BridgeBio Pharma, Inc. — Q3 2022 Form 10-Q Summary
Business context and reporting period
BridgeBio is a commercial-stage biopharmaceutical company developing medicines for genetically driven diseases and cancers. The unaudited report covers the three and nine months ended September 30, 2022, with comparisons to the same periods in 2021. The company reported 149.5 million common shares outstanding as of October 28, 2022.
Key financial metrics
| Metric | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 |
|---|---|---|---|---|
| Total revenue | $0.3 million | $2.3 million | $75.8 million | $56.8 million |
| Research and development | $92.5 million | $104.3 million | $308.6 million | $328.8 million |
| SG&A | $31.2 million | $46.1 million | $111.3 million | $137.5 million |
| Restructuring, impairment and related charges | $5.0 million | — | $36.1 million | — |
| Loss from operations | $(129.1) million | $(149.5) million | $(383.0) million | $(411.0) million |
| Net loss | $(140.2) million | $(161.0) million | $(344.1) million | $(434.2) million |
| Net loss attributable to BridgeBio common stockholders | $(137.3) million | $(155.9) million | $(343.6) million | $(415.4) million |
| Loss per share | $(0.93) | $(1.06) | $(2.34) | $(2.88) |
| Net cash used in operating activities | Not separately provided | Not separately provided | $(326.3) million | $(364.0) million |
For the nine months, license and services revenue was $74.3 million, including $73.3 million recognized under the Navire-BMS license agreement. Product sales were $1.5 million, versus $1.7 million in the prior-year period. Nine-month cost of license revenue and products sold was $2.8 million, implying an approximately 96% gross margin; however, the revenue mix was heavily affected by the nonrecurring BMS license transaction. Q3 revenue was only $0.3 million against $0.7 million of cost of license revenue and products sold.
Cash, cash equivalents and marketable securities totaled $558.3 million at September 30, 2022, compared with $787.5 million at December 31, 2021. Including equity securities, reported liquid investments were approximately $592.0 million. Cash, cash equivalents and restricted cash increased by $89.4 million during the first nine months to $485.8 million.
Debt consisted primarily of $747.5 million principal amount of 2.25% convertible senior notes due 2029, $550.0 million principal amount of 2.50% convertible senior notes due 2027, and term-loan principal of approximately $438.4 million including PIK interest. Net carrying amounts were $734.5 million, $541.2 million and $423.0 million, respectively. Total debt was approximately $1.7 billion net of discounts, issuance costs and accretion. Nine-month interest expense was $60.4 million, and cash interest paid was $47.6 million.
Material changes versus the prior comparable period
- Nine-month revenue increased $18.9 million, primarily because of the $73.3 million recognized from the Navire-BMS agreement, compared with significant upfront and milestone revenue from Helsinn and LianBio in 2021.
- Operating loss improved by $28.0 million for the nine months, while net loss improved by $90.1 million, largely reflecting the $107.9 million net gain from selling a priority review voucher.
- R&D expense declined $20.3 million and SG&A declined $26.1 million, primarily due to program reprioritization and cost-streamlining efforts.
- Interest expense increased $28.8 million for the nine months because of higher debt balances, including the term loan and 2029 Notes.
- The company recorded $36.1 million of restructuring, impairment and related charges through September 30, 2022, including $12.7 million of long-lived asset impairments and write-offs.
- In May 2022, the company amended its term-loan agreement, reduced the undrawn second tranche to $100.0 million, and modified principal-payment and guarantor provisions. The BMS upfront payment triggered a $20.5 million mandatory prepayment.
Guidance, outlook, commentary and risks
- Management expects continued operating and net losses for at least the next several years and does not expect product-sale revenue for the remainder of 2022 because selling activities for approved products have been transferred or transitioned to partners.
- Management expects existing cash, marketable securities and equity investments to fund operations for at least the next 12 months from the filing date under current plans and forecasts. Additional financing could be required sooner if plans or forecasts change.
- The 2022 restructuring initiative is expected to generate total charges of approximately $36.1 million to $48.4 million, with possible additional costs that are not currently foreseeable.
- Helsinn notified QED of its intent to terminate the amended infigratinib collaboration for convenience, citing commercial considerations. BridgeBio will lose future regulatory and sales milestones but remains eligible for royalties while Helsinn continues product sales. Wind-down responsibilities remained under negotiation.
- Material operating risks include clinical-trial and regulatory failure, inability to commercialize candidates, reliance on licensing and collaboration transactions, substantial cash burn, debt-service and covenant obligations, potential dilution or difficulty accessing capital, supply-chain and manufacturing constraints, COVID-19-related delays, inflation, rising interest rates, and the Russia-Ukraine conflict.
- The company had no material legal proceedings reported at quarter-end. A derivative stockholder action was dismissed with prejudice after stockholder ratification and approval of the relevant director compensation matters; the company agreed to pay $2.05 million in plaintiff counsel fees and expenses, subject to court consideration.
- Management concluded that disclosure controls and procedures were effective as of September 30, 2022, and reported no material change in internal control over financial reporting.
Important facts for investors to verify
- Whether the stated liquidity runway remains valid after subsequent clinical, restructuring, financing, debt-service and partnership developments.
- The timing and probability of regulatory and clinical milestones, particularly for acoramidis, encaleret, infigratinib and other prioritized programs.
- The final financial and operational consequences of the Helsinn termination and product wind-down.
- The remaining cash requirements, mandatory prepayments, covenants and potential refinancing needs associated with the term loan and convertible notes.
- How much of future revenue will be recurring royalties or collaboration services versus one-time transactions such as the BMS license and PRV sale.
- The ultimate amount of 2022 restructuring charges and the effect of program reprioritization on the development pipeline.
- Potential dilution from convertible notes, stock options, restricted awards and performance-based milestone compensation; approximately 55.8 million potentially dilutive shares were excluded from diluted loss-per-share calculations at September 30, 2022.