Bridgebio Pharma, Inc. annual report, FY2019

BridgeBio Pharma, Inc. 2019 Form 10-K Summary

Business context and reporting period

BridgeBio Pharma is a clinical-stage biopharmaceutical company focused on developing medicines for genetically driven diseases and cancers. Its portfolio included more than 20 programs spanning discovery through late-stage clinical development, organized through wholly owned, partially owned and controlled subsidiaries. The filing covers the fiscal year ended December 31, 2019, with quarterly data provided for the quarter ended December 31, 2019.

BridgeBio completed its initial public offering on July 1, 2019, issuing 23.575 million shares at $17.00 per share and receiving approximately $366.2 million of net proceeds. The company had 248 full-time employees at year-end.

Financial performance, liquidity and capital structure

Metric	2019	2018	Change
License revenue	$40.6 million	$0	New in 2019
Research and development expense	$209.9 million	$140.1 million	Up $69.9 million
General and administrative expense	$94.4 million	$43.6 million	Up $50.8 million
Total operating expenses	$306.8 million	$183.7 million	Up $123.1 million
Loss from operations	$(266.2) million	$(183.7) million	Greater loss
Net loss	$(288.6) million	$(169.5) million	Greater loss
Net loss attributable to BridgeBio common stockholders	$(260.6) million	$(130.7) million	Greater loss
Basic and diluted net loss per share	$(2.48)	$(2.12)	Higher loss per share

• License revenue primarily reflected a $25.0 million upfront payment and related consideration from Eidos’ Japanese license of AG10, plus $13.8 million from QED’s infigratinib license arrangement. The filing states that BridgeBio has not generated product-sales revenue.
• Gross license economics were limited by $2.5 million of related sublicensing costs. The implied license-revenue gross margin was approximately 93.8%, but this is not representative of a commercial product margin because the revenue was primarily upfront licensing consideration.
• Net cash used in operating activities was $253.6 million, compared with $136.6 million in 2018. Stock-based compensation was $21.4 million and share-of-losses from equity-method investments was $20.9 million.
• Net cash used in investing activities was $217.3 million, primarily reflecting $212.9 million of marketable-securities purchases.
• Net cash provided by financing activities was $398.8 million, including IPO proceeds, term-loan proceeds and Eidos financing, partially offset by $55.0 million spent to acquire Eidos shares from a noncontrolling interest holder.
• Cash, cash equivalents and marketable securities totaled $577.1 million at December 31, 2019, including $191.2 million held by Eidos and restricted to Eidos or its subsidiaries. Excluding Eidos, BridgeBio reported $385.9 million.
• Working capital was $508.2 million, compared with $412.6 million at December 31, 2018. Accumulated deficit was $440.0 million.
• Reported noncurrent term loans were $91.8 million, consisting primarily of BridgeBio’s $75.0 million Hercules facility and Eidos’ $17.5 million Tranche A loan, net of discounts and issuance costs. The filing indicates no liquidity covenant under the Hercules facility, but the debt is secured and includes operating restrictions.
• Management stated that available cash, cash equivalents and marketable securities were expected to fund operations for at least the next 12 months based on current plans.

Material changes versus prior comparable periods

• Operating expenses increased 67% in 2019, driven by expanded clinical and preclinical development, manufacturing preparation, personnel and public-company compliance costs.
• Research and development spending increased 50% to $209.9 million. The largest 2019 program expenditures were infigratinib, $65.1 million; BBP-265/AG10, $46.7 million; BBP-870, $19.5 million; BBP-631, $14.7 million; BBP-812, $14.6 million; and BBP-589, $8.0 million.
• General and administrative expense more than doubled to $94.4 million, primarily due to higher headcount and costs associated with the IPO and ongoing SEC compliance.
• The loss attributable to common stockholders nearly doubled to $260.6 million, while weighted-average shares increased to 105.1 million from 61.8 million because of the reorganization and IPO.
• BridgeBio used $212.9 million to purchase marketable securities in 2019, whereas no such purchases were reported in 2018.
• PellePharm was deconsolidated in November 2018. In 2019, BridgeBio recognized $20.9 million of share-of-losses from equity-method investments, compared with $0.3 million in 2018, and no longer recognized the $19.3 million deconsolidation gain recorded in 2018.
• Quarterly fourth-quarter 2019 license revenue was $13.8 million, operating expenses were $92.5 million and net loss was $84.2 million. Net loss attributable to common stockholders was $73.5 million, or $0.62 per share.

Pipeline, outlook and management commentary

• BBP-265/AG10: An oral TTR stabilizer in an ongoing Phase 3 ATTR-CM study targeting approximately 510 patients. Management anticipated reporting 12-month six-minute walk-distance data in 2021 and initiating a Phase 3 ATTR-PN study in the first half of 2020.
• BBP-831/infigratinib: An FGFR1-3 inhibitor. Management intended to submit an NDA in 2020 for previously treated advanced cholangiocarcinoma with FGFR2 fusions or translocations. The program also included first-line cholangiocarcinoma, urothelial carcinoma and achondroplasia development plans. A companion diagnostic was expected to be important to the CCA regulatory pathway.
• BBP-870/fosdenopterin: A rolling NDA submission for molybdenum cofactor deficiency Type A had begun in late 2019. The product had breakthrough-therapy, orphan-drug and rare-pediatric-disease designations.
• BBP-009/patidegib: A topical therapy in Phase 3 development for Gorlin Syndrome and Phase 2b development for high-frequency basal-cell carcinoma. LEO Pharma held an option to acquire PellePharm, exercisable no later than July 30, 2021, subject to specified conditions.
• BBP-589: A recombinant collagen VII therapy in a Phase 1/2 study for recessive dystrophic epidermolysis bullosa. The FDA partial clinical hold imposed in 2018 was removed in February 2020 after the company’s response regarding analytical testing.
• BBP-631 and BBP-812: Preclinical AAV gene-therapy programs for congenital adrenal hyperplasia and Canavan disease, respectively. The company anticipated IND submissions or further development activities in 2020, subject to preclinical and toxicology results.
• BridgeBio expected continuing operating losses and increasing expenses for the foreseeable future. It had no approved products, no product-sale revenue and no stated profitability timeline.

Key risks, contingencies and unusual items

• Drug-development, clinical-trial and regulatory outcomes remain highly uncertain. Product candidates may fail, require additional studies, experience enrollment delays or receive narrower approvals than anticipated.
• The company relies extensively on CROs, CMOs and single-source or limited-source suppliers. Manufacturing failures, supply interruptions, quality issues or regulatory deficiencies could delay development.
• BridgeBio has substantial future obligations that are contingent on milestones, including up to $34.0 million of employee milestone compensation, license and acquisition milestones, royalties, and the $8.0 million remaining obligation under a dedicated manufacturing-suite arrangement.
• Debt obligations include secured facilities, interest and final-payment charges, mandatory-prepayment provisions and covenants that may restrict financing, acquisitions, investments and other corporate activities. Eidos may draw up to an additional $37.5 million under its facility, subject to conditions.
• The company’s cash resources are distributed among subsidiaries and may not be freely transferable. Eidos’ cash is restricted to Eidos and its subsidiaries.
• BridgeBio recognized a $4.1 million Level 3 LEO call-option liability at year-end, along with a $1.2 million Eidos embedded derivative liability.
• The company disclosed that prior material weaknesses in internal control over financial reporting were remediated as of December 31, 2019. Management cautioned that controls may become inadequate or deteriorate in future periods.
• The company disclosed exposure to competition from approved or developing therapies, including tafamidis for ATTR, erdafitinib and other FGFR inhibitors, and multiple KRAS and gene-therapy programs.
• The filing identifies risks from reimbursement and drug-price regulation, intellectual-property challenges, healthcare-law compliance, data privacy, cybersecurity, geopolitical events and the emerging coronavirus outbreak noted as of the filing date.

Important facts for investors to verify

• Whether cash held at BridgeBio and its subsidiaries remains sufficient to fund the stated development plan, considering the reported $253.6 million annual operating cash burn and increasing R&D spending.
• The timing, statistical significance and regulatory usefulness of Phase 3 data for BBP-265/AG10 and the status of its ATTR-PN program.
• Whether the planned infigratinib NDA was accepted and approved, and whether the companion diagnostic received required regulatory authorization.
• The progress and regulatory status of the fosdenopterin rolling NDA and any potential priority review voucher.
• Clinical-trial safety, enrollment and manufacturing updates for BBP-589, BBP-631, BBP-009 and other key programs.
• The amount and timing of future milestone, royalty, manufacturing and debt obligations, including obligations at subsidiaries that may not be funded by parent-company cash.
• BridgeBio’s ownership, voting control and access to cash at Eidos and other consolidated or controlled entities, as well as the effect of noncontrolling interests on common-stockholder economics.
• Whether the company can reduce losses, generate recurring licensing revenue or obtain product-sales revenue before additional equity or debt financing is required.