Gossamer Bio, Inc. Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2020. This is an annual Form 10-K rather than a standalone fourth-quarter filing. Gossamer Bio is a clinical-stage biopharmaceutical company focused on immunology, inflammation and oncology. It had four clinical-stage candidates and six preclinical programs at year-end.
Financial Position and Results
| Metric | 2020 | 2019 | Change |
|---|---|---|---|
| Revenue | $0 | $0 | No product revenue |
| Research and development expense | $160.9 million | $143.4 million | +$17.5 million |
| In-process research and development | $23.4 million | $3.6 million | +$19.8 million |
| General and administrative expense | $49.7 million | $39.1 million | +$10.6 million |
| Total operating expenses | $234.0 million | $186.1 million | +$47.8 million |
| Net loss | $243.4 million | $180.3 million | +$63.1 million loss |
| Net loss per share | $3.55 | $3.29 | Higher loss per share |
| Cash used in operating activities | $176.4 million | $144.8 million | Higher cash burn |
| Cash, cash equivalents and marketable securities | $512.6 million | $401.8 million | +$110.8 million |
Gross margin and operating margin are not meaningful because the company has not generated revenue. Accumulated deficit increased to $577.5 million from $334.2 million. Stock-based compensation was $38.7 million, including $5.5 million of incremental expense related to the former CEO’s transition agreement.
At December 31, 2020, total assets were $539.4 million, total liabilities were $218.7 million and stockholders’ equity was $320.7 million. Cash, cash equivalents and restricted cash totaled $486.6 million. The company reported no income tax provision and maintained a full valuation allowance against deferred tax assets.
Debt and Liquidity
- The company issued $200.0 million of 5.00% convertible senior notes due 2027, generating approximately $193.6 million of net proceeds. The notes had a $143.6 million carrying value at year-end and an initial conversion price of approximately $16.23 per share.
- The company had $30.0 million outstanding under a secured credit facility, with $120.0 million of additional commitments subject to clinical, cash and other conditions. The facility bears interest at one-month LIBOR plus 7.00%, subject to a 2.00% LIBOR floor, and matures in January 2025.
- The credit facility requires minimum unrestricted cash equal to at least 25% of outstanding term-loan principal. The company reported compliance with its debt covenants at December 31, 2020.
- Management believes existing cash, investments and available credit will fund operations for at least the next 12 months, but states that additional capital will be required to support longer-term development.
Material Changes and Development Status
- Seralutinib (GB002): Phase 2 TORREY trial in pulmonary arterial hypertension began in December 2020. Topline results were expected in the first half of 2022, subject to COVID-19-related developments. The program incurred a $5.0 million development milestone payment.
- GB004: Phase 2 SHIFT-UC trial in active mild-to-moderate ulcerative colitis began in October 2020. Topline results were expected in the first half of 2022. A $15.0 million payment to Aerpio amended the license and reduced future milestone and royalty obligations.
- GB1275: Ongoing Phase 1/2 oncology trial evaluating monotherapy and combinations with pembrolizumab or chemotherapy. One partial response was reported in microsatellite-stable colorectal cancer, with additional data expected in 2021.
- GB001: Phase 2b LEDA asthma trial did not meet its primary endpoint. Numerical reductions in asthma worsening were observed, but none were statistically significant. Two dose groups achieved statistically significant improvement in time to first asthma worsening. Further development is not planned without a partner, and development in chronic rhinosinusitis has been discontinued.
- Research and development spending increased across GB004, GB1275, seralutinib and other programs, partly offset by lower GB001 spending. Six preclinical programs remained active, and management expected at least one additional candidate to enter clinical trials within 12 months.
Outlook, Risks and Unusual Items
The company expects continuing and substantially increasing operating losses, no product revenue for the foreseeable future, and significant additional financing needs. Future capital requirements depend on clinical-trial timing, enrollment, manufacturing, regulatory review, licensing milestones and potential commercialization expenses.
- COVID-19 paused enrollment in a seralutinib Phase 1b study and could delay enrollment, trial completion, data readouts, regulatory interactions, manufacturing and supply activities.
- All product candidates remain investigational and require additional clinical development and regulatory approval. Early-stage results may not predict later efficacy or safety.
- GB001 carries notable liver-safety history, including liver chemistry elevations meeting Hy’s Law criteria and a separate intrahepatic cholestasis event at a high dose.
- The company relies on third parties for clinical research, manufacturing and supply, creating execution, quality, timing and concentration risks.
- Seralutinib and GB1275 have U.S. and European orphan drug designations, but designation does not assure approval or commercial success.
- A putative securities class action related to the February 2019 IPO remained pending. The company moved to dismiss, and it could not estimate a reasonably possible loss or range of loss.
- The company changed chief executive officers in November 2020, with Faheem Hasnain replacing Sheila Gujrathi.
- The company’s facilities and substantially all domestic personal property, including intellectual property, secure the credit facility.
Investor Verification Checklist
- Verify cash runway assumptions against current clinical-trial spending, enrollment timing and planned preclinical expansion.
- Review the terms, conversion dilution potential and effective interest accounting for the 2027 convertible notes.
- Assess credit-facility covenant requirements, interest-rate exposure, collateral and the conditions for accessing the remaining $120.0 million.
- Validate the primary and secondary endpoint results, safety data and enrollment status for TORREY, SHIFT-UC and KEYNOTE-A36.
- Monitor whether GB001 obtains a partner or incurs additional development costs despite the current pause in further trials.
- Review the pending IPO-related securities litigation and any subsequent disclosures regarding potential loss or settlement.
- Consider dilution from outstanding options, restricted shares and approximately 12.3 million potential shares issuable upon conversion of the 2027 notes.