BridgeBio Pharma, Inc. — 2021 Q2 Form 10-Q Summary
Business context and reporting period
BridgeBio is a biotechnology company developing medicines for genetically driven diseases and cancers through a portfolio of more than 30 programs, ranging from discovery to late-stage development. This unaudited Form 10-Q covers the three and six months ended June 30, 2021, with comparisons to the corresponding 2020 periods.
BridgeBio’s products Nulibry and Truseltiq received FDA approval in February and May 2021, respectively, and initial product sales began in the second quarter. The company completed its acquisition of the remaining Eidos shares in January 2021, making Eidos a wholly owned subsidiary.
Financial performance and liquidity
| Metric | Three months ended June 30, 2021 | Six months ended June 30, 2021 |
|---|---|---|
| Total revenue | $54.0 million | $54.5 million |
| License revenue | $53.0 million | $53.5 million |
| Product sales | $1.0 million | $1.0 million |
| Research and development expense | $102.0 million | $224.5 million |
| SG&A expense | $46.0 million | $91.4 million |
| Loss from operations | $(94.0) million | $(261.5) million |
| Net loss | $(102.1) million | $(273.2) million |
| Net loss attributable to BridgeBio common stockholders | $(96.3) million | $(259.4) million |
| Basic and diluted loss per share | $(0.66) | $(1.82) |
Revenue was primarily nonrecurring or milestone-related: $44.4 million from the QED-Helsinn infigratinib agreement and $8.5 million from a regulatory milestone under the Navire-LianBio agreement. Product sales remained limited at $0.987 million.
Calculated operating margins were approximately negative 174% for the quarter and negative 480% for the six-month period. Calculated net margins were approximately negative 189% and negative 501%, respectively. These percentages are significantly affected by the company’s early commercial stage and substantial research investment.
- Cash and cash equivalents were $378.4 million at June 30, 2021; cash, cash equivalents and marketable securities totaled $898.4 million.
- Net cash used in operating activities was $242.5 million for the six months, compared with $171.8 million in 2020.
- Net cash used in investing activities was $281.6 million, primarily reflecting purchases of marketable securities and a $20.0 million investment in equity securities.
- Net cash provided by financing activities was $546.5 million, primarily from the 2029 Notes offering and a $25.0 million Hercules term-loan draw.
- Cash, cash equivalents and restricted cash increased by $22.4 million during the six months to $381.1 million.
- Outstanding debt was $1.3739 billion net of discounts, issuance costs and accretion, consisting principally of $747.5 million principal amount of 2029 Notes, $550.0 million principal amount of 2027 Notes and approximately $100.0 million of Hercules term loans.
- Total stockholders’ equity was negative $457.5 million at June 30, 2021, and accumulated deficit was $1.1339 billion.
Material changes versus the prior comparable period
- Revenue increased from zero in the 2020 periods to $54.0 million in the second quarter and $54.5 million year to date, reflecting licensing milestones and initial product sales.
- Second-quarter net loss attributable to common stockholders improved to $96.3 million from $121.0 million, primarily because of new revenue and related collaboration cost sharing. For the six-month period, however, attributable net loss increased to $259.4 million from $212.9 million.
- Research and development expense increased 18% in the quarter and 45% year to date, driven by personnel, external development and manufacturing costs, milestone payments and higher stock-based compensation.
- SG&A expense increased 21% in the quarter and 27% year to date, reflecting organizational growth, commercial launch preparation and accelerated stock-based compensation associated with the Eidos merger.
- The company issued $747.5 million of 2.25% convertible senior notes due 2029 and used approximately $61.3 million for capped calls and $50.0 million to repurchase shares.
- BridgeBio acquired the remaining Eidos noncontrolling interest for aggregate consideration of approximately $1.652 billion, consisting of $21.3 million in cash and approximately 26.2 million BridgeBio shares. The transaction reduced additional paid-in capital by approximately $1.613 billion under the accounting treatment used.
- BridgeBio early adopted ASU 2020-06, resulting in the 2027 Notes being accounted for wholly as debt and a $153.8 million reduction to opening total equity, principally through accumulated deficit and additional paid-in capital adjustments.
- LEO terminated its option to acquire PellePharm, and BridgeBio subsequently consolidated PellePharm effective April 15, 2021. The termination also resulted in derecognition of a $5.6 million LEO call-option liability.
Guidance, outlook, commentary, risks and unusual items
Management expects continued net losses for the next several years as research, clinical development and commercial launch costs remain substantial. Management stated that available cash, cash equivalents and marketable securities are expected to fund operations for at least the next 12 months based on current plans and forecasts, but additional financing could be required sooner if plans or forecasts change.
- The QED-Helsinn agreement provides potential aggregate payments of up to approximately $2.45 billion, including more than $100 million of upfront, regulatory and launch milestones, commercial milestones and tiered royalties. Future milestone and royalty amounts remain dependent on development, regulatory and commercial performance.
- Helsinn began sharing 60% of specified infigratinib research and development costs and 50% of U.S. co-commercialization profits or losses after FDA approval of Truseltiq. BridgeBio recorded $19.5 million of R&D cost sharing and a $4.1 million reduction for Helsinn’s share of co-commercialization losses.
- Management expected to report initial data from the Phase 2 infigratinib achondroplasia study by the end of 2021, while noting that COVID-19 had delayed or temporarily suspended some clinical-trial enrollment and other development activities.
- Potential performance-based milestone compensation totaled $243.8 million at June 30, 2021, of which $18.5 million was accrued as probable.
- The company authorized a $150.0 million share repurchase program and had repurchased $5.3 million of stock under the program by June 30, 2021. The program is discretionary and may be suspended or discontinued.
- The Hercules term loan carried a 7.65% interest rate at June 30, 2021, with interest-only payments scheduled through June 2024 and maturity in May 2025, subject to extension conditions. An additional $185.0 million of facilities had not been drawn.
- BridgeBio reported no material legal proceedings, no material changes to previously disclosed risk factors and effective disclosure controls as of June 30, 2021.
Important facts for investors to verify
- Whether initial Nulibry and Truseltiq sales can grow sufficiently to offset continuing development, commercialization and corporate costs.
- The sustainability and timing of licensing, milestone and collaboration revenue, including the significant nonrecurring amounts recognized in the first half of 2021.
- Cash-burn trends, restricted availability of cash held by subsidiaries and the timing of any future financing requirement.
- Conversion, dilution and refinancing risks associated with the $1.2975 billion principal amount of convertible notes, including the 2027 Notes’ conversion eligibility during the first half of 2021.
- Clinical, regulatory and commercial execution risks across the portfolio, including the effects of COVID-19 on trial enrollment and development timelines.
- The probability and eventual settlement method of the $243.8 million of potential performance-based compensation and other contingent milestone obligations.
- The financial and accounting effects of the Eidos merger, PellePharm consolidation, ASU 2020-06 adoption and future changes in fair values or ownership interests.