September 15
of each year, beginning on September 15, 2020, at a rate of 2.50% per year. The 2027 Notes will mature on March 15, 2027, unless earlier converted or
repurchased. Upon conversion, the 2027 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common
stock, at our election.
127
We received net proceeds from the 2020 Note Offering of approximately $537.0 million, after deducting the Initial Purchasers’ discount and offering
expenses. We used approximately $49.3 million of the net proceeds from the 2020 Note Offering to pay for the cost of the Capped Call Transactions, and
approximately $75.0 million to pay for the repurchases of shares of our common stock in connection with the 2020 Note Offering.
A holder of 2027 Notes may convert all or any portion of its 2027 Notes at its option at any time prior to the close of business on the business day
immediately preceding December 15, 2026 only under certain circumstances.
On or after December 15, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder
may convert all or any portion of its 2027 Notes at any time.
We may not redeem the 2027 Notes prior to the maturity date, and no sinking fund is provided for the 2027 Notes. If we undergo a fundamental
change (as defined in the Indenture), holders may require us to repurchase for cash all or any portion of their 2027 Notes at a fundamental change
repurchase price equal to 100% of the principal amount of the 2027 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the
fundamental change repurchase date. The Indenture contains customary terms and covenants, including that upon certain events of default occurring and
continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the 2027 Notes then outstanding may declare the entire
principal amount of all the Notes plus accrued special interest, if any, to be immediately due and payable. The 2027 Notes are our general unsecured
obligations and rank senior in right of payment to all of our indebtedness that is expressly subordinated in right of payment to the 2027 Notes; equal in right
of payment with all of our liabilities that are not so subordinated; effectively junior to any of our secured indebtedness to the extent of the value of the
assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.
Refer to Note 10 in our consolidated financial statements for other details, including our future minimum payments under the 2027 Notes.
Financing Agreement
On January 17, 2024, we entered into the Financing Agreement with certain of our subsidiaries party thereto as guarantors, the Lenders and the
Administrative Agent, which was amended on February 12, 2024.
Pursuant to the terms and conditions of the Financing Agreement, the Lenders have agreed to extend a senior secured credit facility to the Company
in an aggregate principal amount of up to $750.0 million, comprised of (i) an Initial Term Loan in an aggregate principal amount of $450.0 million and (ii)
one or more Incremental Term Loans in an aggregate amount not to exceed $300.0 million, subject to the satisfaction of certain terms and conditions set
forth in the Financing Agreement. The Initial Term Loan was funded on January 17, 2024. Incremental Term Loans are available at the Company’s and the
Lenders’ mutual consent from time to time after January 17, 2024.
The obligations of the Company under the Financing Agreement are and will be guaranteed by certain of the Company’s existing and future direct
and indirect subsidiaries, subject to certain exceptions (such subsidiaries, collectively, the “Guarantors”). As security for the obligations of the Company
and the Guarantors, each of the Company and the Guarantors are required to grant to the Administrative Agent, for the benefit of the Lenders and secured
parties, a continuing first priority security interest in substantially all of the assets of the Company and the Guarantors (including all equity interests owned
or hereafter acquired by the Company and the Guarantors), subject to certain customary exceptions.
Any outstanding principal on the Term Loans will initially bear interest at a rate per annum equal to (A) in the case of Term Loans bearing interest
based on the base rate defined in the Financing Agreement (and which base rate will not be less than 2.00%), the sum of (i) the base rate plus (ii) 5.75%
and (B) in the case of Term Loans bearing interest based on the three-month forward-looking term secured overnight financing rate administered by the
Federal Reserve Bank of New York (“Term SOFR”), the sum of (i) three-month Term SOFR (subject to 1.00% per annum floor), plus (ii) 6.75%. Accrued
interest is payable quarterly following the funding of the Initial Term Loan on the Closing Date, on any date of prepayment or repayment of the Term Loans
and at maturity.
The Company will be required to make principal payments of $22.5 million on the outstanding balance of the Initial Term Loan commencing on
June 30, 2027 in quarterly installments (the “Scheduled Amortization Payments”); provided that if the Company achieves a senior total net leverage ratio of
less than or equal to 5.00:1.00, up to four (4) Scheduled Amortization Payments may be deferred for a period of one fiscal quarter each. Such Scheduled
Amortization Payments would be reduced in connection with voluntary or mandatory prepayments,
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if any, of the Initial Term Loans. Incremental Term Loans, if any, will be payable in accordance with their respective amortization schedules. Additionally,
if the Company’s market capitalization is less than $1.5 billion at any time after January 17, 2024, the Company shall also be required to make additional
quarterly principal payments of $10.0 million on the outstanding balance of the Initial Term Loan (the “Special Amortization Payments”) commencing with
the first quarterly installment payment date occurring thereafter. The outstanding balance of the Term Loans, if not repaid sooner, shall be due and payable
in full on the maturity date thereof. The stated maturity date of the Term Loans is January 17, 2029, with two springing earlier maturity dates at 91 days
prior to the stated maturity dates of the Company’s outstanding convertible senior notes, in each case to the extent there is an aggregate outstanding amount
of such notes of more than $50.0 million on such dates. The Company may prepay the Term Loans at any time (in whole or in part) or be required to make
mandatory prepayments upon the occurrence of certain customary prepayment events. In certain instances and during certain time periods, these
prepayments will be subject to customary prepayment fees. The amount of any such prepayment fee may vary, but the maximum amount that may be due
with any such prepayment would be an amount equal to 3.00% of the Term Loans being prepaid at such time, plus a customary make whole amount.
The Financing Agreement contains affirmative covenants and negative covenants applicable to the Company and its subsidiaries that are customary
for financings of this type. Such covenants, among other items, limit the Company’s and its subsidiaries’ ability to (i) incur additional permitted
indebtedness, (ii) pay dividends or make certain distributions, (iii) dispose of its and their assets, grant liens and license or permit other encumbrances on its
and their assets, (iv) fundamentally alter the nature of their businesses and (v) enter into certain transactions with affiliates. The Company and the
Guarantors are also required to maintain a minimum unrestricted cash balance of $70.0 million at all times. The Company and its subsidiaries are permitted
to license their intellectual property, dispose of other assets and enter into monetization and royalty transactions, in each case, subject to satisfaction of
certain terms and conditions. The Financing Agreement also includes representations, warranties, indemnities and events of default that are customary for
financings of this type, including an event of default relating to a change of control of the Company. Upon the occurrence of an event of default, the
Lenders may, among other things, accelerate the Company’s obligations under the Financing Agreement.
Term Loan, net
In November 2021, we entered into the Loan Agreement, by and among (i) U.S. Bank National Association, in its capacity as administrative agent
(in such capacity, the Administrative Agent), and collateral agent (in such capacity, the Collateral Agent), (ii) certain lenders, or the Lenders, (iii)
BridgeBio, as a borrower, and (iv) certain subsidiaries of BridgeBio, as guarantors, or the Guarantors.
Pursuant to the original terms and conditions of the Loan Agreement, the Lenders agreed to extend term loans to us in an aggregate principal amount
of up to $750.0 million, comprised of (i) a tranche 1 advance of $450.0 million, or the Tranche 1 Advance, and (ii) a tranche 2 advance of $300.0 million,
or the Tranche 2 Advance or collectively, the Term Loan Advances. The Tranche 1 Advance under the Loan Agreement was funded on November 17,
2021. The Tranche 2 Advance remained available for funding until December 31, 2022, which was available at our election after the occurrence of certain
milestone events relating to data from our clinical trials. The terms related to the Tranche 2 Advance were modified in the First Amendment and Second
Amendment as further discussed below. The First Amendment included the reduction of the aggregate amount of the Tranche 2 Advance from $300.0
million to $100.0 million. The Second Amendment eliminated the $100.0 million Tranche 2 Advance. As a result of the Second Amendment, the total
aggregate principal amount of the loan is $450.0 million before any mandatory prepayment.
As security for our obligations under the Loan Agreement, each of BridgeBio and the Guarantors granted the Collateral Agent, for the benefit of the
Lenders, a continuing security interest in substantially all of the assets of BridgeBio and the Guarantors, (including all equity interests owned or hereafter
acquired by BridgeBio and the Guarantors), subject to certain customary exceptions. Upon exceeding certain investment and disposition thresholds,
additional subsidiaries of BridgeBio will be required to join as guarantors.
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Any outstanding principal on the Term Loan Advances will accrue interest at a fixed rate equal to 9.0% per annum, 3.0% of which can be paid in
kind, or PIK, until January 1, 2025. Interest payments are payable quarterly following the funding of a Term Loan Advance. We will be required to make
principal payments on the outstanding balance of the Term Loan Advances commencing on January 2, 2025, or the Term Loan Amortization Date in nine
quarterly installments, plus interest. If we have achieved certain milestone events relating to data from the clinical trial of acoramidis, or the Acoramidis
Milestone, on or prior to January 1, 2025, then the Term Loan Amortization Date will be automatically extended to January 2, 2026. Any amounts
outstanding under the Term Loan Advances are due and payable on November 17, 2026, or the Maturity Date.
We may prepay the outstanding principal amount of the Term Loan Advances at any time (in whole, but not in part), plus accrued and unpaid
interest and a prepayment premium ranging from 1.0% to 3.0% of the principal amount outstanding depending on the timing of payment (plus a customary
make-whole amount if prepaid on or prior to November 17, 2022).
At the Lenders’ election, we are also required to make mandatory prepayments upon the occurrence of certain prepayment events related to the
repurchase or redemption of pledged collateral, entry into certain royalty transactions, disposition of other assets or subsidiaries, and entry into licensing
and other monetization transactions (all such events “prepayment events”), which could be 50% or 75% of net cash proceeds from such transaction
depending on achievement of the Acoramidis Milestone.
Subject to the mandatory prepayment requirements for certain prepayment events, the Loan Agreement contains customary affirmative and limited
negative covenants which, among other things, limit our ability to (i) incur additional indebtedness, (ii) pay dividends or make certain distributions, (iii)
dispose of our assets, grant liens, license or encumber our assets or (iv) fundamentally alter the nature of our business. BridgeBio and the Guarantors have
broad ability to license our intellectual property, dispose of other assets and enter into monetization and royalty transactions, subject in each case to the
requirement to make a mandatory prepayment described above. The Loan Agreement provides that BridgeBio and the Guarantors may, subject to certain
limitations, (x) repurchase the BridgeBio’s equity interest and the equity interest of any of its subsidiaries, (y) enter into any joint ventures or similar
investments, and (z) make other investments and acquisitions. Subject to the mandatory prepayment requirement described above, portfolio companies
owned by BridgeBio that are not parties to the Loan Agreement are, subject to certain exceptions, not subject to any covenants or limitations under the
Loan Agreement.
The Loan Agreement also contains customary events of default, including among other things, our failure to make any principal or interest payments
when due, the occurrence of certain bankruptcy or insolvency events or the breach of the covenants under the Loan Agreement. Upon the occurrence of an
event of default, the Lenders may, among other things, accelerate our obligations under the Loan Agreement.
We received net proceeds from the Tranche 1 Advance of $431.3 million, after deducting debt discount and issuance costs of $18.7 million, of
which approximately $1.1 million of debt issuance cost were incurred for professional services provided by KKR Capital Markets LLC. KKR Capital
Markets LLC is an affiliate of KKR Genetic Disorder L.P., a related party being a principal stockholder of BridgeBio.
In May 2022, we entered into the First Amendment, which, among other things:
•
•
•
•
permitted the sale of our priority review voucher, or PRV, (see Note 12) and, generally, future dispositions of other PRVs;
reduced the aggregate amount of the Tranche 2 Advance from $300.0 million to $100.0 million and modified certain conditions to the
availability thereof, as mentioned above;
amended the principal payments such that the entire outstanding principal balance of the Term Loan Advances is due and payable at the
Maturity Date or upon early termination; and
modified the terms and conditions governing when certain entities into which we have made investments will be required to become
guarantors under the Amended Loan Agreement.
In June 2022, the receipt of an upfront payment under the Navire-BMS License Agreement, which is further described in Note 11, triggered certain
mandatory prepayment provisions of the Amended Loan Agreement. As a result, we paid $20.5 million to the Lenders, of which $20.1 million and $0.4
million were applied to principal and exit fee, respectively.
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Pursuant to the terms of the Loan Agreement and the Amended Loan Agreement, we exercised our option to convert accrued interest into principal
via PIK amounting to $10.2 million and $15.3 million for the years ended December 31, 2023 and 2022, respectively.
In November 2022, we entered into the Second Amendment, which, among other things:
•
•
•
•
acknowledged that the Company’s prior prepayment made with certain cash proceeds received in connection with the receipt of an upfront
payment under the Navire-BMS License Agreement, which is further described in Note 11, satisfied the mandatory prepayment requirement
under the Amended Loan Agreement, on the terms and conditions specified in the Amended Loan Agreement;
permitted certain budgeted expenses to be excluded from the definition of cash proceeds subject to the Company’s mandatory prepayment
obligations, on the terms and conditions specified in the Amended Loan Agreement; refer to Note 2 under Restricted Cash section for further
discussion.
removed certain threshold amounts applicable to certain prepayment events; and
terminated the Lenders’ $100.0 million Tranche 2 Advance.
On January 17, 2024, we repaid all outstanding principal and accrued interest and fees under the Loan Agreement with the proceeds of the
Financing Agreement and cash on hand. The Loan Agreement was effectively terminated, and all guarantees and liens granted thereunder were released, on
January 17, 2024.
Refer to Note 10 and Note 20 in our consolidated financial statements for other details regarding the Financing Agreement and Term Loan, net.
Royalty Monetization
Funding Agreement
On January 17, 2024, the Company and its subsidiaries Eidos Therapeutics, Inc., BridgeBio Europe B.V. and BridgeBio International GmbH
(collectively, the “Seller Parties”) entered into the Funding Agreement with the Purchasers, and Alter Domus (US) LLC, as the collateral agent.
Pursuant to the Funding Agreement, the Purchasers agreed to pay to the Company $500.0 million (net of certain transaction expenses) (“Investment
Amount”) upon the first FDA approval of acoramidis, subject to certain conditions relating to the FDA approval and other customary conditions (such date
of payment, “Funding Date”).
In return, the Company granted the Purchasers the right to receive Royalty Interest Payments equal to 5% of the Net Sales of acoramidis. Each
Royalty Interest Payment will become payable to the Purchasers on a quarterly basis after the Funding Date. In addition, the Seller Parties granted the
collateral agent, for the benefit of the Purchasers, a security interest in specific assets related to acoramidis.
The Purchasers’ rights to the Royalty Interest Payments and ownership interest in Net Sales will terminate upon the earlier of the Purchasers’
receipt of (a) Royalty Interest Payments equal to $950.0 million (“Cap Amount”) and (b) a buy-out payment (“Buy-Out Payment”) in an amount
determined in accordance with the Funding Agreement but that will not exceed the Cap Amount. In the event that a change in control (as customarily
defined in the Funding Agreement) occurs on or after the effective date of the Funding Agreement and prior to FDA approval of acoramidis, either party
may terminate the Funding Agreement and the Seller Parties shall make a one-time payment of $25.0 million (in the aggregate) to the Purchasers. Under
certain conditions, including conditions relating to sales performance of acoramidis by or on behalf of the Company, the rate of the Royalty Interest
Payments may adjust to a maximum rate of 10% in 2027.
The Funding Agreement will terminate upon customary events, and also in the event the Funding Date does not occur on or prior to May 15,
2025 (in which case either party may terminate the Funding Agreement at no charge and without premium or penalty).
Under the Funding Agreement, the Seller Parties are required to comply with various covenants, including using commercially reasonable efforts
to obtain regulatory approval for and commercialize acoramidis, providing the Purchasers with certain clinical, commercial, regulatory and intellectual
property updates and certain financial statements, and providing notices upon the occurrence of certain events, each as agreed under the Funding
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Agreement. The Funding Agreement also contains certain representations and warranties, indemnification obligations, put-option events and other
provisions that are customary for transactions of this nature.
Refer to Note 20 in our consolidated financial statements for other details.
Kyowa Kirin Exclusive License
On February 7, 2024, our subsidiary, QED, and Kyowa Kirin entered into a partnership wherein QED granted Kyowa Kirin an exclusive license to
develop, manufacture, and commercialize infigratinib for achondroplasia, hypochondroplasia, and other skeletal dysplasias in Japan in accordance with the
terms therein. In exchange, QED will receive an upfront payment of $100.0 million and will be eligible to receive royalties up to the high-twenties percent
on sales of infigratinib in Japan, with the potential to receive additional development and sales-based milestone-based payments.
Cash Flows
The following table summarizes our cash flows during the periods indicated:
Net cash used in operating activities
Net cash provided by investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in cash, cash equivalents
and restricted cash
$
$
Year Ended December 31,
2023
2022
(in thousands)
Change
(527,720 )
$
(419,494 )
$
54,033
451,535
453,147
(13,134 )
(108,226 )
(399,114 )
464,669
(22,152 )
$
20,519
$
(42,671 )
Net Cash Flows Used in Operating Activities
Net cash used in operating activities was $527.7 million in 2023, consisting primarily of our net loss of $653.3 million; adjusted for non-cash items
totaling $120.5 million, which primarily includes $108.7 million in stock-based compensation expense, $10.2 million in accrued payment-in-kind interest,
$8.9 million in accretion of debt, $6.5 million in depreciation and amortization, and offset by a net gain of $18.3 million from investment in equity
securities; with the remaining $5.1 million net cash inflow related to changes in operating assets and liabilities. The $5.1 million net cash inflow related to
changes in operating assets and liabilities was attributed mainly to a decrease of $15.3 million from licensing and collaboration agreements receivables
primarily due to collections, an increase of $7.8 million in accrued compensation and benefits due to timing of payments; partially offset by a decrease of
$9.9 million in accrued research and development liabilities due to timing of payments, a decrease in deferred revenue of $5.4 million due to revenue
recognized, and a decrease in operating lease liabilities of $4.8 million.
Net cash used in operating activities was $419.5 million in 2022, consisting primarily of our net loss of $484.7 million, adjusted for non-cash items
including a $110.0 million gain from the sale of our PRV (excluding transaction costs), $91.6 million in stock-based compensation expense, $13.6 million
of payment-in-kind interest added to the term loan principal, $12.7 million in impairment of long-lived assets, $12.5 million gain from recognition of a
receivable from Helsinn under the Amended QED-Helsinn License and Collaboration Agreement, $8.6 million debt accretion, $8.2 million in net loss from
certain investment in equity securities, $6.8 million in depreciation and amortization, $6.3 million loss on the sale certain of assets in connection with the
Origin-Sentynl APA, $5.2 million in noncash lease expense and $4.6 million fair value of shares issued under the license agreement, as well as $28.1
million net cash inflow related to changes in operating assets and liabilities. The $28.1 million net cash inflow related to changes in operating assets and
liabilities was attributed mainly to an increase of $15.3 million in deferred revenue arising from the Navire-BMS License Agreement, decrease of $15.2
million in receivables from licensing and collaborative agreements, and decrease in other assets of $11.0 million, partially offset by a decrease of $7.7
million in accrued professional and other liabilities, $4.3 million decrease in accrued research and development liabilities, and decrease of $2.4 million in
accrued compensation and benefits mainly due to timing of payments.
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Net Cash Flows Provided by Investing Activities
Net cash provided by investing activities was $54.0 million in 2023, attributable primarily to $110.6 million in proceeds from the sale of equity
securities and $82.6 million in maturities of marketable securities, partially offset by purchases of investments in equity securities of $107.5 million and
purchases of marketable securities of $29.7 million.
Net cash provided by investing activities was $453.1 million in 2022, consisting primarily of $479.7 million in maturities of marketable securities,
$110.0 million gross proceeds from sale of PRV, $52.8 million in sale of investment in equity securities and $10.0 million proceeds from sale of certain
assets, partially offset by $137.5 million purchases of marketable securities and $55.6 million purchases of investment in equity securities.
Cash Flows Provided by (Used in) Financing Activities
Net cash provided by financing activities was $451.5 million in 2023, consisting primarily of $240.8 million in net proceeds from the issuance of
common stock through the Private Placement offering, $144.0 million in net proceeds from the issuance of common stock through the Follow-on offering,
$65.0 million in net proceeds from the issuance of common stock through the ATM offering, and $6.0 million in net proceeds from stock option exercises,
partially offset by $6.9 million of repurchases of shares to satisfy tax withholdings.
Net cash used in financing activities was $13.1 million in 2022, consisting primarily of prepayment of term loan of $20.5 million partially offset by
net proceeds from the issuance of our common stock through ATM offering of $4.9 million.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements,
which have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The preparation of these
consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of
contingent assets and liabilities at the date of the consolidated financial statements, as well as revenues and expenses incurred during the reporting periods.
Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.
We believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated
financial statements for the periods in this report.
Collaborative Arrangements
We enter into collaboration arrangements with partners, under which we may grant licenses to further develop, manufacture and commercialize our
drug compounds and or/products. We may also perform research, development, manufacturing, commercialization, and supply activities under our
collaboration agreements. Consideration under these arrangements may include, upfront payments, development and regulatory milestones, expense
reimbursements, royalties based on net sales of commercial products, and commercial sales milestone payments.
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When we enter into collaboration agreements, we assess whether the arrangements fall within the scope of Accounting Standards Codification
(“ASC”) 808, Collaborative Arrangements, based on whether the arrangements involve joint operating activities and whether both parties have active
participation in the arrangement and are exposed to significant risks and rewards. To the extent that the arrangement falls within the scope of ASC 808 we
assess whether the payments between us and our partner fall within the scope of other accounting literature. If we conclude that payments from the partner
to us represent consideration from a customer, such as license fees, contract manufacturing, and research and development activities, we account for those
payments within the scope of ASC 606, Revenue from Contracts with Customers. However, if we conclude that our partner is not a customer for certain
activities and associated payments, such as for certain collaborative research, development, manufacturing, and commercial activities, we record such
payments as a reduction of research and development expense or selling, general and administrative expense, based on where we present the underlying
expense. Additionally, if we reimburse our collaboration partners for these activities, we record such reimbursements as research and development expense
or selling, general and administrative expense, depending upon the nature of the underlying expense.
If our collaborative arrangement provides for the sharing of profits and losses with our partner for commercialization activities, the treatment of our
share in the profit-sharing structure depends on who the selling party is. If we are the selling party and the deemed principal, we record our collaboration
partner’s share of profits as an addition to selling, general and administrative expenses and our collaboration partner’s share of loss as a reduction in selling,
general and administrative expenses. If our partner is the selling party and the deemed principal, we record our share of profits as collaboration revenue and
our share of losses as an addition to selling, general and administrative expenses.
Revenue Recognition
For elements or transactions that we determine should be accounted for under ASC 606, we perform the following five steps: (i) identify the
contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price
to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy our performance obligation. We apply the five-step model
to contracts when it is probable that we will collect the consideration to which we are entitled in exchange for the goods or services we transfer to the
customer.
At inception of the arrangement, we assess the promised goods or services to identify the performance obligations within the contract. We then
recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation, on a relative standalone selling price
basis, when (or as) the performance obligation is satisfied, either at a point in time or over time. If the performance obligation is satisfied over time, we
recognize revenue based on the use of an input method. As part of the accounting for these arrangements, we develop assumptions that require judgment to
determine the standalone selling price for each performance obligation identified in the contract. These key assumptions may include forecasted revenue or
costs, development timelines, discount rates and probabilities of clinical and regulatory success.
License Fees: For arrangements that include a grant of a license to our intellectual property, we consider whether the license grant is distinct from
the other performance obligations included in the arrangement. Generally, we would conclude that the license is distinct if the customer is able to benefit
from the license with the resources available to it. For licenses that are distinct, we recognize revenues from nonrefundable, upfront license fees and other
consideration allocated to the license when the license term has begun and we have provided all necessary information regarding the underlying intellectual
property to the customer, which generally occurs at or near the inception of the arrangement. For licenses that are bundled with other promises, we
determine whether the combined performance obligation is satisfied over time or at a point in time. If the combined performance obligation is satisfied over
time, we use judgment in determining the appropriate method of measuring progress for purposes of recognizing revenue from the up-front license fees. We
evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.
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Development and Regulatory Milestone Payments: At the inception of each arrangement that includes development and regulatory milestone
payments, we evaluate whether the milestones are considered probable of being achieved and estimate the amount to be included in the transaction price
using the most likely amount method. We generally include these milestone payments in the transaction price when they are achieved because there is
considerable uncertainty in the research and development processes that trigger these payments under our agreements. Similarly, we include approval
milestone payments in the transaction price once the product is approved by the applicable regulatory agency. At the end of each subsequent reporting
period, we re-evaluate the probability of achieving such development and regulatory milestones and any related constraint, and if necessary, adjust our
estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis.
Sales-based Milestone Payments and Royalties: For arrangements that include sales-based royalties, including milestone payments based on the
volume of sales, we will determine whether the license is deemed to be the predominant item to which the royalties or sales-based milestones relate and if
such is the case, we will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of
the royalty has been allocated has been satisfied (or partially satisfied).
Product supply services: Arrangements that include a promise for the future supply of drug product for either clinical development or commercial
supply at the licensee’s discretion are generally considered as options. We will assess if these options provide a material right to the licensee and if so, they
are accounted for as separate performance obligations and recognized when the future goods or services related to the option are provided or the option
expires.
Research and Development Services: For arrangements that include research and development services, we will recognize revenue over time using
an input method, representing the transfer of goods or services as we perform activities over the term of the arrangement.
Accrued Research and Development Liabilities
We record accruals for estimated costs of research and development activities conducted by third-party service providers, which include the conduct
of preclinical studies, clinical trials, and contract manufacturing activities. We record the estimated costs of research and development activities based upon
the estimated amount of services provided but not yet invoiced, and include these costs in accrued research and development liabilities in the consolidated
balance sheets and within research and development expense in the consolidated statements of operations. These costs are a significant component of our
research and development expenses.
Examples of estimated research and development expenses that we accrue include:
•
•
•
•
fees paid to CROs in connection with preclinical and toxicology studies and clinical trials;
fees paid to investigative sites in connection with clinical trials;
fees paid to CMOs in connection with the production of product and clinical trial materials; and
professional service fees for consulting and related services.
We base our expense accruals related to clinical trials on our estimates of the services received and efforts expended pursuant to contracts with
multiple research institutions and CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements vary from contract to
contract and may result in uneven payment flows. Payments under some of these contracts depend on factors, such as the successful enrollment of patients
and the completion of clinical trial milestones. Our service providers generally invoice us monthly in arrears for services performed. In accruing service
fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If we do not identify costs
that we have begun to incur or if we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could
differ from our estimates. We record advance payments to service providers as prepaid assets.
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We record accruals for the estimated costs of our contract manufacturing activities performed by third parties. The financial terms of these
agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows to our vendors. Payments under the contracts
include upfront payments and milestone payments, which depend on factors such as the achievement of the completion of certain stages of the
manufacturing process. For purposes of recognizing expense, we assess whether we consider the production process sufficiently defined to be considered
the delivery of a good or the delivery of a service, where processes and yields are developing and less certain. If we consider the process to be the delivery
of a good, we recognize expense when the drug product is delivered, or we otherwise bear risk of loss. If we consider the process to be the delivery of a
service, we recognize expense based on our best estimates of the contract manufacturer’s progress towards completion of the stages in the contract. We
base our estimates on the best information available at the time. However, additional information may become available to us which may allow us to make
a more accurate estimate in future periods. In this event, we may be required to record adjustments to research and development expenses in future periods
when the actual level of activity becomes more certain. Any increases or decreases in cost are generally considered to be changes in estimates and will be
reflected in research and development expenses in the period identified.
To date, we have not experienced significant changes in our estimates of accrued research and development liabilities after a reporting period.
However, due to the nature of estimates, there is no assurance that we will not make changes to our estimates in the future as we become aware of
additional information about the status or conduct of our clinical studies and other research activities.
Accrued Milestone Compensation Arrangements
We have performance-based milestone compensation arrangements with certain employees and consultants, whose vesting is contingent upon
meeting various regulatory and development milestones, with fixed monetary amounts known at inception that can be settled in the form of (i) cash, (ii)
equity of BridgeBio, or (iii) cash or equity of BridgeBio at our sole election, upon achievement of each contingent milestone. For arrangements that involve
settlement by cash or equity of BridgeBio at our sole election, we will classify the milestone compensation arrangements as liability-classified awards
when it is probable of achievement because of the possible fixed monetary amounts settlement outcomes. The arrangements would also result in settlement
with a variable number of shares based on the then-current stock price at achievement date of each contingent milestone should we elect to settle in equity.
We record accruals for the compensation expense arising from each development milestone when the specific contingent development milestone is
probable of achievement and such accruals are measured at each reporting period. We estimate the probability of achieving such milestones based on the
progression and expected outcome of the related clinical programs. We base our estimates on the best available information at that time. However,
additional information may become available to us which may allow us to make a more accurate estimate in future periods. In this event, we may be
required to record adjustments to milestone compensation expenses in future periods. Any increases or decreases in such expenses are generally considered
to be changes in estimates and will be reflected in the period identified.
To date, we have not experienced significant changes in our estimates of accrued milestone compensation expenses after a reporting period.
However, due to the nature of estimates, there is no assurance that we will not make changes to our estimates in the future as we become aware of
additional information about the progression and expected outcome of our clinical programs.
Recent Accounting Pronouncements
See Note 2, “Summary of Significant Accounting Policies - Recently Adopted Accounting Pronouncements” to our consolidated financial statements
appearing under Part II, Item 8 for more information.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of December 31, 2023, we held cash, cash equivalents, and restricted cash of $392.6 million. As of December 31, 2022, we held cash, cash
equivalents, marketable securities and restricted cash of $466.2 million. Our cash equivalents consist of amounts invested in money market accounts, such
as money market funds and short-term commercial paper. Our marketable securities consisted of high investment grade fixed income securities that were
primarily invested in commercial paper, corporate bonds, and U.S. government securities. We do not enter into investments for trading or speculative
purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. We have not been exposed nor do we anticipate
being exposed to material risks due to changes in interest rates. We do not believe that our cash, cash equivalents or marketable securities have a significant
risk of default or illiquidity.
As of December 31, 2023 and 2022, we had no outstanding debt with a variable interest rate. Our 2029 Notes, 2027 Notes and term loan had
principal balances of $747.5 million, $550.0 million and $455.4 million, respectively, as of December 31, 2023, and bear fixed interest rates. Our 2029
Notes, 2027 Notes and term loan had principal balances of $747.5 million, $550.0 million and $445.2 million, respectively, as of December 31, 2022, and
bear fixed interest rates. Our cash flows on these debt obligations as of December 31, 2023 are not subject to variability as a result of changes in interest
rates. A hypothetical 100 basis point change in interest rate during any of the periods presented would not have had a material impact on our financial
statements.
We are exposed to changes in the fair value of our investments in equity securities. As of December 31, 2023, our investment in equity securities,
which consist of equity securities of publicly held companies, have a balance of $58.9 million. These shares are carried in our consolidated balance sheets
at fair value based on the closing price of the shares owned on the last trading day of the reporting period. Fluctuations in the underlying bid price of the
shares could result in material gains or losses. As of December 31, 2022, our investment in equity securities, which consist of equity securities of publicly
held companies, had a balance of $43.7 million. These shares are carried in our consolidated balance sheets at fair value based on the closing price of the
shares owned on the last trading day of the reporting period.
We do not believe that inflation and changing prices had a significant impact on our business, financial conditions or results of operations for any of
the periods presented herein. Significant adverse changes in inflation and prices in the future could result in material losses.
137
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022
Consolidated Statements of Operations for each of the three years in the period ended December 31, 2023
Consolidated Statements of Comprehensive Loss for each of the three years in the period ended December 31, 2023
Consolidated Statements of Redeemable Convertible Noncontrolling Interests and Stockholders’ Equity (Deficit) for each of the three years in
the period ended December 31, 2023
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2023
Notes to Consolidated Financial Statements
Page
139
142
143
144
145
146
148
138
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of BridgeBio Pharma, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of BridgeBio Pharma, Inc., its subsidiaries and controlled entities (the “Company”)
as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, redeemable convertible noncontrolling interests
and stockholders’ equity (deficit) and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the
Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December
31, 2023, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2024, expressed an
unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. 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. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included
performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or
required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical
audit matter or on the accounts or disclosures to which it relates.
Accrued Research and Development Liabilities, Prepaid expenses and other current assets, Other assets and Research and Development Expenses
from Contract Research Organizations (CROs) and Contract Manufacturing Organizations (CMOs) — Refer to Notes 2 and 9 to the financial
statements
Critical Audit Matter Description
The Company incurs research and development expenses related to the costs of research and development activities, including third-party service
agreements with contract research organizations (CROs) and contract manufacturing organizations (CMOs) to provide research and development services
related to preclinical studies and
139
clinical trials, which are estimated at each reporting period. As of December 31, 2023, the Company had accrued for $27 million of research and
development expenses related to CROs and CMOs. In addition, the Company had recorded $11 million of prepaid expenses and other current assets and
$13 million of other assets, respectively, for amounts paid in advance of services incurred to be performed by CROs and CMOs. For the year ended
December 31, 2023, the Company incurred $187 million of research and development expenses for services provided by CROs and CMOs. The Company
records these expenses based on estimates of the services and activities completed to date pursuant to the provisions of the signed contracts relative to the
amounts invoiced and paid to date, resulting in an accrued liability or prepaid expense balance at period end.
We identified the accrual or prepaid of these third-party research and development costs as a critical audit matter because of the judgments necessary
for management to estimate both the cost of services provided but not yet invoiced and the amounts paid ahead of services being incurred, the significant
volume of transactions and the varied nature of audit evidence obtained from vendor to vendor. The amount of expense recognized and the corresponding
accrual and prepaid balances recorded are based on the unique terms and conditions in each arrangement and are often dependent on limited information
available from the vendors regarding the progress of the services through the reporting date. This required extensive audit effort due to the volume and
variability in the arrangements and available information from the vendors and required a high degree of auditor judgment when performing audit
procedures to audit management’s estimates of total expenses, accrued and prepaid balances and evaluating the results of those procedures.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the estimate of research and development expenses and the related accrued and prepaid balances included the
following, among others:
•
•
•
•
We evaluated the design and tested the operating effectiveness of controls over the Company’s research and development expense accrual
process, including controls over the estimation of activities completed to date.
We evaluated publicly available information (e.g., the Company’s website, news articles, press releases, and investor presentations) and board
of directors’ materials, and corroborated this information gathered with Company personnel responsible for overseeing the clinical trial
activities regarding the status of such activities. We then compared this information to the judgments applied in management’s estimate of the
recorded expenses and corresponding accrual and prepaid balances.
We evaluated management’s ability to accurately estimate accrual of these third-party research and development costs by performing a
lookback analysis over a sample of prior year accrual and prepaid balances, comparing invoices received subsequent to the prior year end to
management’s historical estimates recorded in the financial statements.
For a sample of contracts, we evaluated the third-party research and development expenses and the corresponding accrued and prepaid
expense balances by:
o
o
o
o
inspecting related agreements, including (but not limited to) master service agreements, change orders, statements of work, and
amendments, and agreeing key provisions of the agreements including timeline, budget, and relevant rates, to the Company’s analysis
of estimated expenses incurred to date.
selecting specific amounts recognized as research and development expense and testing accuracy and completeness by obtaining
invoices, contracts and other underlying support.
sending written confirmations directly to CROs or CMOs to confirm completeness of agreements as well as payments received,
invoices billed and yet to be billed, and costs incurred to date and inspecting correspondence received directly from them, including
status reports, and comparing such information to the amounts used in the Company’s estimates.
agreeing other third-party information to the inputs used in the Company’s analysis and recalculating the Company’s estimated
expense, accrual, and prepaid balances.
140
o
performing a lookback analysis by comparing the estimated accrual balance as of December 31, 2023, to the vendor confirmations
received by management after year-end to evaluate the Company’s ability to estimate the accrual.
/s/ Deloitte & Touche LLP
San Francisco, California
February 22, 2024
We have served as the Company’s auditor since 2018.
141
BRIDGEBIO PHARMA, INC.
Consolidated Balance Sheets
(in thousands, except shares and per share amounts)
December 31,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
Marketable securities
Investment in equity securities
Receivable from licensing and collaboration agreements
Restricted cash
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Intangible assets, net
Other assets
Total assets
Liabilities, Redeemable Convertible Noncontrolling Interests and Stockholders’ Deficit
Current liabilities:
Accounts payable
Accrued compensation and benefits
Accrued research and development liabilities
Operating lease liabilities, current portion
Deferred revenue, current portion
Accrued professional and other accrued liabilities
Total current liabilities
2029 Notes, net
2027 Notes, net
Term loan, net
Operating lease liabilities, net of current portion
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 9)
Redeemable convertible noncontrolling interests
Stockholders’ deficit:
Undesignated preferred stock, $0.001 par value; 25,000,000 shares
authorized; no shares issued and outstanding
Common stock, $0.001 par value; 500,000,000 shares authorized;
181,274,712 shares issued and 175,082,951 shares outstanding as of
December 31, 2023, 156,817,333 shares issued and 150,625,572 shares
outstanding as of December 31, 2022
Treasury stock, at cost; 6,191,761 shares as of December 31, 2023 and
December 31, 2022
Additional paid-in capital
Accumulated other comprehensive income (loss)
Accumulated deficit
Total BridgeBio stockholders’ deficit
Noncontrolling interests
Total stockholders’ deficit
Total liabilities, redeemable convertible noncontrolling interests and
stockholders’ deficit
$
$
$
$
$
$
375,935
—
58,949
1,751
16,653
24,305
477,593
11,816
8,027
26,319
22,625
546,380
10,655
57,370
29,765
4,128
6,096
35,830
143,844
736,905
543,379
446,445
8,981
9,361
1,888,915
478
—
181
(275,000 )
1,481,032
31
(2,560,501 )
(1,354,257 )
11,244
(1,343,013 )
$
546,380
$
376,689
51,580
43,653
17,079
37,930
21,922
548,853
14,569
10,678
28,712
20,224
623,036
11,558
31,256
39,803
3,675
8,156
26,980
121,428
734,988
541,634
430,993
12,274
26,643
1,867,960
(1,589 )
—
157
(275,000 )
938,703
(328 )
(1,918,149 )
(1,254,617 )
11,282
(1,243,335 )
623,036
The accompanying notes are an integral part of these consolidated financial statements.
142
BRIDGEBIO PHARMA, INC.
Consolidated Statements of Operations
(in thousands, except shares and per share amounts)
Revenue
Operating costs and expenses:
Cost of revenue
Research and development
Selling, general and administrative
Restructuring, impairment and related charges
Total operating costs and expenses
Loss from operations
Other income (expense), net:
Interest income
Interest expense
Gain from sale of priority review voucher, net
Other income (expense), net
Total other income (expense), net
Net loss
Net loss attributable to redeemable convertible
noncontrolling interests and noncontrolling interests
Net loss attributable to common stockholders
of BridgeBio
Net loss per share attributable to common stockholders
of BridgeBio, basic and diluted
Weighted-average shares used in computing net loss
per share attributable to common stockholders
of BridgeBio, basic and diluted
$
$
$
2023
Year Ended December 31,
2022
9,303
$
77,648
$
2021
2,446
455,711
150,590
7,926
616,673
(607,370 )
18,038
(81,289 )
—
17,370
(45,881 )
(653,251 )
10,049
(643,202 )
(3.95 )
3,434
399,462
143,189
43,765
589,850
(512,202 )
7,542
(80,438 )
107,946
(7,500 )
27,550
(484,652 )
3,469
$
$
(481,183 )
(3.26 )
$
$
69,716
3,114
451,024
192,210
—
646,348
(576,632 )
1,133
(46,778 )
—
35,823
(9,822 )
(586,454 )
23,915
(562,539 )
(3.90 )
162,791,511
147,473,076
144,356,619
The accompanying notes are an integral part of these consolidated financial statements.
143
BRIDGEBIO PHARMA, INC.
Consolidated Statements of Comprehensive Loss
(in thousands)
Net loss
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities
Comprehensive loss
Comprehensive loss attributable to redeemable convertible
noncontrolling interests and noncontrolling interests
Comprehensive loss attributable to common stockholders
of BridgeBio
2023
Year Ended December 31,
2022
2021
$
(653,251 )
$
(484,652 ) $
(586,454 )
359
(652,892 )
10,049
(196 )
(484,848 )
(324 )
(586,778 )
3,469
23,915
$
(642,843 )
$
(481,379 ) $
(562,863 )
The accompanying notes are an integral part of these consolidated financial statements.
144
BRIDGEBIO PHARMA, INC.
Consolidated Statements of Redeemable Convertible Noncontrolling Interests and Stockholders’ Equity (Deficit)
(in thousands, except shares and per share amounts)
Additiona
l
Paid-In
Capital
Accumulat
ed
Other
Comprehe
nsive
Income
(Loss)
Total
Accumulate
d
Deficit
BridgeBio
Stockholde
rs’
Equity
(Deficit)
Non-
control
ling
Interes
ts
Total
Stockholders’
Equity
(Deficit)
1,021,3
44
(168,07
$
192
$ (888,755 ) $
57,906
$
48,3
50
$
106,256
8 )
—
14,328
(153,750 )
—
(153,750 )
Redeema
ble
Converti
ble
Noncont
rolling
Common Stock
Treasury Stock
Balances as of December 31, 2020
Interests
Shares
Amount
Shares
Amount
(75,00
$ 1,630
122,849,389
$
125
2,414,681
$
0 ) $
Cumulative effect of ASU 2020-06 adoption
Repurchase of Eidos noncontrolling interests
for cash and shares, including transaction costs
of $70,734
Purchase of capped calls
Fair value of PellePharm noncontrolling interest
on consolidation
Repurchase of common stock
—
—
—
—
26,156,446
—
5,074
—
Issuance of shares under equity
compensation plans
Issuance of common stock under ESPP
Repurchase of RSU shares to satisfy tax
withholding
Stock-based compensation
Issuance of noncontrolling interests
Transfers from (to) noncontrolling
interests
Unrealized loss on available-for-sale
securities
Net loss
—
—
—
—
3,500
(3,456 )
—
(5,325 )
(3,777,080 )
2,085,286
116,222
(86,940 )
—
—
—
—
—
—
26
—
—
—
3
—
—
—
—
—
—
—
—
—
—
—
3,777,080
—
—
—
—
—
—
—
—
(53,856 )
(61,295 )
—
(200,0
00 )
—
—
16,642
3,821
(4,747 )
89,823
—
(2,124 )
—
—
—
—
—
—
—
—
—
—
—
Balances as of December 31, 2021
1,423
147,343,323
154
6,191,761
(275,0
00 )
841,53
0
Issuance of shares under equity
compensation plans
Issuance of common stock under ESPP
Repurchase of RSU shares to satisfy tax
withholding
Stock-based compensation
Issuance of common stock under at-the-market
offering, net
Issuance of noncontrolling interests
Transfers from (to) noncontrolling
interests
Unrealized gain on available-for-sale
securities
Net loss
Balances as of December 31, 2022
Issuance of shares under equity
compensation plans
Issuance of common stock under ESPP
Repurchase of RSU shares to satisfy tax
withholding
Stock-based compensation
Issuance of common stock under Follow-on
offering, net
Issuance of common stock under ATM offering,
net
Issuance of common stock under Private
Placement offering, net
Issuance (repurchase) of noncontrolling
interests
Transfers from (to) noncontrolling
interests
Deconsolidation of PellePharm
Unrealized gain on available-for-sale
securities
Net loss
Balances as of December 31, 2023
—
—
—
—
—
—
2,399
—
(5,411 )
2,658,109
339,549
(171,209 )
—
455,800
—
—
—
—
3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
663
2,558
(1,561 )
94,173
4,852
—
(3,512 )
—
—
(1,589 )
150,625,572
157
6,191,761
(275,0
00 )
938,70
3
—
—
—
—
—
—
—
1,500
4,851
899
—
(5,183 )
4,193,444
339,979
(301,984 )
—
8,887,000
2,171,217
9,167,723
—
—
—
—
—
4
—
—
—
9
2
9
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(275,0
6,004
3,398
(6,880 )
98,601
144,04
0
64,963
240,78
7
—
(10,534 )
1,950
—
—
1,481,0
32
—
—
(324 )
—
(562,539 )
(1,436,96
(562,539 )
(132 )
6 )
(870,414 )
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(196 )
—
(328 )
—
—
—
—
—
—
—
—
—
—
359
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(53,830 )
(61,295 )
(38,
167 )
—
(91,997 )
(61,295 )
—
—
—
(200,000 )
—
(200,000 )
16,645
3,821
—
—
(4,747 )
89,823
—
(2,124 )
(324 )
—
—
6,24
0
5,57
9
—
(18,
590 )
3,41
2
666
2,558
—
—
(1,561 )
94,173
—
—
4,852
—
(3,512 )
(196 )
—
4,81
5
1,11
3
—
1,94
2
11,2
82
6,008
3,398
—
—
(6,880 )
98,601
—
—
16,645
3,821
(4,747 )
89,823
6,240
3,455
(324 )
(581,129 )
(867,002 )
666
2,558
(1,561 )
94,173
4,852
4,815
(2,399 )
(196 )
(479,241 )
(1,243,335 )
6,008
3,398
(6,880 )
98,601
(481,183 )
(1,918,14
9 )
(481,183 )
(1,254,6
17 )
144,049
—
144,049
64,965
—
64,965
240,796
—
(2,0
240,796
—
06 )
(2,006 )
(238 )
(10,772 )
850
—
2,800
359
5,92
1
1,15
1
—
(5,1
(642,964 )
(2,560,50
(642,964 )
(1,354,2
04 )
11,2
(4,851 )
3,951
359
(648,068 )
57 ) $
44
$
(1,343,013 )
478
$
The accompanying notes are an integral part of these consolidated financial statements.
175,082,951
00 ) $
6,191,761
$
$
181
$
$
31
1 ) $
145
BRIDGEBIO PHARMA, INC.
Consolidated Statements of Cash Flows
(in thousands)
Operating activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation
Depreciation and amortization
Noncash lease expense
Accrual of payment-in-kind interest on term loan
Loss on deconsolidation of PellePharm
(Gain) loss from investment in equity securities, net
Fair value of shares issued under a license agreement
Accretion of debt
Fair value adjustment of warrants
Loss on sale of certain assets
Impairment of long-lived assets
Gain from sale of priority review voucher, excluding transaction costs
Gain from recognition of receivable from licensing and collaboration agreement
LEO call option income
Loss on early extinguishment of debt
Other noncash adjustments
Changes in operating assets and liabilities:
Receivable from licensing and collaboration agreements
Prepaid expenses and other current assets
Other assets
Accounts payable
Accrued compensation and benefits
Accrued research and development liabilities
Operating lease liabilities
Deferred revenue
Accrued professional and other liabilities
Net cash used in operating activities
Investing activities:
Purchases of marketable securities
Maturities of marketable securities
Sales of marketable securities
Purchases of investment in equity securities
Sales of investment in equity securities
Decrease in cash and cash equivalents resulting from deconsolidation of PellePharm
Increase in cash and cash equivalents from consolidation of PellePharm
Payment for intangible assets
Proceeds from sale of priority review voucher
Proceeds from sale of certain assets
Purchases of property and equipment
Net cash provided by (used in) investing activities
Financing activities:
Proceeds from issuance of common stock through Private Placement offering, net
Proceeds from issuance of common stock through Follow-on offering, net
Proceeds from issuance of common stock through ATM offering, net
Proceeds from issuance of 2029 Notes
Issuance costs and discounts associated with issuance of 2029 Notes
Purchase of capped calls
Repurchases of common stock
Transactions with noncontrolling interests
Repurchase of Eidos noncontrolling interest, including direct transaction costs
Proceeds from term loan, net of issuance costs
Repayment of term loan
Proceeds from BridgeBio common stock issuances under ESPP
Repurchase of RSU shares to satisfy tax withholding
Proceeds from stock option exercises, net of repurchases
Other financing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
2023
Year Ended December 31,
2022
2021
$
(653,251 )
$
(484,652 ) $
(586,454 )
108,710
6,494
4,032
10,207
1,241
(18,314 )
—
8,907
(984 )
—
—
—
—
—
—
181
15,328
(2,702 )
(1,546 )
2,780
7,802
(9,855 )
(4,829 )
(5,438 )
3,517
(527,720 )
(29,726 )
82,550
—
(107,538 )
110,556
(503 )
—
—
—
—
(1,306 )
54,033
240,796
144,049
64,965
—
—
—
—
(801 )
—
—
—
3,398
(6,880 )
6,008
—
451,535
(22,152 )
416,884
394,732
91,559
6,771
5,172
13,562
—
8,222
4,567
8,570
1,571
6,261
12,720
(110,000 )
(12,500 )
—
—
604
15,169
7,671
10,971
(349 )
(2,362 )
(4,309 )
(6,245 )
15,262
(7,729 )
(419,494 )
(137,493 )
479,688
—
(55,562 )
52,835
—
—
(1,500 )
110,000
10,000
(4,821 )
453,147
—
—
4,852
—
—
—
—
—
—
—
(20,486 )
2,558
(1,561 )
666
837
(13,134 )
20,519
396,365
416,884
$
$
99,505
5,843
5,611
—
—
(29,914 )
—
5,795
1,197
—
—
—
—
(5,550 )
3,337
7,092
(19,749 )
(4,262 )
(9,816 )
2,833
7,378
11,178
(6,122 )
—
14,164
(497,934 )
(589,892 )
380,200
62,691
(53,383 )
34,150
—
13,654
(35,000 )
—
—
(13,246 )
(200,826 )
—
—
—
747,500
(16,064 )
(61,295 )
(200,000 )
3,500
(85,090 )
456,296
(124,119 )
3,821
(4,746 )
16,643
—
736,446
37,686
358,679
396,365
$
The accompanying notes are an integral part of these consolidated financial statements.
146
BRIDGEBIO PHARMA, INC.
Consolidated Statements of Cash Flows
(Continued)
(in thousands)
2023
Year Ended December 31,
2022
2021
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest
Supplemental Disclosures of Noncash Investing and Financing Information:
Unpaid property and equipment
Leasehold improvements paid by landlord
Recognized intangible asset recorded in “Other accrued and other long-term liabilities”
Transfers (to) from noncontrolling interests (Note 6)
Noncash contribution by a noncontrolling interest
Payment-in-kind interest added to principal of term loan
Unpaid debt issuance costs
Net noncash portion of repurchase of Eidos noncontrolling interests
Direct transaction costs in the repurchase of Eidos recorded in additional paid-in capital previously classified in
prepaid expenses and other current assets
Reconciliation of Cash, Cash Equivalents and Restricted Cash:
Cash and cash equivalents
Restricted cash
Restricted cash — Included in “Other assets”
Total cash, cash equivalents and restricted cash at end of periods
$
$
$
$
$
$
$
$
$
$
$
$
61,108
100
—
—
(10,534 )
—
—
—
—
—
375,935
16,653
2,144
394,732
$
$
$
$
$
$
$
$
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
147
54,443
$
47
—
$
$
11,000
$
(3,512 ) $
$
—
$
$
$
1,763
—
—
—
$
376,689
37,930
2,265
416,884
$
$
29,774
563
2,449
12,500
(2,124 )
21,600
—
1,120
38,168
8,749
393,772
177
2,416
396,365
BRIDGEBIO PHARMA, INC.
Notes to Consolidated Financial Statements
1.
Organization and Description of Business
BridgeBio Pharma, Inc. (“BridgeBio” or the “Company”), is a commercial-stage biopharmaceutical company founded to discover, create, test and
deliver transformative medicines to treat patients who suffer from genetic diseases and cancers with clear genetic drivers. BridgeBio’s pipeline of
development programs ranges from early science to advanced clinical trials. BridgeBio was founded in 2015 and its team of experienced drug discoverers,
developers and innovators are committed to applying advances in genetic medicine to help patients as quickly as possible.
Since inception, BridgeBio has either created wholly-owned subsidiaries or has made investments in certain controlled entities, including partially-
owned subsidiaries for which BridgeBio has a majority voting interest, and variable interest entities (“VIEs”) for which BridgeBio is the primary
beneficiary (collectively, “we”, “our”, or “us”). BridgeBio is headquartered in Palo Alto, California.
2.
Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The consolidated financial statements include the accounts of BridgeBio Pharma, Inc., its wholly-owned subsidiaries and controlled entities,
substantially all of which are denominated in U.S. dollars. All intercompany balances and transactions have been eliminated in consolidation. For
consolidated entities where we own or are exposed to less than 100% of the economics, we record “Net loss attributable to redeemable convertible
noncontrolling interests and noncontrolling interests” in our consolidated statements of operations equal to the percentage of the economic or ownership
interests retained in such entities by the respective noncontrolling parties.
In determining whether an entity is considered a controlled entity, we applied the VIE and Voting Interest Entity (“VOE”) models. We assess
whether we are the primary beneficiary of a VIE based on our power to direct the activities of the VIE that most significantly impact the VIE’s economic
performance and our obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Entities that
do not qualify as a VIE are assessed for consolidation under the VOE model. Under the VOE model, BridgeBio consolidates the entity if it determines that
it has a controlling financial interest in the entity through its ownership of greater than 50% of the outstanding voting shares of the entity and that other
equity holders do not have substantive voting, participating or liquidation rights. We assess whether we are the primary beneficiary of a VIE or whether we
have a majority voting interest for entities consolidated under the VOE model at the inception of the arrangement and at each reporting date.
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or U.S.
GAAP and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of our
financial position, our results of operations and comprehensive loss, and our cash flows for the periods presented. The results of operations for the years
ended December 31, 2023, 2022 and 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any
other future annual or interim period.
Variable Interest Entities and Voting Interest Entities
BridgeBio consolidates those entities in which it has a direct or indirect controlling financial interest based on either the VIE model or the VOE
model.
VIEs are entities that, by design, either (i) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial
support from other parties; or (ii) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through
voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity.
148
The primary beneficiary of a VIE is required to consolidate the assets and liabilities of the VIE. The primary beneficiary is the party that has both (i)
the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses or the
right to receive benefits from the VIE that could potentially be significant to the VIE through its interest in the VIE.
To assess whether BridgeBio has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance,
BridgeBio considers all the facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment
includes identifying the activities that most significantly impact the VIE’s economic performance and identifying which party, if any, has power over those
activities. In general, the parties that make the most significant decisions affecting the VIE (management and representation on the Board of Directors) and
have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE.
To assess whether BridgeBio has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be
significant to the VIE, BridgeBio considers all of its economic interests, which primarily include equity investments in preferred and common stock and
issuance of notes that are convertible into preferred stock, that are deemed to be variable interests in the VIE. This assessment requires BridgeBio to apply
judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing the
significance include: the design of the VIE, including its capitalization structure, subordination of interests, payment priority, relative share of interests held
across various classes within the VIE’s capital structure, and the reasons why the interests are held by BridgeBio.
At the VIE’s inception, BridgeBio determines whether it is the primary beneficiary and if the VIE should be consolidated based on the facts and
circumstances. We have determined that the consolidated VIEs, in which BridgeBio is the primary beneficiary, individually meet the definition of a
business. There are no significant restrictions on the assets and liabilities of BridgeBio’s consolidated VIEs. BridgeBio then performs ongoing
reassessments of the VIE based on reconsideration events and reevaluates whether a change to the consolidation and disclosure conclusions are required
each reporting period.
Entities that do not qualify as a VIE are assessed for consolidation under the VOE model. Under the VOE model, BridgeBio consolidates the entity
if it determines that it, directly or indirectly, has greater than 50% of the voting shares and that other equity holders do not have substantive voting,
participating, or liquidation rights. Refer to Note 5.
Equity Method and Other Equity Investments
As of December 31, 2020, we had an equity method and equity security investments in PellePharm. The equity security investments in PellePharm
were without a readily determinable fair value and were carried at cost less impairment plus or minus observable price changes. PellePharm became a
consolidated VIE in April 2021 under ASC 810, Consolidation. On January 16, 2023, PellePharm’s board of directors authorized the assignment of all
PellePharm’s assets to PellePharm ABC, LLC for liquidation and distribution under the General Assignment for the Benefit of Creditors (“ABC”). As part
of the ABC proceedings, PellePharm’s board of directors resigned effective March 6, 2023. The date the board of directors resigned was determined to be a
VIE reconsideration event. Based on the changes to PellePharm’s governance structure and composition of the board of directors as a result of the ABC,
BridgeBio was no longer the primary beneficiary, as it no longer had the power over key decisions that significantly impact PellePharm’s economic
performance. Accordingly, BridgeBio deconsolidated PellePharm effective during the three months ended March 31, 2023.
As of December 31, 2020, we had an equity method investment in LianBio representing ordinary shares held by BridgeBio Pharma, LLC (“BBP
LLC”). In November 2021, we no longer held significant influence over LianBio and therefore began accounting for the investment in LianBio under ASC
321, Investments — Equity Securities.
Refer to Note 7 for further discussion on the PellePharm and LianBio investments, both of which were no longer accounted for as equity method
investments as of December 31, 2021. We no longer have any equity method investments as of December 31, 2023 and 2022.
149
Concentration of Credit Risk and Other Risks and Uncertainties
Financial instruments that subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents, marketable securities and
restricted cash. Substantially all of our cash, cash equivalents, marketable securities and restricted cash are held in financial institutions in the United States.
Amounts on deposit may at times exceed federally insured limits. Although management currently believes that the financial institutions with whom it does
business will be able to fulfill their commitments to the Company, there is no assurance that those institutions will be able to continue to do so. The
Company has not experienced any credit losses associated with its balances in such accounts as of and for the years ended December 31, 2023 and 2022.
We are subject to certain risks and uncertainties and we believe that changes in any of the following areas could have a material adverse effect on
future financial position or results of operations: ability to obtain future financing, regulatory approval and market acceptance of, and reimbursement for,
product candidates, performance of third-party contract research organizations and manufacturers upon which we rely, development of sales channels,
protection of our intellectual property, litigation or claims against us based on intellectual property, patent, product, regulatory, clinical or other factors, and
our ability to attract and retain employees necessary to support our growth.
We are dependent on third-party manufacturers to supply products for research and development activities in our programs. In particular, we rely
and expects to continue to rely on a small number of manufacturers to supply us with our requirements for the active pharmaceutical ingredients and
formulated drugs related to these programs. These programs could be adversely affected by a significant interruption in the supply of active pharmaceutical
ingredients and formulated drugs.
Due to the COVID-19 pandemic we have experienced delays in or temporary suspensions of the enrollment of patients in our subsidiaries’ clinical
trials in the past. While we have not had any recent concerns, we may continue to experience delays in certain ongoing key program activities, including
commencement of planned clinical trials, as well as non-clinical experiments and Investigational New Drug Application-enabling good laboratory practice
toxicology studies. In response to the COVID-19 pandemic, we implemented safety measures to protect our patient community, employees, partners,
suppliers and stockholders. In May 2023, the World Health Organization declared that COVID-19 is no longer a global health emergency. However, we
cannot predict the impact COVID-19 or any future public health emergency or pandemic may have on global business operations and economic conditions,
or on our business or strategy, including the effects on our ongoing and planned clinical development activities and prospects or on our financial and
operating results.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, and disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported
amounts of expenses during the reporting period. Significant estimates and assumptions made in the accompanying consolidated financial statements
include, but are not limited to:
•
•
•
•
•
accruals for research and development activities and contingent clinical, development, regulatory, and sales-based milestone payments in our
in-licensing agreements and asset acquisitions,
accruals for performance-based milestone compensation arrangements,
determining and allocating the transaction price to performance obligations for transactions accounted for under ASC 606, Revenue from
Contracts with Customers (“ASC 606”),
the expected recoverability and estimated useful lives of our long-lived assets, and
additional charges as a result of, or that are associated with, any restructuring initiative as well as impairment and related charges.
We base our estimates on historical experience and on various other assumptions that are believed to be reasonable. Actual results may differ from
those estimates or assumptions.
150
Cash, Cash Equivalents and Marketable Securities
We consider all highly liquid investments purchased with original maturities of 90 days or less from the purchase date to be cash equivalents. Cash
equivalents consist primarily of amounts invested in money market instruments, such as money market funds, treasury bills and securities issued by the
U.S. government or its agencies.
Our marketable securities consist of high investment grade fixed income securities that are primarily invested in commercial paper. We classify our
marketable securities as available-for-sale securities and report them at fair value in cash equivalents or marketable securities on the consolidated balance
sheets with related unrealized gains and losses included as a component of stockholders’ deficit. We classify our marketable securities as either short-term
or long-term based on each instrument’s underlying contractual maturity date. The amortized cost of debt securities is adjusted for amortization of
premiums and accretion of discounts to maturity which is included in interest income on the consolidated statements of operations. Realized gains and
losses and declines in value judged to be other-than-temporary, if any, on available-for-sale securities are included in “Other income (expense), net”. The
cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in
interest income.
Our cash, cash equivalents and marketable securities are exposed to credit risk in the event of default by the third parties that hold or issue such
assets. Our cash, cash equivalents and marketable securities are held by financial institutions that management believes are of high credit quality. Our
investment policy limits investments to fixed income securities denominated and payable in U.S. dollars such as corporate bonds, corporate commercial
paper, U.S. government obligations, and money market funds, and places restrictions on maturities and concentrations by type and issuer.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum
to the total of the amounts shown in the consolidated statements of cash flows:
Cash and cash equivalents
Restricted cash
Restricted cash, non-current — included in “Other assets”
Total cash, cash equivalents and restricted cash
shown on the consolidated statements of cash flows
Restricted Cash
2023
$
December 31,
2022
(in thousands)
375,935 $
16,653
2,144
376,689 $
37,930
2,265
$
394,732 $
416,884 $
2021
393,772
177
2,416
396,365
Restricted cash primarily represents funds in a controlled account that was established in connection with the Second Amendment of the Company’s
Loan and Security Agreement that is described in Note 10. The use of such non-interest-bearing cash is restricted per the terms of the underlying amended
loan agreement and is to be used solely for certain research and development expenses directly attributable to the performance of obligations associated
with the Navire-BMS License Agreement, which is further described in Note 11. As of December 31, 2023 and 2022, restricted cash related to this
agreement was $16.5 million and $37.8 million, respectively, which is presented as part of “Restricted cash” on the consolidated balance sheets.
Additionally, under certain lease agreements and letters of credit, we have pledged cash and cash equivalents as collateral. As of December 31,
2023, restricted cash related to such agreements was $0.1 million and $2.1 million, which is presented as part of “Restricted cash” and “Other assets”,
respectively, on the consolidated balance sheets. As of December 31, 2022, restricted cash related to such agreements was $0.1 million and $2.3 million,
respectively, which is presented as part of “Restricted Cash” and “Other Assets”, respectively, on the consolidated balance sheets.
151
Investment in Equity Securities
We have investment in equity securities of public companies starting in 2021. We measure the fair value of our investment in equity securities at
each reporting period in accordance with ASC 321, Investments — Equity Securities. Changes in fair value resulting from observable price changes are
included in “Other income (expense), net” in our consolidated statements of operations. Upon sale of an equity security, any realized gain or loss is
recognized in our consolidated statements of operations. We generally classify our investment in equity securities as a noncurrent asset, unless we intend to
liquidate these investments to fund current operations, in which case we would classify these investments as a current asset.
Fair Value Measurements
Assets and liabilities recorded at fair value on a recurring basis in the consolidated balance sheets are categorized based upon the level of judgment
associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price
that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market
participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of
unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value
measurements as follows:
Level 1 — Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include
quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not
active; and
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value
requires more judgment. Accordingly, the degree of judgment we exercise in determining fair value is greatest for instruments categorized in Level 3. A
financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The carrying amounts reflected in the accompanying consolidated balance sheets for cash and cash equivalents, restricted cash, receivable from
licensing and collaboration agreements, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate their fair values,
due to their short-term nature.
Property and Equipment, net
Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization of property and
equipment are calculated using the straight-line method over the estimated useful lives of the respective assets. Maintenance and repairs that do not
improve or extend the life of the assets are expensed when incurred. Upon sale or retirement of assets, the cost and accumulated depreciation and
amortization are removed from the consolidated balance sheets and any resulting gain or loss is reflected in the consolidated statement of operations in the
period realized.
The estimated useful lives of our property and equipment are as follows:
Furniture and office equipment
Laboratory and machinery equipment
Leasehold improvements
3 - 5 years
5 - 15 years
Shorter of remaining lease term or estimated useful life of the related asset
Depreciation and amortization expense of property and equipment was $4.1 million, $4.1 million and $3.3 million for the years ended December 31,
2023, 2022 and 2021, respectively.
152
Leases
Our lease portfolio includes leases for our corporate headquarters, office spaces, and laboratory facilities. We determine if an arrangement is a lease
at the inception of the contract. The asset component of our operating leases is recorded as “Operating lease right-of-use assets”, and the liability
component is recorded as “Operating lease liabilities, current portion” and “Operating lease liabilities, net of current portion” in our consolidated balance
sheets. The asset component of our finance leases is included in “Property and equipment, net”, and current and noncurrent finance lease liabilities are
presented as part of “Accrued professional and other accrued liabilities” and “Other long-term liabilities”, respectively, in our consolidated balance sheets.
Assets under finance leases are depreciated in a manner similar to other property and equipment.
Right-of-use assets and lease liabilities are recognized based on the present value of lease payments over the lease term at the lease commencement
date. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, we use
an incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. Right-
of-use assets are adjusted for lease incentive amounts expected to be received. On the lease commencement date, we estimate and include in our lease
payments any lease incentive amounts based on future events when (1) the events are within our control and (2) the event triggering the right to receive the
incentive is deemed reasonably certain to occur. If the lease incentive received is greater or less than the amount recognized at lease commencement, we
recognize the difference as an adjustment to right-of-use asset and/or lease liability, as applicable.
Right-of-use assets and lease liabilities are remeasured upon certain modifications to leases using the present value of remaining lease payments and
estimated incremental borrowing rate upon lease modification. Operating lease cost is recognized on a straight-line basis over the lease term, and includes
amounts related to short-term leases. For finance leases, we record interest expense on the lease liability in addition to amortizing the right-of-use asset,
which is generally straight-line, over the shorter of the lease term or the useful life of the right-of-use asset. We recognize variable lease payments as
operating expenses in the period in which the obligation for those payments is incurred. Variable lease payments primarily include common area
maintenance, utilities, real estate taxes, insurance, and other operating costs that are passed on from the lessor in proportion to the space we lease.
Asset Acquisitions
We measure and recognize asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets, which includes
transaction costs. Goodwill is not recognized in asset acquisitions. In an asset acquisition, the cost allocated to acquire in-process research and
development, or IPR&D, with no alternative future use is charged to research and development expense at the acquisition date.
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability is measured by comparison of the carrying amount of an asset group to the future net undiscounted cash flows
that the assets are expected to generate. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is
recognized in the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. Refer to Note 14 for impairment of
certain long-lived assets recognized for the year ended December 31, 2021.
Accrued Professional and Other Accrued Liabilities
Accrued professional and other accrued liabilities presented on the consolidated balance sheets consisted of the following balances:
Accrued interest
Milestone liability
Accrued professional services
Other accrued liabilities
Accrued professional and other accrued liabilities
2023
December 31,
(in thousands)
2022
17,761 $
6,000
7,412
4,657
35,830 $
17,500
2,500
1,790
5,190
26,980
$
$
153
Segments
We are a single operating and reportable segment, which is in the business of identifying and advancing transformative medicines to treat patients.
We operate in one segment because our business offerings have similar economics and other characteristics, including the nature of products and
manufacturing processes, types of customers, distribution methods, and regulatory environment. We are comprehensively managed as one business
segment by the Chief Operating Decision Maker, which is our Chief Executive Officer.
Total revenues, which are mainly from license and collaborative arrangements are attributed to regions based on the headquarters of the partner.
•
•
•
For the year ended December 31, 2023, approximately 80.6% and 14.5% of our total revenue is from Bristol-Myers Squibb Company
(“BMS”), with headquarters located in New York, United States and from LianBio with headquarters located in Shanghai, China,
respectively.
For the year ended December 31, 2022, approximately 98.2% of our total revenue is from BMS, with headquarters located in New York,
United States.
For the year ended December 31, 2021, approximately 80.3% and 13.0% of our total revenue is from Helsinn Healthcare S.A. (“HHC”), with
headquarters located in Switzerland and from LianBio with headquarters located in Shanghai, China, respectively.
As of December 31, 2023 and 2022, our capitalized property and equipment located in the United States and Canada is approximately 69.1% and
30.6%, and 72.7% and 27.0%, respectively.
Capped Call Transactions
In January 2021 and March 2020, in connection with the issuance of the 2029 Notes and the 2027 Notes, respectively, (see Note 10), BridgeBio
entered into certain capped call transactions, or the Capped Call Transactions. The Capped Call Transactions are generally expected to reduce the potential
dilution to the holders of BridgeBio’s common stock upon any conversion of the Notes and/or offset any cash payments BridgeBio is required to make in
excess of the principal amount of converted Notes, with such reduction and/or offset subject to a cap based on the cap price (see Note 10). The capped calls
meet the conditions outlined in ASC 815-40, Derivatives and Hedging, to be classified in stockholders’ equity as a reduction to additional paid-in capital
and are not subsequently remeasured as long as the conditions for equity classification continue to be met.
Debt Issuance Costs
Debt issuance costs are amortized to interest expense over the estimated life of the related debt based on the effective interest method. In accordance
with ASC 835, Interest, we present debt issuance costs on the consolidated balance sheets as a direct deduction from the associated debt.
Treasury Stock
Repurchased treasury stock is recorded at cost, including any commissions and fees.
Collaborative Agreements
We enter into collaboration arrangements with partners, under which we may grant licenses to further develop, manufacture and commercialize our
drug compounds and/or product candidates. We may also perform research, development, manufacturing, commercialization, and supply activities under
our collaboration agreements. Consideration under these arrangements may include, upfront payments, development and regulatory milestones, expense
reimbursements, royalties based on net sales of commercial products, and commercial sales milestone payments.
154
When we enter into collaboration agreements, we assess whether the arrangements fall within the scope of ASC 808, Collaborative Arrangements,
based on whether the arrangements involve joint operating activities and whether both parties have active participation in the arrangement and are exposed
to significant risks and rewards. To the extent that the arrangement falls within the scope of ASC 808, we assess whether the payments between us and our
partner fall within the scope of other accounting literature. If we conclude that payments from the partner to us represent consideration from a customer,
such as license fees, contract manufacturing, and research and development activities, we account for those payments within the scope of ASC 606.
However, if we conclude that our partner is not a customer for certain activities and associated payments, such as for certain collaborative research,
development, manufacturing, and commercial activities, we record such payments as a reduction of research and development expense or selling, general
and administrative expense, based on where we present the underlying expense. Additionally, if we reimburse our collaboration partners for these activities,
we record such reimbursements as research and development expense or selling, general and administrative expense, depending upon the nature of the
underlying expense.
If our collaborative arrangement provides for the sharing of profits and losses with our partner for commercialization activities, the treatment of our
share in the profit-sharing structure depends on who the selling party is. If we are the selling party and the deemed principal, we record our collaboration
partner’s share of profits as an addition to selling, general and administrative expenses and our collaboration partner’s share of loss as a reduction in selling,
general and administrative expenses. If our partner is the selling party and the deemed principal, we record our share of profits as collaboration revenue and
our share of losses as an addition to selling, general and administrative expenses.
Revenue Recognition
For elements or transactions that we determine should be accounted for under ASC 606, we perform the following five steps: (i) identify the
contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price
to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy our performance obligation. We apply the five-step model
to contracts when it is probable that we will collect the consideration to which we are entitled in exchange for the goods or services we transfer to the
customer.
At inception of the arrangement, we assess the promised goods or services to identify the performance obligations within the contract. We then
recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation, on a relative standalone selling price
basis, when (or as) the performance obligation is satisfied, either at a point in time or over time. If the performance obligation is satisfied over time, we
recognize revenue based on the use of an input method. As part of the accounting for these arrangements, we develop assumptions that require judgment to
determine the standalone selling price for each performance obligation identified in the contract. These key assumptions may include forecasted revenue or
costs, development timelines, discount rates and probabilities of clinical and regulatory success.
License Fees: For arrangements that include a grant of a license to our intellectual property, we consider whether the license grant is distinct from
the other performance obligations included in the arrangement. Generally, we would conclude that the license is distinct if the customer is able to benefit
from the license with the resources available to it. For licenses that are distinct, we recognize revenues from nonrefundable, upfront license fees and other
consideration allocated to the license when the license term has begun and we have provided all necessary information regarding the underlying intellectual
property to the customer, which generally occurs at or near the inception of the arrangement. For licenses that are bundled with other promises, we
determine whether the combined performance obligation is satisfied over time or at a point in time. If the combined performance obligation is satisfied over
time, we use judgment in determining the appropriate method of measuring progress for purposes of recognizing revenue from the up-front license fees. We
evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.
155
Development and Regulatory Milestone Payments: At the inception of each arrangement that includes development and regulatory milestone
payments, we evaluate whether the milestones are considered probable of being achieved and estimate the amount to be included in the transaction price
using the most likely amount method. We generally include these milestone payments in the transaction price when they are achieved because there is
considerable uncertainty in the research and development processes that trigger these payments under our agreements. Similarly, we include approval
milestone payments in the transaction price once the product is approved by the applicable regulatory agency. At the end of each subsequent reporting
period, we re-evaluate the probability of achieving such development and regulatory milestones and any related constraint, and if necessary, adjust our
estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis.
Sales-based Milestone Payments and Royalties: For arrangements that include sales-based royalties, including milestone payments based on the
volume of sales, we will determine whether the license is deemed to be the predominant item to which the royalties or sales-based milestones relate and if
such is the case, we will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of
the royalty has been allocated has been satisfied (or partially satisfied).
Product supply services: Arrangements that include a promise for the future supply of drug product for either clinical development or commercial
supply at the licensee’s discretion are generally considered as options. We will assess if these options provide a material right to the licensee and if so, they
are accounted for as separate performance obligations and recognized when the future goods or services related to the option are provided or the option
expires.
Research and Development Services: For arrangements that include research and development services, we will recognize revenue over time using
an input method, representing the transfer of goods or services as we perform activities over the term of the arrangement.
Receivables from Licensing and Collaboration Agreements
Receivables from licensing and collaboration agreements represent valid claims against our partners, including unbilled receivables and royalty
payments due from third parties for licensing our technology. Unbilled receivables include balances due from our partners related to development services
and transition-related receivables that are recognized upon incurrence of the costs for the partnered programs but prior to the achievement of contractual
billing rights. As of December 31, 2023 and 2022, we had unbilled receivables of $0.9 million and $16.8 million, respectively. As of December 31, 2023
and 2022, respectively, 61.9% and 97.5% of total unbilled receivables related to one partner. Total receivables from licensing and collaboration agreements
as of December 31, 2023 and 2022, respectively, are presented as “Receivable from licensing and collaboration agreements” in our consolidated balance
sheets.
We evaluate the collectability of our receivable from licensing and collaboration agreements based on historical collection trends, the financial
condition of payment partners, and external market factors and provides for an allowance for potential credit losses based on management’s best estimate of
the amount of probable credit losses. As of December 31, 2023 and 2022, we did not have an allowance for credit losses.
Research and Development Expenses
Research and development costs are expensed as incurred. Research and development expenses consist of salaries, benefits and other personnel
related costs including stock-based compensation expense, laboratory supplies, preclinical studies, clinical trials and related clinical manufacturing costs,
costs related to manufacturing preparations, fees paid to other entities to conduct certain research and development activities on our behalf, and allocated
facility and other related costs. Non-refundable advance payments for goods or services that will be used or rendered for future research and development
activities are deferred and capitalized as prepaid expenses until the related goods are delivered or services are performed.
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Accrued Research and Development Liabilities
We record accruals for estimated costs of research and development activities conducted by third-party service providers, which include the conduct
of preclinical studies, clinical trials, and contract manufacturing activities. We record the estimated costs of research and development activities based upon
the estimated amount of services provided but not yet invoiced, and include these costs in accrued research and development liabilities in the consolidated
balance sheets and within research and development expense in the consolidated statements of operations. These costs are a significant component of our
research and development expenses.
Examples of estimated research and development expenses that we accrue include:
•
•
•
•
fees paid to CROs in connection with preclinical and toxicology studies and clinical trials;
fees paid to investigative sites in connection with clinical trials;
fees paid to CMOs in connection with the production of product and clinical trial materials; and
professional service fees for consulting and related services.
We base our expense accruals related to clinical trials on our estimates of the services received and efforts expended pursuant to contracts with
multiple research institutions and CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements vary from contract to
contract and may result in uneven payment flows. Payments under some of these contracts depend on factors, such as the successful enrollment of patients
and the completion of clinical trial milestones. Our service providers generally invoice us monthly in arrears for services performed. In accruing service
fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If we do not identify costs
that we have begun to incur or if we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could
differ from our estimates. We record advance payments to service providers as prepaid assets.
We record accruals for the estimated costs of our contract manufacturing activities performed by third parties. The financial terms of these
agreements are subject to negotiation, vary from contract to contract, and may result in uneven payment flows to our vendors. Payments under the contracts
include upfront payments and milestone payments, which depend on factors such as the achievement of the completion of certain stages of the
manufacturing process. For purposes of recognizing expense, we assess whether we consider the production process sufficiently defined to be considered
the delivery of a good or the delivery of a service, where processes and yields are developing and less certain. If we consider the process to be the delivery
of a good, we recognize expense when the drug product is delivered, or we otherwise bear risk of loss. If we consider the process to be the delivery of a
service, we recognize expense based on our best estimates of the contract manufacturer’s progress towards completion of the stages in the contract. We
base our estimates on the best information available at the time. However, additional information may become available to us which may allow us to make
a more accurate estimate in future periods. In this event, we may be required to record adjustments to research and development expenses in future periods
when the actual level of activity becomes more certain. Any increases or decreases in cost are generally considered to be changes in estimates and will be
reflected in research and development expenses in the period identified.
Milestone and Royalty Payments Under Asset Acquisitions, In-licensing and Other Research & Development Agreements
Under our asset acquisitions, in-licensing, and other research and development agreements, we could be required to pay development, regulatory,
and sales-based milestone payments if certain substantive milestones are met. We generally expense development milestones as incurred. For regulatory or
sales-based milestones that are associated with an approved asset, we capitalize the milestone payments related to the asset purchase as a finite-lived
intangible asset provided that the milestone payment is recoverable based on our estimated projected cash flows and if the asset has alternative future use.
Such intangible asset is amortized over its estimated useful life on a straight-line basis, beginning on the date the asset is acquired, which would generally
be the regulatory approval date. We assess the carrying value of our finite-lived intangible assets for impairment whenever events or changes in
circumstances indicate that the carrying value may not be fully recoverable. Recoverability of finite-lived intangible assets is measured by comparison of
the carrying value of the asset to the future undiscounted cash flows the asset is expected to generate.
We could also be required to pay royalties based on actual net sales under in-licensing agreements and asset acquisitions. Such royalties are
expensed in the period of sale of the product.
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Selling, general and administrative expenses
Selling, general and administrative expenses include all costs that are not directly related to revenue generating arrangements or research and
development. Selling, general and administrative expenses include items for the Company’s selling and administrative functions, such as pre-
commercialization, finance, legal, human resources, and information technology support. These functions include costs for items such as salaries and
benefits, stock-based compensation and other personnel-related costs, professional fees for external legal, accounting, and other consulting services, and
depreciation and amortization expenses.
Sales of Nonfinancial Assets
We generally account for sales of nonfinancial assets that are outside the scope of our ordinary activities under ASC 610-20, Other Income - Gains
and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”). Pursuant to ASC 610-20, we apply the guidance in ASC 606 to determine if a
contract exists, identify the distinct nonfinancial assets, and determine when control transfers and, therefore, when to derecognize the nonfinancial asset.
Additionally, we apply the measurement principles of ASC 606 to determine the amount of consideration, if any, to include in the calculation of the gain or
loss for the sale of the nonfinancial asset.
Restructuring, Impairment and Related Charges
Long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances, including restructuring and exit activities,
indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount of an asset group to
the future net undiscounted cash flows that the assets are expected to generate. If the carrying amount of an asset group exceeds its estimated future cash
flows, an impairment charge is recognized in the amount by which the carrying amount of the asset group exceeds the fair value of the asset group.
Costs related to contracts without future benefit or contract termination costs are recognized at the earlier of the contract termination or the cease-use
dates. Employee severance costs are generally recognized when payments are probable and amounts are reasonably estimable. Other winding down and
exit-related costs are recognized as incurred.
Stock-Based Compensation
Stock-based compensation arrangements include stock option grants, restricted stock awards, or RSA, and restricted stock units, or RSU awards
under our equity incentive plans, as well as shares issued under our Employee Stock Purchase Plan, or ESPP, through which employees may purchase our
common stock at a discount to the market price.
We use the Black‑Scholes option pricing model to estimate the fair value of options granted under our equity incentive plans and rights to acquire
shares granted under our ESPP. The Black‑Scholes option valuation model requires the use of assumptions, including the expected term of the award and
the expected share price volatility. We use the “simplified” method to estimate the expected option term.
Stock-based compensation is measured at the grant date for all stock-based awards made to employees and non-employees based on the fair value of
the awards. Compensation expense for purchases under the ESPP is recognized based on the fair value of the award on the date of offering. Stock-based
compensation is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period.
The estimated fair value of equity awards that contain performance conditions is expensed using an accelerated method over the term of the award
once we have determined that it is probable that performance milestones will be achieved. Compensation expense for equity-classified awards that contain
performance conditions is measured based on the grant date fair value of the award. Compensation expense for liability-classified awards that contain
performance conditions is initially measured based on the grant date fair value of the award and is remeasured at fair value at each reporting date until the
date of settlement. Compensation expense is recorded over the requisite service period based on management’s best estimate as to whether it is probable
that the shares awarded are expected to vest. We assess the probability of the performance milestones being met on a continuous basis.
We have elected to recognize the actual forfeitures by reducing the stock-based compensation in the same period as the forfeitures occur.
158
Market-based performance equity awards vest based on achievement of market targets, which are subject to the continued service of the employee
through the vest date, and are subject to accelerated vesting upon a change in control event. The grant-date fair value of the market-based performance
equity awards is determined using the Monte-Carlo valuation model and are recognized as compensation expense over the derived service period of the
awards. The Monte-Carlo valuation model requires the use of assumptions, including but not limited to the expected volatility, risk free rate, expected
dividend yield, expected term and possible future market estimates over the derived service period based on historical stock prices and market data. Stock-
based compensation expense will be recorded regardless of whether the market conditions are achieved or not. If the related market condition is achieved
earlier than its estimated derived service period, the stock-based compensation expense will be accelerated, and a cumulative catch-up expense will be
recorded during the period in which the market condition is met.
Stock-based compensation is generally recorded in research and development expense, and selling, general and administrative expense based on the
function of the applicable employee and non-employee.
Accrued Milestone Compensation Arrangements
We have performance-based milestone compensation arrangements with certain employees and consultants, whose vesting is contingent upon
meeting various regulatory and development milestones, with fixed monetary amounts known at inception that can be settled in the form of (1) cash, (2)
equity of BridgeBio, or (3) cash or equity of BridgeBio at our sole election, upon achievement of each contingent milestone. For arrangements that involve
settlement by cash or equity of BridgeBio at our sole election, we will classify the milestone compensation arrangements as liability-classified awards
when it is probable of achievement because of the possible fixed monetary amounts settlement outcomes. The arrangements would also result in settlement
with a variable number of shares based on the then-current stock price at achievement date of each contingent milestone should we elect to settle in equity.
We record accruals for the compensation expense arising from each development milestone when the specific contingent development milestone is
probable of achievement and such accruals are measured at each reporting period. We estimate the probability of achieving such milestones based on the
progression and expected outcome of the related clinical programs. We base our estimates on the best available information at that time. However,
additional information may become available to us which may allow us to make a more accurate estimate in future periods. In this event, we may be
required to record adjustments to milestone compensation expenses in future periods. Any increases or decreases in such expenses are generally considered
to be changes in estimates and will be reflected in the period identified.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base and
net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are determined based upon the difference between the consolidated
financial statement carrying amounts and the tax basis of assets and liabilities and are measured using the enacted tax rate expected to apply to taxable
income in the years in which the differences are expected to be reversed. Deferred tax assets are reduced by a valuation allowance if it is more likely than
not that some portion or all of the deferred tax asset will not be realized.
For U.S. federal income tax purposes, we are required to file a consolidated U.S. federal income tax return for the consolidated entities which meet
the requirements as prescribed by the consolidated regulations. Those entities that do not meet the threshold to be included in the consolidated filing
continue to file separate U.S. federal income tax returns. We are required to assess stand-alone valuation allowances separately in each entity even though
we consolidate their financial results in the consolidated financial statements. We continue to file combined state tax returns in most jurisdictions. As a
result, we continue to assess the state portion of valuation allowance for those jurisdictions on a consolidated basis. The Company also operates in various
foreign jurisdictions and assesses stand-alone valuation allowances separately in each entity operating overseas.
159
We evaluate our deferred tax assets regularly to determine whether adjustments to the valuation allowance are appropriate due to changes in facts or
circumstances, such as changes in expected future pre-tax earnings, tax law, interactions with taxing authorities and developments in case law. In making
this evaluation, we rely on our recent history of pre-tax earnings. Our material assumptions are our forecasts of future pre-tax earnings and the nature and
timing of future deductions and income represented by the deferred tax assets and liabilities, all of which involve the exercise of significant judgment.
Although we believe our estimates are reasonable, we are required to use significant judgment in determining the appropriate amount of valuation
allowance recorded against deferred tax assets.
We recognize uncertain income tax positions at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing
authority. Changes in recognition or measurement are reflected in the period in which judgment occurs. Our policy is to recognize interest and penalties
related to the underpayment of income taxes as a component of the provision for income taxes. To date, there have been no interest or penalties recorded in
relation to unrecognized tax benefits.
Net Loss per Share Attributable to Common Stockholders of BridgeBio
Basic net loss per share attributable to common stockholders of BridgeBio is calculated by dividing the net loss attributable to common stockholders
of BridgeBio by the weighted-average number of shares of BridgeBio’s common stock outstanding for the period, without consideration for potential
dilutive shares of common stock, such as stock options, unvested restricted stock units and awards and performance-based milestone compensation awards,
shares issuable under the employee stock purchase plan and assumed conversion of our 2029 and 2027 Notes. The common stock equivalents of
performance-based milestone compensation arrangements are included as potentially dilutive shares only if the performance condition has been met as of
the end of the reporting period. Shares of common stock subject to repurchase are excluded from the weighted-average shares. Since we were in a loss
position for all periods presented, basic net loss per share attributable to common stockholders of BridgeBio is the same as diluted net loss per share
attributable to common stockholders of BridgeBio since the effects of potentially dilutive securities are antidilutive.
New Accounting Pronouncements Not Yet Adopted
In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-06, Disclosure
Improvements: Codification Amendments in Response to the SEC’s Disclosure Updated and Simplification Initiative, which amends the disclosure or
presentation requirements related to various subtopics in the FASB Accounting Standards Codification. ASU 2023-06 was issued in response to the U.S.
Securities and Exchange Commission’s (the “SEC”) August 2018 final rule that updated and simplified disclosure requirements and is intended to align
U.S. GAAP requirements with those of the SEC and to facilitate the application of U.S. GAAP for all entities. For entities subject to the SEC’s existing
disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of
issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC
removes that related disclosure from its rules. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the
amendments will be removed from the Codification and not become effective for any entity. We are currently evaluating the impact of this guidance, but we
do not expect the adoption of this guidance to have a material impact on our consolidated financial statements and disclosures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which are
intended to improve reportable segment disclosure requirements. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of
significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit
or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.
The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15,
2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. We are
currently evaluating the impact that this guidance will have on our consolidated financial statements and disclosures.
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In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures
in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be
effective for annual periods beginning after December 15, 2024. We are currently evaluating the impact that this guidance will have on our consolidated
financial statements and disclosures.
3.
Fair Value Measurements
The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis and indicates
the fair value hierarchy of the valuation:
Assets
Cash equivalents:
Money market funds
Treasury bills
Total cash equivalents
Investment in equity securities
LianBio Warrant
Total financial assets
Liability
Embedded derivative
Assets
Cash equivalents:
Money market funds
Commercial paper
Total cash equivalents
Marketable securities:
Commercial paper
Total marketable securities
Investment in equity securities
LianBio Warrant
Total financial assets
Liability
Embedded derivative
Total
Level 1
Level 2
Level 3
December 31, 2023
(in thousands)
13,530 $
—
13,530
58,949
1,554
74,033 $
13,530 $
256,067
269,597
58,949
1,554
330,100 $
— $
256,067
256,067
—
—
256,067 $
—
—
—
—
—
—
1,665 $
— $
— $
1,665
Total
Level 1
Level 2
Level 3
December 31, 2022
(in thousands)
202,250 $
159,758
362,008
51,580
51,580
43,653
570
457,811 $
202,250 $
—
202,250
—
—
43,653
570
246,473 $
— $
159,758
159,758
51,580
51,580
—
—
211,338 $
—
—
—
—
—
—
—
—
1,201 $
— $
— $
1,201
$
$
$
$
$
$
There were no transfers between Level 1, Level 2 or Level 3 during the periods presented.
There are uncertainties on the fair value measurement of the instruments classified under Level 3 due to the use of unobservable inputs and
interrelationships between these unobservable inputs, which could result in higher or lower fair value measurements.
Marketable Securities
The fair value of our marketable securities classified within Level 2 is based upon observable inputs that may include benchmark yields, reported
trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research
publications.
161
Investment in Equity Securities
We have investment in equity securities of publicly held companies, which are actively traded with quoted prices that are readily available, and we
do not have restrictions on our ability to sell these securities. Therefore, these are classified within Level 1. As of December 31, 2023 and 2022, our
investment in equity securities had an aggregate fair value of $58.9 million and $43.7 million, respectively, which includes our investment in LianBio
whose fair value amounted to $22.4 million and $8.2 million, respectively. This investment was originally accounted for under the equity method until it
was converted into an investment in equity securities that is accounted for under ASC 321 upon completion of LianBio’s initial public offering, or IPO, in
November 2021 (see Note 7).
Total realized and unrealized gains and losses associated with investment in equity securities for the periods presented consisted of the following:
Gain on conversion from equity method investment to equity securities
Net realized gain recognized on investment in equity securities sold
Net unrealized gain (loss) recognized on investment in equity securities held as of
the end of the period
Total net gain (loss) included in “Other income (expense), net”
$
$
LianBio Warrant
2023
Year Ended December 31,
2022
(in thousands)
2021
— $
8,668
9,646
18,314 $
— $
3,731
(11,953 )
(8,222 ) $
68,538
2,206
(40,830 )
29,914
As of December 31, 2023 and 2022, our subsidiary, QED held a warrant which entitles QED to purchase shares of LianBio, or the LianBio Warrant,
see Note 7. We classify the LianBio Warrant, which pertains to an equity security of a publicly held company, within Level 1 as the fair value of this equity
security is derived from observable inputs such as quoted prices in an active market.
LEO Call Option Liability
As of December 31, 2023 and 2022, we no longer recognized the LEO Call Option that we previously carried as a liability in our consolidated
balance sheets. In November 2018, LEO Pharma, or LEO, was granted an exclusive, irrevocable option to acquire our subsidiary, PellePharm, Inc, or
PellePharm. The LEO Call Option was exercisable by LEO on or before the occurrence of certain events relating to PellePharm’s clinical development
programs and no later than July 30, 2021. The LEO Call Option liability was subject to remeasurement to fair value at each balance sheet date until the
LEO Call Option was either exercised, terminated or it expired as it did not qualify for equity classification. On March 30, 2021, LEO provided a notice of
termination of the LEO Call Option effective April 15, 2021. As a result and based on the facts and circumstances that existed as of March 31, 2021, we
evaluated that the likelihood of LEO exercising said option was remote and we remeasured the LEO Call Option liability to zero as of March 31, 2021 and
recognized a gain on remeasurement of the LEO Call Option liability of $5.6 million recorded in “Other income (expense), net” for the year ended
December 31, 2021.
Notes
The fair value of our 2029 Notes and our 2027 Notes, or, collectively, the Notes, see Note 10, which differ from their respective carrying values, are
determined by prices for the Notes observed in market trading. The market for trading of the Notes is not considered to be an active market and therefore
the estimate of fair value is based on Level 2 inputs. As of December 31, 2023, the estimated fair value of our 2029 Notes and 2027 Notes, which have
aggregate face values of $747.5 million and $550.0 million, respectively, were $638.7 million and $695.8 million, respectively, based on their market prices
on the last trading day for the period. As of December 31, 2022, the estimated fair value of our 2029 Notes and 2027 Notes, which have aggregate face
values of $747.5 million and $550.0 million, respectively, were $314.0 million and $218.6 million, respectively, based on their market prices on the last
trading day for the period.
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Term Loan
The fair value of our outstanding term loan as of December 31, 2023 and 2022 (see Note 10) is estimated using the net present value of the
payments, discounted at an interest rate that is consistent with a market interest rate, which is a Level 2 input. The estimated fair value of our outstanding
term loan as of December 31, 2023 and 2022 was $389.1 million and $377.2 million, respectively.
4.
Cash Equivalents and Marketable Securities
We invest in certain U.S. government money market funds, treasury bills and commercial paper classified as cash equivalents. The marketable
securities consist of high investment grade fixed income securities that are primarily invested in commercial paper.
Cash equivalents and marketable securities classified as available-for-sale consisted of the following:
Cash equivalents:
Money market funds
Treasury bills
Total cash equivalents
Cash equivalents:
Money market funds
Commercial paper
Total cash equivalents
Marketable securities:
Commercial paper
Total marketable securities
Total cash equivalents and marketable securities
Amortized
Cost Basis
Unrealized
Gains
Unrealized
Losses
Estimated Fair
Value
December 31, 2023
13,530
256,036
269,566
$
$
(in thousands)
—
31
31
$
$
December 31, 2022
—
—
—
$
$
13,530
256,067
269,597
Amortized
Cost Basis
Unrealized
Gains
Unrealized
Losses
Estimated Fair
Value
202,250
159,812
362,062
51,854
51,854
413,916
$
$
(in thousands)
—
—
—
—
—
—
$
$
$
—
(54 )
(54 )
(274 )
(274 )
(328 ) $
202,250
159,758
362,008
51,580
51,580
413,588
$
$
$
$
There have been no significant realized gains or losses on available-for-sale securities for the periods presented. As of December 31, 2023 and 2022,
there were no available-for-sale securities that have been in a continuous unrealized loss position for more than 12 months. As of December 31, 2022, our
marketable securities had average contractual maturities of approximately six months. We believe that we have the ability to realize the full value of all of
these investments upon their respective maturities.
5.
Eidos Therapeutics, Inc, or Eidos
From the date of BridgeBio’s initial investment until June 22, 2018, the Eidos IPO closing date, Eidos was determined to be a VIE and BridgeBio
consolidated Eidos as the primary beneficiary. Subsequent to the Eidos IPO, BridgeBio determined that Eidos was no longer a VIE due to Eidos having
sufficient equity at risk to finance its activities without additional subordinated financial support. From June 22, 2018, through January 26, 2021, BridgeBio
determined that it held greater than 50% of the voting shares of Eidos and there were no other parties with substantive participating, liquidation or kick-out
rights. BridgeBio consolidated Eidos under the VOE model until January 26, 2021, the date on which the Merger Transactions (as defined below) were
consummated.
On October 5, 2020, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with Eidos, Globe Merger Sub I, Inc., or Merger
Sub, and Globe Merger Sub II, Inc. (the two latter companies being our indirect wholly-owned subsidiaries), providing for, in a series of merger
transactions, or the Merger Transactions, the acquisition by us of all of the outstanding shares of common stock of Eidos, or the Eidos Common Stock,
other than shares of Eidos Common Stock that (i) were owned by Eidos as treasury stock, (ii) were owned by us and our subsidiaries and, in each case, not
owned on behalf of third parties and (iii) were subject to an Eidos Restricted
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Share Award (as defined below). Under the Merger Agreement, the stockholders of Eidos had the right to receive, at their election, either 1.85 shares of our
common stock or $73.26 in cash per Eidos share in the transaction, subject to proration as necessary to ensure that the aggregate amount of cash
consideration was no greater than $175.0 million. In addition, immediately prior to the effective time of the merger of Merger Sub with and into Eidos, or
the Effective Time, (i) each option to purchase Eidos Common Stock, or an Eidos Option were to be converted into an option, on the same terms and
conditions applicable to such Eidos Option immediately prior to the Effective Time, to purchase a specified number of shares of BridgeBio common stock,
calculated pursuant to the terms of the Merger Agreement, and (ii) each outstanding award of shares of Eidos Common Stock that was subject to forfeiture
conditions (subject to certain exceptions), or, each, an Eidos Restricted Share Award was to be converted into an award, on the same terms and conditions
applicable to such Eidos Restricted Share Award immediately prior to the Effective Time, covering a number of whole restricted shares of BridgeBio
common stock, calculated pursuant to the terms of the Merger Agreement, with any fractional shares being paid out to the holder of such Eidos Restricted
Share Award in cash (conversion of the Eidos Option and the Eidos Restricted Share Awards collectively referred to as the “Eidos Awards Exchange”).
On January 19, 2021, the stockholders of each of BridgeBio and Eidos voted to approve all proposals related to the Merger Transactions and on
January 26, 2021, we closed and completed the Merger Transactions. The acquisition of the Eidos Common Stock was settled through an aggregate
consideration of $1,651.6 million, which was comprised of cash payments of $21.3 million and the issuance of approximately 26,156,446 shares of our
common stock, with a total fair value of $1,630.3 million. We accounted for the purchase of the outstanding Eidos Common Stock as acquisition of
noncontrolling interest in accordance with ASC 810, Consolidation. Under ASC 810, the carrying amount of the Eidos noncontrolling interest was adjusted
to reflect the change in our ownership interest, and the difference between the fair value of the consideration paid, and the amount by which the
noncontrolling interest was adjusted was recognized in equity. Such difference recognized in equity amounted to $1,613.4 million and recorded as
reduction in “Additional paid-in capital” for the year ended December 31, 2021. We continued to recognize the assets and liabilities of Eidos at their
respective historical values as of the closing date of the Merger Transactions.
Through the closing of the Merger Transactions, we incurred transaction costs aggregating $70.7 million that were recorded in “Additional paid-in
capital” for the year ended December 31, 2021.
Upon closing and completion of the Merger Transactions with Eidos, Eidos became our wholly-owned subsidiary. Eidos’ common stock ceased to
trade on The Nasdaq Global Select Market prior to the opening of business on January 26, 2021 and Eidos’ Certification and Notice of Termination of
Registration under Section 12(g) of the Exchange Act was filed with the SEC on February 5, 2021.
6.
Noncontrolling Interests
As of December 31, 2023 and 2022, we had both redeemable convertible noncontrolling interests and noncontrolling interests in consolidated
partially-owned entities, for which BridgeBio is the primary beneficiary under the VIE model. These balances are reported as separate components outside
stockholders’ deficit in “Redeemable convertible noncontrolling interests” and as part of stockholders’ deficit in “Noncontrolling interests” in the
consolidated balance sheets.
We adjust the carrying value of noncontrolling interests to reflect the book value attributable to noncontrolling shareholders of consolidated
partially-owned entities when there is a change in the ownership during the respective reporting period. For the years ended December 31, 2023, 2022 and
2021, such adjustments in the aggregate amounts of $(10.5) million, $(3.5) million and $(2.1) million, respectively, are recorded to additional paid-in
capital. All such adjustments are disclosed within the “Transfers from (to) noncontrolling interests” line item in the consolidated statements of redeemable
convertible noncontrolling interests and stockholders’ equity (deficit).
164
7.
Other Equity Investments
LianBio
In October 2019, BBP LLC entered into an exclusivity agreement with LianBio, pursuant to which BBP LLC received equity in LianBio
representing a 10% ownership interest. The equity interest was issued in consideration for certain rights of first negotiation and rights of first offer granted
by BBP LLC to LianBio with respect to specified transactions covering intellectual property rights owned or controlled by BBP LLC or its affiliates in
certain territories outside the United States. The equity interest gave BBP LLC the right to appoint or remove one director to the board of directors of
LianBio, and, therefore, can exercise significant influence over LianBio. As a result, we had accounted for this investment under the equity method and
LianBio was considered a related party.
On November 1, 2021, LianBio completed its IPO. Upon completion of the LianBio IPO, BBP LLC’s ownership in LianBio was reduced to
approximately 4.7% of LianBio’s fully-diluted equity and, pursuant to the exclusivity agreement, BBP LLC’s right to appoint or remove one director to the
board of directors of LianBio was terminated. BBP LLC no longer exercises significant influence over LianBio; and, therefore, we started accounting for
BBP LLC’s equity interest in LianBio under ASC 321. LianBio is also no longer considered a related party. Consequently, we recognized a $68.5 million
gain on conversion from equity method investment to investment in equity securities which is presented as part of “Other income (expense), net” in our
consolidated statement of operations for the year ended December 31, 2021. For the years ended December 31, 2023, 2022 and 2021, we recorded
unrealized gain of $14.2 million, and unrealized losses of $22.6 million and $37.7 million, respectively, for the ongoing mark-to-market adjustments of our
investment, see Note 3.
Pursuant to a License Agreement entered into in October 2019 between QED and LianBio, or the QED-LianBio License Agreement (see Note 11),
QED also received warrants which entitle QED to purchase 10% of the then-fully diluted shares of one of the subsidiaries of LianBio upon achievement of
certain contingent development milestones. Changes in fair value of the warrants were not material for the years ended December 31, 2023, 2022 and 2021.
In October 2021, the warrants held by QED to purchase shares of one of the subsidiaries of LianBio were converted into the LianBio Warrant, which
entitles QED to purchase 347,569 shares of LianBio. The LianBio Warrant is measured at fair value on a recurring basis, with changes in fair value
recognized in our consolidated statements of operations as part of “Other income (expense), net”. The LianBio Warrant, which is presented as part of
“Other assets” in our consolidated balance sheets, had a fair value of $1.6 million and $0.6 million as of December 31, 2023 and 2022, respectively.
On February 13, 2024, LianBio announced plans to wind down its operations, including the sale of its remaining assets, delisting of its American
Depository Shares from the Nasdaq Global Market, deregistration under Section 12(b) of the Securities Act of 1934, and workforce reductions. LianBio's
Board of Directors has also declared a special cash dividend of $4.80 per ordinary share which is expected to be received by the Company on March 14,
2024, net of applicable depositary fees of $0.05 per shares held and applicable taxes. On February 20, 2024, QED exercised the 347,569 shares of LianBio
warrants it held for an immaterial amount. As of February 22, 2024, the Company held 5,350,361 shares of LianBio common stock. We are currently
evaluating the impact LianBio's wind down of operations may have on the QED-LianBio License Agreement and our operations.
PellePharm
As of April 15, 2021, BridgeBio had been the primary beneficiary of PellePharm as it had power over key decisions that significantly impact
PellePharm’s economic performance. BridgeBio also had the obligation to absorb losses or the right to receive benefits from PellePharm that could
potentially be significant to PellePharm through its common and preferred stock interest in PellePharm. Accordingly, BridgeBio had consolidated
PellePharm during the period April 15, 2021 through December 31, 2022.
On January 16, 2023, PellePharm’s board of directors authorized the assignment of all PellePharm’s assets to PellePharm ABC, LLC for liquidation
and distribution under the ABC.
As part of the ABC proceedings, PellePharm’s board of directors resigned effective March 6, 2023. The date the board of directors resigned was
determined to be a VIE reconsideration event. Based on the changes to PellePharm’s governance structure and composition of the board of directors as a
result of the ABC, BridgeBio was no longer the primary beneficiary, as it no longer had the power over key decisions that significantly impact
165
PellePharm’s economic performance. Accordingly, BridgeBio deconsolidated PellePharm effective during the three months ended March 31, 2023 and
recognized a loss of $1.2 million which is presented as part of “Other expense, net” on the consolidated statements of operations.
8.
Intangible Assets
The following table summarizes our recognized intangible assets for the years ended December 31, 2023 and 2022 as a result of the arrangements
described in the following sections:
Gross amount
Less: accumulated amortization
Total
December 31, 2023
December 31, 2022
Weighted-average
Estimated Useful
Lives
11.0 years
Amount
(in thousands)
$
$
$
32,500
(6,181 )
26,319
Weighted-average
Estimated Useful
Lives
12.0 years
Amount
(in thousands)
$
$
$
32,500
(3,788 )
28,712
Amortization expense recorded as part of cost of license revenue and products sold for the years ended December 31, 2023, 2022 and 2021 was $2.4
million, $2.4 million and $2.6 million, respectively. Future amortization expense is $2.4 million for each of the years from 2024 to 2027 and $16.7 million
thereafter.
Novartis License Agreement
In January 2018, QED entered into a License Agreement with Novartis International Pharmaceutical, Inc. or Novartis, pursuant to which QED
acquired certain intellectual property rights, including patents and know-how, related to infigratinib for the treatment of patients with FGFR-driven
diseases. QED accounted for the transaction as an asset acquisition as substantially all of the estimated fair value of the gross assets acquired was
concentrated in a single identified asset, in-process research and development, or IPR&D, thus satisfying the requirements of the screen test in ASU 2017-
01, Business Combinations (Topic 805), Clarifying the Definition of a Business. The assets acquired and liabilities assumed in the transaction were
measured based on their fair values. The fair value of the IPR&D acquired was charged to research and development expense as it had no alternative future
use at the time of the acquisition.
If certain substantial milestones are met, QED could be required to pay up to $60.0 million in regulatory milestone payments, $35.0 million in sales-
based milestone payments, and pay royalties of up to low double-digit percentages on net sales. Following the FDA approval of TRUSELTIQTM in May
2021, we paid a one-time regulatory milestone payment to Novartis of $20.0 million. We capitalized such payment as a finite-lived intangible asset and
amortize the amount over its estimated useful life on a straight-line basis. While a request to withdraw the New Drug Application (“NDA”) for
TRUSELTIQTM was submitted in May 2023, all clinical investigations under the associated Investigational New Drug application (“IND”) were
discontinued as of March 2023 due to difficulty enrolling study patients for the required confirmation trial. However, the intellectual property rights,
patents and know-how related to infigratinib is being applied to other clinical investigations for FGFR-driven diseases.
166
Diagnostics Agreement with Foundation Medicine
In November 2018, QED and Foundation Medicine, Inc., or FMI, entered into a companion diagnostics agreement relating to QED’s drug discovery
and development initiatives. Pursuant to the agreement, QED could be required to pay $12.5 million in regulatory approval milestones over a period of four
years subsequent to the FDA approval of a companion diagnostic for TRUSELTIQTM in patients with cholangiocarcinoma. The FDA approved the
companion diagnostic for TRUSELTIQTM in May 2021, which resulted in the capitalization of $12.5 million as a finite-lived intangible asset to be
amortized over its estimated useful life on a straight-line basis. While a request to withdraw the NDA for TRUSELTIQTM was submitted in May 2023, and
all clinical investigations under the associated IND were discontinued, the FMI companion diagnostics agreement drug discovery and development
initiatives are being applied to other clinical investigations. As of December 31, 2023, the amount due to FMI is presented in our consolidated balance
sheets in “Accrued professional and other accrued liabilities” for $6.0 million and “Other long-term liabilities” for $5.0 million. As of December 31, 2022,
the amount due to FMI is presented in our consolidated balance sheets in “Accrued professional and other accrued liabilities” for $2.5 million and “Other
long-term liabilities” for $8.5 million.
9.
Commitments and Contingencies
Milestone Compensation Arrangements
We have performance-based milestone compensation arrangements with certain employees and consultants, whose vesting is contingent upon
meeting various milestones, with fixed monetary amounts known at inception that can be settled in the form of cash or equity at our sole discretion. We
also have performance-based milestone compensation arrangements with certain employees and consultants as part of the 2020 Stock and Equity Award
Exchange Program, or the Exchange Program (see Note 16). The compensation arrangements under the Exchange Program are to be settled in the form of
equity only. Performance-based milestone awards that are settled in the form of equity are satisfied in the form of fully-vested restricted stock awards, or
RSAs. We accrue for such contingent compensation when the related milestone is probable of achievement and is recorded in “Accrued compensation and
benefits” for the current portion and in “Other long-term liabilities” for the noncurrent portion in the consolidated balance sheets. There is no accrued
compensation expense for performance-based milestone awards that are assessed to be not probable of achievement. The table below shows our
commitment for the potential milestone amounts and the accruals for milestones deemed probable of achievement as of December 31, 2023.
Settlement Type
Cash
Stock
Cash or stock at our sole discretion
(2)
Total
Potential Fixed Monetary
Amount
Accrued
(1)
Amount
$
$
(in thousands)
9,406 $
51,550
129,742
190,698 $
565
9,092
12,572
22,229
(1)
(2)
Amount recorded for performance-based milestone awards that are probable of achievement.
Includes the performance-based milestone awards that were granted as part of the Exchange Program further discussed in Note 16.
167
Other Research and Development and Commercial Agreements
We may also enter into contracts in the normal course of business with contract research organizations for services related to clinical trials, with
contract manufacturing organizations for clinical supplies, and with other vendors for preclinical studies, supplies, and other services and products for
commercial and operating purposes. These contracts generally provide for termination on notice with potential termination charges. As of December 31,
2023, there were no material amounts accrued related to termination charges. As of December 31, 2022, we had liabilities for certain fees that we incurred
related to reprioritization of our research and development projects of approximately $3.3 million (see Note 17).
Indemnification
In the ordinary course of business, we may provide indemnifications of varying scope and terms to vendors, lessors, business partners, board
members, officers, and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services
to be provided by us, our negligence or willful misconduct, violations of law, or intellectual property infringement claims made by third parties. In addition,
we have entered into indemnification agreements with directors and certain officers and employees that will require us, among other things, to indemnify
them against certain liabilities that may arise by reason of their status or service as directors, officers, or employees. No material demands have been made
upon us to provide indemnification under such agreements, and thus, there are no claims that we are aware of that could have a material effect in our
consolidated financial statements.
We also maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors and
certain officers. To date, we have not paid any claims related to our indemnification obligations. As of December 31, 2023 and 2022, we did not have any
material indemnification claims that were probable or reasonably possible, and consequently have not accrued any liabilities in the consolidated financial
statements as a result of these provisions.
Contingencies
From time to time, we may become involved in legal proceedings arising in the ordinary course of business. We are not currently a party to any
material legal proceedings.
10.
Debt
Notes
2029 Notes
On January 28, 2021, we issued an aggregate of $717.5 million principal amount of our 2029 Notes pursuant to an Indenture dated January 28,
2021, or the 2029 Notes Indenture, between us and U.S. Bank National Association, as trustee, or the 2029 Notes Trustee, in a private offering to qualified
institutional buyers, or the 2021 Note Offering, pursuant to Rule 144A under the Securities Act of 1933, as amended, or the Securities Act. The 2029 Notes
issued in the 2021 Note Offering include $67.5 million aggregate principal amount of 2029 Notes sold to the initial purchasers, or the 2029 Notes Initial
Purchasers, pursuant to the exercise in part of the 2029 Notes Initial Purchasers’ option to purchase $97.5 million principal amount of additional 2029
Notes. On January 28, 2021, the 2029 Notes Initial Purchasers exercised the remaining portion of their option to purchase $30.0 million principal amount
of additional 2029 Notes. The sale of those additional 2029 Notes closed on February 2, 2021, which resulted in the total aggregate principal amount of
$747.5 million.
The 2029 Notes are senior, unsecured obligations of BridgeBio and will accrue interest payable semiannually in arrears on February 1 and August 1
of each year, beginning on August 1, 2021, at a rate of 2.25% per year. The 2029 Notes will mature on February 1, 2029, unless earlier converted,
redeemed or repurchased. The 2029 Notes are convertible into cash, shares of BridgeBio’s common stock, or a combination of cash and shares of
BridgeBio’s common stock, at our election.
168
We received net proceeds from the 2021 Note Offering of approximately $731.4 million, after deducting the 2029 Notes Initial Purchasers’ discount
(there were no direct offering expenses borne by us for the 2029 Notes). We used approximately $61.3 million of the net proceeds from the 2021 Note
Offering to pay for the cost of the 2021 Capped Call Transactions described below and approximately $50.0 million to pay for the repurchase of shares of
BridgeBio common stock described below.
A holder of 2029 Notes may convert all or any portion of its 2029 Notes at its option at any time prior to the close of business on the business day
immediately preceding November 1, 2028, in multiples of $1,000 only under the following circumstances:
•
•
•
•
During any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the
last reported sale price of BridgeBio’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30
consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal
to 130% of the conversion price on each applicable trading day;
During the five-business day period after any five consecutive trading day period, or the measurement period, in which the “trading price” (as
defined in the 2029 Notes Indenture) per $1,000 principal amount of 2029 Notes for each trading day of the measurement period was less
than 98% of the product of the last reported sale price of BridgeBio’s common stock and the conversion rate on each such trading day;
If we call such notes for redemption, at any time prior to the close of business on the second business day immediately preceding the
redemption date; or
Upon the occurrence of specified corporate events, as defined in the 2029 Notes Indenture.
On or after November 1, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder
may convert all or any portion of its 2029 Notes at any time, regardless of the foregoing.
The conversion rate will initially be 10.3050 shares of BridgeBio’s common stock per $1,000 principal amount of 2029 Notes (equivalent to an
initial conversion price of approximately $97.04 per share of BridgeBio’s common stock, for a total of approximately 7,702,988 shares).
The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following
certain corporate events that occur prior to the maturity date or if we deliver a notice of redemption, we will, in certain circumstances, increase the
conversion rate for a holder who elects to convert its 2029 Notes in connection with such a corporate event. The maximum number of shares issuable
should there be an increase in the conversion rate is 11,361,851 shares of BridgeBio’s common stock.
We may not redeem the 2029 Notes prior to February 6, 2026. We may redeem for cash all or any portion of the 2029 Notes, at our option, on a
redemption date occurring on or after February 6, 2026 and on or before the 41st scheduled trading day immediately before the maturity date, under certain
circumstances. No sinking fund is provided for the Notes. If we undergo a fundamental change (as defined in the 2029 Notes Indenture), holders may
require us to repurchase for cash all or any portion of their 2029 Notes at a fundamental change repurchase price equal to 100% of the principal amount of
the 2029 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2029 Notes
Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the 2029 Notes Trustee or
the holders of not less than 25% in aggregate principal amount of the 2029 Notes then outstanding may declare the entire principal amount of all the Notes
plus accrued special interest, if any, to be immediately due and payable. The 2029 Notes are our general unsecured obligations and rank senior in right of
payment to all of our indebtedness that is expressly subordinated in right of payment to the 2029 Notes; equal in right of payment with all of our liabilities
that are not so subordinated, including our 2027 Notes; effectively junior to any of our secured indebtedness to the extent of the value of the assets securing
such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.
169
In connection with the issuance of the 2029 Notes, we incurred approximately $16.1 million of debt issuance costs, which consisted of initial
purchasers’ discounts. This was recorded as a reduction in the carrying value of the debt on the consolidated balance sheets and is amortized to interest
expense using the effective interest method over the expected life of the 2029 Notes or approximately their eight-year term.
2027 Notes
On March 9, 2020, we issued an aggregate principal amount of $550.0 million of our 2.50% Convertible Senior Notes due 2027, or the 2027 Notes,
pursuant to an Indenture dated March 9, 2020, or the 2027 Notes Indenture, between us and U.S. Bank National Association, as trustee (the “2027 Notes
Trustee”), in a private offering to qualified institutional buyers, or the 2020 Note Offering, pursuant to Rule 144A under the Securities Act. The 2027 Notes
issued in the 2020 Note Offering include $75.0 million in aggregate principal amount of 2027 Notes sold to the initial purchasers, or the 2027 Notes Initial
Purchasers, resulting from the exercise in full of their option to purchase additional 2027 Notes.
The 2027 Notes will accrue interest payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2020,
at a rate of 2.50% per year. The 2027 Notes will mature on March 15, 2027, unless earlier converted or repurchased. The 2027 Notes are convertible into
cash, shares of BridgeBio’s common stock or a combination of cash and shares of BridgeBio’s common stock, at our election.
We received net proceeds from the 2020 Note Offering of approximately $537.0 million, after deducting the 2027 Notes Initial Purchasers’ discount
and offering expenses. We used approximately $49.3 million of the net proceeds from the 2020 Note Offering to pay for the cost of the 2020 Capped Call
Transactions described below, and approximately $75.0 million to pay for the repurchase of shares of BridgeBio common stock described below.
A holder of 2027 Notes may convert all or any portion of its 2027 Notes at its option at any time prior to the close of business on the business day
immediately preceding December 15, 2026, in multiples of $1,000 only under the following circumstances:
•
•
•
During any calendar quarter commencing after the calendar quarter ending on June 30, 2020 (and only during such calendar quarter), if the
last reported sale price of BridgeBio’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30
consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal
to 130% of the conversion price on each applicable trading day (the “Conversion Price Condition”);
During the five-business day period after any five consecutive trading day period, or the measurement period, in which the “trading price” (as
defined in the Indenture) per $1,000 principal amount of 2027 Notes for each trading day of the measurement period was less than 98% of
the product of the last reported sale price of BridgeBio’s common stock and the conversion rate on each such trading day; or,
Upon the occurrence of specified corporate events, as defined in the 2027 Notes Indenture.
On or after December 15, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder
may convert all or any portion of its 2027 Notes at any time, regardless of the foregoing.
Only during each of the calendar quarters ended March 31, 2021 and June 30, 2021, the 2027 Notes were eligible for conversion at the option of the
holders as the Conversion Price Condition was met during the period. The Conversion Price Condition was not met for any other period during fiscal years
2022 and 2021.
The conversion rate will initially be 23.4151 shares of BridgeBio’s common stock per $1,000 principal amount of 2027 Notes (equivalent to an
initial conversion price of approximately $42.71 per share of BridgeBio’s common stock, for a total of approximately 12,878,305 shares).
The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following
certain corporate events that occur prior to the maturity date, we will, in certain circumstances, increase the conversion rate for a holder who elects to
convert its 2027 Notes in connection with such a corporate event. The maximum number of shares issuable should there be an increase in the conversion
rate is 17,707,635 shares of BridgeBio’s common stock.
170
We may not redeem the 2027 Notes prior to the maturity date, and no sinking fund is provided for the 2027 Notes. If we undergo a fundamental
change (as defined in the 2027 Notes Indenture), holders may require us to repurchase for cash all or any portion of their 2027 Notes at a fundamental
change repurchase price equal to 100% of the principal amount of the 2027 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding,
the fundamental change repurchase date. The 2027 Notes Indenture contains customary terms and covenants, including that upon certain events of default
occurring and continuing, either the 2027 Notes Trustee or the holders of not less than 25% in aggregate principal amount of the 2027 Notes then
outstanding may declare the entire principal amount of all the 2027 Notes plus accrued special interest, if any, to be immediately due and payable. The
2027 Notes are our general unsecured obligations and rank senior in right of payment to all of our indebtedness that is expressly subordinated in right of
payment to the 2027 Notes; equal in right of payment with all of BridgeBio’s liabilities that are not so subordinated, including our 2029 Notes; effectively
junior to any of BridgeBio’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all
indebtedness and other liabilities (including trade payables) of our subsidiaries.
In accounting for the issuance of the 2027 Notes in 2020 under ASC 470-20, Debt: Debt with Conversion and Other Options, we separately
accounted for the liability and equity components of the 2027 Notes by allocating the proceeds between the liability component and the embedded
conversion options, or equity component, due to our ability to settle the 2027 Notes in cash, BridgeBio common stock, or a combination of cash and
BridgeBio common stock at our option. Effective January 1, 2021, we early adopted ASU 2020-06, Debt – Debt with Conversion and Other Options
(Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and
Contracts in an Entity’s Own Equity, and, as a result, we no longer separately account for the liability and equity components of the 2027 Notes, and,
instead, account for our 2027 Notes wholly as debt.
In connection with the issuance of the 2027 Notes, we incurred approximately $13.0 million of debt issuance costs, which primarily consisted of
initial purchasers’ discounts and legal and other professional fees. We allocated these costs to the liability and equity components based on the allocation of
the proceeds. The portion of these costs allocated to the equity component totaling approximately $4.1 million was recorded as a reduction to additional
paid-in capital in 2020. The portion of these costs allocated to the liability component totaling approximately $8.9 million was recorded as a reduction in
the carrying value of the debt on the consolidated balance sheets and was amortized to interest expense using the effective interest method over the
expected life of the 2027 Notes or approximately their seven-year term.
Additional Information Related to the Notes
The outstanding Notes’ balances consisted of the following:
Principal
Unamortized debt discount and issuance costs
Net carrying amount
December 31, 2023
December 31, 2022
2029 Notes
2027 Notes
2029 Notes
2027 Notes
$
$
(in thousands)
747,500 $
(10,595 )
736,905 $
550,000 $
(6,621 )
543,379 $
(in thousands)
747,500 $
(12,512 )
734,988 $
550,000
(8,366 )
541,634
The following table sets forth the total interest expense recognized and effective interest rates related to the Notes:
Contractual interest expense
Amortization of debt discount and issuance costs
Total interest and amortization expense
2029 Notes
Year Ended December 31, 2023
2027 Notes
Total
$
$
(in thousands)
16,819 $
1,917
18,736 $
13,750 $
1,745
15,495 $
30,569
3,662
34,231
Effective interest rate
2.6 %
2.8 %
171
Contractual interest expense
Amortization of debt discount and issuance costs
Total interest and amortization expense
Effective interest rate
Contractual interest expense
Amortization of debt discount and issuance costs
Total interest and amortization expense
2029 Notes
Year Ended December 31, 2022
2027 Notes
Total
(in thousands)
16,819 $
1,869
18,688 $
13,750 $
1,699
15,449 $
30,569
3,568
34,137
2.6 %
2.8 %
2029 Notes
Years Ended December 31, 2021
2027 Notes
Total
(in thousands)
15,557 $
1,682
17,239 $
13,750 $
1,654
15,404 $
29,307
3,336
32,643
$
$
$
$
Effective interest rate
2.6 %
2.8 %
As of December 31, 2023, interest payable on the 2029 and 2027 Notes amounted to $7.0 million and $4.0 million, respectively. As of December
31, 2022, interest payable on the 2029 and 2027 Notes amounted to $7.0 million and $4.0 million, respectively. Such amounts are included in “Accrued
professional and other accrued liabilities” in our consolidated balance sheets.
Future minimum payments under the Notes as of December 31, 2023, are as follows:
Year ending December 31:
2024
2025
2026
2027
2028
Thereafter
Total future payments
Less amounts representing interest
Total principal amount
2029 Notes
2027 Notes
(in thousands)
Total
16,819
16,819
16,819
16,819
16,819
755,908
840,003
(92,503 )
747,500 $
13,750
13,750
13,750
556,875
—
—
598,125
(48,125 )
550,000 $
30,569
30,569
30,569
573,694
16,819
755,908
1,438,128
(140,628 )
1,297,500
$
172
Capped Call and Share Repurchase Transactions with Respect to the Notes
On each of January 25, 2021 and March 4, 2020, concurrently with the pricing of the 2029 Notes and 2027 Notes, respectively, we entered into
separate privately negotiated capped call transactions (the “2021 Capped Call Transactions” and the “2020 Capped Call Transactions”, respectively), or,
together, the Capped Call Transactions, with certain financial institutions, or the Capped Call Counterparties. We used approximately $61.3 million and
$49.3 million of the net proceeds from the 2021 Note Offering and 2020 Note Offering, respectively, to pay for the cost of the respective Capped Call
Transactions. The Capped Call Transactions are expected generally to reduce the potential dilution to BridgeBio’s common stock upon any conversion of
Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be, with such
reduction and/or offset subject to a cap initially equal to $131.58 for the 2021 Capped Call Transactions and $62.12 for the 2020 Capped Call Transactions
(both of which represented a premium of 100% over the last reported sale price of BridgeBio’s common stock on the date of the Capped Call Transactions)
and are subject to certain adjustments under the terms of the Capped Call Transactions. The 2021 Capped Calls and 2020 Capped Calls cover 7,702,988
shares and 12,878,305 shares, respectively, of our common stock (subject to anti-dilution and certain other adjustments), which are the same number of
shares of common stock that initially underlie the Notes. The 2021 Capped Calls have an initial strike price of approximately $97.04 per share, which
corresponds to the initial conversion price of the 2029 Notes. The 2020 Capped Calls have an initial strike price of approximately $42.71 per share, which
corresponds to the initial conversion price of the 2027 Notes. The Capped Call Transactions are separate transactions, entered into by us with the Capped
Call Counterparties, and are not part of the terms of the Notes.
These Capped Call instruments meet the conditions outlined in ASC 815-40, Derivatives and Hedging, to be classified in stockholders’ equity and
are not subsequently remeasured as long as the conditions for equity classification continue to be met. We recorded a reduction to additional paid-in capital
of approximately $61.3 million and $49.3 million for the years ended December 31, 2021 and 2020, respectively, related to the premium payments for the
Capped Call Transactions.
Additionally, we used approximately $50.0 million and $75.0 million of the net proceeds from the 2021 Note Offering and 2020 Note Offering to
repurchase 759,993 shares and 2,414,681 shares, respectively, of our common stock concurrently with the closing of the Note Offerings from certain of the
Notes’ Initial Purchasers in privately negotiated transactions. The agreed purchase price per share of common stock in the repurchases were $65.79 and
$31.06, which were the last reported sale prices per share of our common stock on The Nasdaq Global Select Market, or Nasdaq, on January 25, 2021 and
March 4, 2020, respectively. The shares repurchased were recorded as treasury stock.
Term Loan, net
Loan and Security Agreement
In November 2021, we entered into a Loan and Security Agreement (the “Loan Agreement,” and as amended by the First Amendment (as defined
below) and the Second Amendment (as defined below), the “Amended Loan Agreement”), by and among (i) U.S. Bank National Association, in its
capacity as administrative agent (in such capacity, the “Administrative Agent”) and collateral agent (in such capacity, the “Collateral Agent”), (ii) certain
lenders (the “Lenders”), (iii) BridgeBio, as a borrower, and (iv) certain subsidiaries of BridgeBio, as guarantors (the “Guarantors”). In May 2022, we
entered into the First Amendment to the Loan Agreement (the “First Amendment”) and in November 2022, we entered into the Second Amendment to the
Loan Agreement (the “Second Amendment”), as further described below.
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Pursuant to the original terms and conditions of the Loan Agreement, the Lenders agreed to extend term loans to us in an aggregate principal amount
of up to $750.0 million, comprised of (i) a tranche 1 advance of $450.0 million (the “Tranche 1 Advance”), and (ii) a tranche 2 advance of $300.0 million
(the “Tranche 2 Advance”) (collectively, the “Term Loan Advances”). The Tranche 1 Advance under the Loan Agreement was funded on November 17,
2021. The Tranche 2 Advance remained available for funding until December 31, 2022, which was available at our election after the occurrence of certain
milestone events relating to data from our clinical trials. The terms related to the Tranche 2 Advance were modified in the First Amendment and Second
Amendment as further discussed below. The First Amendment’s term included the reduction of the aggregate amount of the Tranche 2 Advance from
$300.0 million to $100.0 million. The Second Amendment eliminated the $100.0 million Tranche 2 Advance. As a result of the Second Amendment, the
total aggregate principal amount of the loan is $450.0 million before any mandatory prepayment.
As security for our obligations under the Loan Agreement, each of BridgeBio and the Guarantors granted the Collateral Agent, for the benefit of the
Lenders, a continuing security interest in substantially all of the assets of BridgeBio and the Guarantors (including all equity interests owned or hereafter
acquired by BridgeBio and the Guarantors), subject to certain customary exceptions. Upon exceeding certain investment and disposition thresholds,
additional subsidiaries of BridgeBio will be required to join as guarantors.
Any outstanding principal on the Term Loan Advances will accrue interest at a fixed rate equal to 9.0% per annum. 3.0% of which can be a
payment-in-kind (“PIK”) until January 1, 2025. Interest payments are payable quarterly following the funding of a Term Loan Advance. We would be
required to make principal payments on the outstanding balance of the Term Loan Advances commencing on January 2, 2025 (the “Term Loan
Amortization Date”) in nine quarterly installments, plus interest. If we have achieved certain milestone events relating to data from the clinical trial of
acoramidis (the “Acoramidis Milestone”) on or prior to January 1, 2025, then the Term Loan Amortization Date would be automatically extended to
January 2, 2026. Any amounts outstanding under the Term Loan Advances are due and payable on November 17, 2026 (the “Maturity Date”).
We may prepay the outstanding principal amount of the Term Loan Advances at any time (in whole, but not in part), plus accrued and unpaid
interest and a prepayment premium ranging from 1.0% to 3.0% of the principal amount outstanding depending on the timing of payment (plus a customary
make-whole amount if prepaid on or prior to November 17, 2022).
At the Lenders’ election, we are also required to make mandatory prepayments upon the occurrence of certain prepayment events related to the
repurchase or redemption of pledged collateral, entry into certain royalty transactions, disposition of other assets or subsidiaries, and entry into licensing
and other monetization transactions (all such events are referred to as “prepayment events”), which could be 50.0% or 75.0% of net cash proceeds from
such transaction depending on achievement of the Acoramidis Milestone.
Subject to the mandatory prepayment requirements for certain prepayment events, the Loan Agreement contains customary affirmative and limited
negative covenants which, among other things, limit our ability to (i) incur additional indebtedness, (ii) pay dividends or make certain distributions, (iii)
dispose of our assets, grant liens, license or encumber our assets or (iv) fundamentally alter the nature of our business. BridgeBio and the Guarantors have
broad ability to license our intellectual property, dispose of other assets and enter into monetization and royalty transactions, subject in each case to the
requirement to make a mandatory prepayment described above. The Loan Agreement provides that BridgeBio and the Guarantors may, subject to certain
limitations, (x) repurchase the BridgeBio’s equity interest and the equity interest of any of its subsidiaries, (y) enter into any joint ventures or similar
investments, and (z) make other investments and acquisitions. Subject to the mandatory prepayment requirement described above, portfolio companies
owned by BridgeBio that are not parties to the Loan Agreement are, subject to certain exceptions, not subject to any covenants or limitations under the
Loan Agreement.
The Loan Agreement also contains customary events of default, including among other things, our failure to make any principal or interest payments
when due, the occurrence of certain bankruptcy or insolvency events or the breach of the covenants under the Loan Agreement. Upon the occurrence of an
event of default, the Lenders may, among other things, accelerate our obligations under the Loan Agreement.
We received net proceeds from the Tranche 1 Advance of $431.3 million, after deducting debt discount and issuance costs of $18.7 million, of
which approximately $1.1 million of debt issuance costs were incurred for professional services provided by KKR Capital Markets LLC. KKR Capital
Markets LLC is an affiliate of KKR Genetic Disorder L.P., a related party being a principal stockholder of BridgeBio.
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In May 2022, we entered into the First Amendment, which, among other things:
•
•
•
•
permitted the sale of our priority review voucher (“PRV”, see Note 12) and, generally, future dispositions of other PRVs;
reduced the aggregate amount of the Tranche 2 Advance from $300.0 million to $100.0 million and modified certain conditions to the
availability thereof, as mentioned above;
amended the principal payments such that the entire outstanding principal balance of the Term Loan Advances is due and payable at the
Maturity Date or upon early termination; and
modified the terms and conditions governing when certain entities into which we have made investments will be required to become
guarantors under the Amended Loan Agreement.
In June 2022, the receipt of an upfront payment under the license development and commercialization agreement that our subsidiary, Navire
Pharma, Inc. (“Navire”), entered into with Bristol-Myers Squibb Company (“BMS”), which is further described in Note 11, triggered certain mandatory
prepayment provisions of the Amended Loan Agreement. As a result, we paid $20.5 million to the Lenders in June 2022, of which $20.1 million and $0.4
million were applied to principal and exit fee, respectively.
Pursuant to the terms of the Loan Agreement and the Amended Loan Agreement, we exercised our option to convert accrued interest into principal
via PIK amounting to $10.2 million and $15.3 million for the years ended December 31, 2023 and 2022, respectively.
In November 2022, we entered into the Second Amendment, which, among other things:
•
•
•
•
acknowledged that our prior prepayment made with certain cash proceeds received in connection the receipt of an upfront payment under the
Navire-BMS License Agreement, which is further described in Note 11, satisfied the mandatory prepayment requirement under the Amended
Loan Agreement, on the terms and conditions specified in the Amended Loan Agreement;
permitted certain budgeted expenses to be excluded from the definition of cash proceeds subject to the Company’s mandatory prepayment
obligations, on the terms and conditions specified in the Amended Loan Agreement, refer to Note 2 under Restricted Cash section for further
discussion.
removed certain threshold amounts applicable to certain prepayment events; and
terminated the Lenders’ $100.0 million Tranche 2 Advance.
For the year ended December 31, 2023, we recognized interest expense related to the Loan Agreement of $46.3 million, of which $5.2 million,
relates to amortization of debt discount and issuance costs. For the year ended December 31, 2022, we recognized interest expense related to the Loan
Agreement of $46.1 million, of which $5.0 million, relates to amortization of debt discount and issuance costs. For the year ended December 31, 2021, we
recognized interest expense related to the Loan Agreement of $5.5 million, of which $0.6 million, relates to amortization of debt discount and issuance
costs. As of December 31, 2023 and 2022, interest payable included in “Accrued professional and other accrued liabilities” in our consolidated balance
sheets amounted to $6.7 million and $6.4 million, respectively.
The balances of our borrowing under the Amended Loan Agreement consisted of the following:
Principal value of term loan
PIK added to principal
Debt discount, issuance costs and exit fee accretion
Term loan, net
December 31, 2023
December 31, 2022
(in thousands)
429,916 $
25,531
(9,002 )
446,445 $
429,916
15,324
(14,247 )
430,993
$
$
175
Future minimum payments under the Amended Loan Agreement as of December 31, 2023, are as follows:
Year Ending December 31:
2024
2025
2026
Total future payments
Less amounts representing interest
Less exit fee
Total principal amount of term loan payments
$
Amount
(in thousands)
38,015
41,560
510,955
590,530
(126,485 )
(8,598 )
455,447
The amounts in the table above do not take into account our option to exercise future interest payments via PIK. Total future interest payments
throughout the term of the Amended Loan Agreement could increase should we decide to exercise such option.
The Amended Loan Agreement was fully repaid on January 17, 2024 using the proceeds of the Financing Agreement and cash on hand. Refer to
Note 20 for additional details regarding the Financing Agreement and the termination and repayment of the Term Loan, net.
Hercules Loan and Security Agreement
We had a Loan and Security Agreement, as amended from time to time, with Hercules Capital, Inc., or Hercules, or the Hercules Term Loan, under
which we borrowed principal amounts of $35.0 million, or Tranche I, $20.0 million, or Tranche II, $20.0 million, or Tranche III, and $25.0 million, or
Tranche IV.
In January 2021, we executed the Fifth Amendment to the Loan and Security Agreement primarily to allow us to issue our 2029 Notes and to enter
into the related 2021 Capped Call and share repurchase transactions.
In April 2021, we executed the Sixth Amendment to the Loan and Security Agreement, or the Amended Hercules Term Loan.
The Amended Hercules Term Loan was prepaid in full in November 2021 using a portion of the net proceeds from the Tranche 1 Advance under the
Loan Agreement mentioned above, which resulted in a loss on early extinguishment of debt of $2.6 million that is included in “Other income (expense)” in
our consolidated statements of operations. For the year ended December 31, 2021, we recognized interest expense related to the Amended Hercules Term
Loan of $8.1 million, of which $1.7 million relates to amortization of debt discount and issuance costs.
Silicon Valley Bank and Hercules Loan and Security Agreement
Eidos entered into a Loan and Security Agreement with Silicon Valley Bank, or SVB, and Hercules Capital, Inc. or the SVB and Hercules Loan
Agreement, under which Eidos borrowed a principal amount of $17.5 million, or the Tranche A Loan, in November 2019. The Tranche A Loan was subject
to an interest rate equal to the greater of either (i) 8.50% or (ii) 3.25% plus the prime rate as reported in The Wall Street Journal (8.50% during the relevant
period in 2021) and had an original maturity date of October 2, 2023.
The Tranche A Loan was prepaid in full in April 2021 for $18.1 million, which includes a final payment charge and a prepayment fee, using a
portion of the proceeds from Tranche IV under the Amended Hercules Term Loan discussed above. Loss on early extinguishment of the Tranche A Loan
recognized by Eidos was not material. Interest expense on the Tranche A Loan was not material in 2021 through the prepayment date.
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11.
License and Collaboration Agreements
License Development and Commercialization Agreement with BMS
On May 12, 2022, BridgeBio and our subsidiary, Navire Pharma, Inc., or Navire, entered into an exclusive license development and
commercialization agreement with BMS, or the Navire-BMS License Agreement, pursuant to which Navire granted BMS exclusive rights to develop and
commercialize Navire’s product candidate, BBP-398, in all indications worldwide, except for the People’s Republic of China (“PRC”), Macau, Hong Kong,
Taiwan, Thailand, Singapore, and South Korea, or the Asia Region. The development and commercialization of BBP-398 within the Asia Region is
governed under the Navire-LianBio License Agreement (as discussed below). The Navire-BMS License Agreement expands an earlier agreement between
Navire and BMS that was executed in July 2021 to study BBP-398 in a combination therapy trial to treat advanced solid tumors with KRAS mutations, or
the 2021 Navire-BMS Agreement. The Navire-BMS License Agreement does not alter the terms of the 2021 Navire-BMS Agreement.
Under the terms of the Navire-BMS License Agreement, Navire was entitled to receive a non-refundable, upfront payment of $90.0 million, which
Navire received in full in June 2022. Additionally, Navire is eligible to receive additional payments totaling up to approximately $815.0 million in the
aggregate, subject to the achievement of development, regulatory and commercial milestones, as well as tiered royalties in the low-to-mid teens as a
percentage of adjusted net sales by BMS of the licensed products sold worldwide, outside of the Asia Region. Navire will retain the option to acquire
higher royalties in the United States in connection with funding a portion of development costs upon the initiation of registrational studies. Based on the
terms of the Navire-BMS License Agreement, Navire will continue to lead its ongoing Phase 1 monotherapy and combination therapy trials collectively,
the Phase 1 Trials, and BMS will lead and fund all other development and commercialization activities. Navire is fully funding the Phase 1 trials with the
exception of the combination therapy governed under the 2021 Navire-BMS Agreement. In accordance with the 2021 Navire-BMS License Agreement,
both parties are sharing all research and development costs equally for this trial. We have recorded all research and development costs for the Phase 1
Trials, as well as the reimbursement for the costs associated with the trial governed by the 2021 Navire-BMS Agreement within research and development
in our consolidated statement of operations.
We determined that the Navire-BMS License Agreement falls within the scope of ASC 606 as BMS is a customer in this arrangement, and we
identified the following performance obligations in the agreement:
•
•
an exclusive license to develop and commercialize BBP-398 and the related know-how; and
research and development services to complete the Phase 1 Trials for BBP-398 (expected to be completed in 2025).
We determined that the performance obligations outlined above are capable of being distinct and distinct within the context of the contract given
such rights and activities are independent of each other. The license can be used by BMS without the research and development services. Similarly, those
services provide a distinct benefit to BMS within the context of the contract, separate from the license, as the services could be provided by BMS or
another third party without our assistance. We may enter into clinical and commercial supply agreements for the licensed territory. We determined that the
optional right to future products under these supply agreements does not represent a material right. In March 2023, Navire and BMS entered into a clinical
supply agreement for the supply of clinical quantities of the licensed product. Navire has provided $2.0 million of clinical supplies to BMS during the year
ended December 31, 2023.
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We determined the initial transaction price at inception of the Navire-BMS License Agreement to be $90.0 million, which is comprised of the fixed
and non-refundable upfront payment. No additional development, regulatory, or sales milestone payments are included in the transaction price, as all such
payments are variable consideration that are fully constrained as of December 31, 2023. We include variable consideration in our transaction price to the
extent that it is probable that it will not result in a significant revenue reversal when the uncertainty associated with the variable consideration is
subsequently resolved. As part of management’s evaluation of the variable consideration, we considered numerous factors, including the fact that
achievement of the milestones is outside of our control, contingent upon the success of our existing and future clinical trials, BMS’ efforts, and receipt of
regulatory approval that is subject to scientific risks of success. Royalty arrangements and commercial-based milestones will be recognized when the sales
occur or the milestones are achieved pursuant to the sales-based royalty exception under ASC 606 because the license is the predominant item to which the
royalties or commercial-based milestones relate. We will re-evaluate the transaction price at each reporting period and as uncertain events are resolved or
other changes in circumstances occur.
We allocated the transaction price of $90.0 million based on the stand-alone selling prices, or SSP, of each of the performance obligations as
follows:
•
•
$70.2 million for the upfront transfer of the license; and
$19.8 million for ongoing research and development services.
The SSP for the license was determined using an approach that considered discounted, probability-weighted cash flows related to the license
transferred. The SSP for the ongoing research and development services were based on estimates of the associated effort and cost of these services,
adjusted for a reasonable gross profit margin that would be expected to be realized under similar contracts.
We recognized revenue for each of the two performance obligations as follows:
•
•
We recognized revenue related to the license at a point in time upon transfer of the rights and control of the license to BMS. The transfer of
the rights and control of the license occurred in June 2022, thus we recognized the full amount allocated to the license and related know-how
during the year ended December 31, 2022.
The research and development services performance obligation consists of our completion of the Phase 1 Trials. We are recognizing revenue
related to the research and development services over time using an input method to measure progress by utilizing costs incurred to-date
relative to total expected costs. We expect to complete the Phase 1 Trials in 2025. Revenue recognized related to this performance obligation
for the years ended December 31, 2023 and 2022 were $5.4 million, $4.5 million, respectively.
For the years ended December 31, 2023 and 2022, we recognized $7.4 million and $74.7 million, respectively of revenue from the Navire-BMS
License Agreement. Our consolidated balance sheet as of December 31, 2023 includes a deferred revenue balance of $9.9 million ($6.1 million presented
as “Deferred revenue, current portion” and $3.8 million included in “Other long-term liabilities”) related to our performance obligation. Our consolidated
balance sheet as of December 31, 2022 includes a deferred revenue balance of $15.3 million ($8.2 million presented as “Deferred revenue, current portion”
and $7.1 million included in “Other long-term liabilities”) related to our performance obligation.
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License and Collaboration Agreement with Helsinn
On March 29, 2021, QED entered into a license and collaboration agreement with Helsinn Healthcare S.A. (“ HHC”), and Helsinn Therapeutics
(U.S.), Inc. (“HTU”), and collectively with HHC, Helsinn, the (“QED-Helsinn License and Collaboration Agreement”), pursuant to which QED granted to
HHC exclusive licenses to develop, manufacture and commercialize QED’s product candidate, infigratinib, in oncology and all other indications except
achondroplasia or any other skeletal dysplasias, worldwide, except for the People’s Republic of China, Hong Kong and Macau (“Greater China”), and
under which QED received a co-exclusive license to co-commercialize infigratinib in the United States in the licensed indications. The QED-Helsinn
License and Collaboration Agreement became effective on April 16, 2021. Upon approval by the FDA in May 2021, QED and HTU co-commercialized
infigratinib in the licensed indications in the United States and shared profits and losses on a 50:50 basis. Additionally, QED and Helsinn shared global,
excluding Greater China, research and development costs for infigratinib in the licensed indications at a rate of 40% for QED and 60% for Helsinn.
On February 28, 2022, QED and Helsinn amended the QED-Helsinn License and Collaboration Agreement (the “Amended QED-Helsinn License
and Collaboration Agreement”), effective as of March 1, 2022. Under the terms of the Amended QED-Helsinn License and Collaboration Agreement,
Helsinn has an exclusive license to commercialize infigratinib in the U.S. and is responsible for developing, manufacturing and commercializing
infigratinib in oncology indications except for achondroplasia or any other skeletal dysplasias worldwide, outside of Greater China. QED retains all rights
to develop, manufacture and commercialize infigratinib in skeletal dysplasia, including achondroplasia.
Pursuant to the Amended QED-Helsinn License and Collaboration Agreement, QED was eligible to receive regulatory and sales-based milestone
payments of up to $66.0 million, as well as tiered royalties in the low to mid-teens as a percentage of adjusted net sales by Helsinn of the licensed products
sold worldwide, outside of Greater China.
The Amended QED-Helsinn License and Collaboration Agreement also provided for a transitional period, which extended from the effective date
through August 31, 2022, for which QED was contracted to assist in research and development and commercialization activities. The costs related to
QED’s contracted activities incurred during the transitional period were fully reimbursable by Helsinn and were due to QED subsequent to the transitional
period. Helsinn also agreed to reimburse QED’s obligation to FMI as described in Note 8 as part of the Amended QED-Helsinn License and Collaboration
Agreement. In recording this transaction, we recognized a corresponding gain as part of “Other income (expense), net” in our consolidated statement of
operations for the year ended December 31, 2022.
Effective December 21, 2022, QED and Helsinn (the “Helsinn Parties”), entered into a Mutual Termination Agreement (“MTA”), which terminates
the Amended QED-Helsinn License and Collaboration Agreement and all rights and obligations thereunder. The Helsinn Parties agreed to perform certain
close-out services to enable QED to pursue the development, manufacture and commercialization of infigratinib as a potential treatment of non-oncology
indications, such as in achondroplasia worldwide, excluding China, Hong Kong, and Macau. As a result of the termination, QED is no longer entitled to
any future regulatory or sales-based milestone payments. QED was subject to royalties on net sales of TRUSELTIQTM through March 31, 2023, at which
date Helsinn no longer sold the licensed product. Helsinn permanently discontinued the distribution of TRUSELTIQTM and requested a withdrawal of the
NDA in May 2023, additionally, all clinical investigations under the associated IND are discontinued. Helsinn completed sales of the licensed product
during the three months ended March 31, 2023, and the associated revenue recognized was immaterial. The Helsinn Parties developed a Close-Out Plan, as
defined within the MTA. Activities within the Close-Out Plan are to be shared equally subsequent to the first $11.0 million of costs, which are the
responsibility of QED. QED reached the threshold of $11.0 million in January 2023. The activities within the Close-Out Plan are complete as of December
31, 2023.
In accordance with the MTA, all outstanding obligations under the Amended QED-Helsinn License and Collaboration agreement related to the
contracted services during the transitional period became due. As of the date of the MTA, outstanding obligations were $31.3 million, consisting of
reimbursable contracted research and development and commercial activities of $18.8 million and the reimbursement of QED’s obligation to FMI of $12.5
million as described in Note 8. In accordance with the payment terms of the MTA, we received $15.0 million from Helsinn in December 2022 and $5.3
million in January 2023. The remaining $11.0 million related to the remaining reimbursement of QED’s obligation to FMI is due in eleven equal monthly
installments of $1.0 million commencing in February 2023, of which we have received in full as of December 31, 2023. All costs incurred
179
subsequent to the transitional period are considered close-out costs and the responsibilities between the Helsinn Parties are outlined within the Close-Out
Plan. For the year ended December 31, 2023, QED has incurred $7.2 million of close-out costs, of which $6.0 million is subject to 50% reimbursement
from Helsinn. As of December 31, 2023, the outstanding receivable due from Helsinn was $0.6 million, which relates to the unpaid reimbursement of
close-out costs. As of December 31, 2022, the outstanding receivable due from Helsinn was $16.3 million. The outstanding receivables are presented in
“Receivables from licensing and collaboration agreements” within our consolidated balance sheets. All close-out costs incurred, including Helsinn’s
reimbursements, are recorded in “Restructuring, impairment and related charges” within our consolidated statement of operations (See Note 17).
The QED-Helsinn License and Collaboration Agreement, the Amended QED-Helsinn License Collaboration Agreement, and the MTA are
considered to be within the scope of ASC 808 as the parties are active participants and are exposed to the significant risks and rewards of the collaborative
activity. The QED-Helsinn License and Collaboration Agreement and the Amended QED-Helsinn License and Collaboration Agreement are also partially
within the scope of ASC 606 for the units of account where Helsinn is identified as a customer. For the units of account in the collaboration arrangement
that do not represent a vendor-customer relationship, including the performance of collaborative research and development and commercialization services,
we determined that ASC 606 is not appropriate to apply by analogy and applied a reasonable and rational accounting policy election that faithfully depicts
the transfer of services to the collaboration partner over the estimated performance period. Reimbursement payments from Helsinn associated with the
collaborative research and development and commercialization services are recognized as the related expense is incurred and classified as an offset to the
underlying expense and excluded from the transaction price.
We evaluated the terms of the QED-Helsinn License and Collaboration Agreement and identified Helsinn as a customer with the following two
distinct performance obligations: (1) exclusive licenses to develop, manufacture, and commercialize the underlying product, and (2) transfer of inventory
within the transitional supply period. The Amended QED-Helsinn License and Collaboration Agreement did not give rise to any additional performance
obligations. All of the license revenue relating to these units of account accounted for under ASC 606 were recognized in the year ended December 31,
2021.
We determined the initial transaction price at inception of the QED-Helsinn License and Collaboration Agreement to be $46.0 million, comprised of
a $20.0 million nonrefundable upfront license fee, $1.0 million for the sale of certain existing inventory, and a $25.0 million launch milestone for the first
launch of the first indication of infigratinib in the United States. At the inception of the QED-Helsinn License and Collaboration Agreement, we considered
all future potential regulatory milestones to be variable consideration that are fully constrained . We determined that the achievements of such regulatory
milestones are contingent upon success in future clinical trials and regulatory approvals, which are not within our control and are uncertain at the inception
date. We constrain variable consideration to the extent that it is probable that it will not result in a significant revenue reversal when the uncertainty
associated with the variable consideration is subsequently resolved. We recognize consideration related to sales-based milestone and royalties when the
subsequent sales occur pursuant to the royalty exception under ASC 606 because the license is the predominant item to which the royalties or sales-based
milestone relate. In the fourth quarter of 2021, we received validation from the EMA for our marketing authorization for infigratinib. Since the uncertainty
of the variable consideration related to the regulatory milestone was resolved, we updated the transaction price to include this consideration, and
accordingly, we increased our transaction price by $10.0 million to $56.0 million. The Amended QED-Helsinn License and Collaboration Agreement did
not affect the transaction price as the modifications to the transaction price related solely to variable consideration, consisting of regulatory and sales-based
milestone payments and royalties. The remaining future potential regulatory milestone payments did not result in a modification to the transactions price as
the transaction price as they were determined to be fully constrained under ASC 606. QED began to receive royalties for net sales of the licensed products
sold in the United States upon the effective date of the Amended QED-Helsinn License and Collaboration Agreement.
We allocated the $56.0 million transaction price based on relative SSPs of each of our performance obligations as $54.4 million for the licenses and
$1.6 million for the transfer of inventory. For the delivery of the licenses, we based the SSP on a discounted cash flow approach and considered several
factors including, but not limited to, forecasted revenue and costs, development timelines, discount rate and probabilities of clinical and regulatory success.
For the transfer of inventory, we based the SSP on the actual costs incurred by us to purchase or manufacture the inventory as well as the average
compensation of employees estimated to be incurred over the performance period.
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As of December 31, 2021, we had provided all necessary information to Helsinn for it to benefit from the license under the license term and
completed the transfer of inventory. During the year ended December 31, 2021, we recognized $56.0 million of license revenue, under these units of
account accounted for under ASC 606.
For the unit of account that is within the scope of ASC 808 relating to collaborative research and development services, pursuant to the QED-
Helsinn License and Collaboration Agreement, the Amended QED-Helsinn License Collaboration Agreement, and the MTA, we have recognized Helsinn’s
share of research and development expenses of $3.0 million for the year ended December 31, 2023, as a reduction to restructuring, impairment and related
charges. We have recognized Helsinn’s share of research and development expenses of $21.5 million and $38.4 million for the years ended December 31,
2022 and 2021, respectively, as a reduction of research and development expenses.
For the unit of account that is within the scope of ASC 808 relating to commercial activities, pursuant to the QED-Helsinn License and
Collaboration Agreement, the Amended QED-Helsinn License Collaboration Agreement, and the MTA, we accounted for Helsinn’s share of the co-
commercialization activities as reduction to selling, general and administrative expenses. We did not incur any costs relating to commercialization activities
subject to reimbursement from Helsinn for the year ended December 31, 2023. We recognized Helsinn’s share of the co-commercialization activities of
$1.5 million and $8.9 million for the years ended December 31, 2022 and 2021, respectively.
License Agreements with LianBio
Navire
In August 2020, Navire entered into an exclusive license agreement with LianBio, or the Navire-LianBio License Agreement. Pursuant to the
Navire-LianBio License Agreement, Navire granted to LianBio an exclusive, sublicensable license under the licensed patent rights and know-how to
develop, manufacture and commercialize SHP2 inhibitor BBP-398, or BBP-398, for tumors driven by RAS and receptor tyrosine kinase mutations. Under
the terms of the Navire-LianBio License Agreement, LianBio will receive commercial rights in China and selected Asian markets and participate in clinical
development activities for BBP-398. In consideration for the rights granted to LianBio, we received a nonrefundable $8.0 million upfront payment. We will
also have the right to receive future development and sales milestone payments of up to $382.1 million, and tiered royalty payments from single-digit to
low-teens on net sales of the product in licensed territories.
We accounted for the Navire-LianBio License Agreement under ASC 606 and identified the exclusive license as a distinct performance obligation
since LianBio can benefit from the license on its own by developing and commercializing the underlying product using its own resources. In addition, we
may enter into clinical and commercial supply agreements for the licensed territory. We determined that the optional right to future products under these
supply agreements did not represent a material right at the inception of the agreement. In July 2022, Navire and LianBio entered into a clinical supply
agreement for the manufacture and supply of clinical quantities of the licensed product. During the years ended December 31, 2023 and 2022, we have
provided $1.1 million and $0.5 million, respectively, of clinical supply to LianBio. Amounts have been recognized within revenue in our consolidated
statements of operations.
We determined the initial transaction price at inception of the Navire-LianBio License Agreement to be $8.0 million, comprised of the
nonrefundable upfront license fee. At the inception of the Navire-LianBio License Agreement, we considered all future potential development milestones
to be variable consideration that are fully constrained. We determined that the achievements of such development milestones are contingent upon success in
future clinical trials and regulatory approvals, which are not within our control and are uncertain at the inception date. We constrain variable consideration
to the extent that it is probable that it will not result in a significant revenue reversal when the uncertainty associated with the variable consideration is
subsequently resolved. We recognize consideration related to sales-based milestone and royalties when the subsequent sales occur pursuant to the royalty
exception under ASC 606 because the license is the predominant item to which the royalties or sales-based milestone relate. In the second quarter of
2021,we received acknowledgement that the First IND acceptance in the PRC was achieved, and therefore the development milestone became probable.
Since the uncertainty of the variable consideration related to the development milestone was resolved, we updated the transaction price to include this
consideration, and accordingly, we increased our transaction price by $8.5 million and recognized the
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entire amount as revenue during the year ended December 31, 2021. We will re-evaluate the transaction price at each reporting period and as uncertain
events are resolved or other changes in circumstances occur.
QED
In October 2019, QED entered into an exclusive license agreement with LianBio (the “QED-LianBio License Agreement”). Pursuant to the QED-
LianBio License Agreement, QED granted to LianBio an exclusive, sublicensable license under the licensed patent rights and know-how to develop,
manufacture and commercialize infigratinib for any and all human prophylactic and therapeutic uses in all cancer indications (including in combination
with other therapies) in certain territories outside the United States. Under the QED-LianBio License Agreement, QED received a nonrefundable upfront
payment of $10.0 million and is entitled to receive development and sales milestones payments of up to $132.5 million and tiered royalties on net sales
ranging from the low to mid-teens. In addition, QED also received warrants which entitled QED to purchase 10% of the then-fully diluted shares of one of
the subsidiaries of LianBio upon achievement of certain contingent development milestones (see Note 7).
We accounted for the QED-LianBio License Agreement and the LianBio Exclusivity Agreement as a single transaction under ASC 606 and
identified the exclusive license as a distinct performance obligation since LianBio can benefit from the license on its own by developing and
commercializing the underlying product using its own resources. In addition, we may enter into clinical and commercial supply agreements for the licensed
territory. We determined that the LianBio’s optional right to future products under these supply agreements is not considered to represent a material right at
the inception of the agreement. A clinical supply agreement was entered into in the fourth quarter of 2021. QED has supplied insignificant amounts to
LianBio as part of the clinical supply agreement and recognized such amounts as revenue during the years ended December 31, 2023, 2022, and 2021.
We consider the future potential development milestone as well as the sales-based royalties to be variable consideration. The future potential
milestone payments were not included in the transaction price as they were all determined to be fully constrained under ASC 606. We determined that the
achievements of such development milestones are contingent upon success in future clinical trials and regulatory approvals, which are not within our
control and are uncertain at this stage. We expect that the royalty arrangements and sales-based milestones will be recognized when the sales occur, or the
milestones are achieved pursuant to the sales-based royalty exception under ASC 606 because the license is the predominant item to which the royalties or
sales-based milestones relate. We will re-evaluate the transaction price at each reporting period and as uncertain events are resolved or other changes in
circumstances occur.
License Agreement with Alexion
In September 2019, Eidos, entered into an exclusive license agreement with Alexion Pharma International Operations Unlimited Company, a
subsidiary of Alexion Pharmaceuticals, Inc., or together Alexion, to develop, manufacture, and commercialize in Japan the compound known as acoramidis
(previously known as AG10) and any of its various chemical forms and any pharmaceutical products containing acoramidis, or the Eidos-Alexion License
Agreement. Under the agreement, Eidos received an upfront nonrefundable payment of $25.0 million.
Eidos also entered into a stock purchase agreement with Alexion, under which Eidos sold to Alexion 556,173 shares of Eidos common stock at a
price per share of $44.95, for an aggregate purchase price of approximately $25.0 million. The excess of the purchase price over the value of the Eidos
shares, determined based on the closing price of a share of Eidos’ common stock of $41.91 as reported on Nasdaq as of the date of execution, was $1.7
million and recognized in revenue as part of the upfront payment as discussed below.
Eidos is also eligible to receive $30.0 million in regulatory milestone payments subject to the achievement of regulatory milestones. Eidos will also
receive royalty payments in the low-teens based on net sales of acoramidis in Japan. The royalty rate is subject to reduction if Alexion is required to obtain
intellectual property rights from third parties to develop, manufacture or commercialize acoramidis in Japan, or upon the introduction of generic
competition into market.
Eidos accounted for the license agreement under ASC 606 and identified the exclusive license as a distinct performance obligation since Alexion
can benefit from the license on its own by developing and commercializing the underlying product using its own resources. In addition, Eidos entered into
a clinical supply agreement and will enter into a commercial supply agreement for the licensed territory. Eidos determined that the optional right to future
products under these supply agreements is not considered to represent a material right at the inception of the
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agreement. Eidos recognized the $25.0 million upfront fee and $1.7 million premium paid for Eidos’ stock for a total upfront payment of $26.7 million in
license revenue upon the effective date of the license agreement in September 2019. Eidos determined that the license was a right to use its intellectual
property and as of the effective date, it had provided all necessary information to Alexion to benefit from the license and the license term had begun. Eidos
has supplied insignificant amounts to Alexion as part of the clinical supply agreement and recognized such amounts as revenue during the years ended
December 31, 2023, 2022, and 2021.
Eidos considers the future potential regulatory milestones of up to approximately $30.0 million and the sales-based royalties to be variable
consideration. Eidos excluded the regulatory milestones from the transaction price because it determined such payments to be fully constrained under ASC
606 due to the inherent uncertainty in the achievement of such milestone payments and are highly susceptible to factors outside of Eidos’ control. As the
sales-based royalties are all related to the license of the intellectual property rights, Eidos will recognize revenue in the period when subsequent sales are
made pursuant to the sales-based royalty exception under ASC 606. Eidos will re-evaluate the transaction price in each reporting period and as uncertain
events are resolved or other changes in circumstances occur.
12.
Sale of Nonfinancial Assets
Sale of Priority Review Voucher
In May 2022, we announced that we entered into a definitive agreement to sell our PRV for $110.0 million. We received the PRV in February 2021
under an FDA program intended to encourage the development of treatments for rare pediatric diseases. We were awarded the PRV when our subsidiary,
Origin received approval of NULIBRYTM. The PRV sale was subject to customary closing conditions and was completed in June 2022 following the
expiration of applicable U.S. antitrust clearance requirements. We accounted for this transaction under ASC 610-20, Gains and Losses from the
Derecognition of Nonfinancial Assets. We received the gross proceeds of $110.0 million during the year ended December 31, 2022 and recognized a gain of
$107.9 million, net of transaction costs, for the year ended December 31, 2022.
Asset Purchase Agreement with Sentynl
On March 4, 2022, Origin and Sentynl entered into the Origin-Sentynl APA, pursuant to which Sentynl acquired global rights to NULIBRY, as well
as certain specified assets of Origin, and will be responsible for the ongoing development and commercialization of NULIBRY in the United States and
developing, manufacturing and commercializing fosdenopterin globally. The transaction closed on March 31, 2022, or the Closing Date. Under terms of the
Origin-Sentynl APA, Origin received an upfront payment of $10.0 million upon the Closing Date and is eligible to receive sales milestone payments, as
well as tiered royalties in the low single-digits as a percentage of adjusted net sales of products related to the acquired assets. Origin will continue to be
responsible for the payment of up to $4.5 million in aggregate payments upon achievement of regulatory-based milestones, including the first pricing
approval in an EMA country or EMA major market country, under the Origin-Alexion APA (see Note 8) and under a separate agreement with a third party.
In October 2022, we paid $3.5 million of the regulatory-based milestone payment as the milestone criteria was met. As of December 31, 2023, Origin will
continue to be responsible for a regulatory-based milestone payment upon first pricing approval in an EMA country of up to $1.0 million when it becomes
due.
We accounted for this transaction under ASC 610-20. Upon the Closing Date, we recognized a loss on sale of $6.3 million within “Other income
(expense), net” in our consolidated statement of operations for the year ended December 31, 2022. The loss on sale was determined as the difference in the
aforementioned upfront payment and the carrying value of the assets purchased by Sentynl of approximately $16.3 million, which comprised mainly of
intellectual property rights and related intangible assets and existing inventories as of the Closing Date.
Origin’s sale of the assets covered in the Origin-Sentynl APA was not subject to the limitation on our ability to dispose of assets under the terms of
the Loan Agreement (see Note 10).
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13.
In-licensing and Other Research and Development Agreements
Stanford License Agreement
In April 2016, Eidos entered into a license agreement with the Board of Trustees of the Leland Stanford Junior University Stanford University, or
Stanford University, relating to Eidos’ drug discovery and development initiatives. Under this agreement, Eidos has been granted certain worldwide
exclusive licenses to make, use, and sell products that are covered by licensed patent rights. In March 2017, Eidos paid a license fee of $10,000, which was
recorded as research and development expense during the year ended December 31, 2017, as the acquired assets did not have any alternative future use.
Eidos may also be required to make future payments of up to approximately $1.0 million to Stanford University upon achievement of specific intellectual
property, clinical and regulatory milestone events, and pay royalties of up to low single-digit percentages on future net sales, if any. In addition, Eidos is
obligated to pay Stanford University a percentage of non-royalty revenue received by Eidos from its sublicensees, with the amount owed decreasing
annually for three years based on when the applicable sublicense agreement is executed.
Additionally, under the license agreement with Stanford University, we will pay Stanford University a portion of nonroyalty sublicensing
consideration attributable to the sublicense of the licensed compounds. The license agreement states that if this event occurred in the third year, 10% is
payable to Stanford University. For the years ended December 31, 2023, 2022 and 2021, the cost of license revenue was not material.
Leidos Biomedical Research License and Cooperative Research and Development Agreements
In March 2017, TheRas entered into a cooperative research and development agreement, or Leidos CRADA, with Leidos Biomedical Research, Inc.,
or Leidos. In December 2018, TheRas and Leidos entered into a license agreement, or Initial Leidos License, under which TheRas was granted certain
worldwide exclusive licenses to use the licensed compounds. The Leidos Agreements are related to TheRas’ drug discovery and development initiatives.
The Initial Leidos License was terminated in 2021. TheRas and Leidos entered into three subsequent license agreements (“Additional Leidos Licenses”),
two in August 2022 related to (i) KRAS G12C inhibitor and (ii) P13Ka breaker compounds, and one in December 2023 related to the PanKRAS inhibitor.
The Leidos CRADA, Initial Leidos License, and Additional Leidos Licenses are also referred to herein as the Leidos Agreements. For the years ended
December 31, 2023, 2022 and 2021, TheRas recognized research and development expenses of $3.6 million, $3.2 million, and $2.8 million, respectively, in
connection with the Leidos Agreements.
Diagnostics Agreement with Foundation Medicine
As discussed in Note 8, QED and FMI entered into a diagnostics agreement relating to QED’s drug discovery and development initiatives. For the
years ended December 31, 2023, 2022 and 2021, QED recognized research and development expenses of nil, $2.6 million, and $4.2 million, respectively,
in connection with this agreement.
Resilience Development and Manufacturing Service Agreements
In September 2023, Aspa Therapeutics, Inc. (“Aspa”) and Adrenas Therapeutics Inc. (“Adrenas”), each entered into a Development and
Manufacturing Services Agreement (collectively the “Resilience DMSAs”) and a Project Agreement (collectively the “Resilience PAs”), (collectively the
“Resilience Agreements”) with Resilience US, Inc. (“Resilience”), for Resilience to provide contract development, manufacturing, testing and related
services with respect to therapeutic and pharmaceutical products for the clinical development applications of BBP-812 and BBP-631, respectively. BBP-
812 is an intravenous AAV9 investigational drug product intended for the treatment of children with Canavan Disease, under the age of five years. BBP-
631 is an intravenous AAV5 investigational drug product intended for the treatment of adults and children with congenital adrenal hyperplasia. The
Resilience DMSAs have ten-year terms and may each be extended for additional two-year periods. Under the Resilience PAs, Resilience will provide Aspa
with a cost sharing credit of the lesser of a fixed percentage of certain agreed upon service costs or $15.5 million. Under the Resilience PAs, Resilience will
provide Adrenas with a cost sharing credit of the lesser of a fixed percentage of certain agreed upon service costs or $29.3 million. In addition to the
payments for their share of services performed by Resilience, Aspa and Adrenas may each be required to make future payments of up to $10.0 million upon
achievement of certain development and approval milestone events, and
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royalty payments (mid-single digits for BBP-812 and low-single digits for BBP-631) based on achievement of certain net sales metrics.
For the year ended December 31, 2023, research and development expenses recognized and cost sharing credits received in connection with the
Resilience Agreements were immaterial.
Other License and Collaboration Agreements
In addition to the agreements described above, we have also entered into other license and collaboration agreements with various institutions and
business entities on terms similar to those described above, none of which are material individually or in the aggregate.
14.
Leases
We have operating leases for our corporate headquarters, office spaces and laboratory facilities. One of our office space leases has a finance lease
component representing lessor provided furniture and office equipment. Our finance lease, which is presented as part of “Property and equipment, net” in
our consolidated balance sheets, is not material.
Certain leases include renewal options at our election, and we include the renewal options when we are reasonably certain that the renewal option
will be exercised. The lease liabilities were measured using a weighted-average discount rate based on the most recent borrowing rate as of the calculation
of the respective lease liability, adjusted for the remaining lease term and aggregate amount of the lease.
The components of lease cost are as follows:
Straight line operating lease costs
Finance lease costs
Variable lease costs
Total lease cost
Supplemental cash flow information related to leases are as follows:
2023
Year Ended December 31,
2022
(in thousands)
2021
$
$
4,032
420
6,844
11,296
$
$
5,172 $
443
6,142
11,757 $
5,611
402
4,243
10,256
2023
Year Ended December 31,
2022
(in thousands)
2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases
Operating cash flows for finance lease
Operating lease right-of-use assets obtained in exchange
for operating lease obligations
$
$
4,829
397
6,245 $
423
1,179
240
Supplemental information related to the remaining lease term and discount rate are as follows:
Weighted-average remaining lease term (in years)
Operating leases
Finance lease
Weighted-average discount rate
Operating leases
Finance lease
185
December 31,
2023
2022
4.7
2.1
6.0 %
6.6 %
6,122
272
6,380
5.3
3.1
6.0 %
6.6 %
As of December 31, 2023, future minimum lease payments for our noncancelable operating leases are as follows. Future minimum lease payments
under our finance lease are not material.
Year ending December 31:
2024
2025
2026
2027
Thereafter
Total future minimum lease payments
Imputed interest
Total
Balance as of December 31, 2023
Operating lease liabilities, current portion
Operating lease liabilities, net of current portion
Total operating lease liabilities
Amount
(in thousands)
4,768
3,949
1,880
860
3,418
14,875
(1,766 )
13,109
4,128
8,981
13,109
$
$
$
The impairment losses related to operating lease right-of-use assets for the years ended December 31, 2023 and 2022 are not material. We recognized
an impairment loss for certain asset groups estimated using discounted cash flow model (income approach) of $3.3 million included in “Selling, general
and administrative” expenses in our consolidated statement of operations for the year ended December 31, 2021. The impairment loss for the year ended
December 31, 2021 includes $2.6 million related to operating lease right-of-use assets and $0.7 million related to property and equipment, namely
leasehold improvements, office furniture, and equipment that we no longer use.
Manufacturing Agreement
In December 2019, we entered into a manufacturing agreement with a vendor to secure clinical and commercial scale manufacturing capacity for the
manufacture of batches of active pharmaceutical ingredients for product candidates of certain subsidiaries of BridgeBio. Unless terminated as allowed
within the manufacturing agreement, the agreement would have expired five years from when qualified operations begin. Under the terms of the agreement,
we were assigned a dedicated manufacturing suite for certain months in each calendar year for a one-time fee of $10.0 million, which would be applied to
the buildout, commissioning, qualification, validation, equipping and exclusive use of the dedicated manufacturing suite.
We recorded a construction-in-progress asset of $10.0 million for the payments directly associated with the dedicated manufacturing suite as these
payments are deemed to represent a non-lease component. In 2020, we entered into a supplemental agreement with the vendor for certain upgrades on the
dedicated manufacturing suite and for additional equipment of approximately $0.2 million. As of December 31, 2021, the readiness determination phase of
the dedicated manufacturing suite was expected to be completed in 2022.
In March 2022, we mutually agreed with the vendor to terminate the manufacturing agreement. The termination agreement was executed effective
May 2022. In accordance with the termination agreement, we paid the $2.0 million remaining payable related to the dedicated manufacturing suite and a
termination fee of $1.8 million. For the year ended December 31, 2022, we recorded an impairment loss of $10.2 million for the carrying value of the
construction-in-progress asset that was no longer recoverable as our rights to the dedicated manufacturing suite ceased pursuant to the termination
agreement. The aforementioned impairment loss and the termination fee are included as part of “Restructuring, impairment and related charges” in our
consolidated statement of operations for the year ended December 31, 2022 (see Note 17).
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15.
Public Offerings, Share Repurchase Program and Securities Purchase Agreements
2020 Shelf Registration
In July 2020, we filed a shelf registration statement on Form S-3, or the 2020 Shelf, with the SEC in relation to the registration of common stock,
preferred stock, debt securities, warrants and units or any combination thereof. We also simultaneously entered into an Open Market Sale AgreementSM
with Jefferies LLC and SVB Leerink LLC, or collectively, the Sales Agents, to provide for the offering, issuance and sale by us of up to an aggregate of
$350.0 million of our common stock from time to time in “at-the-market” offerings under the 2020 Shelf and subject to the limitations thereof, or the 2020
Sales Agreement. We will pay to the applicable Sales Agents cash commissions of up to 3.0% of the gross proceeds of sales of common stock under the
2020 Sales Agreement. During the year ended December 31, 2022, the Company sold 455,800 shares through this offering at an average price of $10.90
per share, resulting in net proceeds of $4.9 million. We did not issue any shares or receive any proceeds from this offering during the years ended
December 31, 2023. In May 2023, we terminated the Open Market Sale AgreementSM.
2021 Share Repurchase Program
In May 2021, our Board of Directors authorized and approved a stock repurchase program pursuant to which we may purchase up to $150.0 million
of BridgeBio’s outstanding common stock. Stock repurchases under the program may be made from time to time, in the open market, in privately
negotiated transactions and otherwise, at the discretion of our management and in accordance with applicable federal securities laws, including Rule 10b-18
of the Securities Exchange Act, of 1934, as amended, and other applicable legal requirements. The timing, pricing, and amounts of these repurchases
depended on a number of factors, including the market price of our common stock and general market and economic conditions. The stock repurchase
program did not obligate us to repurchase any dollar amount or number of shares, and the program may be suspended or discontinued at any time. We
repurchased 3,017,087 shares in the open market at an average price of $49.72 per share for a total of approximately $150.0 million in 2021. The
repurchased shares are held in treasury as treasury stock as of December 31, 2023 and 2022.
2023 Follow-on Offering
In March 2023, we entered into an Underwriting Agreement (the “Follow-on Agreement”) with Goldman Sachs & Co. LLC, Evercore Group
L.L.C., Morgan Stanley & Co. LLC and KKR Capital Markets LLC (“KCM”), as representatives of several underwriters (collectively, the “Underwriters”),
relating to an underwritten public offering (the “Follow-on offering”) of 8,823,530 shares of the Company’s common stock, $0.001 par value per share (the
“Common Stock”), at a public offering price of $17.00 per share. The Company also granted the Underwriters a 30-day option to purchase, at the public
offering price less underwriting discounts and commissions, up to an additional 1,323,529 shares of Common Stock. The Company paid the Underwriters a
commission of 4.3% of the aggregate gross proceeds received from all sales of the common stock under the Follow-on Agreement. The Underwriters
included KCM, which is an affiliate of KKR Genetic Disorder L.P., a related party being a stockholder who beneficially owns greater than 5% of our
outstanding securities. KCM received a commission of 0.315% of the aggregate gross proceeds received from all sales of the common stock under the
Follow-on Agreement. On March 10, 2023, 8,823,530 shares were issued under the Follow-on Agreement, for net proceeds of $143.0 million, after
deducting underwriting fees and commissions of $6.5 million (of which $0.5 million related to commissions paid to KCM) and offering costs of $0.5
million. On April 3, 2023, the Underwriters partially exercised their 30-day option to purchase additional shares, for which 63,470 shares were issued for
net proceeds of $1.0 million, after deducting underwriting fees and commissions of less than $0.1 million.
2023 Shelf Registration Statement and ATM Agreement
In May 2023, we filed a shelf registration statement on Form S-3 (the “2023 Shelf”) with the SEC in relation to the registration of common stock,
preferred stock, debt securities, warrants and units or any combination thereof. We also concurrently entered into an Equity Distribution Agreement (the
“ATM Agreement”) with Goldman Sachs & Co. LLC and SVB Securities LLC (collectively, the “ATM Sales Agents”), with respect to an “at-the-market”
offering program under which we may issue and sell, from time to time at our sole discretion and pursuant to a prospectus supplement, shares of our
common stock, par value $0.001 per share, having an aggregate offering price of up to $450.0 million through the ATM Sales Agents. We will pay the
ATM Sales Agents a commission of up to 3.0% of the aggregate gross proceeds received from all sales of the common stock under the ATM Agreement.
During the year ended December 31, 2023, 2,171,217 shares were issued under the ATM Agreement, for net
187
proceeds of $65.0 million, after deducting sales agent fees and commissions of $1.0 million. As of December 31, 2023, we are still eligible to sell up to
$384.0 million of our common stock pursuant to the ATM Agreement under the 2023 Shelf.
In February 2024, 678,110 shares were issued under the ATM Agreement, for net proceeds of $24.8 million, after deducting sales agent fees and
commissions of $0.4 million. As of February 22, 2024 we are still eligible to sell up to $358.8 million of our common stock pursuant to the ATM
Agreement under the 2023 Shelf.
Securities Purchase Agreement and Private Placement
In September 2023, we and certain accredited investors (each an “Investor” and collectively, the “Investors”) entered into a securities purchase
agreement pursuant to which we sold and issued to the Investors in a private placement (the “Private Placement”) an aggregate of 9,167,723 shares of our
common stock, par value $0.001 per share, at a purchase price of $27.27 per share. We paid certain placement agents a commission based on the aggregate
gross proceeds received from all sales of the common stock under the Private Placement. One of the placement agents in the Private Placement was KCM,
which is an affiliate of KKR Genetic Disorder L.P., a related party being a stockholder who beneficially owns greater than 5% of our outstanding securities.
KCM received a commission of $1.8 million of the aggregate gross proceeds received from all sales of the common stock in the Private Placement. During
the year ended December 31, 2023, we received net proceeds of $240.8 million under the Private Placement offering, after deducting placement agent
commissions of $8.7 million and offering costs of $0.5 million.
16.
Stock-Based Compensation
Under each of the legal entity’s equity plans, we recorded stock-based compensation in the following expense categories in our consolidated
statements of operations for employees and non-employees:
Research and development
Selling, general and administrative
Total stock-based compensation
Research and development
Selling, general and administrative
Restructuring, impairment and related charges
Total stock-based compensation
Research and development
Selling, general and administrative
Total stock-based compensation
Year Ended December 31, 2023
Other
Subsidiaries
Equity Plan
BridgeBio
Equity Plan
(in thousands)
61,433 $
53,288
114,721 $
214 $
81
295 $
Year Ended December 31, 2022
Other
Subsidiaries
Equity Plan
BridgeBio
Equity Plan
(in thousands)
37,700 $
54,669
1,172
93,541 $
287 $
—
—
287 $
Years Ended December 31, 2021
Other
Subsidiaries
Equity Plan
BridgeBio
Equity Plan
(in thousands)
53,829 $
46,357
100,186 $
2,366 $
3,022
5,388 $
$
$
$
$
$
$
Total
61,647
53,369
115,016
Total
37,987
54,669
1,172
93,828
Total
56,195
49,379
105,574
We have recorded $6.3 million, $2.2 million, and $6.0 million of stock-based compensation expense for the years ended December 31, 2023, 2022
and 2021, respectively, for performance-based milestone awards that were achieved during the period and were settled in cash.
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Equity-Based Awards of BridgeBio
On June 22, 2019, we adopted the 2019 Stock Option and Incentive Plan (the “2019 Plan”), which became effective on June 25, 2019. The 2019
Plan provides for the grant of stock-based incentive awards, including common stock options and other stock-based awards. We were authorized to issue
11,500,000 shares of common stock for issuance of awards under the 2019 Plan, which may be allocated among stock options, awards of restricted
common stock, restricted common units and other stock-based awards. On June 2, 2020, our stockholders approved an amendment and restatement of the
2019 Plan, or the A&R 2019 Plan, to, among other things, increase the number of shares of common stock reserved for issuance thereunder by 2,500,000
shares. The A&R 2019 Plan was further amended on December 15, 2021 (the “2021 A&R Plan”).
The 2021 A&R Plan, provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning
on January 1, 2020 and ending on the date of the Company’s annual stockholder’s meeting in calendar year 2023 (which occurred on June 21, 2023), by
5% of the issued and outstanding number of shares of common stock on the immediately preceding December 31, or such lesser number of shares as
determined by the Compensation Committee of the Board of Directors.
On November 13, 2019, we adopted the 2019 Inducement Equity Plan (the “2019 Inducement Plan”). The 2019 Inducement Plan provides for the
grant of stock-based awards to induce highly qualified prospective officers and employees who are not currently employed by BridgeBio or its Subsidiaries
to accept employment and to provide them with a proprietary interest in BridgeBio, including common stock options and other stock-based awards. We
were authorized to issue 1,000,000 shares of common stock for inducement awards under the 2019 Inducement Plan, which may be allocated among stock
options, awards of restricted common stock, restricted common units and other stock-based awards. In February 2023, the 2019 Inducement Plan was
amended and restated to increase the total number of shares authorized for issuance from 1,000,000 shares to 2,000,000 shares.
As of December 31, 2023, 6,781,711 and 1,902,409 shares were reserved for future issuances under the 2021 A&R Plan and 2019 Inducement Plan,
respectively. Pursuant to the Merger Transactions, we also reserved 2,802,644 shares specifically under the Eidos Award Exchange, or the Eidos Award
Exchange Plan, all of which were issued upon execution of the Eidos Award Exchange as discussed below. The 2021 A&R Plan and the 2019 Inducement
Plan and the Eidos Award Exchange Plan are collectively referred herein as the “Plans.”
In January 2024, the 2019 Inducement Plan was further amended and restated to increase the number of shares authorized for issuance from
2,000,000 shares to 3,750,000 shares.
2020 Stock and Equity Award Exchange Program (Exchange Program)
On April 22, 2020, we completed our 2020 Stock and Equity Award Exchange Program, or the Exchange Program, for certain subsidiaries, which
was an opportunity for eligible controlled entities’ employees and consultants to exchange their subsidiary equity (including common stock, vested and
unvested stock options and restricted stock awards, or RSAs) for BridgeBio equity (including common stock, vested and unvested stock options and RSAs)
and/or performance-based milestone awards tied to the achievement of certain development and regulatory milestones. The Exchange Program aligns our
incentive compensation structure for employees and consultants across the BridgeBio group of companies to be consistent with the achievement of our
overall corporate goals. In connection with the Exchange Program, we issued awards of BridgeBio equity under the 2019 A&R Plan to 149 grantees
covering 554,064 shares of common stock, 1,268,110 stock options to purchase common stock, 50,145 shares of RSAs and 22,611 shares of performance-
based RSAs. The exchange also included performance-based milestone awards of up to $183.4 million to be settled in fully-vested RSAs in the future upon
achievement of the milestones, or, collectively, the New Awards. In consideration for all the subsidiaries’ shares tendered, BridgeBio increased its
ownership in controlled entities included in the Exchange Program and the corresponding noncontrolling interest decreased.
On November 18, 2020, we completed a stock and equity award under our Exchange Program for a subsidiary. We issued awards of BridgeBio
equity under the 2019 A&R Plan to 16 grantees covering 24,924 shares of common stock, 70,436 stock options to purchase common stock, and 10,772
shares of performance-based stock options to purchase common stock. The exchange also included performance-based milestone awards of up to $11.7
million to be settled in fully-vested RSAs in the future upon achievement of the milestones.
189
We evaluated the exchange of the controlled entities’ outstanding common stock and equity awards for BridgeBio awards as a modification under
ASC 718, Share Based Payments. Under ASC 718, a modification is a change in the terms or conditions of a stock-based compensation award. In assessing
the accounting treatment, we consider the fair value, vesting conditions and classification as an equity or liability award of the controlled entity equity
before the exchange, compared to the BridgeBio equity received as part of the exchange to determine whether modification accounting must be applied.
When applying modification accounting, we considered the type of modification to determine the appropriate stock-based compensation cost to be
recognized on April 22 and November 18, 2020, (each the “Modification Date”), and subsequent to the Modification Date.
We considered the total shares of common stock and equity awards, whether vested or unvested, held by each participant in each controlled entity as
the unit of account. The controlled entity’s common stock and equity awards in each unit of account was exchanged for a combination of BridgeBio’s
common stock, time-based vesting equity awards and/or performance-based milestone awards. Other than the exchange of the controlled entity equity
awards for performance-based milestone awards, all other exchanged BridgeBio equity awards retained the original vesting conditions. As a result, there
was no incremental stock-based compensation expense resulting from the exchange of time-based equity awards.
At the completion of the Exchange Program, we determined $17.4 million of the performance-based milestone awards were probable of
achievement and represented the incremental stock-based compensation cost resulting from the modification of time-based equity awards to performance-
based milestone awards. These performance-based milestone awards were to be recognized over a period ranging from 0.7 year to 1.7 years. There was no
incremental stock-based compensation cost arising from the completion of the Exchange Program on November 18, 2020. Under ASC 718, we account for
such performance-based milestone awards as a liability in “Accrued compensation and benefits” and in “Other long-term liabilities” in the consolidated
balance sheets due to the fixed milestone amount that will be converted into a variable number of shares of BridgeBio common stock to be granted upon
the achievement date.
For the years ended December 31, 2023, 2022 and 2021, we recognized $3.4 million, $0.7 million, and $26.7 million, respectively, of stock-based
compensation cost associated with performance-based milestone awards whereby the milestones were determined to be probable of achievement as of each
of the reporting date. Refer to Note 9 for contingent compensation accrued associated with performance-based milestones that are determined to be
probable as of December 31, 2023.
Performance-based Milestone Awards
Apart from the Exchange Program discussed above, we have performance-based milestone compensation arrangements with certain employees and
consultants whose vesting is contingent upon meeting various regulatory and development milestones, with fixed monetary amounts known at inception
that can be settled in the form of cash or equity at our sole discretion, upon achievement of each contingent milestone. Upon achievement of a contingent
milestone and if such performance-based milestone awards are settled in the form of equity, these are satisfied in the form of fully-vested RSAs. We
recognize such contingent stock-based compensation expense when the milestone is probable of achievement. For the years ended December 31, 2023,
2022, and 2021, we recognized $16.8 million, $1.9 million, and $7.9 million, respectively, of stock-based compensation expense associated with
performance-based milestone awards that were determined to be probable of achievement as of each reporting date. Refer to Note 9 for contingent
compensation accrued associated with performance-based milestones awards that are determined to be probable as of December 31, 2023.
190
Stock Option Grants of BridgeBio
The following table summarizes BridgeBio’s stock option activity under the Plans for the year ended December 31, 2023:
Outstanding as of December 31, 2022
11,637,861
Options
Outstanding
Weighted-
Average
Exercise
Price per
Option
Weighted-
Average
Remaining
Contractual
Life (years)
Aggregate
Intrinsic
Value
(in thousands)
Regular equity program
Eidos Awards Exchange
Exchange Program
Granted
Regular equity program
Exercised
Regular equity program
Eidos Awards Exchange
Exchange Program
Cancelled
Regular equity program
Eidos Awards Exchange
Exchange Program
Outstanding as of December 31, 2023
Regular equity program
Eidos Awards Exchange
Exchange Program
Exercisable as of December 31, 2023
Regular equity program
Eidos Awards Exchange
Exchange Program
9,811,936
1,445,885
380,040
$
$
$
28.00
14.96
2.35
7.7 $
5.9 $
6.2 $
—
1,427
2,246
1,724,909
$
13.37
1,724,909
(122,763 )
(185,230 )
(61,021 )
(620,220 )
(38,713 )
(2,381 )
10,793,862
1,221,942
316,638
7,291,814
1,182,008
314,218
(369,014 )
$
$
$
(661,314 )
$
$
$
12,332,442
$
$
$
8,788,040
$
$
$
23.92
15.64
2.86
28.35
22.97
11.18
25.69
14.60
2.19
27.36
14.22
2.18
7.1 $
4.7 $
5.3 $
6.4 $
4.7 $
5.3 $
178,594
31,580
12,105
108,772
30,981
12,015
The options granted to employees and non-employees are exercisable at the price of BridgeBio’s common stock at the respective grant dates. The
options granted have a service condition and generally vest over a period of three to four years.
The weighted-average grant date fair value of options granted during the year ended December 31, 2023 was $8.48.
The aggregate intrinsic value of options outstanding and exercisable as of December 31, 2023, in the table above are calculated based on the
difference between the exercise price and the current fair value of BridgeBio common stock. The total intrinsic value of options exercised during the year
ended December 31, 2023, was $5.3 million.
For the years ended December 31, 2023, 2022, and 2021, we recognized stock-based compensation expense of $28.5 million, $39.7 million, $31.1
million, respectively, related to stock options under the Plans. As of December 31, 2023, there was $36.0 million of total unrecognized compensation cost
related to stock options under the Plans that is expected to be recognized over a weighted-average period of 2.0 years.
191
Restricted Stock Units (RSUs) of BridgeBio
The following table summarizes BridgeBio’s RSU activity under the Plans for the year ended December 31, 2023:
Balance as of December 31, 2022
Granted
Vested
Cancelled
Balance as of December 31, 2023
Unvested
Shares of
RSUs
Outstanding
Weighted-
Average
Grant Date
Fair Value
4,108,642 $
8,993,599 $
(3,608,021 ) $
(551,407 ) $
8,942,813 $
21.60
13.58
15.51
17.03
16.27
The RSUs have a service condition and generally vest over a period of two to four years.
For the years ended December 31, 2023, 2022, and 2021, we recognized stock-based compensation expense of $59.1 million, $43.1 million, $25.0
million, respectively, related to shares of RSUs under the Plans. As of December 31, 2023, there was $135.9 million of total unrecognized compensation
cost related to RSUs under the Plans that is expected to be recognized over a weighted-average period of 2.9 years.
Market-Based RSUs of BridgeBio
In December 2023, the Company approved and granted performance restricted stock units under the 2021 A&R Plan to certain employees with
vesting based on achievement of market capitalization targets (“market-based RSUs”), which are subject to the continued service of the employees through
the vest date and are subject to accelerated vesting upon a change in control event. The achievement of the market capitalization targets will be measured
based on BridgeBio market capitalization data (available on the Nasdaq.com website) meeting the targets for 20-consecutive trading days during the
performance period of up to six years from the date of grant.
The respective grant-date fair value of the market-based RSUs, which aggregated to $10.8 million, was determined using the Monte Carlo valuation
model and are recognized as compensation expense over the derived service period of the awards. The assumptions used in the Monte Carlo valuation
included expected volatility ranging from 96.8% - 113.7%, risk free rate ranging from 4.22% - 4.35%, no expected dividend yield, expected term of three to
six years and possible future market capitalization over the derived service period based on historical stock prices and market capitalization.
As of December 31, 2023, 375,000 market-based RSUs were outstanding with a weighted average grant date fair value of $28.73. For the year
ended December 31, 2023, we recognized $0.7 million stock-based compensation expense related to market-based RSU awards. As of December 31, 2023,
there was $10.1 million of total unrecognized compensation cost related to market-based RSUs under the Plans that is expected to be recognized over a
weighted-average period of 1.2 years.
Restricted Stock Awards (RSAs) of BridgeBio
In 2019, all unvested outstanding management incentive units and common units of BBP LLC which existed prior to the reorganization and IPO
were cancelled and converted into shares of BridgeBio’s RSAs.
The following table summarizes our RSA activity under the Plans for the year ended December 31, 2023:
Balance as of December 31, 2022
Granted — Exchange Program
Vested — Exchange Program
Vested — Regular equity program
Balance as of December 31, 2023
Unvested
Shares of
RSAs
Outstanding
Weighted-
Average
Grant Date
Fair Value
652,058 $
211,860 $
(211,860 ) $
(566,605 ) $
85,453 $
7.29
19.14
19.14
7.20
7.27
192
For the years ended December 31, 2023, 2022, and 2021, we recognized stock-based compensation expense related to RSAs under the Plans as
follows:
Exchange Program
Other RSAs
Total stock-based compensation expense
2023
Year Ended December 31,
2022
(in thousands)
4,056
4,033
8,089
$
$
3,238 $
5,326
8,564 $
2021
24,065
6,240
30,305
$
$
As of December 31, 2023, there was $0.6 million of total unrecognized compensation cost related to RSAs under the Plans that is expected to be
recognized over a weighted-average period of 0.1 years. The respective balances of unvested RSAs as of December 31, 2023 and 2022 are included as
outstanding shares disclosed in the consolidated balance sheets as the shares were actually issued but are subject to forfeiture per the terms of the awards.
2019 Employee Stock Purchase Plan (ESPP) of BridgeBio
On June 22, 2019, we adopted the 2019 ESPP, which became effective on June 25, 2019 and was amended and restated effective as of December 12,
2019. The ESPP initially reserves and authorizes the issuance of up to a total of 2,000,000 shares of common stock to participating employees. The ESPP
provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2020, by the
lower of: i) 1% of the outstanding number of shares of common stock on the immediately preceding December 31, ii) 2,000,000 shares or iii) such lesser
number of shares as determined by the Compensation Committee.
Under the ESPP, eligible employees may purchase shares of BridgeBio common stock through payroll deductions at a price equal to 85% of the
lower of the fair market values of the stock as of the beginning or the end of six-month offering periods. An employee’s payroll deductions under the ESPP
are limited to 15% of the employee’s compensation and employees may not purchase more than 3,500 shares of BridgeBio common stock during any
offering period.
For the years ended December 31, 2023 and 2022 we recognized $2.3 million and $2.6 million, respectively, of stock-based compensation expense
related to our ESPP while the stock-based compensation expense for the year ended December 31, 2021 was not material. As of December 31, 2023,
3,555,912 shares were reserved for future issuance under the ESPP.
Valuation Assumptions
We used the Black-Scholes model to estimate the fair value of stock options and stock purchase rights under ESPP. We used the following weighted-
average assumptions in the Black-Scholes calculations:
Expected term (in years)
Expected volatility
Risk-free interest rate
Dividend yield
Weighted-average fair
value of stock-based
awards granted
2023
Year Ended December 31,
2022
2021
Stock Options
ESPP
Stock Options
ESPP
Stock Options
ESPP
6.0
0.5
66.2% - 67.5%
86.1% - 122.1%
3.9% - 4.1%
3.1% - 5.5%
—
—
6.0
65.9 %
3.2 %
—
0.5
5.5 - 6.1
0.5
52.0% - 191.7%
49.0% - 52.0%
47.6% - 52.0%
0.1% - 3.1%
0.6% - 1.3%
—
—
0.1%
—
$
8.48
$
8.22
$
5.24
$
6.29
$
23.09
$
18.31
193
Equity Awards of Eidos
Prior to the Merger Transactions, Eidos issued its own equity-based awards under the Eidos 2016 Equity Incentive Plan and the Eidos 2018 Stock
Option and Incentive Plan, or collectively, the Eidos Plans. Upon closing of the Merger Transactions, we issued 2,776,672 stock options to purchase
common stock of BridgeBio and 25,972 shares of BridgeBio RSUs to 88 employees of Eidos under the Eidos Award Exchange in exchange for their then
outstanding common stock options and RSUs under the Eidos Plans, or the Replaced Awards. The awards issued in the Eidos Award Exchange have the
same vesting terms and conditions as the Replaced Awards. We evaluated the exchange of the awards as a modification under ASC 718 and recognized no
incremental compensation cost from such modification.
Stock-based compensation under the Eidos Plans from January 1, 2021 until the closing of the Merger Transactions was not material.
17.
Restructuring, Impairment and Related Charges
In January 2022, we committed to a restructuring initiative designed to drive operational changes in our business processes, efficiencies and cost
savings to advance our corporate strategy and development programs. The restructuring initiative included, among other components, consolidation and
rationalization of our facilities, reprioritization of development programs and the reduction in our workforce. During the years ended December 31, 2023
and 2022, our restructuring, impairment and related charges amounted to $7.9 million and $43.8 million, respectively, which consisted primarily of winding
down costs, exit and other related costs, impairments and write-offs of long-lived assets, and severance and employee-related costs. We may also incur
additional costs that are not currently foreseeable as we continue to evaluate our restructuring alternatives to drive operational changes in business
processes, efficiencies and cost savings.
Restructuring, impairment and related charges included in our consolidated statement of operations for the years ended December 31, 2023 and
2022 consisted of the following:
Long-lived assets impairments and write-offs
Severance and employee-related costs
Winding down, exit and other related costs
Total
Year Ended December 31,
2023
2022
(in thousands)
— $
715
7,211
7,926
$
12,720
10,306
20,739
43,765
$
$
There were no restructuring initiatives during the year ended December 31, 2021, or prior.
The following table summarizes the activity related to the restructuring liabilities associated with our restructuring initiatives for the years ended
December 31, 2023 and 2022:
Beginning balance
Reclassification of final payment obligation related to a manufacturing
agreement that was recognized in the prior period (see Note 14)
Restructuring, impairment and related charges
Cash payments
Noncash activities
Ending balance
194
Year Ended December 31,
2023
2022
(in thousands)
6,826 $
—
7,926
(14,697 )
—
55 $
—
2,185
43,765
(25,232 )
(13,892 )
6,826
$
$
Restructuring liabilities are presented in our consolidated balance sheets as follows:
Accounts payable
Accrued compensation and benefits
Accrued research and development liabilities
Total
December 31, 2023
December 31, 2022
$
$
(in thousands)
$
48
—
7
55 $
896
41
5,889
6,826
18.
Income Taxes
The following table presents the components of net loss before income taxes:
Domestic
Foreign
Total loss before income taxes
2023
Year Ended December 31,
2022
(in thousands)
565,840 $
87,411
653,251 $
485,079 $
(427 )
484,652 $
$
$
2021
586,478
(24 )
586,454
There was no current or deferred income tax expense or benefit (domestic and foreign) for the years ended December 31, 2023, 2022, and 2021.
The following table presents a reconciliation of the statutory federal rate and our effective tax rate:
Tax at statutory federal rate
Change in valuation allowance
Research and development credits
Stock-based compensation
Disallowed executive compensation
Pellepharm deconsolidation
Foreign rate differential
Other
Effective income tax rate
2023
Year Ended December 31,
2022
2021
21.0 %
(20.3 )
2.3
0.6
(0.8 )
(1.4 )
(1.2 )
(0.2 )
— %
21.0 %
(21.7 )
3.2
(1.8 )
—
—
—
(0.7 )
— %
21.0 %
(25.6 )
3.9
1.2
—
—
—
(0.5 )
— %
195
Significant components of our deferred tax assets and liabilities are as follows:
Deferred tax assets:
Net operating loss carry-forwards
Amortization
Accruals and reserves
Deferred revenue
Stock-based compensation
Tax credits
Operating lease liabilities
Deferred income from asset sale
Capitalized research and experimental expenditures
Deferred interest expense
Property and equipment
Other
Gross deferred tax assets
Less valuation allowance
Deferred tax assets, net of valuation allowance
Deferred tax liabilities:
Property and equipment
Operating lease right-of-use assets
Unrealized gains and losses
Deferred tax liabilities
Net deferred tax assets (liabilities)
2023
December 31,
(in thousands)
2022
$
358,867
10,024
6,453
2,130
21,340
97,735
3,153
2,333
144,873
26,596
822
4,230
678,556
(672,084 )
6,472
—
(1,784 )
(4,688 )
(6,472 )
—
$
325,830
9,172
5,261
—
16,134
86,012
3,075
2,391
77,190
13,154
600
268
539,087
(533,929 )
5,158
—
(2,001 )
(3,157 )
(5,158 )
—
$
$
As of December 31, 2023, we have net operating loss carryforwards available to reduce future taxable income, if any, for federal and state income
tax purposes of approximately $1.6 billion and $280.8 million, respectively. The federal net operating losses generated prior to 2018 amounting to $28.8
million will begin to expire in 2036, losses generated after 2018 amounting to $1.5 billion will carry over indefinitely and would be subject to an 80%
taxable income limitation in the year utilized. State net operating losses will generally begin to expire in 2036.We also have foreign net operating loss
carryforwards of $86.1 million available to reduce future taxable income, if any, which will begin to expire in 2030.
As of December 31, 2023, we had federal research and development and orphan drug credit carryforwards of $102.2 million, which will expire
beginning in 2036 if not utilized. As of December 31, 2023, we have California and other state research and development tax credit carryforwards of $22.4
million. The state research and development tax credits will expire at various dates while the California research and development tax credits will carry
over indefinitely.
Beginning in 2022, the 2017 Tax Cuts and Jobs Act amended Section 174 to eliminate current-year deductibility of research and experimentation
(R&E) expenditures and software development costs (collectively, R&E expenditures) and instead require taxpayers to charge their R&E expenditures to a
capital account amortized over five years (15 years for expenditures attributable to R&E activity performed outside the United States). The Company
generates a deferred tax asset for capitalized R&E expenditures for the year ended December 31, 2023 which is fully offset with a valuation allowance.
A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a
valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize
the deferred tax assets. Based on the weight of the available evidence, which includes our historical operating losses and forecast of future losses, we
provided a valuation allowance against the U.S. federal, state, and foreign deferred tax assets resulting from the tax loss and credits carried forward. The
valuation allowance increased by $138.2 million, $110.0 million, and $199.5 million for the years ended December 31, 2023, 2022, and 2021, respectively.
196
Utilization of the net operating loss and credit carryforwards may be subject to a substantial annual limitation due to an ownership change limitation
as provided by section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the
expiration of net operating losses and credits before utilization. In the event that we had a change of ownership, utilization of the net operating loss and tax
credit carryforwards may be restricted.
As of December 31, 2023, we had an immaterial amount of undistributed earnings of our non-U.S. subsidiaries for which we have not provided for
non-U.S. withholding taxes and state taxes because such earnings are intended to be reinvested indefinitely in international operations. The amount of
applicable taxes due if such earnings were distributed would be immaterial. Accordingly, we have not provisioned U.S. state taxes and foreign withholding
taxes on non-U.S. subsidiaries for which the earnings are permanently reinvested.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Balance at the beginning of the year
Additions of prior year positions
Reductions of prior year positions
Additions based on tax positions related to
current year
Balance at the end of the year
December 31,
2023
2022
(in thousands)
27,013 $
10
(2,504 )
6,337
30,856 $
21,254
724
—
5,035
27,013
$
$
As of December 31, 2023 and 2022, we have not recorded interest and penalties associated with our unrecognized tax benefits. Our policy is to
recognize interest and penalties related to income tax matters in income tax expense.
Our unrecognized gross tax benefits would not reduce the annual effective tax rate if recognized because we have recorded a valuation allowance on
our deferred tax assets.
We file federal and various income tax returns. We currently have no federal or state tax examinations in progress. All years are open for
examination by federal and state authorities.
On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022, or the Inflation Act, into law. The Inflation Act contains certain
tax measures, including a corporate alternative minimum tax of 15% on some large corporations and an excise tax of 1% on corporate stock buy-backs. The
various provisions of the Inflation Act do not have a material impact on the Company’s financial statements.
19.
Net Loss Per Share Attributable to Common Stockholders of BridgeBio
Basic net loss per share attributable to common stockholders of BridgeBio is computed by dividing net loss attributable to common stockholders of
BridgeBio by the weighted-average number of shares of common stock outstanding. Diluted net loss per share attributable to common stockholders of
BridgeBio is computed by dividing net loss by the weighted-average number of shares of common stock outstanding, plus all additional common shares
that would have been outstanding, assuming dilutive potential common shares had been issued for other dilutive securities. For the years ended December
31, 2023, 2022 and 2021, diluted and basic net loss per share attributable to common stockholders of BridgeBio was identical since potential common
shares were excluded from the calculation, as their effect was anti-dilutive.
197
The following common stock equivalents were excluded from the computation of diluted net loss per share attributable to common stockholders of
BridgeBio, because including them would have been antidilutive:
Unvested RSAs
Unvested RSUs
Unvested performance-based RSUs
Unvested market-based RSUs
Common stock options issued and outstanding
Estimated shares issuable under performance-based milestone
compensation arrangements
Estimated shares issuable under the ESPP
Assumed conversion of 2027 Notes
Assumed conversion of 2029 Notes
2023
85,453
8,942,813
3,326
375,000
12,332,442
4,865,250
75,889
12,878,305
7,702,988
47,261,466
As of December 31,
2022
652,058
4,108,642
7,875
—
11,637,861
19,201,212
217,660
12,878,305
7,702,988
56,406,601
2021
1,789,943
3,537,719
69,340
—
12,141,756
13,959,588
172,927
12,878,305
7,702,988
52,252,566
Our 2029 Notes and 2027 Notes are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination
thereof, at our election.
As discussed in Notes 9 and 16, we have performance-based milestone compensation arrangements, whose vesting is contingent upon meeting
various regulatory and development milestones, with fixed monetary amounts known at inception that can be settled in the form of cash or equity at our
sole election, upon achievement of each contingent milestone. The common stock equivalents of such arrangements were estimated as if the contingent
milestones were achieved as of the reporting date and the arrangements were all settled in equity.
20.
Subsequent Events
Funding Agreement
On January 17, 2024, the Company and its subsidiaries, Eidos Therapeutics, Inc., BridgeBio Europe B.V. and BridgeBio International GmbH
(collectively, the “Seller Parties”), entered into a Funding Agreement (the “Funding Agreement”) with LSI Financing 1 Designated Activity Company and
CPPIB Credit Europe S.à r.l. (together, the “Purchasers”), and Alter Domus (US) LLC, as the collateral agent.
Pursuant to the Funding Agreement, the Purchasers agreed to pay to the Company $500.0 million (net of certain transaction expenses) (“Investment
Amount”) upon the first FDA approval of acoramidis, subject to certain conditions relating to the FDA approval and other customary conditions (such date
of payment, “Funding Date”).
In return, the Company granted the Purchasers the right to receive payments (the “Royalty Interest Payments”) equal to 5% of the global Net Sales
of acoramidis (“Net Sales”). Each Royalty Interest Payment will become payable to the Purchasers on a quarterly basis after the Funding Date. In addition,
the Seller Parties granted the collateral agent, for the benefit of the Purchasers, a security interest in specific assets related to acoramidis.
The Purchasers’ rights to the Royalty Interest Payments and ownership interest in Net Sales will terminate upon the earlier of the Purchasers’
receipt of (a) Royalty Interest Payments equal to $950.0 million (“Cap Amount”) and (b) a buy-out payment (“Buy-Out Payment”) in an amount
determined in accordance with the Funding Agreement but that will not exceed the Cap Amount. In the event that a change in control (as customarily
defined in the Funding Agreement) occurs on or after the effective date of the Funding Agreement and prior to FDA approval of acoramidis, either party
may terminate the Funding Agreement and the Seller Parties shall make a one-time payment of $25.0 million (in the aggregate) to the Purchasers. Under
certain conditions, including conditions relating to sales performance of acoramidis by or on behalf of the Company, the rate of the Royalty Interest
Payments may adjust to a maximum rate of 10% in 2027.
The Funding Agreement will terminate upon customary events, and also in the event the Funding Date does not occur on or prior to May 15,
2025 (in which case either party may terminate the Funding Agreement at no charge and without premium or penalty).
198
Under the Funding Agreement, the Seller Parties are required to comply with various covenants, including using commercially reasonable efforts
to obtain regulatory approval for and commercialize acoramidis, providing the Purchasers with certain clinical, commercial, regulatory and intellectual
property updates and certain financial statements, and providing notices upon the occurrence of certain events, each as agreed under the Funding
Agreement. The Funding Agreement also contains certain representations and warranties, indemnification obligations, put-option events and other
provisions that are customary for transactions of this nature.
Financing Agreement
On January 17, 2024, the Company entered into a Financing Agreement (the “Financing Agreement”) with certain of its subsidiaries party thereto
as guarantors, the lenders party thereto (the “Lenders”) and Blue Owl Capital Corporation, as administrative agent for the Lenders (the “Administrative
Agent”), which was amended on February 12, 2024.
Pursuant to the terms and conditions of the Financing Agreement, the Lenders have agreed to extend a senior secured credit facility to the Company
in an aggregate principal amount of up to $750.0 million, comprised of (i) an initial term loan in an aggregate principal amount of $450.0 million (the
“Initial Term Loan”) and (ii) one or more incremental term loans in an aggregate amount not to exceed $300.0 million (collectively, the “Incremental Term
Loan,” and together with the Initial Term Loan, collectively, the “Term Loans”), subject to the satisfaction of certain terms and conditions set forth in the
Financing Agreement. The Initial Term Loan was funded on January 17, 2024. Incremental Term Loans are available at the Company’s and the Lenders’
mutual consent from time to time after January 17, 2024.
The obligations of the Company under the Financing Agreement are and will be guaranteed by certain of the Company’s existing and future direct
and indirect subsidiaries, subject to certain exceptions (such subsidiaries, collectively, the “Guarantors”). As security for the obligations of the Company
and the Guarantors, each of the Company and the Guarantors are required to grant to the Administrative Agent, for the benefit of the Lenders and secured
parties, a continuing first priority security interest in substantially all of the assets of the Company and the Guarantors (including all equity interests owned
or hereafter acquired by the Company and the Guarantors), subject to certain customary exceptions.
Any outstanding principal on the Term Loans will initially bear interest at a rate per annum equal to (A) in the case of Term Loans bearing interest
based on the base rate defined in the Financing Agreement (and which base rate will not be less than 2.00%), the sum of (i) the base rate plus (ii) 5.75%
and (B) in the case of Term Loans bearing interest based on the three-month forward-looking term secured overnight financing rate administered by the
Federal Reserve Bank of New York (“Term SOFR”), the sum of (i) three-month Term SOFR (subject to 1.00% per annum floor), plus (ii) 6.75%. Accrued
interest is payable quarterly following the funding of the Initial Term Loan on the Closing Date, on any date of prepayment or repayment of the Term Loans
and at maturity.
The Company will be required to make principal payments of $22.5 million on the outstanding balance of the Initial Term Loan commencing on
June 30, 2027 in quarterly installments (the “Scheduled Amortization Payments”); provided that if the Company achieves a senior total net leverage ratio of
less than or equal to 5.00:1.00, up to four (4) Scheduled Amortization Payments may be deferred for a period of one fiscal quarter each. Such Scheduled
Amortization Payments would be reduced in connection with voluntary or mandatory prepayments, if any, of the Initial Term Loans. Incremental Term
Loans, if any, will be payable in accordance with their respective amortization schedules. Additionally, if the Company’s market capitalization is less than
$1.5 billion at any time after January 17, 2024, the Company shall also be required to make additional quarterly principal payments of $10.0 million on the
outstanding balance of the Initial Term Loan (the “Special Amortization Payments”) commencing with the first quarterly installment payment date
occurring thereafter. The outstanding balance of the Term Loans, if not repaid sooner, shall be due and payable in full on the maturity date thereof. The
stated maturity date of the Term Loans is January 17, 2029, with two springing earlier maturity dates at 91 days prior to the stated maturity dates of the
Company’s outstanding convertible senior notes, in each case to the extent there is an aggregate outstanding amount of such notes of more than $50.0
million on such dates. The Company may prepay the Term Loans at any time (in whole or in part) or be required to make mandatory prepayments upon the
occurrence of certain customary prepayment events. In certain instances and during certain time periods, these prepayments will be subject to customary
prepayment fees. The amount of any such prepayment fee may vary, but the maximum amount that may be due with any such prepayment would be an
amount equal to 3.00% of the Term Loans being prepaid at such time, plus a customary make whole amount.
199
The Financing Agreement contains affirmative covenants and negative covenants applicable to the Company and its subsidiaries that are customary
for financings of this type. Such covenants, among other items, limit the Company’s and its subsidiaries’ ability to (i) incur additional permitted
indebtedness, (ii) pay dividends or make certain distributions, (iii) dispose of its and their assets, grant liens and license or permit other encumbrances on its
and their assets, (iv) fundamentally alter the nature of their businesses and (v) enter into certain transactions with affiliates. The Company and the
Guarantors are also required to maintain a minimum unrestricted cash balance of $70.0 million at all times. The Company and its subsidiaries are permitted
to license their intellectual property, dispose of other assets and enter into monetization and royalty transactions, in each case, subject to satisfaction of
certain terms and conditions. The Financing Agreement also includes representations, warranties, indemnities and events of default that are customary for
financings of this type, including an event of default relating to a change of control of the Company. Upon the occurrence of an event of default, the
Lenders may, among other things, accelerate the Company’s obligations under the Financing Agreement.
Loan and Security Agreement
On January 17, 2024, the Company repaid all outstanding principal and accrued interest and fees under the Loan and Security Agreement, dated as
November 17, 2021 (as amended to date, the “Existing Loan Agreement”), by and among the Company, as borrower, certain of the Company’s subsidiaries
party thereto as guarantors, the lenders party thereto and U.S. Bank National Association, as administrative agent and collateral agent (such repayment, the
“Refinancing”), which Refinancing was funded with the proceeds of the Initial Term Loan and cash on hand. The Existing Loan Agreement was effectively
terminated, and all guarantees and liens granted thereunder were released, on January 17, 2024 upon the consummation of the Refinancing.
Kyowa Kirin Exclusive License
On February 7, 2024, the Company’s subsidiary, QED, and Kyowa Kirin Co., Ltd (“Kyowa Kirin”) entered into a partnership wherein QED granted
Kyowa Kirin an exclusive license to develop, manufacture, and commercialize infigratinib for achondroplasia, hypochondroplasia, and other skeletal
dysplasias in Japan, in accordance with the terms therein. In exchange, QED will receive an upfront payment of $100.0 million and will be eligible to
receive royalties up to the high-twenties percent on sales of infigratinib in Japan, with the potential to receive additional development and sales-based
milestone payments.
200
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current
reports that we file under the Exchange Act of 1934, as amended, with the U.S. Securities and Exchange Commission, or the SEC, is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to
our management, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required
disclosure.
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer (our principal executive officer and principal
financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2023 and concluded that our
disclosure controls and procedures were effective at the reasonable assurance level as of that date. The term “disclosure controls and procedures,” as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow
timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship
of possible controls and procedures.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and
15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act
Rules 13a-15(f). Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief
Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external
purposes in accordance with U.S. generally accepted accounting principles.
As of December 31, 2023, we assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal
control over financial reporting under the 2013 “Internal Control — Integrated Framework,” issued by the Committee of Sponsoring Organizations, or
COSO, of the Treadway Commission, under the supervision of, and with the participation of our management, including our Chief Executive Officer and
Chief Financial Officer. Based on that assessment, our management concluded that we maintained effective internal control over financial reporting as of
December 31, 2023.
Deloitte & Touche LLP, an independent registered public accounting firm, audited the effectiveness of our internal control over financial reporting
as of December 31, 2023, as stated in their attestation report, which is included herein.
201
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of BridgeBio Pharma, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of BridgeBio Pharma, Inc., its subsidiaries and controlled entities (the “Company”) as
of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013)issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 22, 2024, expressed an
unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining
an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
San Francisco, California
February 22, 2024
202
ITEM 9B. OTHER INFORMATION
On February 21, 2024, we, through BridgeBio Services, Inc. (the “Services Company”), entered into an amendment (the “Amendment”) to the
employment agreement of Dr. Brian Stephenson, our Chief Financial Officer and Secretary. The Amendment provides the following: (i) in the event of a
termination of his employment by the Services Company without “cause” or Dr. Stephenson’s resignation from employment with the Services Company
for “good reason,” Dr. Stephenson will be entitled to the following severance payments and benefits: (a) a lump sum payment equal to 9 months of his
then-current base salary; and (b) up to 9 months of COBRA reimbursements; and (ii) in the event of a termination of his employment by the Services
Company without “cause” or Dr. Stephenson’s resignation from employment with the Services Company for “good reason” upon or within 12 months after
a “sale event,” Dr. Stephenson will be entitled to the following severance payments and benefits: (a) a lump sum payment equal to 12 months of his then-
current base salary; (b) his then annual target bonus; and (c) up to 12 months of COBRA reimbursements. In each case, Dr. Stephenson is entitled to
receive such severance payments and benefits subject to his execution of an effective release of claims in favor of the Services Company. The terms “good
reason,” “cause” and “sale event” are as defined in the Amendment.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy
of which is filed herewith as Exhibit 10.39 and incorporated herein by reference.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
203
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Except as set forth below, the information required by this Item is incorporated by reference from our definitive proxy statement for our 2024
Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2023.
We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal
executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions. A current copy of the code is
posted on the Corporate Governance section of our website, located at https://investor.bridgebio.com/static-files/e15fa82d-1c86-4951-96a1-0676f0a6bb3d.
If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for our principal executive officer, principal
financial officer, principal accounting officer, controller or persons performing similar functions, or any officer or director, we will disclose the nature of
such amendment or waiver on our website or in a current report on Form 8-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference from our definitive proxy statement for our 2024 Annual Meeting of
Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2023, except as to information disclosed therein
pursuant to Item 402(v) of Regulation S-K relating to pay versus performance.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
The information required by this Item is incorporated by reference from our definitive proxy statement for our 2024 Annual Meeting of
Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2023.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item is incorporated by reference from our definitive proxy statement for our 2024 Annual Meeting of
Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2023.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this Item is incorporated by reference from our definitive proxy statement for our 2024 Annual Meeting of
Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2023.
204
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as part of this Annual Report on Form 10‑K:
1.
Financial Statements:
PART IV
The following financial statements and schedules of the Registrant are contained in Part II, Item 8, “Financial Statements and Supplementary Data”
of this Annual Report on Form 10‑K:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Operations for of the three years in the period ended December 31, 2023
Consolidated Statements of Comprehensive Loss for each of the three years in the period ended December 31, 2023
Consolidated Statements of Redeemable Convertible Noncontrolling Interests and Stockholders’ Equity (Deficit) for each of the three
years in the period ended December 31, 2023
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2023
Notes to Consolidated Financial Statements
Page
139
142
143
144
145
146
148
2.
Financial Statement Schedules:
All schedules have been omitted because of the absence of conditions under which they are required or because the required information, where
material, is shown in the financial statements, financial notes or supplementary financial information.
(b)
Exhibits required by Item 601 of Regulation S‑K:
The exhibits listed in the accompanying Exhibit Index are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K.
205
ITEM 16. FORM 10‑K SUMMARY
None.
Exhibit
Number
2.1
3.1
3.2
4.1
4.2
4.3
4.4
Exhibits
Exhibit Title
Form
File No.
Exhibit
Filing Date
Agreement and Plan of Merger, dated as of October 5,
2020, by and among BridgeBio Pharma, Inc., Eidos
Therapeutic, Inc., Globe Merger Sub I, Inc. and Globe
Merger Sub II, Inc. (incorporated by reference to
Exhibit 2.1 to BridgeBio’s Current Report on Form 8-K
filed with the SEC on October 6, 2020).
8-K
001-38959
2.1
January 26, 2021
Amended and Restated Certificate of Incorporation of
8-K
001-38959
the Registrant, as currently in effect.
Amended and Restated Bylaws of the Registrant, as
currently in effect.
Specimen Common Stock Certificate.
Form of Registration Rights Agreement, among the
Registrant and certain of its shareholders, dated June
26, 2019.
S-4
S-1
S-1
333-249944
333-231759
333-231759
Description of Securities.
10-K
001-38959
Indenture, dated as of March 9, 2020, by and between
8-K
001-38959
BridgeBio Pharma, Inc. and U.S. Bank National
Association, as Trustee.
3.1
3.2
4.1
4.3
4.3
4.1
July 3, 2019
November 6, 2020
June 24, 2019
June 24, 2019
February 25, 2022
March 10, 2020
4.5
Form of Global Note, representing BridgeBio Pharma,
8-K
001-38959
4.2
March 10, 2020
Inc.’s 2.50% Convertible Senior Notes due 2027
(included as Exhibit A to the Indenture filed as Exhibit
4.1).
4.6
Indenture, dated as of January 28, 2021, by and between
8-K
001-38959
BridgeBio Pharma, Inc. and U.S. Bank National
Association, as Trustee.
4.7
Form of Global Note, representing BridgeBio Pharma,
8-K
001-38959
4.1
4.2
January 29, 2021
January 29, 2021
Inc.’s 2.25% Convertible Senior Notes due 2029
(included as Exhibit A to the Indenture filed as Exhibit
4.1).
4.8
Securities Purchase Agreement, dated September 25,
2023, by and among BridgeBio Pharma, Inc., and the
purchasers party thereto.
206
8-K
001-38959
10.1
September 25, 2023
4.9†
10.1#
Registration Rights Agreement, dated September 25,
2023, by and among BridgeBio Pharma, Inc. and the
purchasers party thereto.
Amended and Restated 2021 Stock Option and
Incentive Plan and forms of award agreements
thereunder.
8-K
001-38959
10.2
September 25, 2023
10-K
001-38959
10.1
February 25, 2022
10.2#
Amended and Restated 2019 Employee Stock Purchase
10-Q
001-38959
10.1
November 4, 2021
Plan.
10.3#
10.4#
Senior Executive Cash Incentive Bonus Plan.
Form of Indemnification Agreement, between the
Registrant and each of its directors.
10.5#
Form of Indemnification Agreement, between the
Registrant and each of its executive officers.
S-1
S-1
S-1
333-231759
333-231759
333-231759
10.6
Lease Agreement, between BridgeBio Pharma LLC and
S-1
333-231759
Michael J. Harbour, dated as of March 23, 2017.
10.7†
Exclusive (Equity) Agreement, by and between Eidos
Therapeutics, Inc. and the Board of Trustees of the
Leland Stanford Junior University, effective as of April
10, 2016, as amended by Amendment No. 1 effective
September 25, 2017.
S-1
333-231759
10.3
10.4
10.5
10.8
10.9
June 24, 2019
June 24, 2019
June 24, 2019
May 24, 2019
May 24, 2019
10.8†
License Agreement, between QED Therapeutics, Inc.
S-1
333-231759
10.10
May 24, 2019
10.9†
10.10†
and Novartis International Pharmaceutical Ltd., dated as
of January 29, 2018.
Asset Purchase Agreement, among BridgeBio Pharma
LLC, Origin Biosciences, Inc., and Alexion Pharma
Holding Unlimited Company, dated as of June 7, 2018.
Exclusive Patent License Agreement, between The
Frederick National Laboratory for Cancer Research,
operated by Leidos Biomedical Research, Inc., under
sponsorship from the National Cancer Institute, and
TheRas, Inc., dated December 14, 2018.
S-1
333-231759
10.11
May 24, 2019
S-1
333-231759
10.16
May 24, 2019
10.11†
Cell Line License Agreement, by and between Life
S-1
333-231759
10.17
May 24, 2019
Technologies Corporation and BridgeBio Services, Inc.,
effective as of November 15, 2018.
10.12#
Offer Letter, between BridgeBio Services, Inc. and Neil
S-1
333-231759
10.19
June 11, 2019
Kumar, dated December 14, 2017.
207
10.13#
Offer Letter, between BridgeBio Services, Inc. and
Brian Stephenson, dated October 28, 2018.
10.14#
Offer Letter, between BridgeBio Services, Inc. and
Charles Homcy, dated February 20, 2019.
10.15#
Offer Letter, between BridgeBio Services, Inc. and
Richard Scheller, dated April 5, 2019.
S-1
S-1
S-1
333-231759
10.20
June 11, 2019
333-231759
10.22
June 11, 2019
333-231759
10.23
June 11, 2019
10.16#†
Consulting Agreement between Frank McCormick and
10-K
001-38959
10.16
February 23, 2023
the Registrant, effective as of January 1, 2021.
10.17#†
10.18#†
Amendment No. 1 to Consulting Agreement between
Frank McCormick and the Registrant, effective as of
March 3, 2022.
Amendment No. 2 to Consulting Agreement between
Frank McCormick and the Registrant, effective as of
March 3, 2023.
10-K
001-38959
10.17
February 23, 2023
10-K
001-38959
10.18
February 23, 2023
10.19
Form of Tax Sharing Agreement, between the
Registrant and each of its subsidiaries.
10.20
Indemnification Agreement, between BridgeBio
Pharma LLC and KKR Genetic Disorder, L.P., dated
March 26, 2016.
S-1
S-1
333-231759
10.27
June 24, 2019
333-231759
10.28
June 24, 2019
10.21†
License Agreement, by and between Eidos
10-Q
000-38959
10.1
November 8, 2019
Therapeutics, Inc. and Alexion Pharma International
Operations Unlimited Company, dated September 9,
2019.
10.22#
BridgeBio Pharma, Inc. Amended and Restated 2019
S-8
333-276393
Inducement Equity Plan.
10.23#
Form of Restricted Stock Unit Award Agreement under
BridgeBio Pharma, Inc. Amended and Restated 2019
Inducement Equity Plan (2023 Form).
10-Q
000-38959
99.1
10.3
January 5, 2024
August 3, 2023
10.24#
Form of Restricted Stock Award Agreement under
10-Q
000-38959
10.4
August 3, 2023
BridgeBio Pharma, Inc. Amended and Restated 2019
Inducement Equity Plan (2023 Form).
10.25#
Form of Non-Qualified Stock Option Agreement under
BridgeBio Pharma, Inc. Amended and Restated 2019
Inducement Equity Plan (2023 Form).
208
10-Q
000-38959
10.5
August 3, 2023
10.26#
Amended and Restated Director Compensation Policy.
10.27
Purchase Agreement, dated March 4, 2020, by and
among BridgeBio Pharma, Inc. and J.P. Morgan
Securities LLC and BofA Securities, Inc., as
representatives of the several Initial Purchasers.
10.28
Form of Confirmation for Capped Call Transactions.
10.29
Purchase Agreement, dated January 25, 2021, by and
among BridgeBio Pharma, Inc. and J.P. Morgan
Securities LLC and Mizuho Securities USA LLC, as
representatives of the several Initial Purchasers.
10.30
Form of Confirmation for Capped Call Transactions.
10.31†
Letter Agreement, Amendment #1 thereto, and
Amendments to License Agreement between QED
Therapeutics, Inc. and Novartis International
Pharmaceutical Ltd., dated May 4, 2018, August 7,
2018, September 10, 2020 and March 30, 2022,
respectively.
10-K
8-K
001-38959
001-38959
10.30
10.1
February 25, 2022
March 6, 2020
8-K
8-K
8-K
—
001-38959
001-38959
001-38959
—
10.1
10.1
10.1
—
March 10, 2020
January 26, 2021
January 29, 2021
Filed herewith
10.32†
License, Development and Commercialization
10-Q
001-38959
10.1
August 4, 2022
Agreement, dated May 11, 2022, by and among the
Registrant, Navire Pharma, Inc. and Bristol-Myers
Squibb Company.
Equity Distribution Agreement dated May 4, 2023, by
and among the Company and Goldman Sachs & Co.
LLC and SVB Securities LLC.
Form of Restricted Stock Unit Award Agreement under
2021 Amended and Restated BridgeBio Pharma, Inc.
Stock Option and Incentive Plan (2023 Form).
Form of Restricted Stock Award Agreement under 2021
Amended and Restated BridgeBio Pharma, Inc. Stock
Option and Incentive Plan (2023 Form).
Form of Non-Qualified Stock Option Agreement under
2021 Amended and Restated BridgeBio Pharma, Inc.
Stock Option and Incentive Plan (2023 Form).
10.33
10.34#
10.35#
10.36#
209
S-3ASR
333-271650
1.2
May 4, 2023
10-Q
001-38959
10.6
August 3, 2023
10-Q
001-38959
10.7
August 3, 2023
10-Q
001-38959
10.8
August 3, 2023
10.37#
Form of Non-Qualified Stock Option Agreement under
2021 Amended and Restated BridgeBio Pharma, Inc.
Stock Option and Incentive Plan for Board of Directors
(2023 Form).
10-Q
001-38959
10.9
August 3, 2023
10.38†
Second Amendment, effective as of August 15, 2023, to
10.-Q
001-38959
10.1
November 2, 2023
the Exclusive (Equity) Agreement, by and between
Eidos Therapeutics, Inc. and the Board of Trustees of
the Leland Stanford Junior University, effective as of
April 10, 2016, as amended by Amendment No. 1,
effective September 25, 2017.
10.39#†
Amendment to Employment Agreement, between
BridgeBio Services, Inc. and Brian Stephenson, dated
February 21, 2024.
19
21
Amended and Restated Insider Trading Policy.
List of Subsidiaries of the Registrant.
23.1
Consent of Independent Registered Public Accounting
Firm.
24
Power of Attorney (reference is made to signature page
hereto).
31.1
31.2
32.1*
Certification of Principal Executive Officer Pursuant to
Rules 13a-14(a) and 15d-14(a) under the Securities
Exchange Act of 1934, as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer Pursuant to
Rules 13a-14(a) and 15d-14(a) under the Securities
Exchange Act of 1934, as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Executive Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
—
—
—
—
—
—
—
—
32.2*
Certification of Principal Financial Officer Pursuant to
—
18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
97
Compensation Clawback Policy.
101.INS
Inline XBRL Instance Document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
—
—
—
210
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation
Linkbase Document.
104
Cover Page Interactive Data File (formatted as inline
XBRL with applicable taxonomy extension information
contained in Exhibits 101).
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
* This certification is deemed to accompany this Annual Report on Form 10-K and will not be deemed “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be
incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated
by reference into such filing.
# Indicates a management contract or any compensatory plan, contract or arrangement.
† Certain confidential portions (indicated by brackets and asterisks) have been omitted from this exhibit in accordance with the rules of the Securities and
Exchange Commission because such information (i) is not material and (ii) is the type that the Registrant treats as private or confidential.
211
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: February 22, 2024
By:
BridgeBio Pharma, Inc.
/s/ Neil Kumar
Neil Kumar, Ph.D.
Chief Executive Officer, Director
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Neil Kumar and Brian
Stephenson, as their true and lawful attorney‑in‑fact and agent, with full power of substitution and resubstitution, for such person and in his or her name,
place and stead, in any and all capacities, to sign any and all amendments to the Annual Report on Form 10‑K, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney‑in‑fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as
he or she could do in person, hereby ratifying and confirming all that said attorney‑in‑fact and agent, or his substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Neil Kumar
Neil Kumar, Ph.D.
/s/ Brian Stephenson
Brian Stephenson, Ph.D., CFA
/s/ Eric Aguiar
Eric Aguiar, M.D.
/s/ Jennifer E. Cook
Jennifer E. Cook
/s/ Douglas A. Dachille
Douglas A. Dachille
/s/ Ronald J. Daniels
Ronald J. Daniels
/s/ Andrea J. Ellis
Andrea J. Ellis
/s/ Fred Hassan
Fred Hassan
President, Chief Executive Officer and Director
(Principal Executive Officer)
February 22, 2024
Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
February 22, 2024
Director
February 22, 2024
Director
February 22, 2024
Director
February 22, 2024
Director
February 22, 2024
Director
February 22, 2024
Director
February 22, 2024
212
/s/ Charles Homcy
Charles Homcy, M.D.
/s/ Andrew W. Lo
Andrew W. Lo, Ph.D.
/s/ Frank P. McCormick
Frank P. McCormick, Ph.D.
/s/ James C. Momtazee
James C. Momtazee
/s/ Ali J. Satvat
Ali J. Satvat
/s/ Randal W. Scott
Randal W. Scott, Ph.D.
/s/ Hannah A. Valantine
Hannah A. Valantine, M.D.
Director
February 22, 2024
Director
February 22, 2024
Director
February 22, 2024
Director
February 22, 2024
Director
February 22, 2024
Director
February 22, 2024
Director
February 22, 2024
213
CERTAIN INFORMATION IDENTIFIED BY “[***]” HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT
IS BOTH NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS
PRIVATE OR CONFIDENTIAL.
Exhibit 10.31
May 4, 2018
Novartis International Pharmaceutical Ltd.
Lichtstrasse 35
CH-4056 Basel Switzerland
RE: Letter Agreement relating to pharmacokinetic analysis and transfer or BGJ398 Material and databases
Ladies and Gentlemen:
Reference is hereby made in this letter agreement (this “Letter Agreement”) to that certain License Agreement by and between
Novartis International Pharmaceutical Ltd. (“Novartis”) and QED Therapeutics, Inc. (“QED”) dated as of January 29, 2018 (as
originally executed and as the same may be amended, supplemented or modified from time to time in accordance with its terms,
the “License Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such
terms in the License Agreement. Novartis and QED are sometimes referred to herein individually as a “Party” and collectively as
the “Parties.”
WHEREAS, the Parties have agreed that Novartis shall conduct certain pharmacokinetic analyses and related activities for
clinical study [***], which activities are not set forth in the License Agreement; and
WHEREAS, the Parties desire to amend the License Agreement with respect to the timing and performance of the transfer of
BGJ398 Material and databases and make such other agreements related thereto, as set forth herein.
NOW THEREFORE, in consideration of the foregoing premises and the mutual promises, covenants and conditions contained in
this Letter Agreement, Novartis and QED hereby agree as follows:
1.
Pharmacokinetic Analysis.
(a) The Parties hereby agree that Novartis shall, at no cost to QED, conduct certain pharmacokinetic analyses and related
activities for the clinical study entitled: [***] pursuant to the Statement of Work attached hereto as Schedule 1. The
Parties hereby agree that all results of all such activities performed by Novartis pursuant to this Statement of Work,
including all reports, records, results, data and other information generated in the conduct of such activities, shall be
considered “Novartis Know-How,” notwithstanding anything to the contrary in the definition of “Novartis Know-
How” and licensed to QED pursuant to Section 2.1 of the License Agreement. Novartis will conduct such activities
in accordance with all Applicable Laws and all applicable industry standards and practices. QED acknowledges that
reports, records, results, data
and other information generated in the conduct of such activities shall be provided “as is” and without implied
warranties of merchantability or fitness for a particular purpose, and any use made by QED of such reports, records,
results, data and other information is at its own risk.
2.
Transfer of BGJ398 Material.
(a) Section 6.1 of the License Agreement is hereby deleted and replaced in its entirety with the following:
“Transfer of BGJ398. Novartis will make available for pick-up (ex works, Incoterms 2010) the material identified
on Exhibit D (the “BGJ398 Material”), in the form as currently exists, from Novartis’ facilities where BGJ398
Material is currently stored, at no additional cost to QED in multiple installments according as set forth in Section
6.3(e) below. The pick-up of each installment of the BGJ398 Material must be completed within [***] after the date
that Novartis notifies such installment of BGJ398 Material is available for pick up. Any installment of BGJ398
Material not picked up by the end of that [***] period may be disposed of by Novartis in its sole discretion.”
(b) Section 6.3(e) of the License Agreement is hereby deleted and replaced in its entirely with the following:
“(e) the BGJ398 Material will be made available for pick up (ex works, Incoterms 2010) by Novartis at Novartis’
facilities where BGJ398 Material is currently stored, and shall be picked up by QED, in multiple installments in the
order of priority set forth in Exhibit H, on a schedule mutually agreed upon by the Parties;”
(c) Exhibit H, as attached hereto, is hereby appended to the License Agreement.
3.
Section 4.3. Database Transfer. Section 4.3 of the License Agreement contemplated that QED establish the appropriate
database structures for receipt of the relevant data not later than [***] after QED’s receipt of the trial master file for the
Compound. The Parties hereby agree that QED received the trial master file for the Compound from Novartis on April 12, 2018
and that such date shall be used to calculate the date for QED’s completion of the establishment of the appropriate database
structures. Further, the Parties hereby amend Section 4.3 by replacing “not later than [***] after" to “not later [***].”
4.
[***]. Section 5.1 and Exhibit F of the License Agreement contemplated that Novartis and its Affiliates assign and transfer
to QED the sponsorship of all of the Regulatory Filings identified in Exhibit F, including [***]. The Parties hereby agree that
Novartis and Affiliates shall not assign and transfer the sponsorship of [***] and that [***] shall not be deemed a “Transferred
IND/CTA'” under the License Agreement. As such, the Parties hereby amend Exhibit F to delete all references to [***].
Effect of Letter Agreement. This Letter Agreement shall not constitute a waiver, amendment or modification of any other
5.
provision of the License Agreement or any other provision not expressly referred to herein. Except as amended as set forth above,
the License Agreement shall continue in full force and effect.
Severability. Should one or more of the provisions of this Letter Agreement become void or unenforceable as a matter of
6.
law, then this Letter Agreement will be construed as if such
provision were not contained herein and the remainder of this Letter Agreement will be in full force and effect, and the
Parties will use their commercially reasonable efforts to substitute for the invalid or unenforceable provision a valid and
enforceable provision which conforms as nearly as possible with the original intent of the Parties.
7.
Governing Law and Jurisdiction. This Letter Agreement will be governed by and construed under the laws of the
Commonwealth of Massachusetts, USA, without giving effect to the conflicts of laws provision thereof, The United Nations
Convention on Contracts for the International Sale of Goods (1980) will not apply to the interpretation of this Letter Agreement.
8.
Entire Agreement. This Letter Agreement, including its Exhibits and schedules, together with the License Agreement sets
forth the entire agreement and understanding of the Parties as to the subject matter hereof and supersedes all proposals, oral or
written, and all other prior communications between the Parties with respect to such subject matter, including the Prior
Confidentiality Agreement In the event of any conflict between a substantive provision of this Letter Agreement and any Exhibit
or schedule hereto, the substantive provisions of this Letter Agreement will prevail.
9.
Counterparts. This Letter Agreement may be executed in two or more counterparts, each of which will be deemed an
original but all of which together will constitute one and the same instrument. Signatures provided by facsimile transmission or in
Adobe Portable Document Format (.pdf) sent by electronic mail shall be deemed to be original signatures.
10. Amendments. No provision of this Letter Agreement may be amended or modified other than by a written document
signed by authorized representatives of each Party.
Survival. The rights and obligations of the parties under this Letter Agreement shall continue until the expiration or
11.
termination of the License Agreement.
This Letter Agreement is signed below by authorized representatives of Novartis and QED respectively indicating the
Parties' acceptance of the terms and conditions of this Letter Agreement.
NOVARTIS INTERNATIONAL PHARMACEUTICAL LTD.
By: /s/Simone Pfirter
(signature)
Name: Simone Pfirter
By: /s/Felix Eichhorn
(signature)
Name: Felix Eichhorn
Title: Authorized Signatory
Title: Authorized Signatory
QED THERAPEUTICS, INC.
By: /s/Michael Henderson
(signature)
Name: Michael Henderson
Title:
CBO
cc: Novartis Institutes for BioMedical Research, Inc,
250 Massachusetts Avenue
Cambridge, MA 02139 USA
Attn: General Counsel
Goodwin Procter
Three Embarcadero Center
28th Floor
San Francisco, CA 94111
Attn: Maggie L, Wong, Esq.
[***]
Statement of Work
Schedule I
Novartis Prioritization of Exhibit D
[***]
Exhihit H
AMENDMENT NO. 1 TO LETTER AGREEMENT
This Amendment No. 1 to the Letter Agreement (this “Amendment”) is made as of 7th August, 2018, by and between Novartis
International Pharmaceutical Ltd. (“Novartis”) and QED Therapeutics, Inc. (“QED”).
RECITALS
WHEREAS, Novartis and QED entered into that certain Letter Agreement dated May 4, 2018 (the “Letter
Agreement”) to that certain License Agreement by and between Novartis and QED dated as of January 29, 2018 (the “License
Agreement”);
WHEREAS, QED and Novartis desire to amend the Letter Agreement;
NOW, THEREFORE, the parties hereto, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, intending to be legally bound, agree as follows:
1. Defined Terms. Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the
Letter Agreement.
2. Amendment to Section 4. Section 4 of the Letter Agreement “[***]” is hereby deleted in its entirety and replaced
with the following text:
“[***]. Notwithstanding anything to the Contrary in the License Agreement, Novartis and its Affiliates shall assign and
transfer to QED the sponsorship of Regulatory Filing [***], as identified on Exhibit F, effective as of August 10, 2018.
Upon such assignment and transfer, [***] shall be deemed a “Transferred IND/CTA” for all purposes under the License
Agreement.”
3. Effect of Amendment. This Amendment shall not constitute a waiver, amendment, or modification of any other
provision of the Letter Agreement or any other provision not expressly referred to herein. Except as amended as set forth above,
the Letter Agreement shall continue in full force and effect.
4. Entire Agreement. This Amendment, together with the License Agreement and the Letter Agreement together
constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof and
any and all other written or oral agreements relating to the subject matter hereof existing between the parties hereto are expressly
superseded hereby.
5. Governing Law. This Amendment will be governed by and construed under the laws of the Commonwealth of
Massachusetts, USA, without giving effect to the conflicts of laws provision thereof. The United Nations Convention on
Contracts for the International Sale of Goods (1980) will not apply to the interpretation of this Amendment.
6. Counterparts. This Amendment may be executed in two or more counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same instrument. Signatures provided by facsimile transmission or
in Adobe Portable Document Format (.pdf) sent by electronic mail shall be deemed to be original signatures.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
2
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 to the Letter Agreement as of the date
first set forth above.
NOVARTIS INTERNATIONAL PHARMACEUTICAL LTD.
By: /s/Riccarda Racine
(signature)
Name: Riccarda Racine
Title: Authorized Signatory
By: /s/Simone Pfirter
(signature)
Name: Simone Pfirter
Title: Authorized Signatory
QED THERAPEUTICS, INC.
By: /s/Sameena Sharif
(signature)
Name: Sameena Sharif
Title:
COO
cc: Novartis Institutes for BioMedical Research, Inc,
250 Massachusetts Avenue
Cambridge, MA 02139 USA
Attn: General Counsel
Goodwin Procter
Three Embarcadero Center
28th Floor
San Francisco, CA 94111
Attn: Maggie L, Wong, Esq
AMENDMENT TO LICENSE AGREEMENT
This Amendment to License Agreement (this “Amendment”) dated as of September 10, 2020 (the “Amendment
Date”), is made by and between Novartis Pharma AG (as the successor in interest to Novartis International Pharmaceutical
Ltd.), a for-profit corporation with its principal place of business at Lichtstrasse 35, CH-4056 Basel, Switzerland (“Novartis”),
and QED Therapeutics, Inc., a Delaware corporation located at One Ferry Building, Suite 220, San Francisco, CA 94111 USA
(“QED”). Novartis and QED may each be referred to herein as a “Party” or collectively as the “Parties.”
WITNESSETH
WHEREAS, Novartis and QED are patties lo the License Agreement, dated January 9, 2018 (the “License
Agreement”), as amended by that certain Letter Agreement, dated May 4, 2018 (the “First Letter Agreement”), and that
certain Amendment #1 to the First Letter Agreement, dated August 7, 2018 (the “Amendment No. 1 to the First Letter
Agreement”), as well as that certain Amendment and Agreement, dated August 30, 2018 (the “Amendment and
Agreement”) and together with the License Agreement, the First Letter Agreement and the Amendment No. 1 to the First
Letter Agreement, the “Agreement”);
WHEREAS, the Parties entered into an Assignment, Assumption and Cooperation Agreement, dated April 25, 2018
(the “Ancillary Agreement”);
WHEREAS, Parties also entered into a second Letter Agreement, dated June 11, 2018, a third Letter Agreement,
dated November 4, 2019, and a fourth Letter Agreement, dated June 22, 2020 (such Letter Agreements, collectively, the
“Letter Agreements,” and together with Agreement and Ancillary Agreement. the “Operative Agreements”);
WHEREAS, effective January 1, 2020, the Operative Agreements were assigned to Novartis Pharma AG pursuant to
its merger with its Affiliate, Novartis International Pharmaceutical Ltd; and
WHEREAS, Novartis and QED desire to amend the Operative Agreements as set forth herein.
NOW THEREFORE, in consideration of good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Novartis and QED mutually agree as follows:
1.Definitions. All capitalized terms used but not defined herein shall have the meanings ascribed thereto in the
License Agreement.
2.
Amendments.
a.
Section 9.4(b) of the License Agreement is hereby amended and restated as follows:
“QED will have the first right to bring and control any legal action in connection with the Third Party
Infringement relating to any Novartis Patent set forth on Exhibit B-1 or Exhibit B-2 in the Field at its own
expense as it
reasonably determines appropriate, and Novartis will have the right, at its own expense, to be represented in any
such action by counsel of its own choice. If QED fails to bring an action or proceeding with respect to, or to
terminate, infringement of any Novartis Patent set forth on Exhibit B-1 or Exhibit B-2 (i) within [***] following
the notice of alleged infringement (or [***] after QED receives the relevant ANDA notification), or (ii) prior to
[***] before the time limit, if any, set forth in the appropriate laws and regulations for the filing of such actions,
whichever comes first, Novartis will have the right to bring and control any such action at its own expense and
by counsel of its own choice, and QED will have the right, at its own expense, to be represented in any such
action by counsel of its own choice; provided, however, that if QED notifies Novartis in writing prior to [***]
before such time limit for the filing of any such action that QED intends to file such action before the time limit,
then QED will be obligated to file such action before the time limit, and Novartis will not have the right to bring
and control such action.”
b.
Section 9.5 of the License Agreement is hereby amended and restated as follows:
“Third Party Patent Invalidity Claim. If a Third Patty at any time asserts a claim that any Novartis Patent on
Exhibit B-1 or Exhibit B-2 is invalid or otherwise unenforceable (an “Invalidity Claim”), whether as a defense in
an infringement action brought by a Patty pursuant to Section 9.4, in a declaratory judgment action or any
patent office-proceeding anywhere in the world (e.g., inter-partes review or European opposition) relating to the
Field, QED shall have the first right, but not the obligation, to defend such Invalidity Claim and Novartis shall
cooperate with QED in preparing and formulating a response to such Invalidity Claim. If QED does not defend
an Invalidity Claim brought against a Novartis Patent on Exhibit B-1 or Exhibit B-2, Novartis may defend such
Invalidity Claim and the coordination provisions of Section 9.4(c) will apply to such Invalidity Claim, mutatis
mutandis as they apply to Third Party Infringement suits. No Party may, without the consent of each other Party,
settle or compromise any Invalidity Claim in any manner which would (a) have an adverse effect on such other
Party’s rights or obligations hereunder or (b) be an admission of liability on behalf of the other Party (provided,
however, that the Party initiating such suit may settle such suit without such consent if such settlement involves
only the receipt of money from, or the payment of money to, such Third Party and the Party settling such suit
makes all such payments to such Third Party). To the extent such Invalidity Claim is raised as a defense in an
infringement action brought by a Party pursuant to Section 9.4, the expense provisions of Section 9.4 will apply
and counsel to the Party controlling the infringement action shall act as the ministerial liaison with the court.”
c.
Section 9.9 of the License Agreement is hereby amended and restated as follows:
“(a) If requested by QED, Novartis will cooperate in obtaining patent term restoration (under but not limited to
the Drug Price Competition and Patent Term Restoration Act), supplemental protection certificates or
their
equivalents, and patent term extensions with respect to the Novartis Patents on Exhibit B-1 or Exhibit B-2
in any country and/or region where applicable. Novartis will provide all reasonable assistance requested
by QED, including permitting QED to proceed with applications for such in the name of Novartis, if
deemed appropriate by QED, and executing documents and providing any relevant information to QED.
(b) As between the Parties, QED, will in its sole discretion determine which, if any, Novartis Patents on
Exhibit B-1 or Exhibit B-2, it will apply to extend; provided, however, that QED will give Novartis [***]
notice before doing so and reasonably consider any input from Novartis with respect to the extension of
any Novartis Patents.”
3. No Other Agreement. In the event of a conflict between this Amendment and the License Agreement, this
Amendment shall control with respect to the subject matter set forth herein. Except as expressly set forth in this Amendment,
all of the terms and conditions of, the Operative Agreements shall remain unchanged and are ratified, reinstated and
confirmed in all respects, and will remain in full force and effect.
4.Warranty. Novartis represents that it has the right and authority to grant all rights to QED under the Agreement as
amended by this Amendment.
5.Entire Agreement. This Amendment, together with the Operative Agreements, as amended, constitutes the entire
agreement between Novartis and QED regarding the subject matter hereof. and any reference to the Operative Agreements
shall refer to the Operative Agreements, including this Amendment.
6.Counterparts. This Amendment may be executed in one or more counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same instrument. Signature pages may be transmitted by
facsimile or other electronic means (such as email of .pdf or similar files) with the same effect as physical delivery of
manually signed originals.
[The remainder of this page is intentionally left blank]
IN WITNESS WHEREFORE, the duly authorized representatives of the Parties hereby execute this Amendment as
of the Amendment Date.
Novartis Pharma AG
QED Therapeutics, Inc.
By: /s/ Carlote Retler
By: /s/ Carl Dambkowski
Name: Dr. Charlotte Retzler
Name: Carl L. Dambkowski
Title: Authorized Signatory
Title: Chief Strategy Officer and EVP of Operations
By: /s/ Ian James Hiscock
Name: Ian James Hiscock
Title: Authorized Signatory
AMENDMENT TO LICENSE AGREEMENT
This Amendment to License Agreement (this “Amendment”) dated as of March 30, 2022 (the “Amendment
Effective Date”), is made by and between Novartis Pharma AG (as the successor in interest to Novartis International
Pharmaceutical Ltd.), a for-profit corporation with its principal place of business at Lichtstrasse 35, CH-4056 Basel,
Switzerland (“Novartis”), and QED Therapeutics, Inc., a Delaware corporation located at 1800 Owens Street, 12th Floor, San
Francisco, CA 94158 (“QED”). Novartis and QED may each be referred to herein as a “Party” or collectively as the
“Parties.”
WHEREAS, Novartis and QED are parties to the License Agreement, dated January 9, 2018, as amended by that
certain Letter Agreement, dated May 4, 2018, that certain Amendment #1 to the First Letter Agreement, dated August 7, 2018,
that certain Amendment and Agreement, dated August 30, 2018, and that certain Amendment to License Agreement dated
September 10, 2020 (the “Agreement”);
WHEREAS, the Parties entered into an Assignment, Assumption and Cooperation Agreement, dated April 25, 2018,
as amended on August 30, 2018 and February 12, 2019 (the “Ancillary Agreement”);
WHEREAS, Parties also entered into a second Letter Agreement, dated June 11, 2018, a third Letter Agreement,
dated April 4, 2019, a fourth Letter Agreement, dated November 4, 2019, and a fifth Letter Agreement, dated June 22, 2020
(such Letter Agreements, collectively, the “Letter Agreements,” and together with Agreement and Ancillary Agreement, the
“Operative Agreements”);
WHEREAS, the Parties entered into a Pharmacovigilance Agreement dated September 20, 2018, which was
terminated, subject to certain survival provisions, pursuant to a Termination Letter dated December 18, 2019;
WHEREAS, effective January 1, 2020, the Operative Agreements existing as of the date thereof were assigned to
Novartis Pharma AG pursuant to its merger with its Affiliate, Novartis International Pharmaceutical Ltd.; and
WHEREAS, the Parties wish to amend the License Agreement as set forth herein.
NOW THEREFORE, in consideration of good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Novartis and QED mutually agree as follows:
1.Definitions. All capitalized terms used but not defined herein shall have the meanings ascribed thereto in the
License Agreement.
2.
Amendments.
a. The License Agreement is hereby amended and restated by adding a new Section
5.4 as follows:
“Source Documentation: The Parties acknowledge and agree that as of the Amendment Effective Date,
Novartis has provided QED with legacy safety data from the Novartis global safety database for the Product
to enable QED to establish the Global Safety Database (the “GSDB”) for the Product, and such transfer of
data from Novartis to QED did not contain any source documentation on safety cases. The Parties
acknowledge and agree that Novartis has provided legacy safety data source documentation upon the request
of QED where required for patient safety or regulatory reasons for the Products. In accordance with the terms
of [***], on November 12, 2021, QED subsequently transferred the GSDB to [***].
Novartis hereby agrees that following the Amendment Effective Date, Novartis shall provide in a timely
manner either to QED or to both QED and [***], as QED’s designee, source documentation and audit trail
data for an individual case as reasonably requested by QED, [***], or the relevant Regulatory Authorities for
patient safety or regulatory reasons for the Product,. QED or [***] will reach out to the Novartis point of
contact [***]. Any source documents requiring transfer shall be transferred in compliance with data privacy
laws and regulations, and copies of anonymized source documents shall be provided only after redaction of
patient and reporter identifiers. Where required, this will be conducted at the expense of QED. No
correspondence, communications, or meetings (including in connection with responses to relevant regulatory
agencies) will be conducted by Novartis and [***] without the participation of QED as a necessary party.
Any source documentation shall be maintained by the Parties, and Novartis’ obligations set forth in this
Section 5.4, shall survive expiration or termination of this Agreement, in each case, for at least [***] after the
last country has withdrawn the Product from the market, or after a development project ends.”
b. The License Agreement is hereby amended and restated by adding the following sentence to the end of
Section 15.12:
“Notwithstanding the foregoing in addition to QED, [***] or [***] shall be entitled to directly enforce the
obligations set forth in Section 5.4.”
3.No Other Agreement. In the event of a conflict between this Amendment and the License Agreement, this
Amendment shall control with respect to the subject matter set forth herein. Except as expressly set forth in this Amendment,
all of the terms and conditions of the Operative Agreements shall remain unchanged and are ratified, reinstated and confirmed
in all respects, and will remain in full force and effect.
4.Warranty. Novartis represents that it has the right and authority to grant all rights to QED under the Agreement as
amended by this Amendment.
5.Entire Agreement. This Amendment, together with the Operative Agreements, as amended, constitutes the entire
agreement between Novartis and QED regarding the subject matter hereof, and any reference to the Operative Agreements
shall refer to the Operative Agreements, including this Amendment.
6.Counterparts. This Amendment may be executed in one or more counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same instrument. Signature pages may be transmitted by
facsimile or other electronic means (such as email of .pdf or similar files) with the same effect as physical delivery of
manually signed originals.
[The remainder of this page is intentionally left blank]
IN WITNESS WHEREFORE, the duly authorized representatives of the Parties hereby execute this Amendment as
of the Amendment Date.
NOVARTIS PHARMA AG QED THERAPEUTICS, INC.
By: /s/ Simone Pfirter By: /s/ Michael Henderson
Name: Simone Pfirter
Name: Michael Henderson
Title: Head NIBR General Legal Europe
Title: CEO
By: /s/ Petra Grohman-Moesching
Name: Petra Grohman-Moesching
Title: Head Finance NIBR Europe
CERTAIN INFORMATION IDENTIFIED BY “[***]” HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH
NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR
CONFIDENTIAL.
Exhibit 10.39
February 21, 2024
Brian Stephenson
Re: Amendment to Employment Agreement
Dear Brian:
This letter (this “Amendment”) confirms the agreement between you and BridgeBio Services, Inc. (the “Company”) to amend the terms of
the employment agreement between you and the Company effective October 28, 2018 (the “Employment Agreement”), to provide a cash
severance opportunity upon certain types of terminations of your employment with the Company. Capitalized terms not otherwise defined
herein shall have the respective meanings ascribed to such terms in the Employment Agreement.
For good and valuable consideration, the receipt of which is hereby acknowledged, you and the Company hereby agree as follows:
1.
The following paragraph is hereby added to the Employment Agreement after the paragraph that begins, “It is understood that you
are an ‘at-will’ employee.”
Severance and Payment of Continued Group Health Plan Benefits
(1)
In the event you are terminated by the Company without Cause or if you resign for Good Reason, subject to you signing a
general release of claims in favor of the Company and all related persons and entities (the “Release”) that becomes
irrevocable within sixty (60) days following the termination date (or such shorter period set forth in the Release), the
Company agrees to (i) pay you a lump sum payment equal to nine (9) months of your then-base salary and (ii) pay directly
to the carrier the full amount of your COBRA premiums on your behalf for your continued coverage under the Company’s
group health plans, including coverage for your eligible dependants, until the earliest of (a) nine (9) months following the
termination date of your employment, (b) the expiration of your eligibility for the continued coverage under COBRA, or
(c) the date you become eligible to participate in a subsequent employer’s health plan.
(2)
(3)
(4)
In the event you are terminated by the Company without Cause or if you resign for Good Reason, upon or within twelve
(12) months after a Sale Event, subject to you signing a Release, the Company agrees to (i) pay you a lump sum payment
equal to (a) twelve (12) months of your then-base salary, and (b) your then-annual target bonus; and (ii) pay directly to the
carrier the full amount of your COBRA premiums on your behalf for your continued coverage under the Company’s group
health plans, including coverage for your eligible dependants, until the earliest of (a) twelve (12) months following the
termination date of your employment, (b) the expiration of your eligibility for the continued coverage under COBRA, or
(c) the date you become eligible to participate in a subsequent employer’s health plan. For the avoidance of doubt, in no
event will you be eligible to receive more than one bonus related to work performed in the year in which the termination
date occurs.
The lump sum payments to you described in Paragraphs (1) and (2) above shall be made within 60 days following the
effective date of the Release; provided that if the 60-day period following the termination date begins in one calendar year
and ends in a second calendar year, the lump sum payment shall be made in the second calendar year and no later than the
last day of such 60-day period.
Each of the terms “Cause”, “Good Reason” and “Sale Event” used above is as defined in the BridgeBio Pharma, Inc.
Change in Control Policy [***].
2. All other provisions of the Employment Agreement shall remain in full force and effect according to their respective terms.
3. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an
original; but such counterparts shall together constitute one and the same document.
[Remainder of the page left in blank]
To accept the terms of this Amendment, please sign and date below and return it to me at your earliest convenience.
Very truly yours,
BRIDGEBIO SERVICES, INC.
/s/ Neil Kumar
Neil Kumar
Chief Executive Officer
Accepted and agreed:
/s/ Brian Stephenson
Brian Stephenson
February 21, 2024
Date
[Signature Page to Amemdment to Employment Agreement]
BRIDGEBIO PHARMA, INC.
AMENDED AND RESTATED INSIDER TRADING POLICY
Exhibit 19
BridgeBio Pharma, Inc. (the “Company”) has adopted the following policy and procedures for securities trading by
Company directors and employees (our “Insider Trading Policy”). Our Insider Trading Policy is intended to prevent the misuse of
material nonpublic information, insider trading in securities, and the severe consequences associated with violations of insider
trading laws. It is your obligation to review, understand, and comply with this Insider Trading Policy and applicable laws. Our
Board of Directors has approved this Insider Trading Policy. The Company’s Chief Legal Officer, along with his or her
designated representatives, collectively serve as the Company’s Compliance Officers, responsible for overseeing insider trading
compliance and administering the policy. They are available to answer your questions. It is your obligation to understand and
comply with this Insider Trading Policy. Please contact the Insider Trading Compliance Officer, at legal@bridgebio.com if you
have any questions regarding the policy.
PART I. OVERVIEW
A.
Who Must Comply?
This Insider Trading Policy applies to all of our employees, executive officers and members of our Board of Directors,
including anyone employed by or acting as a director of any of the Company’s subsidiaries, as well as any other individuals
whom the Compliance Officer may designate as Insiders (defined below) because they have access to material nonpublic
information about the Company.
In addition, all of our directors, executive officers (as defined by Section 16 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) and other designated employees must comply with the Trading Procedures included in Part II of
this Insider Trading Policy (the “Trading Procedures”); we will refer to these individuals in this policy as “Insiders.” The Trading
Procedures provide rules for when Insiders can trade in our securities and explain the process for mandatory pre-clearance of
proposed trades. You will be notified if you are considered to be an Insider who is required to comply with the Trading
Procedures.
This Insider Trading Policy and, for Insiders, the Trading Procedures also apply to the following persons (“Affiliated
Persons”):
•
your “Family Members” (“Family Members” are (a) your spouse or domestic partner, children, stepchildren,
grandchildren, parents, stepparents, grandparents, siblings and in-laws who reside in the same household as you, (b)
your children or your spouse’s children who do not reside in the same household as you but are financially
dependent on you, (c) any of your other family members who do not reside in your household but whose
transactions are directed by you, and (d) any other individual over whose account you have control and to whose
financial support you materially
1
•
•
•
contribute. (Materially contributing to financial support would include, for example, paying an individual’s rent but
not just a phone bill.);
all trusts, family partnerships and other types of entities formed for your benefit or for the benefit of a member of
your family and over which you have the ability to influence or direct investment decisions concerning securities;
all persons who execute trades on your behalf; and
all investment funds, trusts, retirement plans, partnerships, corporations and other types of entities over which you
have the ability to influence or direct investment decisions concerning securities; provided, however, that the
Trading Procedures do not apply to any such entity that engages in the investment of securities in the ordinary
course of its business (e.g., an investment fund or partnership) if the entity has established its own insider trading
controls and procedures in compliance with applicable securities laws and it (or an affiliated entity) has represented
to the Company that its affiliated entities: (a) engage in the investment of securities in the ordinary course of their
respective businesses; (b) have established insider trading controls and procedures in compliance with securities
laws; and (c) are aware the securities laws prohibit any person or entity who has material nonpublic information
concerning the Company from purchasing or selling securities of the Company or from communicating such
information to any other person under circumstances in which it is reasonably foreseeable that such person is likely
to purchase or sell securities.
You are responsible for ensuring compliance with this Insider Trading Policy, including the Trading Procedures
contained herein, by all of your Affiliated Persons.
B.
What is Prohibited by this Insider Trading Policy?
You and your Affiliated Persons are prohibited from engaging in insider trading and from trading in securities in
violation of this Insider Trading Policy. “Insider trading” is (1) trading (buying or selling) the securities of a company whether for
your account or for the account of another, while in the possession of material nonpublic information (see definition below) about
that company or (2) disclosing material nonpublic information about a company to others who may trade on the basis of that
information. Insider trading can result in criminal prosecution, jail time, significant fines and public embarrassment for you and
the Company.
Prohibition on Trading in Company Securities
When you are in possession of material nonpublic information about the Company, whether positive or negative, you are
prohibited from trading (whether for your account of for the account of another) in the Company’s securities, which include
common stock, options to purchase common stock, any other type of securities that the Company may issue (such as preferred
stock, convertible debentures, warrants and exchange-traded options), and any derivative securities that provide the economic
equivalent of ownership of any the Company’s securities or an opportunity, direct or indirect, to profit from any change in the
value of the
2
Company’s securities, except for trades made pursuant to plans approved by the Compliance Officer in accordance with this
policy that are intended to comply with Rule 10b5-1 under the Exchange Act.
The trading prohibitions in this Insider Trading Policy do not apply to: (1) an exercise of an employee stock option when
payment of the exercise price is made in cash or (2) the withholding by the Company of shares of stock upon vesting of restricted
stock or upon settlement of restricted stock units to satisfy applicable tax withholding requirements if (a) such withholding is
required by the applicable plan or award agreement or (b) the election to exercise such tax withholding right was made by the
Insider in compliance with the Trading Procedures.
The trading prohibitions in this Insider Trading Policy do apply, however, to the use of outstanding Company securities
to pay part or all of the exercise price of a stock option, any sale of stock as part of a broker-assisted cashless exercise of an
option, and any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.
Prohibition on Tipping
Providing material nonpublic information about the Company to another person who may trade or advise others to trade
on the basis of that information is known as “tipping” and is illegal. You are prohibited from providing material nonpublic
information about the Company to a friend, relative, or anyone else who might buy or sell a security or other financial instrument
on the basis of that information, whether or not you intend to or actually do realize a profit (or any other benefit) from such
tipping. Additionally, you are prohibited from recommending to any person that such person engage in or refrain from engaging
in any transaction involving the Company’s securities, or otherwise give trading advice concerning the Company’s securities, if
you are in possession of material nonpublic information about the Company.
Prohibition on Trading in Securities of Other Companies
This policy’s prohibitions against insider trading and tipping also apply to trading in securities of other companies,
including the Company’s suppliers, collaboration partners and other enterprises with which we are working (such as when
negotiating an acquisition, license, investment or other transaction that could be material to the other company). Whenever,
during the course of your service to or employment by the Company, you become aware of material nonpublic information about
another company, including any confidential information that is reasonably likely to affect the market price of that company’s
securities (for example, discussions of licensing a product or acquiring that other company), neither you nor your Affiliated
Persons may trade in any securities of that company, give trading advice about that company, tip or disclose that information,
pass it on to others, or engage in any other action to take advantage of that information.
If your work regularly involves handling or discussing confidential information of one of our suppliers, collaboration
partners or other entities with whom we conduct business, you should consult with the Compliance Officer before trading in any
of that company’s securities.
3
Duration of Trading Prohibitions
These trading prohibitions continue whenever and for as long as you know or are in possession of material nonpublic
information. Remember, anyone scrutinizing your transactions will be doing so after the fact, with the benefit of hindsight. As a
practical matter, before engaging in any transaction, you should carefully consider even the appearance of improper insider
trading and how enforcement authorities and others might view the transaction in hindsight.
This Insider Trading Policy applies to you and your Affiliated Persons so long as you are associated with the Company.
If you leave the Company for any reason, this Insider Trading Policy, including, if applicable, the Trading Procedures described
in Part II, will continue to apply to you and your Affiliated Persons until the later of: (1) the first trading day following the public
release of earnings for the fiscal quarter in which you leave the Company or (2) the first trading day after any material nonpublic
information known to you has become public or is no longer material.
C.
What is Material Nonpublic Information?
This Insider Trading Policy prohibits you from trading in a company’s securities if you are in possession of information
about the company that is both “material” and “nonpublic.” If you have a question whether certain information you are aware of
is material or has been made public, you should consult with the Compliance Officer.
“Material” Information
Information about our Company or any other company is “material” if it could reasonably be expected to affect the
investment decisions of a stockholder or potential investor or if disclosure of the information could reasonably be expected to
significantly alter the total mix of information in the marketplace about us or any other company. We speak mostly in this Insider
Trading Policy about determining whether information about us is material and nonpublic, but the same analysis applies to
information about other companies that would preclude you from trading in their securities.
In simple terms, material information is any type of information that could reasonably be expected to affect the market
price of our securities. Both positive and negative information may be material. While it is not possible to identify all information
that would be deemed “material,” the following items are examples of the types of information that could be material:
•
•
•
•
program developments, regulatory or clinical status or updates, including preclinical and clinical data and
communications with regulatory authorities;
projections of future earnings or losses, or other earnings guidance;
business plans or budgets, and material deviations therefrom;
quarterly financial results that are known but have not been publicly disclosed;
4
•
•
•
•
•
•
•
•
•
•
potential restatements of the Company’s financial statements, changes in auditors or auditor notification that the
Company may no longer rely on an auditor’s audit report;
pending or proposed strategic transactions, collaborations, licenses, corporate mergers, acquisitions, tender offers,
joint ventures or dispositions of significant assets or a change in control of the Company;
changes in senior management or members of our Board of Directors;
significant actual or threatened litigation or governmental investigations or major developments in such matters;
cybersecurity risks and incidents, including the discovery of significant vulnerabilities or breaches;
significant developments regarding collaborations, licenses, product candidates, research and development
programs, products, customers, suppliers, orders, contracts or financing sources (e.g., the acquisition or loss of a
contract);
changes in dividend policy, declarations of stock splits, or proposed securities offerings or other financings;
potential defaults under our credit agreements or indentures or potential material liquidity issues;
bankruptcies or receiverships; and
banking and other financial sector disruptions that could adversely affect the Company’s current and projected
business operations and its financial condition and results of operations.
The above items will not always be material. For example, some new product developments or contracts may clearly be
material while others may not be. No “bright-line” standard or list of items can adequately address the range of situations that
may arise; information and events should be carefully considered in terms of their materiality to the Company.
“Nonpublic” Information
Material information is “nonpublic” if it has not been disseminated in a manner making it available to investors
generally.
To demonstrate that information is public, one must be able to point to some fact that establishes that the information has
become publicly available, such as the filing of a report with the SEC, the distribution of a press release, publishing the
information on our website or posting on social media if those are regular ways we communicate with investors, or by other
means that are reasonably designed to provide broad public access. Before a person with material nonpublic information can
trade, the market must have adequate time to absorb the information that has
5
been disclosed. For the purposes of this Insider Trading Policy, information will be considered public after the completion of one
full day of trading following our public release of the information. For that purpose, a full day of trading means an entire calendar
day in which a session of regular trading hours on the New York Stock Exchange (“NYSE”) or Nasdaq Stock Market (“Nasdaq”)
between 9:30 a.m. and 4:00 p.m. Eastern Time (or such earlier close time as has been set by exchange rules) has occurred.
For example, if the Company publicly discloses material nonpublic information of which you are aware before trading
begins on a Tuesday, the first time you can buy or sell Company securities is the opening of the market on Wednesday. However,
if the Company publicly discloses material information after trading begins on a Tuesday, the first time that you can buy or sell
Company securities is the opening of the market on Thursday.
D.
What are the Penalties for Insider Trading and Noncompliance with this Insider Trading Policy?
Both the U.S. Securities and Exchange Commission (the “SEC”) and the national securities exchanges, through the
Financial Industry Regulatory Authority (“FINRA”), investigate and are very effective at detecting insider trading. The U.S.
government pursues insider trading violations vigorously, successfully prosecuting, for example, trading by employees in foreign
accounts, trading by family members and friends of insiders, and trading involving only a small number of shares.
The penalties for violating rules against insider trading can be severe and include:
•
•
•
•
•
forfeiting any profit gained or loss avoided by the trading;
payment of the loss suffered by the persons who, contemporaneously with the purchase or sale of securities that are
subject of a violation, have purchased or sold securities of the same class;
payment of criminal penalties of up to $5,000,000;
payment of civil penalties of up to three times the profit made or loss avoided; and
imprisonment for up to 20 years.
The Company and/or the supervisors of the person engaged in insider trading may also be required to pay civil penalties
or fines of $2,000,000 or more, up to three times the profit made or loss avoided, as well as criminal penalties of up to
$25,000,000, and could under some circumstances be subject to private lawsuits.
Violation of this Insider Trading Policy or any federal or state insider trading laws may subject you to disciplinary action
by the Company, including termination of your employment or other relationship with the Company. The Company reserves the
right to determine, in its own discretion and on the basis of the information available to it, whether this Insider Trading Policy has
been violated. The Company may determine that specific conduct violates this Insider Trading Policy whether or not it also
violates the law. It is not necessary for the Company to
6
await the filing or conclusion of a civil or criminal action against an alleged violator before taking disciplinary action.
E.
How Do You Report a Violation of this Insider Trading Policy?
If you have a question about this Insider Trading Policy, including whether certain information you are aware of is
material or has been made public, you should consult with the Compliance Officer. In addition, if you violate this Insider Trading
Policy or any federal or state laws governing insider trading or know of any such violation by any director or employee of the
Company, you should report the violation immediately to the Compliance Officer.
PART II. TRADING PROCEDURES
A.
Special Trading Restrictions Applicable to Insiders
In addition to needing to comply with the restrictions on trading in our securities set forth above, Insiders and their
Affiliated Persons are subject to the following special trading restrictions:
1.
Special Closed Trading Periods
The Compliance Officer may designate, from time to time, a “Special Closed Window” or “Trading Blackout Period”.
During any such Special Closed Window or Trading Blackout Period, designated Insiders (which could be all Insiders or a subset
of them) may not trade in the Company’s securities. The Compliance Officer may also impose a Special Closed Window or
Trading Blackout Period on Insiders or a subset of them to prohibit trading in the securities of other companies, including
specified peers or competitors of the Company. The imposition of a Special Closed Window or Trading Blackout Period will not
be announced to the Company generally, should not be communicated to any other person, and may itself be considered under
this Insider Trading Policy to be material nonpublic information about the Company.
2.
Prohibited Transactions
• No Short Sales. You may not at any time sell any securities of the Company that are not owned by you at
the time of the sale (a “short sale”).
• No Purchases or Sales of Derivative Securities or Hedging Transactions. You may not buy or sell puts,
calls, other derivative securities of the Company or any derivative securities that provide the economic
equivalent of ownership of any of the Company’s securities or an opportunity, direct or indirect, to profit
from any change in the value of our securities or engage in any other hedging transaction with respect to
our securities.
• No Company Securities Subject to Margin Calls. You may not use the Company’s securities as collateral
in a margin account.
• No Pledges. You may not pledge Company securities as collateral for a loan (or modify an existing pledge).
7
3.
Gifts and Other Distributions in Kind.
No Insider may donate or make any other transfer of Company securities without consideration when the Insider is not
permitted to trade unless the donee agrees not to sell the shares until the Insider is permitted to sell. In addition to charitable
donations or gifts to family members, friends, trusts or others, this prohibition applies to distributions to limited partners by
limited partnerships that are subject to this Insider Trading Policy.
B.
Pre-Clearance Procedures
No Insider may trade in our securities, even during an open trading window, unless the trade has been approved by the
Compliance Officer in accordance with the procedures described below. Gifts of Company securities are considered a trade in
securities for purposes of this Part II.B. In reviewing trading requests, the Compliance Officer may consult with our other officers
and/or outside legal counsel and will seek approval of their own trades from the Chief Executive Officer or the Chief Financial
Officer.
1.
Procedures. No Insider may trade in our securities unless:
•
•
•
•
The Insider has notified the Compliance Officer of the amount and nature of the proposed trade(s) using the
Stock Transaction Request form attached to this Insider Trading Policy. To provide adequate time for the
preparation of any required reports under Section 16 of the Exchange Act, a Stock Transaction Request
form should, if practicable, be received by the Compliance Officer at least two (2) business days before the
intended trade date;
The Insider has certified to the Compliance Officer in writing before the proposed trade(s) that the Insider
does not possess material nonpublic information concerning the Company;
If the Insider is an executive officer or director, the Insider has informed the Compliance Officer, using the
Stock Transaction Request form, whether, to the Insider’s best knowledge, (a) the Insider has (or is deemed
to have) engaged in any opposite way transactions within the previous six months that were not exempt
from Section 16(b) of the Exchange Act and (b) if the transaction involves a sale by an “affiliate” of the
Company or of “restricted securities” (as such terms are defined under Rule 144 under the Securities Act of
1933, as amended (“Rule 144”)), whether the transaction meets all of the applicable conditions of Rule 144;
and
The Compliance Officer has approved the trade(s) and has certified their approval in writing (which may be
by email).
The Compliance Officer does not assume responsibility for, and approval by the Compliance Officer does not protect the
Insider from, the consequences of prohibited insider trading.
8
2.
Additional Information.
Insiders shall provide to the Compliance Officer any documentation the Compliance Officer reasonably requires in
furtherance of the foregoing procedures. Any failure to provide such information will be grounds for the Compliance Officer to
deny approval of the trade request.
3.
Notification of Brokers of Insider Status
Insiders who are required to file reports under Section 16 of the Exchange Act shall inform their broker-dealers that (a)
the Insider is subject to Section 16; (b) the broker shall confirm that any trade by the Insider or any of their affiliates has been
precleared by the Company; and (c) the broker is to provide transaction information to the Insider and/or Compliance Officer on
the day of a trade.
4.
No Obligation to Approve Trades.
The foregoing approval procedures do not in any way obligate the Compliance Officer to approve any trade. The
Compliance Officer has sole discretion to reject any trading request.
From time to time, an event may occur that is material to the Company and is known only by a limited number of
directors and employees. The Compliance Officer may decline an Insider’s request to preclear a proposed trade based on the
existence of a material nonpublic development – even if the Insider is not aware of that material nonpublic development. If any
Insider engages in a trade before a material nonpublic development is disclosed to the public or resolved, the Insider and the
Company might be exposed to a charge of insider trading that could be costly and difficult to refute even if the Insider was
unaware of the development. So long as the event remains material and nonpublic, the Compliance Officer may decide not to
approve any transactions in the Company’s securities. The Compliance Officer will subsequently notify the Insider once the
material nonpublic development is disclosed to the public or resolved. If an Insider requests preclearance of a trade during the
pendency of such an event, the Compliance Officer may reject the trading request without disclosing the reason.
5.
Completion of Trades.
After receiving written clearance to engage in a trade signed by the Compliance Officer, an Insider must complete the
proposed trade within two (2) business days or make a new trading request. Even if an Insider has received clearance, the Insider
may not engage in a trade if (i) such clearance has been rescinded by the Compliance Officer, (ii) the Insider has otherwise
received notice that the trading window has closed or (iii) the Insider has or acquires material nonpublic information.
6.
Post-Trade Reporting.
The details of any transactions in our securities (including transactions effected pursuant to a Rule 10b5-1 Plan) by an
Insider (or an Affiliated Person) who is required to file reports under Section 16 of the Exchange Act must be reported to the
Compliance Officer by the Insider or their brokerage firm on the same day on which a trade order is placed or such a transaction
9
otherwise is entered into. The report shall include the date of the transaction, quantity of shares, the price and the name of the
broker-dealer that effected the transaction. This reporting requirement may be satisfied by providing (or having the Insider’s
broker provide) a trade order confirmation to the Compliance Officer if the Compliance Officer receives such information by the
required date. Compliance by directors and executive officers with this provision is imperative given the requirement of Section
16 of the Exchange Act that these persons generally report changes in ownership of Company securities within two (2) business
days. The sanctions for noncompliance with this reporting deadline include mandatory disclosure in the Company’s proxy
statement for the next annual meeting of stockholders, as well as possible civil or criminal sanctions for chronic or egregious
violators.
C.
Exemptions
1.
Pre-Approved Rule 10b5-1 Plan.
Transactions made pursuant to an approved Rule 10b5-1 Plan (as defined below) will not be subject to our trading
windows or pre-clearance procedures, and Insiders are not required to complete a Stock Transaction Request form for such
transactions. Rule 10b5-1 of the Exchange Act provides an affirmative defense from insider trading liability under the federal
securities laws for trading plans, arrangements or instructions that meet specified requirements. A trading plan, arrangement or
instruction that meets the requirements of the SEC’s Rule 10b5-1 (a “Rule 10b5-1 Plan”) enables Insiders to trade in Company
securities outside of our trading windows, even when in possession of material nonpublic information. The Company has adopted
a separate Rule 10b5-1 Trading Plan Policy that sets forth the requirements for putting in place a Rule 10b5-1 Plan with respect
to Company securities.
2.
Employee Equity and Retirement Plans.
Exercise of Stock Options. The trading prohibitions and restrictions set forth in the Trading Procedures do not apply to
the exercise for cash of an option to purchase securities of the Company. However, the exercise is subject to the current reporting
requirements of Section 16 of the Exchange Act and, therefore, Insiders must comply with the post-trade reporting requirement
described in Section C above for any such transaction. In addition, the securities acquired upon the exercise of an option to
purchase Company securities are subject to all of the requirements of this Insider Trading Policy, including the Trading
Procedures. Moreover, the Trading Procedures apply to the use of outstanding Company securities to pay part or all of the
exercise price of an option, any net option exercise, any exercise of a stock appreciation right, share withholding and any sale of
stock as part of a broker-assisted cashless exercise of an option or any other market sale for the purpose of generating the cash
needed to pay the exercise price of an option.
Tax Withholding on Restricted Stock/Units. The trading prohibitions and restrictions set forth in the Trading Procedures
do not apply to the withholding by the Company of shares of stock upon vesting of restricted stock or upon settlement of
restricted stock units to satisfy tax withholding requirements if (a) withholding is required by the applicable plan or award
agreement or (b) the election to exercise the tax withholding right was made by the Insider in compliance with the Trading
Procedures.
10
Employee Stock Purchase Plan. The trading prohibitions and restrictions set forth in the Trading Procedures do not
apply to periodic wage withholding contributions by the Company or its employees or the use of such withholding contributions
to purchase Company stock pursuant to the employees’ advance instructions under the BridgeBio Pharma, Inc. Amended and
Restated 2019 Employee Stock Purchase Plan. However, an Insider may not: (a) elect to participate in the plan or alter their
instructions regarding the level of withholding or purchase by the Insider of Company securities under the plan; or (b) make cash
contributions to the plan (other than through periodic wage withholding) without complying with the Trading Procedures. Any
sale of securities acquired under the plan is subject to the prohibitions and restrictions of the Trading Procedures.
D.
Waivers
A waiver of any provision of this Insider Trading Policy or the Trading Procedures may be authorized in writing by the
Compliance Officer, who shall then transmit the waiver request to the Audit Committee. A waiver of any provision of these
Trading Procedures in a specific instance may be authorized in writing by the Audit Committee, and any such waivers shall be
reported to the Board of Directors.
PART III. ACKNOWLEDGEMENT
We will deliver a copy of this Insider Trading Policy to all current employees and directors and to future employees and
directors at the start of their employment or relationship with the Company. Each of these individuals must acknowledge that they
have received a copy and agree to comply with the terms of this Insider Trading Policy, and, if applicable, the Trading Procedures
contained herein. The attached acknowledgment must be completed and submitted to the Company within ten days of receipt.
At our request, directors and employees will be required to re-acknowledge and agree to comply with the Insider Trading
Policy (including any amendments or modifications). For that purpose, an individual will be deemed to have acknowledged and
agreed to comply with the Insider Trading Policy, as amended from time to time, when copies of those items have been delivered
by regular or electronic mail (or other delivery option used by the Company) to the Compliance Officer.
Questions regarding this Insider Trading Policy are encouraged and may be directed to the Compliance Officer.
* * *
Amended and Restated effective May 19, 2023
11
EXHIBIT A
STOCK TRANSACTION REQUEST
Pursuant to BridgeBio Pharma, Inc.’s Insider Trading Policy, I hereby notify BridgeBio Pharma, Inc. (the “Company”) of my
intent to trade the securities of the Company as indicated below:
REQUESTER INFORMATION
Insider’s Name:
INTENT TO PURCHASE
Number of shares:
Intended trade date:
Means of acquiring shares:
INTENT TO SELL
Number of shares:
Intended trade date:
INTENT TO GIFT
Number of shares:
Intended trade date:
Intended recipient:
☐
☐
☐
Acquisition through employee benefit plan (please specify):
Purchase through a broker on the open market
Other (please specify):
Means of selling shares:
☐ Sale through employee benefit plan (please specify):
☐
☐
Sale through a broker on the open market
Other (please specify):
SECTION 16
RULE 144 (Not applicable if transaction requested involves a
purchase)
☐
☐
☐
I am not subject to Section 16.
To the best of my knowledge, I have not (and am not deemed to
have) engaged in an opposite way transaction within the previous 6
months that was not exempt from Section 16(b) of the Exchange
Act.
None of the above.
I am not an “affiliate” of the Company and the transaction
requested above does not involve the sale of “restricted
securities” (as those terms are defined in Rule 144 under the
Securities Act of 1933, as amended).
To the best of my knowledge, the transaction requested above
will meet all of the applicable conditions of Rule 144.
The transaction requested will be made pursuant to an
effective registration statement covering such transaction.
None of the above.
☐
☐
☐
☐
12
CERTIFICATION
I hereby certify that I am not (1) in possession of any material nonpublic information concerning the Company, as defined in the Company’s Insider
Trading Policy and (2) purchasing any securities of the Company on margin in contravention of the Company’s Trading Procedures. I understand that,
if I trade while possessing such information or in violation of such trading restrictions, I may be subject to severe civil and/or criminal penalties and
may be subject to discipline by the Company including termination of my employment.
Insider’s Signature
APPROVAL
Date
Signature of Compliance Officer (or designee)
Date
* NOTE: Multiple lots must be listed on separate forms or broken out.
13
EXHIBIT B
ACKNOWLEDGEMENT
I hereby acknowledge that I have read, that I understand, and that I agree to comply with the Insider Trading Policy of
BridgeBio Pharma, Inc. (the “Company”). I further acknowledge and agree that I am responsible for ensuring compliance with
the Insider Trading Policy and the Trading Procedures by all of my “Affiliated Persons.” I also understand and agree that I will be
subject to sanctions, including termination of employment, that may be imposed by the Company, in its sole discretion, for
violation of the Insider Trading Policy, and that the Company may give stop-transfer and other instructions to the Company’s
transfer agent or any brokerage firm managing the Company’s equity incentive plan(s) against the transfer of any Company
securities that the Company considers to be in contravention of the Insider Trading Policy.
This acknowledgement constitutes consent for the Company to impose sanctions for violation of the Insider Trading
Policy, including the Trading Procedures, and to issue any stop-transfer orders to the Company’s transfer agent that the Company,
in its sole discretion, deems appropriate to ensure compliance.
Date:
Send signed Acknowledgement to:
[Name]
[Title]
BridgeBio Pharma, Inc.
3160 Porter Dr., Suite 250
Palo Alto, CA 94304
Signature:
Name:
Title:
14
List of Subsidiaries
Entity Name
Place of Incorporation
BB Square Capital Investors I, LP
BB Square Capital, LLC
BB Square Holdings, LLC
BB Square Investors GP I, LLC
BB Square LP Investment, LLC
BridgeBio Chemistry, Inc.
BridgeBio Gene Therapy LLC
BridgeBio Gene Therapy Research, Inc.
BridgeBio Pharma LLC
BridgeBio Services Inc.
Calcilytix Therapeutics, Inc.
Cyan Therapeutics, Inc.
DTD Therapeutics, Inc.
Eidos Therapeutics, Inc.
CoA Therapeutics, Inc.
Origin Biosciences, Inc.
TheRas, Inc.
Portal Therapeutics, Inc.
Adrenas Therapeutics, Inc.
QED Therapeutics, Inc.
Sub22, Inc.
Ferro Therapeutics, Inc.
Eulamin Therapeutics, Inc.
Sub21, Inc.
Cantero Therapeutics, Inc.
Venthera, Inc.
G Protein Therapeutics, Inc.
Molecular Skin Therapeutics, Inc.
Phoenix Tissue Repair, Inc.
Navire Pharma, Inc.
ML Bio Solutions, Inc.
Sen Therapeutics, Inc.
Audition Therapeutics, Inc.
BridgeBio Pharma Canada, ULC
BridgeBio Pharma Cayman
BridgeBio France SAS
BridgeBio Germany, GmbH
BridgeBio Pharma (HK) Limited
BridgeBio Europe B.V.
BridgeBio International GmbH
BridgeBio UK Limited
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Canada
Cayman Islands
France
Germany
Hong Kong
Netherlands
Switzerland
United Kingdom
Exhibit 21
Ownership % as of
December 31, 2023
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
99.9%
99.9%
99.9%
99.8%
99.2%
99.2%
98.5%
98.2%
98.0%
99.8%
96.5%
96.1%
96.2%
91.4%
86.5%
81.3%
84.2%
75.9%
34.4%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following Registration Statements:
• Registration Statement Nos. 333-271656 and 333-276393 on Form S-8 pertaining to the Amended and Restated 2019 Inducement Equity Plan
• Registration Statement Nos. 333-269600 and 333-263009 on Form S-8 pertaining to the 2021 Amended and Restated Stock Option and Incentive
Plan
• Registration Statement Nos. 333-232491 and 333-236872 on Form S-8 pertaining to the 2019 Stock Option and Incentive Plan and 2019 Employee
Stock Purchase Plan
• Registration Statement No. 333-234803 on Form S-8 pertaining to the 2019 Inducement Equity Plan
• Registration Statement No. 333-239718 on Form S-8 pertaining to the Amended and Restated 2019 Stock Option and Incentive Plan
• Registration Statement No. 333-252393 on Form S-8 pertaining to the Eidos Therapeutics, Inc. Amended and Restated 2018 Stock Option and
Incentive Plan and Eidos Therapeutics, Inc. Amended and Restated 2016 Equity Incentive Plan
• Registration Statement No. 333-252394 on Form S-8 pertaining to the Amended and Restated 2019 Stock Option and Incentive Plan and Amended
and Restated 2019 Employee Stock Purchase Plan
• Registration Statement Nos. 333-271650, 333-273452 and 333-275280 on Form S-3ASR
of our reports dated February 22, 2024, relating to the consolidated financial statements of BridgeBio Pharma, Inc. and the effectiveness of BridgeBio
Pharma, Inc.'s internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 31, 2023.
/s/ Deloitte & Touche LLP
San Francisco, California
February 22, 2024
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Neil Kumar, certify that:
Exhibit 31.1
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of BridgeBio Pharma, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: February 22, 2024
/s/ Neil Kumar
Neil Kumar, Ph.D.
Chief Executive Officer and Director
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Brian Stephenson, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of BridgeBio Pharma, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: February 22, 2024
/s/ Brian Stephenson
Brian Stephenson, Ph.D., CFA
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report of BridgeBio Pharma, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2023, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
Date: February 22, 2024
ACTIVE/102476072.2
/s/ Neil Kumar
Neil Kumar, Ph.D.
Chief Executive Officer and Director
(Principal Executive Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report of BridgeBio Pharma, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2023, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
Date: February 22, 2024
ACTIVE/102476080.2
/s/ Brian Stephenson
Brian Stephenson, Ph.D., CFA
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
Exhibit 97
BRIDGEBIO PHARMA, INC.
COMPENSATION CLAWBACK POLICY
Adopted as of September 27, 2023
BridgeBio Pharma, Inc., a Delaware corporation (the “Company”), has adopted a Compensation Clawback Policy (this “Policy”)
as described below.
1.
Overview
The Policy sets forth the circumstances and procedures under which the Company may recover Erroneously Awarded
Compensation (as defined below) from Covered Persons (as defined below) in accordance with rules issued by the United States
Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
and the Nasdaq Stock Market. Capitalized terms used and not otherwise defined herein shall have the meanings given in Section
3 below.
2.
Compensation Recovery Requirement
In the event the Company is required to prepare a Financial Restatement, except as set forth in Section 4 below, the Company
shall recover reasonably promptly all Erroneously Awarded Compensation with respect to such Financial Restatement.
3.
Definitions
a.
b.
c.
d.
e.
“Applicable Recovery Period” means the three completed fiscal years immediately preceding the Restatement Date
for a Financial Restatement. In addition, in the event the Company has changed its fiscal year: (i) any transition
period of less than nine months occurring within or immediately following such three completed fiscal years shall
also be part of such Applicable Recovery Period and (ii) any transition period of nine to 12 months will be deemed
to be a completed fiscal year.
“Applicable Rules” means any rules or regulations adopted by the Exchange pursuant to Rule 10D-1 under the
Exchange Act and any applicable rules or regulations adopted by the SEC pursuant to Section 10D of the Exchange
Act.
“Board” means the Board of Directors of the Company.
“Committee” means the Compensation Committee of the Board or, in the absence of such committee, a majority of
independent directors serving on the Board.
“Covered Person” means any Executive Officer. The Committee shall determine a person’s status as a Covered
Person with respect to Erroneously Awarded Compensation as of the time of receipt of such Erroneously Awarded
Compensation regardless of the person’s current role or status with the Company (e.g., if a person began service as
an Executive Officer after the beginning of an Applicable Recovery Period, that person would not be considered a
Covered Person with respect to
f.
g.
Erroneously Awarded Compensation received before the person began service as an Executive Officer, but would be
considered a Covered Person with respect to Erroneously Awarded Compensation received after the person began
service as an Executive Officer where such person served as an Executive Officer at any time during the
performance period for such Erroneously Awarded Compensation).
“Effective Date” means October 2, 2023.
“Erroneously Awarded Compensation” means the amount of any Incentive-Based Compensation received by a
Covered Person on or after the Effective Date and during the Applicable Recovery Period that exceeds the amount
that otherwise would have been received by the Covered Person had such compensation been determined based on
the restated amounts in a Financial Restatement, computed without regard to any taxes paid. Calculation of
Erroneously Awarded Compensation with respect to Incentive-Based Compensation based on stock price or total
shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical
recalculation directly from the information in a Financial Restatement, shall be based on a reasonable estimate of the
effect of the Financial Restatement on the stock price or total shareholder return upon which the Incentive-Based
Compensation was received, and the Company shall maintain documentation of the determination of such
reasonable estimate and provide such documentation to the Exchange in accordance with the Applicable Rules.
Incentive-Based Compensation is deemed received during the fiscal period during which the Financial Reporting
Measure is attained, even if the actual payment or grant of the Incentive-Based Compensation occurs after the end of
that period.
h.
“Exchange” means the Nasdaq Stock Market LLC.
i. An “Executive Officer” means any person who served the Company in any of the following roles, at any time during
the performance period applicable to Incentive-Based Compensation and received Incentive-Based Compensation
after beginning service in any such role (regardless of whether such Incentive-Based Compensation was received
during or after such person’s service in such role): the president, principal financial officer, principal accounting
officer (or if there is no such accounting officer the controller), any vice president in charge of a principal business
unit, division or function (such as sales, administration or finance), any other officer who performs a policy making
function, or any other person who performs similar policy making functions for the Company. Executive officers of
parents or subsidiaries of the Company may be deemed executive officers of the Company if they perform such
policy making functions for the Company. At a minimum, “Executive Officer” means executive officers identified
pursuant to Item 401(b) of Regulation S-K.
j.
“Financial Reporting Measures” mean measures that are determined and presented in accordance with the
accounting principles used in preparing the Company’s financial statements, any measures that are derived wholly or
in part from such measures (including, for example, a non-GAAP financial measure), and stock price and total
2
shareholder return. A Financial Reporting Measure need not be presented within the Company’s financial statements
or included in a filing with the SEC.
k. A “Financial Restatement” means a restatement of previously issued financial statements of the Company due to the
material noncompliance of the Company with any financial reporting requirement under the securities laws,
including any required restatement to correct an error in previously-issued financial statements that is material to the
previously-issued financial statements or that would result in a material misstatement if the error were corrected in
the current period or left uncorrected in the current period.
l.
“Incentive-Based Compensation” means any compensation that is granted, earned, or vested based, in whole or in
part, upon the attainment of a Financial Reporting Measure.
m. “Restatement Date” means, with respect to a Financial Restatement, the earlier to occur of: (i) the date the Board
concludes, or reasonably should have concluded, that the Company is required to prepare the Financial Restatement
or (ii) the date a court, regulator or other legally authorized body directs the Company to prepare the Financial
Restatement.
4.
Exception to Compensation Recovery Requirement
The Company may elect not to recover Erroneously Awarded Compensation pursuant to this Policy if the Committee determines
that recovery would be impracticable, and one or more of the following conditions, together with any further requirements set
forth in the Applicable Rules, are met: (i) the direct expense paid to a third party, including outside legal counsel, to assist in
enforcing this Policy would exceed the amount to be recovered, and the Company has made a reasonable attempt to recover such
Erroneously Awarded Compensation; or (ii) recovery would likely cause an otherwise tax-qualified retirement plan to fail to be
so qualified under applicable regulations.
5.
Tax Considerations
To the extent that, pursuant to this Policy, the Company is entitled to recover any Erroneously Awarded Compensation that is
received by a Covered Person, the gross amount received (i.e., the amount the Covered Person received, or was entitled to
receive, before any deductions for tax withholding or other payments) shall be returned by the Covered Person.
6.
Method of Compensation Recovery
The Committee shall determine, in its sole discretion, the method for recovering Erroneously Awarded Compensation hereunder,
which may vary between Covered Persons or based on the nature of the applicable Incentive-Based Compensation, and which
may include, without limitation, any one or more of the following:
a.
requiring reimbursement of cash Incentive-Based Compensation previously paid;
3
b.
c.
d.
e.
f.
seeking recovery of any Incentive-Based Compensation, which may include any gain realized on the vesting,
exercise, settlement, sale, transfer or other disposition of any equity-based awards;
cancelling or rescinding some or all outstanding vested or unvested equity-based awards;
adjusting or withholding from unpaid compensation or other set-off;
cancelling or offsetting against planned future grants of equity-based awards; and/or
any other method permitted by applicable law or contract.
Notwithstanding the foregoing, a Covered Person will be deemed to have satisfied such person’s obligation to return Erroneously
Awarded Compensation to the Company if such Erroneously Awarded Compensation is returned in the exact same form in which
it was received; provided that equity withheld to satisfy tax obligations will be deemed to have been received in cash in an
amount equal to the tax withholding payment made.
7.
Policy Interpretation
This Policy shall be interpreted in a manner that is consistent with the Applicable Rules and any other applicable law. The
Committee shall take into consideration any applicable interpretations and guidance of the SEC in interpreting this Policy,
including, for example, in determining whether a financial restatement qualifies as a Financial Restatement hereunder. To the
extent the Applicable Rules require recovery of Incentive-Based Compensation in additional circumstances besides those
specified above, nothing in this Policy shall be deemed to limit or restrict the right or obligation of the Company to recover
Incentive-Based Compensation to the fullest extent required by the Applicable Rules. The Company will be deemed to have
recovered Erroneously Awarded Compensation in accordance with this Policy to the extent the Company actually receives such
amounts pursuant to any other Company policy, program or agreement, pursuant to Section 304 of the Sarbanes-Oxley Act or
otherwise.
8.
Policy Administration
This Policy shall be administered by the Committee; provided, however, that the Board shall have exclusive authority to
authorize the Company to prepare a Financial Restatement, unless otherwise mandated by a court or regulatory entity. In doing
so, the Board may rely on a recommendation of the Audit Committee of the Board. The Committee shall have such powers and
authorities related to the administration of this Policy as are consistent with the governing documents of the Company and
applicable law. The Committee shall have full power and authority to take, or direct the taking of, all actions and to make all
determinations required or provided for under this Policy and shall have full power and authority to take, or direct the taking of,
all such other actions and make all such other determinations not inconsistent with the specific terms and provisions of this Policy
that the Committee deems to be necessary or appropriate to the administration of this Policy. The interpretation and construction
by the
4
Committee of any provision of this Policy and all determinations made by the Committee under this policy shall be final, binding
and conclusive.
9.
Compensation Recovery Repayments Not Subject to Indemnification
Notwithstanding anything to the contrary set forth in any agreement with, or the organizational documents of, the Company or
any of its subsidiaries, Covered Persons are not entitled to indemnification for Erroneously Awarded Compensation or for any
losses arising out of or in any way related to Erroneously Awarded Compensation recovered under this Policy.
10.
No Limitation on Other Remedies
Nothing in this Policy will be deemed to limit the Company’s right to terminate employment of any Covered Person, to seek
recovery of other compensation paid to a Covered Person, or to pursue other rights or remedies available to the Company under
applicable law.
5