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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2023
| |||||
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Delaware | 47-5461709 | |||||||||||
(State or other jurisdiction of
| (I.R.S. Employer
| |||||||||||
3013 Science Park Road | San Diego | California | 92121 | |||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Common Stock, $0.0001 par value per share | GOSS | Nasdaq Global Select Market |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||||||||
Non-accelerated filer |
| Smaller reporting company |
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Emerging growth company |
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☐
Securities registered pursuant to Section 12(b) of the Act:
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|
As of May 8, 2019,4, 2023, the registrant had 65,893,27695,444,095 shares of common stock ($0.0001 par value) outstanding.
1
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Condensed Consolidated Balance Sheets as of March 31, |
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2022 (unaudited) | ||||||||||||
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)for the Three Months ended March 31, 2023 and 2022 (unaudited) | ||||||||||||
Condensed Consolidated Statements of Cash Flowsfor the Three Months |
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2
(Unaudited)
|
| March 31, 2019 |
|
| December 31, 2018 |
| |||||||||||||
|
|
|
|
|
|
|
|
| March 31, 2023 | December 31, 2022 | |||||||||
ASSETS |
|
|
|
|
|
|
|
| ASSETS | (unaudited) | |||||||||
Current assets |
|
|
|
|
|
|
|
| Current assets | ||||||||||
Cash and cash equivalents |
| $ | 170,847 |
|
| $ | 105,219 |
| Cash and cash equivalents | $ | 65,242 | $ | 111,973 | ||||||
Marketable securities |
|
| 310,374 |
|
|
| 123,439 |
| Marketable securities | 136,614 | 143,705 | ||||||||
Restricted cash |
|
| — |
|
|
| 200 |
| |||||||||||
Prepaid expenses and other current assets |
|
| 16,567 |
|
|
| 3,095 |
| Prepaid expenses and other current assets | 8,557 | 6,202 | ||||||||
Total current assets |
|
| 497,788 |
|
|
| 231,953 |
| Total current assets | 210,413 | 261,880 | ||||||||
Property and equipment, net |
|
| 4,110 |
|
|
| 3,193 |
| Property and equipment, net | 3,516 | 3,981 | ||||||||
Operating lease right-of-use assets |
|
| 11,922 |
|
|
| — |
| Operating lease right-of-use assets | 5,234 | 5,909 | ||||||||
Other assets |
|
| 2,129 |
|
|
| 4,273 |
| Other assets | 743 | 680 | ||||||||
Total assets |
| $ | 515,949 |
|
| $ | 239,419 |
| Total assets | $ | 219,906 | $ | 272,450 | ||||||
LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
| |||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||||||||||
Current liabilities |
|
|
|
|
|
|
|
| Current liabilities | ||||||||||
Accounts payable |
| $ | 4,548 |
|
| $ | 2,182 |
| Accounts payable | $ | 2,731 | $ | 1,459 | ||||||
Accrued research and development expenses |
|
| 12,725 |
|
|
| 10,653 |
| Accrued research and development expenses | 11,523 | 15,626 | ||||||||
Accrued expenses |
|
| 7,879 |
|
|
| 7,568 |
| |||||||||||
Current portion of long-term debt | Current portion of long-term debt | 11,613 | 11,613 | ||||||||||||||||
Accrued expenses and other current liabilities | Accrued expenses and other current liabilities | 14,704 | 20,532 | ||||||||||||||||
Total current liabilities |
|
| 25,152 |
|
|
| 20,403 |
| Total current liabilities | 40,571 | 49,230 | ||||||||
Operating lease liabilities |
|
| 10,537 |
|
|
| — |
| |||||||||||
Accrued expenses - long-term |
|
| — |
|
|
| 718 |
| |||||||||||
Long-term convertible senior notes | Long-term convertible senior notes | 195,925 | 195,709 | ||||||||||||||||
Long-term debt | Long-term debt | 9,221 | 11,988 | ||||||||||||||||
Operating lease liabilities - long-term | Operating lease liabilities - long-term | 2,645 | 3,446 | ||||||||||||||||
Total liabilities |
|
| 35,689 |
|
|
| 21,121 |
| Total liabilities | 248,362 | 260,373 | ||||||||
Commitments and contingencies - Note 10 |
|
|
|
|
|
|
|
| |||||||||||
Series Seed convertible preferred stock, $0.0001 par value; 0 shares issued and outstanding as of March 31, 2019 and 20,000,000 shares issued and outstanding as of December 31, 2018 and; liquidation preference of $0 and $20,000 as of March 31, 2019 and December 31, 2018, respectively |
|
| — |
|
|
| 29,200 |
| |||||||||||
Series A convertible preferred stock, $0.0001 par value; 0 shares issued and outstanding as of March 31, 2019 and 45,714,286 shares issued and outstanding as of December 31, 2018; liquidation preference of $0 and $80,000 as of March 31, 2019 and December 31, 2018, respectively |
|
| — |
|
|
| 79,615 |
| |||||||||||
Series B convertible preferred stock, $0.0001 par value; 0 shares issued and outstanding as of March 31, 2019 and 71,506,513 shares issued and outstanding as of December 31, 2018; liquidation preference of $0 and $230,000 as of March 31, 2019 and December 31, 2018, respectively |
|
| — |
|
|
| 229,552 |
| |||||||||||
Commitments and contingencies (Note 9) | Commitments and contingencies (Note 9) | ||||||||||||||||||
Stockholders' equity (deficit) |
|
|
|
|
|
|
|
| Stockholders' equity (deficit) | ||||||||||
Common stock, $0.0001 par value; 700,000,000 shares authorized as of March 31, 2019 and 49,160,177 shares authorized as of December 31, 2018; 65,891,910 shares issued and 60,029,470 shares outstanding as of March 31, 2019, and 15,533,450 shares issued and 8,051,418 shares outstanding as of December 31, 2018 |
|
| 7 |
|
|
| 2 |
| |||||||||||
Common stock, $0.0001 par value; 700,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 95,444,096 shares issued and outstanding as of March 31, 2023, and 94,478,405 shares issued and 94,423,181 shares outstanding as of December 31, 2022 | Common stock, $0.0001 par value; 700,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 95,444,096 shares issued and outstanding as of March 31, 2023, and 94,478,405 shares issued and 94,423,181 shares outstanding as of December 31, 2022 | 10 | 10 | ||||||||||||||||
Additional paid-in capital |
|
| 666,648 |
|
|
| 33,853 |
| Additional paid-in capital | 1,053,358 | 1,044,864 | ||||||||
Accumulated deficit |
|
| (186,474 | ) |
|
| (153,863 | ) | Accumulated deficit | (1,081,388) | (1,032,223) | ||||||||
Accumulated other comprehensive income (loss) |
|
| 79 |
|
|
| (61 | ) | |||||||||||
Accumulated other comprehensive loss | Accumulated other comprehensive loss | (436) | (574) | ||||||||||||||||
Total stockholders' equity (deficit) |
|
| 480,260 |
|
|
| (120,069 | ) | Total stockholders' equity (deficit) | (28,456) | 12,077 | ||||||||
Total liabilities, convertible preferred stock and stockholders' equity (deficit) |
| $ | 515,949 |
|
| $ | 239,419 |
| |||||||||||
Total liabilities and stockholders' equity (deficit) | Total liabilities and stockholders' equity (deficit) | $ | 219,906 | $ | 272,450 |
3
|
| Three months ended March 31, |
| Three months ended March 31, | |||||||||||||||||||||||||||
|
| 2019 |
|
| 2018 |
| 2023 | 2022 | |||||||||||||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
| Operating expenses: | ||||||||||||||||||||||
Research and development |
| $ | 24,983 |
|
| $ | 2,624 |
| Research and development | $ | 37,795 | $ | 42,322 | ||||||||||||||||||
In process research and development |
|
| 1,000 |
|
|
| 20,898 |
| In process research and development | 15 | 20 | ||||||||||||||||||||
General and administrative |
|
| 8,034 |
|
|
| 2,604 |
| General and administrative | 10,132 | 12,001 | ||||||||||||||||||||
Total operating expenses |
|
| 34,017 |
|
|
| 26,126 |
| Total operating expenses | 47,942 | 54,343 | ||||||||||||||||||||
Loss from operations |
|
| (34,017 | ) |
|
| (26,126 | ) | Loss from operations | (47,942) | (54,343) | ||||||||||||||||||||
Other income (expenses) |
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Other expense | Other expense | ||||||||||||||||||||||||||||||
Interest income |
|
| 1,049 |
|
|
| 89 |
| Interest income | 587 | 224 | ||||||||||||||||||||
Interest expense |
|
| (19 | ) |
|
| — |
| Interest expense | (3,500) | (3,467) | ||||||||||||||||||||
Other income |
|
| 376 |
|
|
| — |
| |||||||||||||||||||||||
Total other income, net |
|
| 1,406 |
|
|
| 89 |
| |||||||||||||||||||||||
Other income (expense), net | Other income (expense), net | 1,690 | (199) | ||||||||||||||||||||||||||||
Total other expense, net | Total other expense, net | (1,223) | (3,442) | ||||||||||||||||||||||||||||
Net loss |
| $ | (32,611 | ) |
| $ | (26,037 | ) | Net loss | $ | (49,165) | $ | (57,785) | ||||||||||||||||||
Other comprehensive income: |
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Unrealized gain on marketable securities, net of tax |
|
| 140 |
|
|
| — |
| |||||||||||||||||||||||
Other comprehensive loss |
|
| 140 |
|
|
| — |
| |||||||||||||||||||||||
Other comprehensive income (loss): | Other comprehensive income (loss): | ||||||||||||||||||||||||||||||
Foreign currency translation | Foreign currency translation | 23 | (8) | ||||||||||||||||||||||||||||
Unrealized gain (loss) on marketable securities | Unrealized gain (loss) on marketable securities | 115 | (377) | ||||||||||||||||||||||||||||
Other comprehensive income (loss) | Other comprehensive income (loss) | 138 | (385) | ||||||||||||||||||||||||||||
Comprehensive loss |
|
| (32,471 | ) |
|
| (26,037 | ) | Comprehensive loss | (49,027) | (58,170) | ||||||||||||||||||||
Net loss per share, basic and diluted |
| $ | (0.90 | ) |
| $ | (4.49 | ) | Net loss per share, basic and diluted | $ | (0.52) | $ | (0.76) | ||||||||||||||||||
Weighted average common shares outstanding, basic and diluted |
|
| 36,317,230 |
|
|
| 5,797,693 |
| Weighted average common shares outstanding, basic and diluted | 94,870,293 | 75,894,692 |
4
| Series Seed |
| Series A |
| Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| |||||||||||||
| convertible preferred stock |
| convertible preferred stock |
| convertible preferred stock |
|
|
| Common stock |
| Additional paid-in |
| Accumulated |
| other comprehensive |
| Total stockholders' |
| ||||||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
|
|
| Shares |
| Amount |
| capital |
| deficit |
| income (loss) |
| equity |
| ||||||||||||
Balance as of December 31, 2018 |
| 20,000,000 |
| $ | 29,200 |
|
| 45,714,286 |
| $ | 79,615 |
|
| 71,506,513 |
| $ | 229,552 |
|
|
|
| 8,051,418 |
| $ | 2 |
| $ | 33,853 |
| $ | (153,863 | ) | $ | (61 | ) | $ | (120,069 | ) |
Issuance of common stock in connection with a public offering, net of underwriting discounts, commissions, and offering costs |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
|
|
| 19,837,500 |
|
| 2 |
|
| 291,342 |
|
| — |
|
| — |
|
| 291,344 |
|
Conversion of convertible preferred stock into common stock |
| (20,000,000 | ) |
| (29,200 | ) |
| (45,714,286 | ) |
| (79,615 | ) |
| (71,506,513 | ) |
| (229,552 | ) |
|
|
| 30,493,460 |
|
| 3 |
|
| 338,364 |
|
| — |
|
| — |
|
| 338,367 |
|
Vesting of restricted stock |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
|
|
| 1,619,592 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
Stock-based compensation |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
|
|
| 27,500 |
|
| — |
|
| 3,089 |
|
| — |
|
| — |
|
| 3,089 |
|
Net loss |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
|
|
| — |
|
| — |
|
| — |
|
| (32,611 | ) |
| — |
|
| (32,611 | ) |
Other comprehensive income |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
|
|
| — |
|
| — |
|
| — |
|
| — |
|
| 140 |
|
| 140 |
|
Balance as of March 31, 2019 |
| — |
| $ | — |
|
| — |
| $ | — |
|
| — |
| $ | — |
|
|
|
| 60,029,470 |
| $ | 7 |
| $ | 666,648 |
| $ | (186,474 | ) | $ | 79 |
| $ | 480,260 |
|
| Series Seed |
| Series A |
| Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| |||||||||||||
| convertible preferred stock |
| convertible preferred stock |
| convertible preferred stock |
|
|
| Common stock |
| Additional paid-in |
| Accumulated |
| other comprehensive |
| Total stockholders' |
| ||||||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
|
|
| Shares |
| Amount |
| capital |
| deficit |
| income (loss) |
| deficit |
| ||||||||||||
Balance as of December 31, 2017 |
| — |
| $ | — |
|
| — |
| $ | — |
|
| — |
| $ | — |
|
|
|
| 9,160,888 |
| $ | — |
| $ | 32 |
| $ | (6,894 | ) | $ | — |
| $ | (6,862 | ) |
Issuance of Series A preferred stock for cash, net of $0.4 million in offering costs |
| — |
|
| — |
|
| 41,328,286 |
|
| 71,944 |
|
| — |
|
| — |
|
|
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
Issuance of stock for acquisition |
| 20,000,000 |
|
| 29,200 |
|
| — |
|
| — |
|
| — |
|
| — |
|
|
|
| 1,101,278 |
|
| — |
|
| 2,874 |
|
| — |
|
| — |
|
| 2,874 |
|
Issuance of Series A preferred stock to convert debt and accrued interest |
| — |
|
| — |
|
| 3,499,209 |
|
| 6,124 |
|
| — |
|
| — |
|
|
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
Stock-based compensation |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
|
|
| — |
|
| — |
|
| 605 |
|
| — |
|
| — |
|
| 605 |
|
Incremental vesting conditions place on previously issued common shares |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
|
|
| (4,580,444 | ) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
Net loss |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
|
|
| — |
|
| — |
|
| — |
|
| (26,037 | ) |
| — |
|
| (26,037 | ) |
Balance as of March 31, 2018 |
| 20,000,000 |
| $ | 29,200 |
|
| 44,827,495 |
| $ | 78,068 |
|
| — |
| $ | — |
|
|
|
| 5,681,722 |
| $ | — |
| $ | 3,511 |
| $ | (32,931 | ) | $ | — |
| $ | (29,420 | ) |
Common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive loss | Total stockholders' equity (deficit) | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance as of December 31, 2022 | 94,423,181 | $ | 10 | $ | 1,044,864 | $ | (1,032,223) | $ | (574) | $ | 12,077 | ||||||||||||||||||||||||
Vesting of restricted stock | 55,225 | — | — | — | — | — | |||||||||||||||||||||||||||||
Stock-based compensation | — | — | 8,127 | — | — | 8,127 | |||||||||||||||||||||||||||||
Issuance of common stock pursuant to Employee Stock Purchase Plan | 249,623 | — | 367 | — | — | 367 | |||||||||||||||||||||||||||||
Issuance of common stock for restricted stock units vested | 716,067 | — | — | — | — | — | |||||||||||||||||||||||||||||
Net loss | — | — | — | (49,165) | — | (49,165) | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | 138 | 138 | |||||||||||||||||||||||||||||
Balance as of March 31, 2023 | 95,444,096 | $ | 10 | $ | 1,053,358 | $ | (1,081,388) | $ | (436) | $ | (28,456) | ||||||||||||||||||||||||
Common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive income (loss) | Total stockholders' equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | 75,752,664 | $ | 8 | $ | 932,944 | $ | (811,534) | $ | 45 | $ | 121,463 | ||||||||||||||||||||||||
Cumulative-effect adjustment from change in accounting principle (See Note 2) | — | — | (53,527) | 8,689 | — | (44,838) | |||||||||||||||||||||||||||||
Vesting of restricted stock | 165,675 | — | — | — | — | — | |||||||||||||||||||||||||||||
Exercise of stock options | 39,525 | — | 126 | — | — | 126 | |||||||||||||||||||||||||||||
Stock-based compensation | — | — | 10,983 | — | — | 10,983 | |||||||||||||||||||||||||||||
Issuance of common stock pursuant to Employee Stock Purchase Plan | 77,496 | — | 595 | — | — | 595 | |||||||||||||||||||||||||||||
Issuance of common stock for restricted stock units vested | 518,577 | — | — | — | — | — | |||||||||||||||||||||||||||||
Net loss | — | — | — | (57,785) | — | (57,785) | |||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | (385) | (385) | |||||||||||||||||||||||||||||
Balance as of March 31, 2022 | 76,553,937 | $ | 8 | $ | 891,121 | $ | (860,630) | $ | (340) | $ | 30,159 | ||||||||||||||||||||||||
5
|
| Three months ended March 31, |
| |||||
|
| 2019 |
|
| 2018 |
| ||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net loss |
| $ | (32,611 | ) |
| $ | (26,037 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 169 |
|
|
| 6 |
|
Stock-based compensation expense |
|
| 3,089 |
|
|
| 605 |
|
In process research and development expenses |
|
| 1,000 |
|
|
| 20,898 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Operating lease right of use assets and liabilities, net |
|
| 61 |
|
|
| — |
|
Prepaid expenses and other current assets |
|
| (3,472 | ) |
|
| (94 | ) |
Other Assets |
|
| 2,144 |
|
|
| (425 | ) |
Accounts payable |
|
| 2,132 |
|
|
| 546 |
|
Accrued expenses |
|
| (789 | ) |
|
| 441 |
|
Accrued research and development expenses |
|
| 2,072 |
|
|
| (126 | ) |
Accrued compensation and benefits |
|
| (1,569 | ) |
|
| 593 |
|
Accrued interest expense |
|
| — |
|
|
| (115 | ) |
Net cash used in operating activities |
|
| (27,774 | ) |
|
| (3,708 | ) |
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Research and development asset acquisitions, net of cash acquired |
|
| (1,000 | ) |
|
| 11,176 |
|
Purchase of investments |
|
| (222,295 | ) |
|
| — |
|
Sales and maturities of investments |
|
| 25,500 |
|
|
| — |
|
Purchase of property and equipment |
|
| (347 | ) |
|
| (511 | ) |
Net cash (used in) provided by investing activities |
|
| (198,142 | ) |
|
| 10,665 |
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock in a public offering, net |
|
| 291,273 |
|
|
| — |
|
Proceeds from the exercise of stock options |
|
| 71 |
|
|
| — |
|
Proceeds from issuance of Series A convertible preferred stock, net |
|
| — |
|
|
| 71,944 |
|
Repayment of notes payable to related parties |
|
| — |
|
|
| (40 | ) |
Net cash provided by financing activities |
|
| 291,344 |
|
|
| 71,904 |
|
Net increase in cash, cash equivalents and restricted cash |
|
| 65,428 |
|
|
| 78,861 |
|
Cash, cash equivalents and restricted cash, at the beginning of the period |
|
| 105,419 |
|
|
| 315 |
|
Cash, cash equivalents and restricted cash, at the end of the period |
| $ | 170,847 |
|
| $ | 79,176 |
|
Supplemental disclosure of noncash investing and financing activities: |
|
|
|
|
|
|
|
|
Acquisition of in-process research and development through issuance of stock |
| $ | — |
|
| $ | 19,284 |
|
Issuance of Series A convertible preferred stock to convert debt and accrued interest |
| $ | — |
|
| $ | 6,124 |
|
Recognition of operating lease right of use asset |
| $ | 12,458 |
|
| $ | — |
|
Recognition of operating lease liabilities |
| $ | 13,182 |
|
| $ | — |
|
Conversion of convertible preferred stock to common stock |
| $ | 338,367 |
|
| $ | — |
|
Change in unrealized gain on marketable securities, net of tax |
| $ | 140 |
|
| $ | — |
|
Unpaid property and equipment |
| $ | 739 |
|
| $ | 43 |
|
Three months ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities | |||||||||||
Net loss | $ | (49,165) | $ | (57,785) | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization expense | 465 | 452 | |||||||||
Stock-based compensation expense | 8,127 | 10,983 | |||||||||
In process research and development expenses | 15 | 20 | |||||||||
Amortization of operating lease right-of-use assets | 675 | 645 | |||||||||
Amortization of long-term debt discount and issuance costs | 352 | 292 | |||||||||
Amortization of premium (discount) on marketable securities, net of accretion of discounts | (1,531) | 125 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Prepaid expenses and other current assets | (2,355) | (2,589) | |||||||||
Other assets | (63) | 61 | |||||||||
Operating lease liabilities | (723) | (683) | |||||||||
Accounts payable | 1,223 | (2,507) | |||||||||
Accrued expenses and other current liabilities | (273) | 52 | |||||||||
Accrued research and development expenses | (4,103) | 753 | |||||||||
Accrued compensation and benefits | (8,117) | (5,802) | |||||||||
Accrued interest expense | 2,484 | 2,500 | |||||||||
Net cash used in operating activities | (52,989) | (53,483) | |||||||||
Cash flows from investing activities | |||||||||||
Research and development asset acquisitions, net of cash acquired | (15) | (20) | |||||||||
Purchase of marketable securities | (76,863) | (37,403) | |||||||||
Maturities of marketable securities | 85,600 | 46,000 | |||||||||
Purchase of property and equipment | — | (157) | |||||||||
Net cash provided by investing activities | 8,722 | 8,420 | |||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of common stock pursuant to Employee Stock Purchase Plan | 367 | 595 | |||||||||
Proceeds from the exercise of stock options | — | 126 | |||||||||
Principal repayments of long-term debt | (2,903) | — | |||||||||
Net cash provided by (used in) financing activities | (2,536) | 721 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 72 | (154) | |||||||||
Net decrease in cash and cash equivalents | (46,731) | (44,496) | |||||||||
Cash and cash equivalents, at the beginning of the period | 111,973 | 183,467 | |||||||||
Cash, cash equivalents and restricted cash, at the end of the period | $ | 65,242 | $ | 138,971 | |||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid for interest | $ | 663 | $ | 675 | |||||||
Supplemental disclosure of noncash investing and financing activities: | |||||||||||
Operating lease right-of-use asset obtained in exchange for lease liability | $ | — | $ | 3,029 | |||||||
Change in unrealized gain (loss) on marketable securities, net | $ | 115 | $ | (377) | |||||||
6
1.
Stock Split
In January 2019, the board of directors of the Company approved a reverse stock split of the Company’s common stock at a ratio of one for every 4.5 shares previously held. The reverse stock split became effective on January 23, 2019. All share and per share data included in these condensed consolidated financial statements reflect the stock split.
Initial Public Offering in February 2019
On February 12, 2019, the Company completed its initial public offering (“IPO”) with the sale of 19,837,500 shares of common stock, including shares of common stock issued upon the exercise in full of the underwriters’ option to purchase additional shares, at a public offering price of $16.00 per share, resulting in net proceeds of $291.3 million, after deducting underwriting discounts, commissions, and offering expenses.
In addition, in connection with the completion of the IPO, all of the Company’s outstanding shares of convertible preferred stock were automatically converted into 30,493,460 shares of common stock.
2.
7
the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s condensed consolidated financial statements relate to accrued research and development expenses, the valuation of preferred and common stock, the valuation of stock options and the valuation allowance of deferred tax assets resulting from net operating losses.expenses. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results could differ from those estimates.
Recently Adopted Accounting Pronouncements
The Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASC 842”), as
| As of March 31, |
| |||||||||||||||
| 2019 |
| 2018 |
| As of March 31, | ||||||||||||
Shares issuable upon conversion of Series Seed Convertible Preferred Stock |
| — |
|
| 4,444,444 |
| |||||||||||
Shares issuable upon conversion of Series A Convertible Preferred Stock |
| — |
| 9,961,663 |
| ||||||||||||
2023 | 2022 | ||||||||||||||||
2027 Notes | 2027 Notes | 12,321,900 | 12,321,900 | ||||||||||||||
Shares issuable upon exercise of stock options |
| 7,469,973 |
| — |
| Shares issuable upon exercise of stock options | 21,681,917 | 13,321,692 | |||||||||
Non-vested shares under restricted stock grants |
| 5,862,440 |
| 5,885,865 |
| Non-vested shares under restricted stock grants | 544,336 | 2,415,204 | |||||||||
Total potentially dilutive securities | Total potentially dilutive securities | 34,548,153 | 28,058,796 |
3.
|
| Estimated Useful Life (in years) |
| March 31, 2019 |
|
| December 31, 2018 |
| Estimated Useful Life (in years) | March 31, 2023 | December 31, 2022 | ||||||||||||||||
Office equipment |
| 3-7 |
| $ | 664 |
|
| $ | 918 |
| Office equipment | 3-7 | $ | 1,097 | $ | 1,097 | |||||||||||
Computer equipment |
| 5 |
|
| 33 |
|
|
| 15 |
| Computer equipment | 5 | 123 | 123 | |||||||||||||
Software |
| 3 |
|
| 50 |
|
|
| 50 |
| Software | 3 | 130 | 130 | |||||||||||||
Lab equipment |
| 2-5 |
|
| 1,870 |
|
|
| 1,070 |
| Lab equipment | 2-5 | 6,180 | 6,098 | |||||||||||||
Leasehold improvements |
| 6-7 |
|
| 1,314 |
|
|
| 1,243 |
| Leasehold improvements | 6-7 | 2,562 | 2,562 | |||||||||||||
Construction in process |
| N/A |
|
| 645 |
|
|
| 194 |
| Construction in process | N/A | — | 83 | |||||||||||||
Total property and equipment |
|
|
|
| 4,576 |
|
|
| 3,490 |
| Total property and equipment | 10,092 | 10,093 | ||||||||||||||
Less: accumulated depreciation |
|
|
|
| 466 |
|
|
| 297 |
| Less: accumulated depreciation | 6,576 | 6,112 | ||||||||||||||
Property and equipment, net |
|
|
| $ | 4,110 |
|
| $ | 3,193 |
| Property and equipment, net | $ | 3,516 | $ | 3,981 |
8
and Other Current Liabilities As of March 31, 2019 December 31, 2018 Accrued compensation $ 2,533 $ 4,102 Operating lease liabilities 2,170 — Accrued professional service fees 1,318 2,697 Accrued other 1,858 769 Total accrued expenses $ 7,879 $ 7,568 Fair Value Measurements at End of Period Using: Quoted Market Significant Significant Prices for Other Observable Unobservable Total Identical Assets Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) As of March 31, 2019 Money market funds $ 40,965 $ 40,965 $ — $ — U.S. Treasury securities 199,874 199,874 — — Commercial paper 26,687 — 26,687 — Corporate debt securities 83,813 — 83,813 — As of December 31, 2018 Money market funds $ 17,295 $ 17,295 $ — $ — U.S. Treasury securities 123,439 123,439 — — periods presented. the reporting date. Based on the assumptions used to value these liabilities at fair value, the debt instrument is categorized as Level 2 in the fair value hierarchy. basis. Gross Gross Amortized Unrealized Unrealized Total Cost Gains Losses Fair Value Marketable securities U.S. Treasury securities $ 199,811 $ 69 $ (6 ) $ 199,874 Commercial paper 26,694 — (7 ) 26,687 Corporate debt securities 83,738 84 (9 ) 83,813 Total marketable securities $ 310,243 $ 153 $ (22 ) $ 310,374 2022, there were no material declines in the market value of the Company’s available-for-sale investments due to credit-related factors. Estimated Fair Value Due within one year $ 261,450 One to two years 48,924 Total $ 310,374 2023 and 2022. (Seralutinib) Three months ended March 31, 2019 2018 GB001 $ — $ 19,148 Other Programs 1,000 1,750 Total in process research and development $ 1,000 $ 20,898 On December 3, 2015, the Company issued 9,160,888 shares of common stock as founder shares for services rendered to the Company, valued at $0.0001 par value per share, for a total of approximately These shares are subject to repurchase by the Company upon a founder's termination of employment or service to the Company. January 1, 2020 and ending with January 1, 2029, by an amount equal to 5% of the outstanding number of shares of the Company’s common stock on December As of March 31, 2023, no shares of restricted stock awards granted under the 2017 Plan were unvested. Shares Subject to Options Outstanding Weighted- Average Weighted- Remaining Average Exercise Contractual Life Aggregate Shares Price (Years) Intrinsic Value (in thousands) Outstanding as of December 31, 2018 5,107,329 $ 7.51 9.7 $ 16,343 Options granted 2,390,144 $ 21.74 Option exercised (27,500 ) $ 2.61 Options forfeited/cancelled — Outstanding as of March 31, 2019 7,469,973 $ 12.08 9.6 $ 72,708 Options vested and exercisable as of March 31, 2019 160,682 $ 3.20 8.9 $ 2,968 Number of Weighted- Restricted Average Stock Units Grant Date Outstanding Fair Value Nonvested at December 31, 2018 7,482,032 $ 4.01 Granted — — Vested (1,619,592 ) $ 4.31 Forfeited — — Nonvested at March 31, 2019 5,862,440 $ 3.92 Stock-based compensation expense has been reported in the Company’s condensed consolidated statements of operations and comprehensive loss as follows (in thousands): Three months ended March 31, 2019 2018 Research and development $ 1,293 $ 4 General and administrative 1,796 601 Total stock-based compensation $ 3,089 $ 605 Three months ended March 31, 2019 Operating lease cost $ 753 Variable lease cost 395 Short-term lease cost 14 Total lease cost $ 1,162 $1.1 million and $0.8 million, respectively. Undiscounted Rent Payments Year ending December 31, 2019 (remaining 9 months) $ 2,216 2020 3,035 2021 3,123 2022 3,216 2023 1,690 2024 1,741 Total undiscounted rent payments $ 15,021 Present value discount (2,314 ) Present value $ 12,707 Current portion of operating lease liability (included as a component of Accrued expenses) $ 2,170 Noncurrent operating lease liabilities 10,537 Total operating lease liability $ 12,707 Years ending December 31, 2019 $ 2,944 2020 3,035 2021 3,123 2022 3,216 2023 1,690 Thereafter 1,741 $ 15,749 For each of the three months ended March 31, 17, 2023. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. patients. significantly from quarter-to-quarter and year-to-year, depending in particular on the timing of our clinical trials and preclinical studies and our expenditures on other research and development activities. •salaries, payroll taxes, employee benefits, and stock-based compensation charges for those individuals involved in research and development efforts; •external research and development expenses incurred under agreements with contract research organizations, or CROs, investigative sites and consultants to conduct our clinical trials and preclinical and non-clinical studies; •laboratory supplies; •costs related to manufacturing our product candidates for clinical trials and preclinical studies, including fees paid to third-party manufacturers; •costs related to compliance with regulatory requirements; and •facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent, maintenance of facilities, insurance, equipment and other supplies. developments and our ongoing assessments as to each product candidate’s commercial potential. We will need to raise substantial additional capital in the future. •per patient trial costs; •the number of trials required for approval; •the number of sites included in the trials; •the countries in which the trials are conducted; •the length of time required to enroll eligible patients; •the number of patients that participate in the trials; •the number of doses that patients receive; •the drop-out or discontinuation rates of patients; •potential additional safety monitoring requested by regulatory agencies; •the duration of patient participation in the trials and follow-up; •the cost and timing of manufacturing our product candidates; •the phase of development of our product candidates; and •the efficacy and safety profile of our product candidates. 17, 2023. 2022 Three months ended March 31, 2019 vs 2018 2019 2018 Change (in thousands) Operating expenses: Research and development $ 24,983 $ 2,624 $ 22,359 In process research and development 1,000 $ 20,898 (19,898 ) General and administrative 8,034 2,604 5,430 Total operating expenses 34,017 26,126 7,891 Loss from operations (34,017 ) (26,126 ) (7,891 ) Other income (expenses) Interest income 1,049 89 960 Interest expense (19 ) — (19 ) Other income 376 — 376 Total other income, net 1,406 89 1,317 Net loss $ (32,611 ) $ (26,037 ) $ (6,574 ) Three months ended March 31, 2019 2018 (in thousands) GB001 $ 8,114 $ 1,052 GB002 5,449 1,179 GB004 4,438 — Other Programs 3,785 141 Unallocated expenses 3,197 252 Total research and development $ 24,983 $ 2,624 investment accretion. We may also use cash on hand to repurchase 2027 Notes through open-market transactions, including through a Rule 10b5-1 trading plan to facilitate open-market repurchases, or otherwise, from time to time. conditions, or the Credit Facility. As of March 31, 2023, no tranches under the Credit Facility were available to be drawn. Three months ended March 31, 2019 2018 (in thousands) Net cash used in operating activities $ (27,774 ) $ (3,708 ) Net cash (used in) provided by investing activities (198,142 ) 10,665 Net cash provided by financing activities 291,344 71,904 Net increase in cash, cash equivalents and restricted cash $ 65,428 $ 78,861 stock options. •the type, number, scope, progress, expansions, results, costs and timing of, our preclinical studies and clinical trials of our product candidates which we are pursuing or may choose to pursue in the future; •the costs and timing of manufacturing for our product candidates; •the costs, timing and outcome of regulatory review of our product candidates; •the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; •our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; •the costs associated with hiring additional personnel and consultants as our preclinical and clinical activities increase; •the timing and amount of the milestone or other payments we must make to the licensors and other third parties from whom we have in-licensed our acquired our product candidates; •the costs and timing of establishing or securing sales and marketing capabilities if any product candidate is approved; •our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products; •the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; •costs associated with any products or technologies that we may in-license or Exhibit Number Exhibit Description Incorporated by Reference Filed Herewith Form Date Number 3.1 8-K 2-12-2019 3.1 3.2 8-K 2-12-2019 3.2 4.1 S-1/A 1-23-2019 4.1 4.2 S-1 1-21-2018 4.2 10.1 8-K 5-3-2019 10.1 31.1 X 31.2 X 32.1* Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 32.2* Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 101.INS XBRL Report Instance Document X 101.SCH XBRL Taxonomy Extension Schema Document X 101.CAL XBRL Taxonomy Calculation Linkbase Document X 101.LAB XBRL Taxonomy Label Linkbase Document X 101.PRE XBRL Presentation Linkbase Document X 101.DEF XBRL Taxonomy Extension Definition Linkbase Document X President and Chief Executive Officer (Principal Executive Officer) Date: May By: /s/ Bryan Giraudo Bryan Giraudo Chief Operating Officer and Chief Financial Officer (Principal Financial and Accounting Officer)4.As of March 31,
2023December 31,
2022Accrued compensation and benefits $ 5,417 $ 13,534 Operating lease liabilities 3,060 2,983 Accrued consulting fees 1,137 1,104 Accrued interest 3,549 1,065 Accrued legal fees 390 380 Accrued accounting fees 185 521 Accrued other 966 945 Total accrued expenses and other current liabilities $ 14,704 $ 20,532 We classify ourourthe Company’s investment grade corporate debt securities and commercial paper is determined using proprietary valuation models and analytical tools, which utilize market pricing or prices for similar instruments that are both objective and publicly available, such as matrix pricing or reported trades, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, and offers.20192023 and December 31, 20182022 (in thousands):Fair Value Measurements at End of Period Using: Total
Fair ValueQuoted Market
Prices for
Identical Assets
(Level 1)Significant
Other Observable
Inputs
(Level 2)Significant
Unobservable
Inputs
(Level 3)As of March 31, 2023 Money market funds $ 53,868 $ 53,868 $ — $ — U.S. Treasury and agency securities 51,358 51,358 — — Commercial paper 72,066 — 72,066 — Corporate debt securities 17,354 — 17,354 — As of December 31, 2022 Money market funds $ 54,662 $ 54,662 $ — $ — U.S. Treasury and agency securities 31,458 31,458 — — Commercial paper 134,954 — 134,954 — Corporate debt securities 8,838 — 8,838 — andany investments between levels in the fair value hierarchy during the first quarter of 2019 or 2018.20192023 and December 31, 2018,2022, the carrying amounts of the Company’s financial instruments, which include cash, restricted cash, prepaid and other current assets, interest receivable, accrued research and securities receivable,development expenses, accounts payable and accrued expenses and other current liabilities, approximate fair values because of their short maturities.Interest and securities20192023 and December 31, 2018, was $11.2 million and $0.6 million, respectively, and2022. Interest receivable is recorded as a component of prepaid expenses and other current assets on the condensed consolidated balance sheets. Securities receivable reflecttiming differencescarrying value of maturities or settlementsthe Credit Facility approximates fair value. The Company estimates the fair value of investmentslong-term debt utilizing an income approach. The Company uses a present value calculation to discount principal and interest payments and the ultimate reinvestmentfinal maturity payment on these liabilities using a discounted cash flow model based on observable inputs. The debt instrument is then discounted based on what the current market rates would be as of such amounts.We invest ourdebt instruments of corporations and commercial obligations,paper, which we classifyare classified as available-for-sale investments. These investments are carried at fair value and are included in the tables above. below. The Company evaluates securities with unrealized losses to determine whether such losses, if any, are other than temporary.due to credit-related factors. Realized gains and losses are calculated using the specific identification method and recorded as interestin other income or expense. We do(expense) in the Company's condensed consolidated statement of operations and comprehensive loss. The Company does not generally intend to sell the investments and it is not more likely than not that wethe Company will be required to sell the investments before recoveryrecover of their amortized cost bases, which may be at maturity.for the three months endedas of March 31, 20192023 and December 31, 2022 are as follows (in thousands):Amortized
CostGross
Unrealized
GainsGross
Unrealized
LossesTotal
Fair ValueAs of March 31, 2023 As of March 31, 2023 U.S. Treasury and agency securities U.S. Treasury and agency securities $ 51,340 $ 18 $ — $ 51,358 Corporate debt securities Corporate debt securities 17,346 8 — 17,354 Commercial paper Commercial paper 67,936 — (34) 67,902 Total marketable securities Total marketable securities $ 136,622 $ 26 $ (34) $ 136,614 Number of securities with unrealized losses Number of securities with unrealized losses 12 As of December 31, 2022 As of December 31, 2022 U.S. Treasury and agency securities U.S. Treasury and agency securities $ 31,445 $ 13 $ — $ 31,458 Corporate debt securities Corporate debt securities 8,876 — (38) 8,838 Commercial paper 103,508 — (99) 103,409 Total marketable securities $ 143,829 $ 13 $ (137) $ 143,705 Number of securities with unrealized losses Number of securities with unrealized losses 16 Noneinvestments have been in a gross unrealized loss for a period greater than 12 months. Company classified $4.2 million and $31.5 million, respectively, of assets with original maturities of 90 days or less as cash and cash equivalents.we performthe Company performs an evaluation of impairment to determine if any unrealized losses are other-than-temporary.due to credit-related factors. The Company records an allowance for credit losses when unrealized losses are due to credit-related factors. Factors considered in determining whether a loss is other-than-temporarywhen evaluating available-for-sale investments for impairment include the lengthseverity of time and extent to which fair value has been less than the cost basis,impairment, changes in underlying credit ratings, the financial condition of the issuer, the probability that the scheduled cash payments will continue to be made and ourthe Company’s intent and ability to hold the investment until recovery of the amortized cost basis. We intendThe Company intends and havehas the ability to hold ourits investments in unrealized loss positions until their amortized cost basis has been recovered. Further, based on our evaluation, we determined that unrealized losses were not other-than-temporary atAs of March 31, 20192023 and December 31, 2018.2019,2023, were as follows (in thousands):Estimated
Fair ValueLess than one year $ 136,614 Greater than one year — Total $ 136,614 We haveourits cash equivalents and short-term investmentsmarketable securities to meet ourits liquidity needs in the next 12 months. Accordingly, those investmentscontractual maturities greater thanMidCap Financial Trust (“MidCap”), as agent and lender, and the additional lenders party thereto from time to time (together with MidCap, the “Lenders”), pursuant to which the Lenders, agreed to make term loans available to the Company for working capital and general business purposes, in a principal amount of up to $150.0 million in term loan commitments, including a $30.0 million term loan that was funded at the closing date, with the ability to access the remaining $120.0 million in two additional tranches (each $60.0 million), subject to specified availability periods, the achievement of certain clinical development milestones, minimum cash requirements and other customary conditions. The Company did not achieve the clinical development milestone required to access one year fromof the date$60.0 million tranches, and access to the other $60.0 million tranche expired on December 31, 2022. The Company, GB001, Inc., GB002, Inc., and GB004, Inc., each wholly-owned subsidiaries of purchasethe Company, are classifieddesignated as current assetsco-borrowers to theaccompanying condensed consolidated balance sheets.5. Convertible Note FinancingOn October 2, 2017,term loan for all payment dates prior to July 1, 2022. The term loans under the Credit Facility began amortizing on July 1, 2022, with equal monthly payments of principal plus interest being made by the Company issuedto the Lenders in consecutive monthly installments following such interest-only period until the Credit Facility matures on January 1, 2025. Upon final repayment of the term loans, the borrower must pay an exit fee of 1.75% of the amount borrowed under the Credit Facility, less any partial exit fees previously paid. Upon partial prepayment of a convertible promissory note (the “Note”)portion of the term loans, the borrower must pay a partial exit fee of 1.75% of the principal being prepaid. At the borrower’s option, the borrower may prepay the outstanding principal balance of the term loan in whole or in part, subject to a prepayment fee of 3.00% of any amount prepaid if the prepayment occurs through and including the first anniversary of the second amendment effective date, 2.00% of the amount prepaid if the prepayment occurs after the first anniversary of the second amendment effective date through and including the second anniversary of the second amendment effective date, and 1.00% of any amount prepaid after the second anniversary of the second amendment effective date and prior to January 1, 2025. $6.0 million to an investor. The Note accrued interest at 8% per year and had a maturity date of October 2, 2018. The Note was subject to an automatic conversion upon a qualified equity financing defined as a raise of $40.0 million, excluding the conversion of the Note and other indebtedness. The conversion was equal to the outstanding principal amount of the Noteterm loans. As of March 31, 2023, the Company was in compliance with these covenants.March 31, 2023 December 31, 2022 Debt, current portion $ 11,613 $ 11,613 Debt, non-current portion 9,677 12,581 Total debt 21,290 24,194 Less: unamortized debt discount and issuance costs (456) (593) Debt, net $ 20,834 $ 23,601 March 31, 2023 2023 (remaining 9 months) $ 8,709 2024 11,613 2025 968 Total $ 21,290 accrued and previously unpaid interest thereon, divided byindebtedness under the lowestCredit Facility.paidof the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; (4) if the Company calls such notes for redemption; and (5) at any time from, and including, March 1, 2027 until the close of business on the scheduled trading day immediately before the maturity date.investormeasuring the fair value of similar debt instruments that do not have associated convertible features. The carrying amount of the equity component representing the conversion option was $53.5 million and was determined by deducting the fair value of the liability component from the par value of the 2027 Notes. The equity component was not re-measured as long as it continued to meet the conditions for qualified equity financing. On January 4, 2018,classification. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) was amortized to interest expense over the term of the 2027 Notes. The debt discount is amortized to interest expense over the term of the 2027 Notes at an effective interest rate of 11.17% over the contractual terms of the 2027 Notes.converted into 3,499,209 shares2 for the impact of Series A Convertible Preferred Stock.10March 31, 2023 December 31, 2022 Principal amount $ 200,000 $ 200,000 Unamortized debt discount (3,818) (4,021) Unamortized debt issuance cost (257) (270) Net carrying amount $ 195,925 $ 195,709 Three months ended March 31, 2023 2022 Contractual interest expense $ 2,500 $ 2,500 Amortization of debt discount 202 191 Amortization of debt issuance cost 14 13 Total interest expense related to the 2027 Notes $ 2,716 $ 2,704 statementstatements of operations and comprehensive loss for the three months ended March 31, 2019.Acquisition of (GB002)GB002seralutinib and certain backup compounds for the treatment, prevention and diagnosis of any and all disease or conditions. The Company also has the right to sublicense its rights under the license agreement, subject to certain conditions.U.S. Food and Drug Administration (“FDA”)FDA approval process, and the Company intends to further develop the assets acquired through potential FDA approval as evidenced by the milestone arrangement in the contract. The development activities cannot be performed without significant cost and effort by the Company. The agreement will remain in effect from the effective date, unless terminated earlier, until, on a licensed product-by-licensed product and country-by-country basis, the later of ten years from the date of first commercial sale or when there is no longer a valid patent claim covering such licensed product or specified regulatory exclusivity for the licensed product in such country. The Company is obligated to make future development and regulatory milestone payments of up to $63.0$58.0 million, which includes a payment of $10.0 million due upon initiation of the first Phase 3 clinical trial, commercial milestone payments of up to $45.0 million, and sales milestone payments of up to $190.0 million. The Company is also obligated to pay tiered royalties on sales for each licensed product, at percentages ranging from the mid-single digits to the high single-digits. In addition, if the Company chooses to sublicense or assign to any third parties its rights under the agreement with respect to a licensed product, or the Company’s seralutinib operating subsidiary undergoes a change of control, the Company must pay to Pulmokine a specified percentage of all revenue to be received in connection with such transaction. The Company made an upfront payment of $5.5 million in October 2017,2017. In December 2020, the Company accrued a milestone payment of $5.0 million in connection with the initiation of the first Phase 2 clinical trial of seralutinib, which was recorded as IPR&D.paid in January 2021. As of March 31, 2019,2023, no other milestones had been accrued as the underlying contingencies had not yet been met.AA Biopharma Inc. Acquisition (GB001)January 4, 2018, the Company acquired AA Biopharma Inc. pursuant toJuly 15, 2022, we completed a merger agreement, and with the acquisition acquired the rights to GB001 and certain backup compounds. In connection with the merger agreement, the Company issued an aggregateprivate placement of 20,000,00016,649,365 shares of Series Seed Convertible Preferred Stock and 1,101,278our common stock at purchase price of $7.21 per share. The gross proceeds for the private placement were approximately $120.1 million, before deducting offering expenses. On August 9, 2022, we filed a registration statement on Form S-3 registering the shares of common stock issued in the private placement, which registration statement became automatically effective on August 9, 2022.the AA Biopharma shareholders. The Company recorded IPR&D of $19.3 million in January 2018 in connection with the acquisition of AA Biopharma.Acquisition of License from Aerpio Pharmaceuticals, Inc. (GB004)On June 24, 2018, the Company entered into a license agreement with Aerpio Pharmaceuticals, Inc. (“Aerpio”) under which the Company was granted an exclusive worldwide license and sublicense to certain intellectual property rights owned or controlled by Aerpio to develop and commercialize GB004, and certain other related compounds for all applications. The Company also has the right to sublicense its rights under the license agreement, subject to certain conditions. The Company is obligated to make future development and regulatory milestone payments of up to $55.0 million, commercial milestone payments of up to $85.0 million and sales milestone payments of up to $260.0 million. The Company is also obligated to pay tiered royalties on sales for each licensed product, at percentages ranging from a high single-digit to mid-teens, subject to certain customary reductions. The Company made an upfront payment of $20.0 million in June 2018, which represented the purchase consideration for an asset acquisition. As of March 31, 2019, no milestones had been accrued as the underlying contingencies had not yet been met.Adhaere Pharmaceuticals, Inc. Acquisition (GB1275)On September 21, 2018, the Company acquired Adhaere Pharmaceuticals, Inc. (“Adhaere”) pursuant to a merger agreement for an upfront payment of $7.5 million in cash, and with the acquisition acquired the rights to GB1275 and certain backup compounds. The Company is obligated to make future regulatory, development and sales milestones of up to $62.0 million and pay tiered royalties on worldwide net sales, at percentages ranging from low to mid-single digits, subject to customary reductions. In September 2018, the Company recorded IPR&D of $7.5 million in connection with the acquisition of Adhaere. As of March 31, 2019, no milestones had been accrued as the underlying contingencies had not yet been met.The Company recorded the following IPR&D expense on the condensed consolidated statements of operations (in thousands):
Repurchase7. Stockholders’ Equity (Deficit)In connection with the Company’s IPO, the outstanding shares of the Company’s Series Seed, Series A, and Series B Convertible Preferred Stock automatically converted into 30,493,460 shares of common stock.Common Stock$4,100.$4,100 (the "founder shares"). On January 4, 2018, incremental vesting conditions were placed on the previously issued founder shares. Fifty percent of the previously issued founder shares vested on January 4, 2018, and the remaining founder shares are subject to vesting restrictions over a period of five years.$300$300.0 million in equity capital, including the capital raised in the Series A financing.Each share of common stock is entitled one vote. Common stock owners are entitled to dividends when funds are legally available and declared by the Board.Shares of Common Stock Subject to RepurchaseIn November 2017, in connection with the issuance of the Series A Convertible Preferred Stock, certain employees entered into stock restriction agreements, whereby 1,305,427 shares are subject to forfeiture by the Company upon the stockholder’s termination of employment or serviceemployment. During the year ended December 31, 2022, no shares were forfeited due to the Company. In January 2018, the Company’s founders entered into stock restriction agreements, whereby 4,580,444 of previously unrestricted shares of common stock were subject to service vesting conditions. These shares are also subject to forfeiture by the Company upon the stockholders’ termination of employment or service to the Company.employment. Any shares subject to repurchase by the Company are not deemed, for accounting purposes, to be outstanding until those shares vest. As such, the Company recognizes the measurement date fair value of the restricted stock over the vesting period as compensation expense. As of March 31, 20192023 and December 31, 20182022, no shares and 55,227 shares of common stock, respectively, were subject to repurchase by the Company was 5,862,450 shares and 7,482,032 shares, respectively.Company. The unvested stock liability related to these awards is immaterial to all periods presented.8.Approval of the 1231st31 of the preceding calendar year or such lesser amount as determined by the Company’s board of directors. As of March 31, 2019,2023, an aggregate of 3,359,8561,054,621 shares of common stock were available for issuance under the 2019 PlanPlan. As of March 31, 2023 and 2,390,144December 31, 2022, 19,695,296 and 16,199,202 shares of common stock, respectively, were subject to outstanding awards under the 2019 Plan.Approval of the ten-yearsten years of the term of the ESPP, beginning with January 1, 2020 and ending with January 1, 2029, by an amount equal to 1% of the outstanding number of shares of the Company’s common stock on December 31st31 of the preceding calendar year or such lesser amount as determined by the Company’s board of directors. During the three months ended March 31, 2023, 249,623 shares were issued pursuant to the ESPP. As of March 31, 2019,2023, an aggregate of 700,0003,146,016 shares of common stock were available for issuance under the ESPP.At As of March 31, 2019, 6,285,4782023 and December 31, 2022, 2,530,957 and 2,582,771 shares of common stock, respectively, were subject to outstanding awardsoptions under the 2017 Plan.prioruses its own volatility to the IPO on February 12, 2019, wasextent it has sufficient trading history, and for awards in which sufficient trading history is not available, a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected volatility based on the historical volatility of a publicly traded set of peer companies.group is used. Due to the lack of historical exercise history, the expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method for awards. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.2019:2023:Shares Subject to
Options OutstandingWeighted-
Average Shares Weighted-
Average
Exercise
PriceRemaining
Contractual
Life
(Years)Aggregate
Intrinsic Value(in thousands) Outstanding as of December 31, 2022 17,487,165 $ 9.24 8.1 $ 47 Options granted 4,620,560 $ 1.22 Options exercised — $ — Options forfeited/cancelled (425,808) $ 8.34 Outstanding as of March 31, 2023 21,681,917 $ 7.54 8.1 $ 227 Options vested and expected to vest as of March 31, 2023 21,681,917 $ 7.54 8.1 $ 227 Options exercisable as of March 31, 2023 8,140,578 $ 12.19 6.4 $ — 20192023 and the exercise price of the stock options. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2023 and 2022 was $0.0 million and $0.2 million, respectively.20192023 and 2022 was $21.74. At$0.81 and $8.53, respectively.2019,2023 and 2022 was $15.9 million and $10.4 million, respectively.Number of
Restricted
Stock Units
OutstandingWeighted-
Average
Grant Date
Fair ValueNonvested at December 31, 2022 1,350,035 $ 10.83 Granted — — Vested (771,293) 10.69 Forfeited (34,406) 11.15 Nonvested at March 31, 2023 544,336 $ 10.99 option awards granted was $55.7$5.2 million, which the Company expects to recognize over a weighted-average period of approximately 3.50.9 years.
Stock-Based Compensation ExpenseRestricted StockThe summary of the Company’s restricted stock activity is as follows:At March 31, 2019, the total unrecognized compensation related to unvested restricted stock awards granted was $16.9 million, which the Company expects to recognize over a weighted-average period of approximately 3.8 years.Three months ended March 31, 2023 2022 Research and development $ 4,690 $ 6,618 General and administrative 3,437 4,365 Total stock-based compensation expense Total stock-based compensation expense $ 8,127 $ 10,983 For the three months ended2019 and 2018, $3.12023, the total unrecognized compensation related to unvested stock option awards granted was $41.4 million, and $0.6 million, respectively,which the Company expects to recognize over a weighted-average period of approximately 2.5 years.stock-basedtotal unrecognized compensation expense related to the issuanceESPP was $2.1 million, which the Company expects to recognize over a weighted-average period of the anti-dilution shares.9.approximately 0.9 years.December 2024January 2025 for the initial leased space and December 2022 for the expansion space leased pursuant to an amendment to the lease agreement entered into in August 2018. In February 2022, the Company exercised its renewal option to extend the term of the expansion space until January 2025. The sublease agreement included options to extend for the entire premises through October 2028. The options to extend must be exercised prior to the termination of the original lease agreement. The period covered by the options was not included in the non-cancellable lease term as it not was not determined to be reasonably certain to be executed. The lease agreement also includes a one-time termination option for the expansion space only whereby the Company can terminate the lease with advance written notice. The termination option was not determined to be reasonably certain to be executed. The lease is subject to charges for common area maintenance and other costs, and base rent is subject to an annual 3% increase each subsequent year. Costs determined to be variable and not based on an index or rate were not included in the measurement of the operating lease liabilities.lease.leases. The operating lease isleases are included in the condensed consolidated balance sheet at the present value of the lease payments at a 7%weighted average discount rate of 7% using the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment as the leases do not provide an implicit rate. TheAs of March 31, 2023, the weighted average remaining lease term was 5.01.8 years.Three months ended March 31, 2023 2022 Operating lease cost $ 778 $ 761 Short-term lease cost 13 10 Total lease cost $ 791 $ 771 1420192023 and 2022 was $1.2 million.2019,2023, were as follows (in thousands):Undiscounted Rent
PaymentsYear ending December 31 2023 (remaining 9 months) $ 2,492 2024 3,419 2025 144 Total undiscounted rent payments $ 6,055 Present value discount (350) Present value of lease payments $ 5,705 Current portion of operating lease liabilities (included as a component of accrued expenses and other current liabilities) 3,060 Noncurrent operating lease liabilities 2,645 Total operating lease liability $ 5,705 Future minimum lease payments under non-cancelable operating leases at December 31, 2018 were as follows (in thousands):20182023 and 2022, the Company recorded approximately $0.5$0.9 million in rent expense.LitigationThe Company is notpartystock option repricing (the “Option Repricing”) whereby the exercise price of each Eligible Option (as defined below) was immediately reduced to any material legal proceedings$1.36 per share, the closing stock price on May 5, 2023. For purposes of the Option Repricing, “Eligible Options” are 6,825,335 outstanding stock options as of May 5, 2023 (vested or unvested) granted under the 2019 Plan prior to November 30, 2022 and is not awareheld by those eligible employees of any pending or threatened claims. From time to time, the Company may beidentified by the Board, including the Company’s executive officers except for Faheem Hasnain, the Company’s Chairman and Chief Executive Officer. The Board and Mr. Hasnain collectively determined that Mr. Hasnain would not participate in the Option Repricing.various legal proceedingstheir agreement to cancel a portion of their Eligible Options effective immediately (the “Cancelled Options”). Each executive was required to agree to cancel one-third of their Eligible Options, on a grant-by-grant basis. The Cancelled Options were deducted proportionately from the vested and claims that arise inunvested portions of each Repriced Option grant.ordinary course of its business activities.10. Subsequent EventsOn May 2, 2019, the Company and its wholly-owned subsidiary GB001, Inc., as borrower, entered into a credit, guaranty and security agreement (the “Credit Facility”) agented by MidCap Financial Trust (“MidCap”) and the additional lenders party thereto from time to time (together with MidCap, the “Lenders”), pursuant to which the Lenders, including affiliates of MidCap and Silicon Valley Bank, agreed to make term loans availableextent an Eligible Option is exercised prior to the Company for working capital and general business purposes,Premium End Date (as defined below), or the eligible employee’s employment terminates prior to the Premium End Date, the eligible employee will be required to pay the original exercise price per share of the Eligible Options. The “Premium End Date” means the earliest of (i) May 5, 2024, (ii) the date of a change in a principal amount of up to $150.0 million in term loan commitments, including a $30.0 million term loan which was funded atcontrol, (iii) the closing date, with the ability to access the remaining $120.0 million in three additional tranches (of $40.0 million, $30.0 million and $50.0 million, respectively),eligible employee’s death or disability, or (iv) if an eligible employee is an executive subject to specified availability periods, the achievement of certain clinical development milestones, minimum cash requirements and other customary conditions. The Credit Facility is secured by substantially all of the Company’s and its domestic subsidiaries’ personal property, including intellectual property, and includes affirmative and negative covenants applicable to the Company.Each term loan under the Credit Facility bears interest at an annual rate equal to the sum of (i) one-month LIBOR (customarily defined, with a change to prime rate if LIBOR funding becomes unlawful or impractical) plus (ii) 6.15%, subject to a LIBOR floor of 2.00%. The Company is required to make interest-only payments on the term loan for all payment dates prior to June 1, 2021. The15term loans under the Credit Facility will begin amortizing on June 1, 2021, with equal monthly payments of principal plus interest being made by the Company to the Lenders in consecutive monthly installments following such interest-only period for 36 months or, for any funding of the fourth tranche occurring after June 1, 2021, the number of months until the Credit Facility matures on May 1, 2024. Upon final repayment of the term loans, the Company must pay an exit fee of 1.75% of the amount borrowed under the Credit Facility, less any partial exit fees previously paid. Upon partial prepaymentcancellation of a portion of Eligible Options and is terminated under circumstances giving rise to severance under his or her employment agreement, the term loans,date of such termination. Except for the Company must pay a partial exit fee of 1.75%reduction in the exercise prices of the principal being prepaid. AtEligible Options as described above, the Company’s option,Eligible Options will retain their existing terms and conditions as set forth in the Company may prepay2019 Plan and the outstanding principal balanceapplicable award agreements.20182022 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on March 22, 2019.strategy, prospective products, product approvals,strategies and plans, research and development plans, the anticipated timing, costs, design and conduct of our ongoing and planned preclinical studies and planned clinical trials for our product candidates, the timing and likelihood of regulatory filings and approvals for our product candidates, the impact of COVID-19 on our business, timing and likelihood of success, plans and objectives of management for future operations and future results of anticipated products, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.1722, 2019.17, 2023. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.discovering, acquiring, developing and commercializing therapeuticsseralutinib for the treatment of pulmonary arterial hypertension, or PAH. In December 2022, we announced positive topline results from the Phase 2 TORREY Study in PAH patients. Upon completion of the 24-week blinded portion of the Phase 2 TORREY Study, patients were able to enroll into an open-label extension trial. We anticipate reporting results from this ongoing open-label extension trial in the middle of 2023. We expect to initiate a Phase 3 program in PAH in the third quarter of 2023. We expect to begin clinical development of seralutinib for the treatment of pulmonary hypertension associated with interstitial lung disease areasin the first half of immunology, inflammation2024. We have decided to terminate all ongoing studies and oncology. Our goal is to be an industry leader in eachdiscontinue development of these therapeutic areas and enhance and extend the lives of patients suffering from such diseases. To accomplish this goal, weGB5121. We have assembled a deeply experienced and highly skilled group of industry veterans, scientists, clinicians and key opinion leaders from leading biotechnology and pharmaceutical companies, as well as leading academic centers from around the world. Our collective immunologyemployees are a team of highly dedicated, passionate individuals who pride themselves on a culture of respect, humility, transparency, inclusion, dedication, collaboration and translational discoveryfun. Our ultimate goal is to enhance and development expertise serves asextend the foundationlives of our company.We are pursuing product candidates with strong scientific rationale to address indications where there is both a high unmet need and an opportunity to develop best-in-class or first-in-class programs. We currently have three clinical-stage product candidates, in addition to multiple preclinical programs. We commenced a Phase 2b clinical trial for our most advanced product candidate, GB001, in moderate-to-severe eosinophilic asthma in October 2018 and expect to conduct an interim analysis in the first half of 2020. If the interim analysis is positive, we plan on initiating a Phase 3 clinical trial thereafter. We recently began screening patients in a proof-of-concept Phase 2 clinical trial of GB001 in patients with chronic rhinosinusitis, both with and without nasal polyps, and expect to initiate a proof-of-concept Phase 2 clinical trial of GB001 in patients with chronic spontaneous urticaria in the second half of 2019. We are developing GB002 for the treatment of pulmonary arterial hypertension, or PAH. We plan to commence screening patients for a Phase 1b clinical trial in PAH in the second quarter of 2019 and initiate a Phase 2/3 clinical trial in PAH in the second half of 2019. We are developing GB004 for the treatment of inflammatory bowel disease, including ulcerative colitis, or UC, and Crohn’s disease. We recently began screening patients in a Phase 1b clinical trial in mild-to-moderate UC patients with active disease symptoms and histology and expect to commence enrollment in this study in the second quarter of 2019. We also plan to initiate a Phase 2 clinical trial in UC in the first half of 2020. Our most advanced preclinical product candidate, GB1275, is an oral small molecule, CD11b modulator in preclinical development for the treatment of oncology indications. We submitted an Investigational New Drug Application, or IND, for GB1275 to the U.S. Food and Drug Administration, or FDA. Subject to the FDA 30-day review period of the IND, we plan to initiate a Phase 1/2 clinical trial for GB1275 in the second half of 2019 in solid tumor indications as a monotherapy and in combination with either an anti-PD-1 therapy or chemotherapy.early clinical trials. We have funded our operations primarily through equity and debt financings. We raised $601.3$1,062.1 million from October 2017 through April 2019March 31, 2023 through the sale of Series A and Series B convertible preferred stock financings, aissuance of convertible note financing, andnotes, proceeds from our initial public offering, or IPO completed in February 2019. In addition, we received $12.8 million2019, proceeds from our Credit Facility, proceeds from our concurrent underwritten public offerings of 5.00% convertible seniorcashMay 2020, and proceeds from a private placement of our common stock in connection with the January 2018 acquisition of AA Biopharma Inc., of which Pulmagen Therapeutics (Asthma) Limited is a wholly-owned subsidiary.July 2022. As of March 31, 2019,2023, we had $481.2$201.9 million in cash, cash equivalents and marketable securities.On February 12, 2019, we closed our IPO and the underwriters in the IPO purchased 19,837,500 shares, including the full exercise of their option to purchase additional shares of common stock. The net proceeds were $291.3 million, after deducting underwriting discounts and commissions and estimated offering costs.20192023 and 2018,2022, our net loss was $32.6$49.2 million and $26.0$57.8 million, respectively. As of March 31, 2019,2023, we had an accumulated deficit of $186.5$1,081.4 million. We expect our expenses and operating losses will increase substantially as we conduct our ongoing and planned clinical trials, continue our research and development activities and conduct preclinical studies, and seek regulatory approvals for our product candidates, as well as hire additional personnel, protect our intellectual property and incur additional costs associated with being a public company. In addition, as our product candidates progress through development and toward commercialization, we will need to make milestone payments to the licensors and other third parties from whom we have in-licensed or acquired our product candidates, including GB002 and GB004.seralutinib. Our net losses may fluctuate18have relatedrelate primarily to preclinical and clinical development of our product candidates and discovery efforts.efforts, as well as our discontinued clinical product candidates. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. For the three months ended March 31, 2019, the majority of our third-party expenses related to the research and development of GB001, GB002 and GB004. We deploy our personnel and facility related resources across all of our research and development activities. We track external costs and personnel expense on a program-by-program basis and allocate common expenses, such as facility related resources, to each program based on the personnel resources allocated to such program. Stock-based compensation and personnel and common expenses not attributable to a specific program are considered unallocated research and development expenses.plan to substantially increaseexpect our research and development expenses for the foreseeable future to remain relatively flat as we continue the development of our product candidates and conduct discovery and research activities for our preclinical programs. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future preclinical studies and clinical trials of our product candidates due to the inherently unpredictable nature of preclinical and clinical development. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future preclinical studies and clinical trials, regulatory19in process research and developmentIPR&D acquired as part of an asset acquisition or in-license for which there is no alternative future use, are expensed as incurred.IPR&D expenses consist of our upfront payments made to Pulmokine, Inc., in connection with the in-license of GB002, the value of our stock issued to former AA Biopharma Inc. shareholders, in connection with the acquisition of GB001, and our upfront payments made to Aerpio Pharmaceuticals, Inc., or Aerpio, in connection with the in-license of GB004, our upfront payments made to Adhaere Pharmaceuticals, Inc., or Adhaere, in connection with the acquisition of GB1275, and upfront payments made in connection with the acquisition of our other preclinical programs.will increase for the foreseeable future to remain relatively flat to support our expandedcurrent infrastructure and increasedcontinued costs of operating as a public company. These increasesexpenses will likely include increased expenses related to audit, legal,the convertible promissory note issued in October 2017,our Credit Facility and (3)our 2027 Notes, and (4) other miscellaneous income (expense). The note converted into shares of our Series A convertible preferred stock in January 2018.U.S. generally accepted accounting principles in the United States, or GAAP. The preparation of these financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. During the three months ended March 31, 2019,2023, there have been no significant changes in our critical accounting policies and estimates as discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K filed with the SEC on March 22, 2019.20192023 and 201820192023 and 2018:2022:Three months ended March 31, 2023 vs 2022 2023 2022 Change (in thousands) Operating expenses: Research and development $ 37,795 $ 42,322 $ (4,527) In process research and development 15 20 (5) General and administrative 10,132 12,001 (1,869) Total operating expenses 47,942 54,343 (6,401) Loss from operations (47,942) (54,343) 6,401 Other income (expense) Other income (expense) Interest income 587 224 363 Interest expense (3,500) (3,467) (33) Other income (expense), net Other income (expense), net 1,690 (199) 1,889 Total other income (expense), net Total other income (expense), net (1,223) (3,442) 2,219 Net loss $ (49,165) $ (57,785) $ 8,620 $25.0$37.8 million for the three months ended March 31, 2019,2023, compared to $2.6$42.3 million for the three months ended March 31, 2018,2022, for an increasea decrease of $22.4$4.5 million, which was primarily attributable to an increasea decrease of $8.1$11.3 million of costs associated with preclinical studies for other terminated programs and a decrease of $1.8 million of costs associated with preclinical studies and clinical trials for GB001,other programs, offset by an increase of $5.4$5.8 million of costcosts associated with preclinical studies and clinical trials for GB002, $4.4seralutinib and an increase of $2.8 million of costcosts associated with preclinical studies and clinical trials for GB004, and $3.8 millionGB5121.20192023 and 2018:2022:Three months ended March 31, 2023 2022 (in thousands) Seralutinib $ 17,950 $ 12,154 GB5121 12,315 9,512 Other programs 6,993 8,812 Other terminated programs 537 11,844 Total research and development $ 37,795 $ 42,322 21$1.0$10.1 million for the three months ended March 31, 2019,2023, compared to $20.9$12.0 million for the three months ended March 31, 2018,2022, for a decrease of $19.9$1.9 million, which was primarily attributable to our $19.3a $0.9 million decrease in stock-based compensation expense, a decrease of costs associated with the issuance$0.5 million in professional services expense and a decrease of our stock$0.2 million in connection with our acquisition of GB001 and AA Biopharma in the first quarter of 2018.General and administrativeGeneral and administrative expenses were $8.0insurance costs.2019,2023, compared to $2.6other expense, net of $3.4 million for the three months ended March 31, 2018,2022, for an increasea decrease of $5.4$2.2 million, which was primarily attributable to a $1.3 millionan increase in stock-based compensation costs, $1.8 million increase in personnel-related costs, and $1.6 million increase in professional and legal fees.Other income, netOther income, net was $1.4 million for the three months ended March 31, 2019, compared to $0.1 million for the three months ended March 31, 2018, related to $1.0 million increase in interest income earned on our cash, cash equivalents and marketable securities during the period and $0.4 million in other income.20192023, we had an accumulated deficit of $186.5$1,081.4 million.the three months ended March 31, 2019,2023, our operations have been financed primarily by gross proceeds of $601.3$1,062.1 million from the sale of our convertible preferred stock, issuance of convertible promissory notenotes, proceeds from our IPO, proceeds from our Credit Facility, proceeds from our concurrent underwritten public offerings of 2027 Notes and common stock, and proceeds from our IPO.private placement of common stock. As of March 31, 2019,2023 we had cash, cash equivalents and marketable securities of $481.2$201.9 million.On February 12, 2019, we closed our IPO and the underwriters in the IPO purchased 19,837,500 shares, including the full exercise of their option to purchase additional shares of common stock. The net proceeds from the IPO were $291.3 million, after deducting underwriting discounts and commissions and estimated offering costs. In connection with the closing of the IPO, the outstanding shares of our convertible preferred stock were converted into shares of common stock at a ratio of 4.5-to-one. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to capital preservation and liquidity.threetwo additional tranches (of $40.0 million, $30.0 million and $50.0 million, respectively)(each $60.0 million), subject to specified availability periods, the achievement ofconditions.20192023 and 2018,2022, respectively:Three months ended March 31, 2023 2022 (in thousands) Net cash used in operating activities $ (52,989) $ (53,483) Net cash provided by investing activities 8,722 8,420 Net cash provided by (used in) financing activities (2,536) 721 Effect of exchange rate changes on cash and cash equivalents 72 (154) Net decrease in cash and cash equivalents $ (46,731) $ (44,496) 2019,2023, operating activities used approximately $27.8$53.0 million of cash, primarily resulting from a net loss of $32.6$49.2 million reduced byand changes in processaccrued research and development expenses of $1.0 million, changes in22operating assets and liabilities of $0.5$4.1 million and stock-based compensation expense of $3.1 million. Net cash provided by changes in operating assets and liabilities consisted primarily of changes in accounts payable, accrued research and development expenses, and other assets of $6.3 million, offset by changes in prepaid expenses due to prepayments for clinical development activities and security deposits, accrued expenses and accrued compensation and benefits of $16.3$8.1 million, reduced by stock-based compensation expense of $8.1 million.2018,2022, operating activities used approximately $3.2$53.5 million of cash, primarily resulting from a net loss of $26.0 million, offset by IPR&D costs of $20.9$57.8 million and net changes in operating assetsaccrued compensation and liabilitiesbenefits of $0.8$5.8 million, reduced by stock-based compensation expense of $11.0 million.2019,2023, investing activities provided approximately $8.7 million of cash, primarily resulting from the maturities of marketable securities of $85.6 million, offset by the purchases of marketable securities of $76.9 million.approximately $198.1$2.5 million of cash, primarily resulting from the principal repayments of long-term debt of $2.9 million, offset by proceeds from the purchase of shares pursuant to the ESPP of $0.4 million.marketable securities of $222.3 million, purchase of long-term investments of $48.9 million,shares pursuant to the ESPP and the purchase of property and equipment of $0.3 million.During the year ended March 31, 2018, investing activities used approximately $10.7 million of cash, primarily resulting from the upfront payment of $1.8 million in connection with the acquisition of a preclinical program, the acquisition of $12.9 million in cash from the purchase of research and development licenses, and the purchase of property and equipment of $0.5 million.Financing activitiesDuring the three months ended March 31, 2019, financing activities provided $291.3 million of cash, primarily resulting from the net proceeds from our IPO.During the three months ended March 31, 2018, financing activities provided $71.9 million of cash, primarily resulting from the net proceeds from the issuanceexercise of our Series A convertible preferred stock.months.months from the date these condensed consolidated financial statements were available to be issued. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Additionally, the process of testing product candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain. andacquire.23Contractual Obligations and CommitmentsUnder our license agreements with Pulmokine and Aerpio, as well as our other license and acquisition agreements, we have payment obligations that are contingent upon future events such as our achievement of specified development, regulatory and commercial milestones and are required to make royalty payments in connection with the sale of products developed under those agreements. As of March 31, 2019, we were unable to estimate the timing or likelihood of achieving the milestones or making future product sales and, therefore, any related payments are not included in the table above.We enter into contracts in the normal course of business with clinical trial sites and clinical supply manufacturers and with vendors for preclinical studies, research supplies and other services and products for operating purposes. These contracts generally provide for termination after a notice period, and, therefore, are cancelable contracts. During the three months ended March 31, 2019, there have been no material changes outside of the ordinary course of business in the composition of these contractual obligations or commitments as discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations and Commitments” in our Annual Report on Form 10-K filed with the SEC on March 22, 2019.Off-Balance Sheet ArrangementsWe did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under the rules and regulations of the SEC.JOBS ActAs an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, we can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. We intend to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of Sarbanes-Oxley.We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the consummation of our IPO, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year, or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.2019,2023, there have been no material changes surrounding our market risk, including interest rate risk, foreign currency exchange risk, and inflation risk, from the discussion provided in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 20182022 filed with the SEC on March 22, 2019.17, 2023.20192023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.2520182022 filed with the SEC on March 22, 2019, other than17, 2023, except as follows:risk factor set forth below.The termsservices of our credit facility place restrictionsmanagement and other clinical and scientific personnel, and if we are not able to retain these individuals or recruit additional management or clinical and scientific personnel, our business will suffer.operatingcontinued ability to attract, retain and financial flexibility.On May 2, 2019, we entered into a credit, guarantymotivate highly qualified management, clinical and security agreement,scientific personnel. We are highly dependent upon our senior management, particularly our Chief Executive Officer, as well as our senior scientists and other members of our senior management team. The loss of services of any of these individuals could delay or prevent the successful development of seralutinib, initiation or completion of our planned clinical trials or the Credit Facility, agented by MidCap Financial Trust,commercialization of seralutinib. For example, effective November 16, 2020, Faheem Hasnain was appointed as our President and Chief Executive Officer, replacing Sheila Gujrathi, M.D., and in 2021, we appointed three new members to our executive team. Executive leadership transitions can be inherently difficult to manage and, as a result, we may experience disruption or MidCap, and the additional lenders party thereto from time to time, that is secured by substantially allhave difficulty in maintaining or developing our business. Although we have executed employment agreements or offer letters with each member of our senior management team, these agreements are terminable at will with or without notice and, our domestic subsidiaries’ personal property, including intellectual property. The outstanding principal balance under the credit facility was $30.0 million at the closing of the Credit Facility on May 2, 2019.The credit facility includes affirmative and negative covenants applicable to us. The affirmative covenants include, among others, covenants requiring us to maintain our legal existence and governmental approvals, deliver certain financial reports, maintain insurance coverage, maintain property, pay taxes, satisfy certain requirements regarding accounts and comply with laws and regulations. The negative covenants include, among others, restrictions on transferring collateral, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, amending material agreements and organizational documents, selling assets and suffering a change in control, in each case subject to certain exceptions.The credit facility also includes events of default, the occurrence and continuation of which could cause interest to be charged at the rate that is otherwise applicable plus 3.0% and would provide MidCap, as agent, with the right to exercise remedies against us, and the collateral securing the credit facility, including foreclosure against our properties securing the credit facilities, including our cash. These events of default include, among other things, our failure to pay any amounts due under the credit facility, a breach of covenants under the Credit Facility, our insolvency or the occurrence of insolvency events, the occurrence of a change in control, the occurrence of certain U.S. Food and Drug Administration and regulatory events, our failure to remain registered with the SEC and listed for trading on NASDAQ, the occurrence of a material adverse change, the occurrence of a default under a material agreement reasonably expected to result in a material adverse change, the occurrence of certain defaults under certain other indebtedness in an amount greater than $2,500,000 and the occurrence of certain defaults under subordinated indebtedness and convertible indebtedness. The occurrence of an event of default could significantly harm our business and prospects and could cause the price of our common stock to decline.Our ability to make scheduled payments on or to refinance our indebtedness depends on our future performance and ability to raise additional sources of cash, which is subject to economic, financial, competitive and other factors beyond our control. Iftherefore, we are unable to generate sufficient cash to service our debt, we may be required to adopt one or more alternatives, such as selling assets, restructuring our debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. If we desire to refinance our indebtedness, our ability to do so will depend on the capital markets and our financial condition at such time. We may not be able to engage inretain their services as expected. We do not currently maintain “key person” life insurance on the lives of our executives or any of our employees. This lack of insurance means that we may not have adequate compensation for the loss of the services of these activitiesindividuals.engageretain qualified management and scientific and clinical personnel in these activitiesthe future due to the increasingly intense competition for qualified personnel among pharmaceutical, biotechnology and other businesses, particularly in the San Diego area. Our industry has experienced a high rate of turnover for all personnel in recent years. In addition, we recently executed an operational reorganization to focus on desirable terms,seralutinib that reduced our headcount by over twenty-five percent, which may expose us to unexpected liabilities beyond cash payments related primarily to one-time severance payments. This headcount reduction may also lead to increased attrition and could result inlead to reduced employee morale and problems retaining existing and recruiting future employees. To provide added incentives to retain and motivate key contributors, our board of directors recently approved a defaultstock option repricing. See Part II, Item 5 of this Quarterly Report on our debt obligations.Form 10-Q for information about the stock option repricing. If we are not able to attract, integrate, retain and motivate necessary personnel to accomplish our business objectives, we may experience constraints that will significantly impede the achievement of our development objectives, our ability to raise any additional debt financing, the terms of such additional debt could further restrictcapital and our operating and financial flexibility.ability to implement our business strategy.Unregistered Sales of Equity SecuritiesDuring the quarter ended March 31, 2019, and prior to the completion of our IPO, options to purchase 11,111 shares of our common stock were exercised for aggregate consideration of approximately $29,000, at an exercise price of $2.61.The stock options and the common stock issuable upon the exercise of such options as described were issued pursuant to written compensatory plans or arrangements with our employees and directors, in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 701 promulgated under the Securities Act or the exemption set forth in Section 4(a)(2) under the Securities Act and Rule 506 promulgated thereunder as a transaction not involving any public offering.26On February 7, 2019, our registration statement on Form S-1 (File No. 333-228984) was declared effective by the SEC for our initial public offering. At the closing of the offering on February 12, 2019, we sold 19,837,500 shares of common stock, which included the exercise in full by the underwriters of their option to purchase 2,587,500 additional shares, at an initial public offering price of $16.00 per share and received gross proceeds of $317.4 million, which resulted in net proceeds to us of approximately $291.3 million, after deducting underwriting discounts and commissions of approximately $22.2 million and offering-related transaction costs of approximately $3.9 million. None of the expenses associated with the initial public offering were paid to directors, officers, persons owning ten percent or more of any class of equity securities, or to their associates, or to our affiliates. Merrill Lynch, Pierce, Fenner & Smith Incorporated, SVB Leerink LLC, Barclays Capital Inc. and Evercore Group L.L.C. acted as joint book-running managers for the offering.There has been no material change in the planned use of proceeds from our initial public offering from that described in the final prospectus filed by us with the SEC on February 8, 2019.None.Executive Officer Original Number of Eligible Options Original Exercise Price Range of Eligible Options Number of Cancelled Options Number of Eligible Options Remaining Following Option Repricing 721,500 $9.79 – 22.10 240,499 481,001 456,500 $9.79 – 22.10 152,166 304,334 372,925 $8.47 – 22.10 124,307 248,618 346,425 $8.49 – 22.10 115,472 230,953 Other Non-Executive Management Employees 699,925 $8.70 – 22.10 233,304 466,621 27Exhibit
NumberExhibit Description Incorporated by Reference Filed Herewith Form Date Number 3.1 8-K 2/12/2019 3.1 3.2 10-Q 5/12/2020 3.2 4.1 S-1/A 1/23/2019 4.1 4.2 S-1 12/21/2018 4.2 4.3 8-K 5/21/2020 4.1 4.4 8-K 5/21/2020 4.2 4.5 8-K 5/21/2020 4.3 10.1 10-K 3/17/2023 10.7 10.2 10-K 3/17/2023 10.24 31.1 X 31.2 X 32.1* X 32.2* X 101.INS XBRL Report Instance Document X 101.SCH XBRL Taxonomy Extension Schema Document X 101.CAL XBRL Taxonomy Calculation Linkbase Document X 101.LAB XBRL Taxonomy Label Linkbase Document X 101.PRE XBRL Presentation Linkbase Document X 101.DEF XBRL Taxonomy Extension Definition Linkbase Document X ** This certification is deemed not filed for purpose of section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act. 28SIGNATURESGOSSAMER BIO, INC. Date: May 9, 2023 By: /s/ Faheem Hasnain Faheem Hasnain GOSSAMER BIO, INC.Date:May 14, 2019By:/s/ Sheila GujrathiSheila Gujrathi14, 201929