BridgeBio Pharma, Inc. — Form 10-Q Summary
Reporting period: Quarterly period ended June 30, 2019. The filing primarily presents the consolidated results of BridgeBio Pharma LLC, the operating entity before the July 1, 2019 reorganization and IPO. BridgeBio is a clinical-stage biopharmaceutical company developing medicines for Mendelian diseases and genetically driven cancers. Its pipeline included more than 15 programs, with four candidates in clinical trials, including two in Phase 3.
Financial Position and Results
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Revenue from product sales | None | None |
| Research and development expense | $52.3 million | $97.2 million |
| General and administrative expense | $16.9 million | $35.8 million |
| Total operating expenses | $69.2 million | $133.0 million |
| Net loss | $74.3 million | $143.7 million |
| Net loss attributable to BridgeBio | $65.9 million | $127.1 million |
| Net cash used in operating activities | Not separately provided | $127.4 million |
All amounts are from the consolidated BridgeBio Pharma LLC statements and are presented in thousands in the filing. The company had no approved products and expected no product revenue in the foreseeable future.
- Cash and cash equivalents were $293.8 million at June 30, 2019, compared with $436.1 million at December 31, 2018. Including restricted cash, total cash, cash equivalents and restricted cash were $294.2 million.
- Cash held by BridgeBio was $112.4 million; $131.4 million was held by Eidos, and remaining cash was held by subsidiaries and controlled entities for specific uses.
- Total assets were $325.5 million and total liabilities were $114.0 million.
- Term loans totaled approximately $75.0 million, with variable interest rates ranging from approximately 9.10% to 9.85% at June 30, 2019.
- Accumulated deficit was $326.1 million at June 30, 2019.
- Operating cash burn increased substantially, with net cash used in operating activities of $127.4 million in the first six months of 2019 versus $51.9 million in the comparable 2018 period.
Material Changes Versus Prior Comparable Period
- Second-quarter research and development expense increased 119% to $52.3 million from $23.9 million, driven by more development programs, clinical-trial activity, employee costs, facilities and research efforts.
- Second-quarter general and administrative expense increased 55% to $16.9 million from $10.9 million as the organization expanded and prepared for public-company operations.
- Second-quarter net loss increased to $74.3 million from $35.7 million; six-month net loss increased to $143.7 million from $78.1 million.
- Six-month research and development expense increased 68% and general and administrative expense increased 90% compared with the first six months of 2018.
- Cash declined by $142.0 million during the first six months of 2019, compared with a $160.4 million increase in the prior-year period. The 2018 increase reflected substantial financing proceeds, including the Eidos IPO, preferred-unit issuances and term loans.
- The company invested in several controlled entities during the first six months, including QED ($40.0 million), Aspa ($8.0 million), Adrenas ($8.0 million), Origin ($10.0 million), CoA ($5.1 million), Ferro ($4.5 million), Navire ($4.5 million), Quartz ($0.4 million) and Venthera ($1.5 million).
IPO, Reorganization and Subsequent Events
- On July 1, 2019, BridgeBio completed its IPO, selling 23,575,000 shares, including the underwriters’ 3,075,000-share overallotment, at $17.00 per share.
- Net IPO proceeds were approximately $366.3 million, after $28.0 million of underwriting discounts and commissions and $6.5 million of offering costs.
- BridgeBio Pharma LLC unitholders exchanged their units for 99,999,967 shares of BridgeBio Pharma, Inc.; BridgeBio Pharma LLC became a wholly owned subsidiary.
- The Hercules facility was subsequently amended to extend the interest-only period to July 1, 2021, extend maturity to January 1, 2023, reduce certain interest rates and permit limited payment-in-kind interest.
- After June 30, 2019, BridgeBio made additional investments of $40.0 million in QED, $7.0 million in Phoenix Tissue Repair, $3.6 million each in Aspa and Adrenas, and $1.5 million in Fortify.
- On August 8, 2019, the company submitted a non-binding proposal to acquire the Eidos shares it did not own for 1.30 BridgeBio shares per Eidos share. The proposal required approval by Eidos’ board and independent special committee and approval by unaffiliated Eidos shareholders.
Outlook, Risks and Unusual Items
- Management expects significant additional operating losses and increasing research and development spending for the foreseeable future, particularly for planned and ongoing Phase 3 programs involving BBP-265 and BBP-831.
- The filing states that cash and the IPO proceeds were expected to fund operations for at least one year from filing. A risk-factor disclosure states that the company expected funding through at least the next 24 months; the filing therefore contains differing time horizons.
- BridgeBio may require additional equity, debt, collaboration or licensing financing. Additional financing may dilute shareholders, impose covenants or require the company to relinquish rights to programs.
- Development programs remain subject to clinical-trial delays, enrollment difficulties, safety findings, manufacturing problems, regulatory rejection and uncertain efficacy. No product candidate had received marketing approval.
- Phoenix Tissue Repair’s BBP-589 program remained subject to an FDA partial clinical hold concerning development of an analytical potency assay for future product lots.
- The company recognized a $9.6 million loss from its PellePharm investment for the first six months and carried a $4.3 million Level 3 LEO call-option liability at June 30, 2019.
- Potential future payments include up to $7.0 million of regulatory milestones and $65.0 million of sales milestones for one June 2019 asset acquisition, plus royalties; additional milestone and royalty obligations exist under other arrangements.
- A legal matter involving Children’s Hospital Research Center at Oakland and PellePharm’s co-founder remained unresolved. The company stated that no loss could be reasonably estimated and no liability was accrued.
- Previously identified material weaknesses in internal control over financial reporting had not been remediated as of June 30, 2019. Eidos also had an unremediated material weakness involving complex debt and equity accounting and disclosure controls.
Most Important Facts to Verify
- Post-IPO cash balance, quarterly cash burn and the resulting operating runway.
- Actual timing, enrollment and results of the key Phase 3 and Phase 2/3 programs, particularly BBP-265 and BBP-831.
- Status and resolution of the BBP-589 partial clinical hold and other manufacturing or regulatory issues.
- Terms, financing impact and shareholder approvals associated with the proposed Eidos acquisition.
- Compliance with the Hercules loan covenants, minimum unrestricted cash requirement and future amortization schedule.
- Progress in remediating BridgeBio’s and Eidos’ material weaknesses in internal control over financial reporting.
- Potential milestone, royalty, litigation and contingent payment obligations across the company’s subsidiary and license portfolio.