BBIO

Business Context and Reporting Period

This Form 8-K, dated January 12, 2021, is a current report filed by BridgeBio Pharma, Inc. (BridgeBio) regarding its proposed acquisition of Eidos Therapeutics, Inc. (Eidos). The filing serves as a voluntary supplement to the definitive proxy statement previously filed on December 15, 2020. The supplement was issued in response to five putative class action lawsuits (collectively, the "Transaction Litigation") alleging omissions of material information regarding the merger. BridgeBio and Eidos deny the allegations but issued the supplement to avoid litigation delays. A special meeting of BridgeBio stockholders to vote on the transaction is scheduled for January 19, 2021.

Key Financial Metrics and Projections

The filing does not contain historical audited financial results for the current period but provides detailed unaudited prospective financial information (projections) used by the Eidos special committee and its financial advisor, Centerview Partners, to evaluate the transaction.

• Valuation Assumptions: Centerview utilized discount rates of 10.0% to 12.0% for both companies. The analysis assumed an 80% year-over-year decline in terminal year cash flows in perpetuity.
• Capital Structure Assumptions:
  • Eidos: Estimated net cash of $105 million as of December 31, 2020. Assumed a future capital raise of $300 million in 2022.
  • BridgeBio (Ex-Eidos): Estimated cash of $493 million and debt of $630 million as of December 31, 2020. Assumed future capital raises of $300 million in 2021 and 2022, and $400 million annually from 2023 to 2025.
• Projected Synergies: The adjusted BridgeBio projections reflect estimated cost synergies of $25 million per year beginning in fiscal year 2021, growing at 3% annually through 2033.
• Analyst Price Targets (as of Oct 2, 2020):
  • Eidos: Low $34.00, Median $56.00, High $80.00.
  • BridgeBio: Low $38.00, Median $44.00–$52.00, High $52.00.

Note: The filing includes extensive tables of projected Revenue, EBIT, and Unlevered Free Cash Flow for Low, Mid, and High cases extending through 2035 for Eidos and 2047 for BridgeBio. These are forward-looking estimates, not historical results.

Material Changes and Supplemental Disclosures

The filing amends the "Background of the Mergers" and "Opinion of the Special Committee's Financial Advisor" sections of the proxy statement with the following new information:

• Company C Interactions:
  • On July 23, 2020, Eidos entered a confidentiality agreement with "Company C" (a large international pharmaceuticals company) regarding a potential licensing/collaboration. No standstill provision existed.
  • On August 16, 2020, Company C delivered a collaboration proposal. Eidos management shared this with the board.
  • On December 11, 2020, Company C informed the Eidos special committee it would not submit a revised proposal at that time following BridgeBio's amendment to the registration statement.
  • On December 13, 2020, the Eidos special committee indicated willingness to continue discussions with Company C for a revised proposal offering increased consideration.
  • As of December 23, 2020, Company C had not submitted further proposals. The special committee concluded the BridgeBio merger was the best alternative because Company C's prior proposals required BridgeBio's approval (which BridgeBio was unwilling to grant regarding governance rights) and the BridgeBio offer value ($125.65 per share equivalent) exceeded Company C's prior indications.
• Financial Advisor Adjustments: The Eidos special committee directed Centerview to adjust BridgeBio management projections regarding probability of success, regulatory timing, launch dates, and pricing for certain product candidates.
• Advisor Fees:
  • 2019 Engagement: Centerview was entitled to $5 million for 2019 strategic alternative evaluation. $2.5 million was paid in Q3 2020; the remaining $2.5 million is payable upon pivotal trial data for acoramidis or June 30, 2022, unless the merger closes.
  • Current Transaction: Eidos agreed to pay Centerview an aggregate fee of approximately $46 million (estimated as of Jan 6, 2021). $2.5 million was payable upon the opinion; the remainder is contingent on transaction consummation.

Guidance, Outlook, and Risks

Management Commentary and Outlook:

• BridgeBio and Eidos maintain that the claims in the Transaction Litigation are without merit and no supplemental disclosure was legally required.
• The supplemental disclosures do not affect the merger consideration or the timing of the special meeting.
• The BridgeBio board continues to unanimously recommend a "FOR" vote on the share issuance proposal and an adjournment proposal if necessary.

Risks and Contingencies:

• Litigation Risk: Five class action complaints have been filed in federal courts (SDNY, NDCA, EDNY) seeking injunctive relief, rescission, or damages. Plaintiffs allege omissions regarding Company C and the valuation process.
• Transaction Risk: Risks include failure to obtain stockholder approval, inability to satisfy closing conditions, and potential termination of the merger agreement.
• Forward-Looking Statements: The financial projections are highly speculative. There is no assurance of regulatory approval for product candidates (specifically acoramidis for Eidos), commercial success, or the realization of projected synergies.
• COVID-19 Impact: The pandemic may delay clinical trial milestones and impact operations.

Investor Verification Checklist

• Verify the status of the five class action lawsuits (Ciccotelli, Waterman, Bushanksy, Ballard, Mullen) and any court rulings regarding the merger timeline.
• Confirm the outcome of the BridgeBio special meeting scheduled for January 19, 2021, specifically the vote on the share issuance proposal.
• Review the definitive joint proxy statement/prospectus (Form S-4) for the full text of the Merger Agreement and the complete risk factors.
• Monitor communications regarding "Company C" to determine if any new proposals or interactions have occurred post-filing.
• Assess the validity of the financial projections, noting they are non-GAAP measures and rely on significant assumptions regarding regulatory approval probabilities (60-80% for acoramidis) and future capital raises.