goss-20220930
FALSE2022Q3000172811712-31http://fasb.org/us-gaap/2021-01-31#AccountingStandardsUpdate202006Member0.061600017281172022-01-012022-09-3000017281172022-10-31xbrli:shares00017281172022-09-30iso4217:USD00017281172021-12-31iso4217:USDxbrli:shares00017281172022-07-012022-09-3000017281172021-07-012021-09-3000017281172021-01-012021-09-300001728117us-gaap:CommonStockMember2021-12-310001728117us-gaap:AdditionalPaidInCapitalMember2021-12-310001728117us-gaap:RetainedEarningsMember2021-12-310001728117us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-3100017281172021-01-012021-12-310001728117us-gaap:AdditionalPaidInCapitalMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-12-310001728117us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-12-310001728117srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-12-310001728117us-gaap:CommonStockMember2022-01-012022-03-310001728117us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-3100017281172022-01-012022-03-310001728117us-gaap:RetainedEarningsMember2022-01-012022-03-310001728117us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001728117us-gaap:CommonStockMember2022-03-310001728117us-gaap:AdditionalPaidInCapitalMember2022-03-310001728117us-gaap:RetainedEarningsMember2022-03-310001728117us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-3100017281172022-03-310001728117us-gaap:CommonStockMember2022-04-012022-06-300001728117us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-3000017281172022-04-012022-06-300001728117us-gaap:RetainedEarningsMember2022-04-012022-06-300001728117us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001728117us-gaap:CommonStockMember2022-06-300001728117us-gaap:AdditionalPaidInCapitalMember2022-06-300001728117us-gaap:RetainedEarningsMember2022-06-300001728117us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-3000017281172022-06-300001728117us-gaap:CommonStockMember2022-07-012022-09-300001728117us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001728117us-gaap:RetainedEarningsMember2022-07-012022-09-300001728117us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001728117us-gaap:CommonStockMember2022-09-300001728117us-gaap:AdditionalPaidInCapitalMember2022-09-300001728117us-gaap:RetainedEarningsMember2022-09-300001728117us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001728117us-gaap:CommonStockMember2020-12-310001728117us-gaap:AdditionalPaidInCapitalMember2020-12-310001728117us-gaap:RetainedEarningsMember2020-12-310001728117us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-3100017281172020-12-310001728117us-gaap:CommonStockMember2021-01-012021-03-310001728117us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-3100017281172021-01-012021-03-310001728117us-gaap:RetainedEarningsMember2021-01-012021-03-310001728117us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001728117us-gaap:CommonStockMember2021-03-310001728117us-gaap:AdditionalPaidInCapitalMember2021-03-310001728117us-gaap:RetainedEarningsMember2021-03-310001728117us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-3100017281172021-03-310001728117us-gaap:CommonStockMember2021-04-012021-06-300001728117us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-3000017281172021-04-012021-06-300001728117us-gaap:RetainedEarningsMember2021-04-012021-06-300001728117us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001728117us-gaap:CommonStockMember2021-06-300001728117us-gaap:AdditionalPaidInCapitalMember2021-06-300001728117us-gaap:RetainedEarningsMember2021-06-300001728117us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-3000017281172021-06-300001728117us-gaap:CommonStockMember2021-07-012021-09-300001728117us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001728117us-gaap:RetainedEarningsMember2021-07-012021-09-300001728117us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001728117us-gaap:CommonStockMember2021-09-300001728117us-gaap:AdditionalPaidInCapitalMember2021-09-300001728117us-gaap:RetainedEarningsMember2021-09-300001728117us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-3000017281172021-09-3000017281172017-10-012022-09-300001728117goss:TwoThousandTwentySevenNotesMember2022-01-012022-09-300001728117goss:TwoThousandTwentySevenNotesMember2021-01-012021-09-300001728117us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001728117us-gaap:EmployeeStockOptionMember2021-01-012021-09-300001728117us-gaap:RestrictedStockMember2022-01-012022-09-300001728117us-gaap:RestrictedStockMember2021-01-012021-09-300001728117us-gaap:OfficeEquipmentMembersrt:MinimumMember2022-01-012022-09-300001728117us-gaap:OfficeEquipmentMembersrt:MaximumMember2022-01-012022-09-300001728117us-gaap:OfficeEquipmentMember2022-09-300001728117us-gaap:OfficeEquipmentMember2021-12-310001728117us-gaap:ComputerEquipmentMember2022-01-012022-09-300001728117us-gaap:ComputerEquipmentMember2022-09-300001728117us-gaap:ComputerEquipmentMember2021-12-310001728117us-gaap:SoftwareDevelopmentMember2022-01-012022-09-300001728117us-gaap:SoftwareDevelopmentMember2022-09-300001728117us-gaap:SoftwareDevelopmentMember2021-12-310001728117srt:MinimumMemberus-gaap:EquipmentMember2022-01-012022-09-300001728117srt:MaximumMemberus-gaap:EquipmentMember2022-01-012022-09-300001728117us-gaap:EquipmentMember2022-09-300001728117us-gaap:EquipmentMember2021-12-310001728117us-gaap:LeaseholdImprovementsMembersrt:MinimumMember2022-01-012022-09-300001728117us-gaap:LeaseholdImprovementsMembersrt:MaximumMember2022-01-012022-09-300001728117us-gaap:LeaseholdImprovementsMember2022-09-300001728117us-gaap:LeaseholdImprovementsMember2021-12-310001728117us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001728117us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001728117us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-09-300001728117us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-09-300001728117us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001728117us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001728117us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-09-300001728117us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-09-300001728117us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001728117us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001728117us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-09-300001728117us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-09-300001728117us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001728117us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001728117us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-09-300001728117us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-09-300001728117us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001728117us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001728117us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2021-12-310001728117us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2021-12-310001728117us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001728117us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001728117us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2021-12-310001728117us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2021-12-310001728117us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001728117us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001728117us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2021-12-310001728117us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2021-12-310001728117us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2022-09-300001728117us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2021-12-310001728117goss:TwoThousandTwentySevenNotesMemberus-gaap:FairValueInputsLevel2Member2022-09-300001728117goss:TwoThousandTwentySevenNotesMemberus-gaap:FairValueInputsLevel2Member2021-12-310001728117us-gaap:USTreasuryAndGovernmentMember2022-09-300001728117us-gaap:CorporateDebtSecuritiesMember2022-09-300001728117us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember2022-09-300001728117us-gaap:CorporateDebtSecuritiesMember2021-12-310001728117us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember2021-12-310001728117goss:TermLoanMemberus-gaap:LineOfCreditMember2019-05-020001728117goss:TermLoanMemberus-gaap:LineOfCreditMember2019-05-022019-05-02goss:tranche0001728117goss:TermLoanMemberus-gaap:LineOfCreditMembergoss:TrancheOneMember2019-05-020001728117goss:TermLoanMemberus-gaap:LineOfCreditMembergoss:TrancheTwoMember2019-05-020001728117goss:TermLoanMemberus-gaap:LineOfCreditMember2022-09-300001728117goss:TermLoanMemberus-gaap:LineOfCreditMembergoss:TrancheOneMember2022-09-300001728117goss:TermLoanMemberus-gaap:LineOfCreditMemberus-gaap:LondonInterbankOfferedRateLIBORMember2019-05-022019-05-02xbrli:pure0001728117goss:TermLoanMemberus-gaap:LineOfCreditMemberus-gaap:LondonInterbankOfferedRateLIBORMember2019-05-020001728117goss:PrepaymentOccursThroughFirstAnniversaryOfClosingDateMembergoss:TermLoanMemberus-gaap:LineOfCreditMember2019-05-020001728117goss:TermLoanMemberus-gaap:LineOfCreditMembergoss:FirstAnniversaryOfClosingDateThroughSecondAnniversaryOfClosingDateMember2019-05-020001728117goss:SecondAnniversaryOfClosingDateAndPriorToJanFirstTwoThousandTwentyFiveMembergoss:TermLoanMemberus-gaap:LineOfCreditMember2019-05-020001728117goss:TermLoanMemberus-gaap:LineOfCreditMembergoss:MidCapFinancialTrustMember2022-01-012022-09-300001728117us-gaap:LineOfCreditMember2022-09-300001728117us-gaap:LineOfCreditMember2021-12-310001728117us-gaap:LineOfCreditMember2022-09-300001728117goss:TwoThousandTwentySevenNotesMember2020-05-212020-05-210001728117goss:TwoThousandTwentySevenNotesMember2020-05-210001728117goss:TwoThousandTwentySevenNotesMembergoss:OneHundredThirtyPercentApplicableConversionPriceMembersrt:MinimumMember2020-05-212020-05-21goss:tradingDay0001728117goss:TwoThousandTwentySevenNotesMembersrt:MaximumMembergoss:OneHundredThirtyPercentApplicableConversionPriceMember2020-05-212020-05-210001728117goss:TwoThousandTwentySevenNotesMembergoss:NinetyEightPercentApplicableConversionPriceMembersrt:MinimumMember2020-05-212020-05-210001728117goss:TwoThousandTwentySevenNotesMembergoss:NinetyEightPercentApplicableConversionPriceMembersrt:MaximumMember2020-05-212020-05-210001728117goss:TwoThousandTwentySevenNotesMembersrt:MaximumMember2020-05-212020-05-210001728117goss:TwoThousandTwentySevenNotesMember2022-09-300001728117goss:TwoThousandTwentySevenNotesMember2021-12-310001728117goss:TwoThousandTwentySevenNotesMember2022-07-012022-09-300001728117goss:TwoThousandTwentySevenNotesMember2021-07-012021-09-300001728117goss:TwoThousandTwentySevenNotesMember2022-01-012022-09-300001728117goss:TwoThousandTwentySevenNotesMember2021-01-012021-09-300001728117goss:LicenseAgreementMembergoss:InProcessResearchAndDevelopmentSeralutinibMembergoss:PulmokineIncMember2017-10-022017-10-020001728117goss:LicenseAgreementMembergoss:InProcessResearchAndDevelopmentSeralutinibMembergoss:PulmokineIncMembersrt:MaximumMember2017-10-020001728117goss:LicenseAgreementMembergoss:InProcessResearchAndDevelopmentSeralutinibMembergoss:PulmokineIncMember2017-10-012017-10-310001728117goss:LicenseAgreementMembergoss:InProcessResearchAndDevelopmentSeralutinibMembergoss:PulmokineIncMember2020-12-310001728117goss:LicenseAgreementMembergoss:InProcessResearchAndDevelopmentSeralutinibMembergoss:PulmokineIncMember2022-09-300001728117goss:LicenseAgreementMembergoss:InProcessResearchAndDevelopmentGBZeroZeroFourMembergoss:AerpioPharmaceuticalsIncMember2022-09-30goss:vote0001728117us-gaap:PrivatePlacementMember2022-07-152022-07-150001728117us-gaap:PrivatePlacementMember2022-07-150001728117goss:FounderSharesMember2015-12-032015-12-030001728117goss:FounderSharesMember2015-12-030001728117goss:FounderSharesMember2018-01-040001728117goss:FounderSharesMember2018-01-042018-01-040001728117goss:FounderMember2018-01-040001728117goss:FounderMember2018-05-212018-05-210001728117goss:FounderMember2018-05-210001728117goss:FounderMember2018-09-062018-09-060001728117goss:FounderMember2018-09-060001728117goss:TwoThousandNineteenEquityIncentivePlanMember2019-02-060001728117goss:TwoThousandNineteenEquityIncentivePlanMember2019-02-062019-02-060001728117goss:TwoThousandNineteenEquityIncentivePlanMember2022-09-300001728117goss:TwoThousandNineteenEquityIncentivePlanMember2021-12-310001728117goss:TwoThousandNineteenEmployeeStockPurchasePlanMembersrt:MaximumMember2019-02-062019-02-060001728117goss:TwoThousandNineteenEmployeeStockPurchasePlanMember2019-02-060001728117goss:TwoThousandNineteenEmployeeStockPurchasePlanMember2019-02-062019-02-060001728117goss:TwoThousandNineteenEmployeeStockPurchasePlanMember2022-01-012022-09-300001728117goss:TwoThousandNineteenEmployeeStockPurchasePlanMember2022-09-300001728117goss:TwoThousandSeventeenEquityIncentivePlanMember2022-09-300001728117goss:TwoThousandSeventeenEquityIncentivePlanMember2021-12-310001728117goss:TwoThousandSeventeenEquityIncentivePlanMemberus-gaap:RestrictedStockMember2022-09-300001728117us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001728117us-gaap:EmployeeStockOptionMember2021-01-012021-09-300001728117us-gaap:RestrictedStockMember2021-12-310001728117us-gaap:RestrictedStockMember2022-01-012022-09-300001728117us-gaap:RestrictedStockMember2022-09-300001728117us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-300001728117us-gaap:ResearchAndDevelopmentExpenseMember2021-07-012021-09-300001728117us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-300001728117us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-09-300001728117us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001728117us-gaap:GeneralAndAdministrativeExpenseMember2021-07-012021-09-300001728117us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001728117us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-09-300001728117us-gaap:StockCompensationPlanMember2022-09-300001728117us-gaap:StockCompensationPlanMember2022-01-012022-09-300001728117us-gaap:StockCompensationPlanMembergoss:TwoThousandNineteenEmployeeStockPurchasePlanMember2022-09-300001728117us-gaap:StockCompensationPlanMembergoss:TwoThousandNineteenEmployeeStockPurchasePlanMember2022-01-012022-09-300001728117goss:NonCancelableLeaseAgreementEnteredInAugust2018Member2022-01-012022-09-3000017281172021-10-292021-10-29
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 10-Q
_________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to_________.
Commission File Number: 001-38796
_________________________
GOSSAMER BIO, INC.
(Exact name of Registrant as specified in its charter).
_________________________
Delaware47-5461709
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
3013 Science Park RoadSan DiegoCalifornia92121
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (858) 684-1300
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)
Name of each exchange on which registered
Common Stock, $0.0001 par value per shareGOSSNasdaq Global Select Market
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes    ☒       No     ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    Yes      ☒     No      ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
 ☒
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
1

Table of Contents
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES   NO ☒
As of October 31, 2022, the registrant had 94,476,801 shares of common stock ($0.0001 par value) outstanding.
2

Table of Contents
TABLE OF CONTENTS
Condensed Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months ended September 30, 2022 and 2021 (unaudited)
Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Nine Months ended September 30, 2022 and 2021 (unaudited)
Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2022 and 2021 (unaudited)
3

Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
GOSSAMER BIO, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and par value amounts)
September 30, 2022December 31, 2021
ASSETS
Current assets
Cash and cash equivalents$153,477 $183,403 
Marketable securities150,906 141,815 
Restricted cash 64 
Prepaid expenses and other current assets7,649 6,498 
Total current assets312,032 331,780 
Property and equipment, net4,305 5,320 
Operating lease right-of-use assets6,572 5,477 
Other assets629 1,080 
Total assets$323,538 $343,657 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable$363 $3,244 
Accrued research and development expenses20,746 16,205 
Accrued expenses and other current liabilities31,536 20,410 
Total current liabilities52,645 39,859 
Long-term convertible senior notes195,496 150,038 
Long-term debt, net of current portion14,834 29,079 
Operating lease liabilities - long-term4,212 3,218 
Total liabilities267,187 222,194 
Commitments and contingencies (Note 9)
Stockholders' equity
Common stock, $0.0001 par value; 700,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 94,135,098 shares issued and
93,914,200 shares outstanding as of September 30, 2022, and 76,470,588 shares issued and 75,752,664 shares outstanding as of December 31, 2021
10 8 
Additional paid-in capital1,033,385 932,944 
Accumulated deficit(976,459)(811,534)
Accumulated other comprehensive (loss) income(585)45 
Total stockholders' equity56,351 121,463 
Total liabilities and stockholders' equity$323,538 $343,657 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4

Table of Contents
GOSSAMER BIO, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(in thousands, except share and per share amounts)
Three months ended September 30,Nine months ended September 30,
2022202120222021
Operating expenses:
Research and development$44,509 $43,190 $129,411 $129,335 
In process research and development15 15 50 60 
General and administrative11,497 12,459 34,775 35,068 
Total operating expenses56,021 55,664 164,236 164,463 
Loss from operations(56,021)(55,664)(164,236)(164,463)
Other expense
Interest income465 191 989 525 
Interest expense(3,475)(4,889)(10,423)(14,503)
Other income (expense), net(332)115 56 721 
Total other expense, net(3,342)(4,583)(9,378)(13,257)
Net loss$(59,363)$(60,247)$(173,614)$(177,720)
Other comprehensive income (loss):
Foreign currency translation(173)(64)(319)(274)
Unrealized gain (loss) on marketable securities102 (73)(311)(188)
Other comprehensive income (loss)(71)(137)(630)(462)
Comprehensive loss(59,434)(60,384)(174,244)(178,182)
Net loss per share, basic and diluted$(0.65)$(0.80)$(2.14)$(2.38)
Weighted average common shares outstanding, basic and diluted91,181,427 75,001,510 81,304,089 74,592,632 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5

Table of Contents
GOSSAMER BIO, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(Unaudited)
(in thousands, except share amounts)
 
Common stockAdditional paid-in capitalAccumulated deficitAccumulated other comprehensive income (loss)Total stockholders' equity (deficit)
SharesAmount
Balance as of December 31, 202175,752,664 $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 stock165,675 — — — — — 
Exercise of stock options39,525 — 126 — — 126 
Stock-based compensation— — 10,983 — — 10,983 
Issuance of common stock pursuant to Employee Stock Purchase Plan77,496 — 595 — — 595 
Issuance of common stock for restricted stock units vested518,577 — — — — — 
Net loss— — — (57,785)— (57,785)
Other comprehensive loss— — — — (385)(385)
Balance as of March 31, 202276,553,937 $8 $891,121 $(860,630)$(340)$30,159 
Vesting of restricted stock165,675 — — — — — 
Exercise of stock options8,005 — 21 — — 21 
Stock-based compensation— — 9,999 — — 9,999 
Issuance of common stock for restricted stock units vested8,607 — — — — — 
Net loss— — — (56,466)— (56,466)
Other comprehensive loss— — — — (174)(174)
Balance as of June 30, 202276,736,224 $8 $901,141 $(917,096)$(514)$(16,461)
Issuance of common stock in connection with a private offering, net of offering costs of $184
16,649,365 2 119,926 — — 119,928 
Vesting of restricted stock165,676 — — — —  
Exercise of stock options219,573 — 1,576 — — 1,576 
Stock-based compensation— — 10,122 — — 10,122 
Issuance of common stock pursuant to Employee Stock Purchase Plan80,362 — 620 — — 620 
Issuance of common stock for restricted stock units vested63,000 — — — — — 
Net loss— — — (59,363)— (59,363)
Other comprehensive loss— — — — (71)(71)
Balance as of September 30, 202293,914,200 $10 $1,033,385 $(976,459)$(585)$56,351 

6

Table of Contents

Common stockAdditional paid-in capitalAccumulated deficitAccumulated other comprehensive income (loss)Total stockholders' equity
SharesAmount
Balance as of December 31, 202073,874,904 $8 $897,607 $(577,530)$599 $320,684 
Vesting of restricted stock238,962 — — — — — 
Exercise of stock options5,721 — 15 — — 15 
Stock-based compensation— — 8,708 — — 8,708 
Issuance of common stock pursuant to Employee Stock Purchase Plan95,004 — 759 — — 759 
Issuance of common stock for restricted stock units vested278,559 — — — — — 
Net loss— — — (57,641)— (57,641)
Other comprehensive loss— — — — (441)(441)
Balance as of March 31, 202174,493,150 $8 $907,089 $(635,171)$158 $272,084 
Vesting of restricted stock231,710 — — — — — 
Exercise of stock options103,922 — 271 — — 271 
Stock-based compensation— — 8,054 — — 8,054 
Issuance of common stock for restricted stock units vested6,170 — — — — — 
Net loss— — — (59,832)— (59,832)
Other comprehensive income— — — — 116 116 
Balance as of June 30, 202174,834,952 $8 $915,414 $(695,003)$274 $220,693 
Vesting of restricted stock228,084 — — — — — 
Exercise of stock options171,252 — 1,357 — — 1,357 
Stock-based compensation— — 7,587 — — 7,587 
Issuance of common stock pursuant to Employee Stock Purchase Plan65,786 — 556 — — 556 
Net loss— — — (60,247)— (60,247)
Other comprehensive loss— — — — (137)(137)
Balance as of September 30, 202175,300,074 $8 $924,914 $(755,250)$137 $169,809 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

Table of Contents
GOSSAMER BIO, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Nine months ended September 30,
20222021
Cash flows from operating activities
Net loss$(173,614)$(177,720)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense1,372 1,292 
Stock-based compensation expense31,104 24,349 
In process research and development expenses50 60 
Amortization of operating lease right-of-use assets1,934 2,593 
Amortization of long-term debt discount and issuance costs893 4,983 
Amortization of premium (discount) on marketable securities, net of accretion of discounts(261)186 
Loss on disposal of property and equipment 84
Changes in operating assets and liabilities:
Prepaid expenses and other current assets(1,151)1,221 
Other assets451 (87)
Operating lease liabilities(2,030)(2,706)
Accounts payable(2,098)(6,808)
Accrued expenses(1,561)4,715 
Accrued research and development expenses4,541 3,375 
Accrued compensation and benefits(1,415)(3,918)
Accrued interest expense2,483  
Net cash used in operating activities(139,302)(148,381)
Cash flows from investing activities
Research and development asset acquisitions, net of cash acquired(50)(60)
Purchase of marketable securities(160,641)(143,897)
Maturities of marketable securities151,500 17,550 
Purchase of property and equipment(308)(1,463)
Net cash used in investing activities(9,499)(127,870)
Cash flows from financing activities
Proceeds from issuance of common stock in a private offering, net of offering costs119,928  
Proceeds from issuance of common stock pursuant to Employee Stock Purchase Plan1,215 1,315 
Proceeds from the exercise of stock options1,723 1,643 
Principal repayments of long-term debt(2,903) 
Net cash provided by financing activities119,963 2,958 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(1,152)211 
Net decrease in cash, cash equivalents and restricted cash(29,990)(273,082)
Cash, cash equivalents and restricted cash, at the beginning of the period183,467 486,620 
Cash, cash equivalents and restricted cash, at the end of the period$153,477 $213,538 
Supplemental disclosure of cash flow information:
Cash paid for interest$7,042 $7,055 
Supplemental disclosure of noncash investing and financing activities:
Operating lease right-of-use asset obtained in exchange for lease liability
$3,029 $ 
Derecognition ROU lease assets obtained in exchange for operating lease liabilities$ $1,650 
Change in unrealized gain (loss) on marketable securities, net$(311)$188 
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities$49 $ 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8

Table of Contents
GOSSAMER BIO, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1 - Description of the Business
Gossamer Bio, Inc. (including its subsidiaries, referred to as “we,” “us,” “our,”, or the “Company”) is a clinical-stage biopharmaceutical company focused on discovering, acquiring, developing and commercializing therapeutics in the disease areas of immunology, inflammation and oncology. The Company was incorporated in the state of Delaware on October 25, 2015 (originally as FSG Bio, Inc.) and is based in San Diego, California.
The unaudited condensed consolidated financial statements include the accounts of Gossamer Bio, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions among the consolidated entity have been eliminated in consolidation.
Liquidity and Capital Resources
The Company has incurred significant operating losses since its inception. As of September 30, 2022, the Company had an accumulated deficit of $976.5 million. From the Company’s inception through September 30, 2022, the Company has funded its operations primarily through equity and debt financings. The Company raised $1,062.1 million from October 2017 through September 30, 2022 through the sale of Series A and B convertible preferred stock, issuance of convertible notes, its initial public offering ("IPO"), the Credit Facility and 2027 Notes (as defined in Note 5 below), and issuances of common stock in May 2020 and July 2022. See Note 5 for additional information regarding the Credit Facility and the 2027 Notes.
The Company expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. As a result, the Company will need to raise additional capital through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. Management believes that it has sufficient working capital on hand to fund operations through at least the next 12 months from the date these condensed consolidated financial statements were available to be issued. There can be no assurance that the Company will be successful in acquiring additional funding, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years.
COVID-19
The COVID-19 pandemic has caused significant business disruption around the globe. The extent of the impact of COVID-19 on the Company’s operational and financial performance will depend on certain developments, including the duration and spread of the pandemic worldwide and the impact on the Company’s clinical trials, employees and vendors. To the extent possible, and consistent with applicable guidance from federal, state and local authorities, the Company is conducting business as usual. The Company will continue to actively monitor the evolving situation related to COVID-19 and may take further actions that alter its operations, including those that may be required by federal, state or local authorities, or that the Company determines are in the best interests of its employees and other third parties with whom the Company does business. At this point, the degree to which COVID-19, including new variants of the virus that causes COVID-19, may continue to impact the Company’s financial condition or results of operations remains uncertain. A prolonged pandemic could have a material and adverse impact on the financial results and business operations of the Company, including the timing and ability of the Company to complete certain clinical trials and other efforts required to advance the development of its product candidates and raise additional capital. For example, certain sites temporarily closed enrollment in the Company's Phase 2 clinical trial in pulmonary arterial hypertension ("PAH") in 2020 as a result of the COVID-19 pandemic and related staffing shortages at sites and key vendors. In addition, due to the challenges of enrolling patients worldwide posed by the COVID-19 pandemic and related staffing shortages at sites and key vendors, the Company previously experienced delays in enrollment of patients in its Phase 2 clinical trial of seralutinib, also known as GB002, in PAH.
9

Table of Contents
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions of the Securities and Exchange Commission (“SEC”) on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, the condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 3, 2022. The results of operations for the interim period shown in this report are not necessarily indicative of the results that may be expected for any other interim period or for the full year. The balance sheet at December 31, 2021, has been derived from the audited financial statements at that date.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at 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 the allocation of the 2027 Notes into liability and equity components and accrued research and development 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.
Recent Accounting Pronouncements - Adopted
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt: Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) (“ASU 2020-06”), which simplifies the accounting for convertible instruments and contracts in an entity's own equity. This guidance is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those years, with early adoption permitted only as of annual reporting periods beginning after December 15, 2020.
The Company adopted ASU 2020-06 on January 1, 2022 using the modified retrospective approach, and accordingly the Company recorded an adjustment that reflects the 2027 Notes as if the embedded conversion feature had not been separated. The impact upon adoption on the Consolidated Balance Sheets was an increase of $44.8 million in convertible senior notes, net, a write-off of $9.4 million in deferred income tax liabilities and a decrease of $53.5 million in additional paid-in capital. In addition, upon adoption, there was an adjustment of $8.7 million to increase the beginning balance of accumulated deficit on the Consolidated Balance Sheets for previously recognized interest expense related to amortization of debt discount related to the carrying value of the embedded conversion feature upon issuance. There was no impact to the Company’s net loss per share calculation. See Note 5 "Indebtedness" for further information regarding the 2027 Notes.
Net Loss Per Share
Basic net loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. The Company uses the if-converted method for assumed conversion of the 2027 Notes to compute the weighted average shares of common stock outstanding for diluted net loss per share. Diluted net loss per share excludes the potential impact of the Company’s common stock options and unvested shares of restricted stock and the potential shares issuable upon conversion of the 2027 Notes because their effect would be anti-dilutive due to the Company’s net loss. Since the Company had a net loss in each of the periods presented, basic and diluted net loss per common share are the same.
The table below provides potentially dilutive securities not included in the calculation of the diluted net loss per share because to do so would be anti-dilutive:
10

Table of Contents
As of September 30,
20222021
2027 Notes12,321,900 12,321,900 
Shares issuable upon exercise of stock options12,789,376 9,540,332 
Non-vested shares under restricted stock grants1,856,688 3,020,509 
Total potentially dilutive securities26,967,964 24,882,741 
Note 3 - Balance Sheet Accounts and Supplemental Disclosures
Property and Equipment
Property and equipment, net consisted of the following (in thousands):
Estimated
Useful Life
(in years)
September 30,
2022
December 31,
2021
Office equipment
3-7
$1,097 $1,097 
Computer equipment5123 123 
Software3130 130 
Lab equipment
2-5
6,044 5,688 
Leasehold improvements
6-7
2,562 2,562 
Total property and equipment9,956 9,600 
Less: accumulated depreciation5,651 4,280 
Property and equipment, net$4,305 $5,320 
For each of the three months ended September 30, 2022 and 2021 the Company recorded approximately $0.5 million in depreciation expense, and for the nine months ended September 30, 2022 and 2021, the Company recorded approximately $1.4 million and $1.3 million, respectively, in depreciation expense, in each case, which is included in general and administrative expense and research and development expense on the consolidated statements of operations and comprehensive loss.

Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
As of
September 30,
2022
December 31,
2021
Accrued compensation and benefits$10,501 $11,916 
Operating lease liabilities2,907 2,902 
Debt, current11,613  
Accrued consulting fees1,433 956 
Accrued interest3,549 1,066 
Accrued legal fees251 202 
Accrued litigation liability 2,375 
Accrued accounting fees429 154 
Accrued other853 839 
Total accrued expenses and other current liabilities$31,536 $20,410 

11

Table of Contents
Note 4 - Fair Value Measurements and Available for Sale Investments
Fair Value Measurements
The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The Company classifies its cash equivalents and available-for-sale investments within Level 1 or Level 2. The fair value of the 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.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents the hierarchy for assets measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021 (in thousands):
Fair Value Measurements at End of Period Using:
Total
Fair Value
Quoted Market
Prices for
Identical Assets
(Level 1)
Significant
Other Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
As of September 30, 2022
Money market funds$81,850 $81,850 $ $ 
U.S. Treasury and agency securities58,883 58,883   
Commercial paper119,603  119,603  
Corporate debt securities12,347  12,347  
As of December 31, 2021
Money market funds$139,794 $139,794 $ $ 
Commercial paper113,939  113,939  
Corporate debt securities37,873  37,873  
The Company did not reclassify any investments between levels in the fair value hierarchy during the periods presented.
Fair Value of Other Financial Instruments
As of September 30, 2022 and December 31, 2021, the carrying amounts of the Company’s financial instruments, which include cash, restricted cash, prepaid and other current assets, interest receivable, accrued research and development expenses, accounts payable and accrued expenses and other current liabilities, approximate fair values because of their short maturities.
Interest receivable as of September 30, 2022 and December 31, 2021, was $0.1 million and $0.2 million, respectively, and is recorded as a component of prepaid expenses and other current assets on the condensed consolidated balance sheets.
The Company believes that its Credit Facility bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics and, accordingly, the carrying value of the Credit Facility approximates fair value. The Company estimates the fair value of long-term debt utilizing an income approach. The Company uses a present value calculation to discount principal and interest payments and the final 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
12

Table of Contents
would be as of 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.
As of September 30, 2022 and December 31, 2021, the fair value of the Company’s 2027 Notes was $227.5 million and $190.5 million, respectively. The fair value was determined on the basis of market prices observable for similar instruments and is considered Level 2 in the fair value hierarchy (see Note 5).
Available for Sale Investments
The Company invests its excess cash in U.S. Treasury and agency securities, corporate debt securities, and commercial paper, which are classified as available-for-sale investments. These investments are carried at fair value and are included in the tables below. The Company evaluates securities with unrealized losses to determine whether such losses, if any, are due to credit-related factors. Realized gains and losses are calculated using the specific identification method and recorded in other income (expense) in the Company's condensed consolidated statement of operations and comprehensive loss. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recover of their amortized cost basis.
The aggregate market value, cost basis, and gross unrealized losses of available-for-sale investments by security type, classified in marketable securities and long-term investments as of September 30, 2022 and December 31, 2021 are as follows (in thousands):
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Total
Fair Value
As of September 30, 2022
U.S. Treasury and agency securities$41,494 $ $(79)$41,415 
 Corporate debt securities12,426  (79)12,347 
     Commercial paper97,345  (201)97,144 
Total marketable securities$151,265 $ $(359)$150,906 
As of December 31, 2021
     Corporate debt securities$37,921 $ $(48)$37,873 
     Commercial paper103,942   103,942 
Total marketable securities$141,863 $ $(48)$141,815 
As of September 30, 2022 and December 31, 2021, the Company classified $39.9 million and $10.0 million, respectively, of assets with original maturities of 90 days or less as cash and cash equivalents.
At each reporting date, the Company performs an evaluation of impairment to determine if any unrealized losses are due to credit-related factors. The Company records an allowance for credit losses when unrealized losses are due to credit-related factors. Factors considered when evaluating available-for-sale investments for impairment include the severity of the 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 the Company’s intent and ability to hold the investment until recovery of the amortized cost basis. The Company intends and has the ability to hold its investments in unrealized loss positions until their amortized cost basis has been recovered. As of September 30, 2022 and December 31, 2021, there were no material declines in the market value of the Company’s available-for-sale investments due to credit-related factors.
Contractual maturities of available-for-sale debt securities, as of September 30, 2022, were as follows (in thousands):
Estimated
 Fair Value
Less than one year$150,906 
Greater than one year 
Total$150,906 
The Company has the ability, if necessary, to liquidate any of its cash equivalents and marketable securities to meet its liquidity needs in the next 12 months.
13

Table of Contents
Note 5 - Indebtedness
Credit Facility
On May 2, 2019, the Company entered into a credit, guaranty and security agreement, as amended on September 18, 2019 and July 2, 2020 (the “Credit Facility”), with MidCap 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, including affiliates of MidCap and Silicon Valley Bank, 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 of the $60.0 million tranches. The Company, GB001, Inc., GB002, Inc., and GB004, Inc., each wholly-owned subsidiaries of the Company, are designated as co-borrowers to the Credit Facility, whereas GB003, Inc., GB005, Inc., GB006, Inc., GB007, Inc., GB008, Inc. and Gossamer Bio Services, Inc., each wholly-owned subsidiaries of the Company, are designated as guarantors. The remaining tranche is available no earlier than the satisfaction of the applicable funding conditions, including the applicable clinical development milestone, and no later than December 31, 2022. As of September 30, 2022, no tranches under the Credit Facility were available to be drawn. The Credit Facility is secured by substantially all of the Company’s and its domestic subsidiaries’ personal property, including intellectual property.
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) 7.00%, subject to a LIBOR floor of 2.00%. The borrower is required to make interest-only payments on the 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 to 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 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.
The Credit Facility includes affirmative and negative covenants applicable to the Company and certain of its subsidiaries. The affirmative covenants include, among others, covenants requiring such entities to maintain their 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 such entities from 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 Company and certain of its subsidiaries are also subject to an ongoing minimum cash financial covenant in which they must maintain unrestricted cash in an amount not less than 25% of the outstanding principal amount of the term loans. As of September 30, 2022, the Company was in compliance with these covenants.
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 3.00% and would provide MidCap, as agent, with the right to exercise remedies against the Company and/or certain of its subsidiaries, and the collateral securing the Credit Facility, including foreclosure against the properties securing the credit facilities, including cash. These events of default include, among other things, failure to pay any amounts due under the Credit Facility, a breach of covenants under the Credit Facility, insolvency or the occurrence of insolvency events, the occurrence of a change in control, the occurrence of certain U.S. Food and Drug Administration (“FDA”) and regulatory events, 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 $2.5 million and the occurrence of certain defaults under subordinated indebtedness and convertible indebtedness.
14

Table of Contents
Debt consisted of the following (in thousands):
September 30, 2022December 31, 2021
Debt, current portion$11,613 $ 
Debt, non-current portion15,484 30,000 
Total debt27,097 30,000 
Less: unamortized debt discount and issuance costs(650)(921)
Debt, net$26,447 $29,079 


The scheduled future minimum principal payments are as follows (in thousands):
September 30, 2022
2022 (remaining 3 months)$2,903 
202311,613 
202411,613 
2025968 
Total$27,097 
5.00% Convertible Senior Notes due 2027
On May 21, 2020, the Company issued $200.0 million aggregate principal amount of 5.00% convertible senior notes due 2027 in a public offering (the "2027 Notes"). The 2027 Notes were registered pursuant to the Company’s shelf registration statement on Form S-3 filed with the SEC on April 10, 2020. The interest rate on the 2027 Notes is fixed at 5.00% per annum. Interest is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2020. The 2027 Notes will mature on June 1, 2027. The net proceeds from the offering, after deducting the underwriting discounts and commissions and other offering costs, were approximately $193.6 million. The 2027 Notes may be settled in cash, shares of the Company’s common stock, or a combination thereof, solely at the Company’s election. The initial conversion rate of the 2027 Notes is 61.6095 shares per $1,000 principal amount, which is equivalent to a conversion price of approximately $16.23 per share, subject to adjustments. In addition, following certain corporate events that occur prior to the maturity date or if the Company issues a notice of redemption, the Company will increase the conversion rate for a holder who elects to convert its 2027 Notes in connection with such a corporate event during the related redemption period in certain circumstances. 
The 2027 Notes are senior unsecured obligations of the Company, ranking senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2027 Notes, and are effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness, including all indebtedness under the Credit Facility.
Holders may convert their notes at their option only in the following circumstances: (1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on September 30, 2020, if the last reported sale price per share of 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.
The Company will not have the right to redeem the 2027 Notes prior to June 6, 2024. On or after June 6, 2024 and on or before the 50th scheduled trading day immediately before the maturity date, the Company may redeem the 2027 Notes, in whole or in part, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect on (1) each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends such notice. In the case of any optional redemption, the Company
15

Table of Contents
will redeem the 2027 Notes at a redemption price equal to 100% of the principal amount of such Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
If the Company undergoes a fundamental change prior to the maturity date of the 2027 Notes, holders of the 2027 Notes may require the Company to repurchase for cash all or part of their 2027 Notes at a repurchase price equal to 100% of the principal amount of the 2027 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
The indenture governing the 2027 Notes provides for customary terms and covenants, including that upon certain events of default, either the trustee or the holders of not less than 25% in aggregate principal amount of the 2027 Notes then outstanding may declare the unpaid principal amount of the 2027 Notes and accrued and unpaid interest, if any, thereon immediately due and payable. As of September 30, 2022, the Company was in compliance with these covenants. In the case of certain events of bankruptcy, insolvency or reorganization, the principal amount of the 2027 Notes together with accrued and unpaid interest, if any, thereon will automatically become and be immediately due and payable.
As of September 30, 2022, there were no events or market conditions that would allow holders to convert the 2027 Notes. When the 2027 Notes become convertible within 12 months of the balance sheet date, the carrying value of the 2027 Notes will be reclassified to short-term.
In accounting for the issuance of the 2027 Notes prior to the adoption of ASU 2020-06, the Company separated the 2027 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring 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 is not remeasured as long as it continues to meet the conditions for equity classification. 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.
In accounting for the debt issuance costs of $0.4 million related to the 2027 Notes, the Company allocated the total amount incurred to the liability and equity components of the 2027 Notes based on their relative fair values. Issuance costs attributable to the liability component were $0.3 million and were amortized to interest expense using the effective interest method over the contractual terms of the 2027 Notes. Issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity. As of January 1, 2022 the Company adopted ASU 2020-06, see Note 2 for the impact upon adoption to the 2027 Notes.
The net carrying amount of the liability component of the 2027 Notes was as follows (in thousands):
September 30, 2022December 31, 2021
Principal amount$200,000 $200,000 
Unamortized debt discount(4,220)(49,716)
Unamortized debt issuance cost(284)(246)
Net carrying amount$195,496 $150,038 
The net carrying amount of the equity component of the 2027 Notes was as follows (in thousands):
September 30, 2022December 31, 2021
Debt discount related to the value of conversion option$ $53,635 
Debt issuance cost (109)
Net carrying amount$ $53,526 
The following table sets forth the interest expense recognized related to the 2027 Notes (in thousands):
Three months ended September 30,Nine months ended September 30,
2022202120222021
Contractual interest expense$2,500 $2,500 $7,500 $7,472 
Amortization of debt discount197 1,606 582 4,713 
Amortization of debt issuance cost13 7 39 23 
Total interest expense related to the 2027 Notes$2,710 $4,113 $8,121 $12,208 
16

Table of Contents
Note 6 - Licenses, Asset Acquisitions and Contingent Consideration
The following purchased assets were accounted for as asset acquisitions as substantially all of the fair value of the assets acquired were concentrated in a group of similar assets and/or the acquired assets were not capable of producing outputs due to the lack of employees and early stage of development. Because the assets had not yet received regulatory approval, the fair value attributable to these assets was recorded as in process research and development (“IPR&D”) expenses in the Company’s condensed consolidated statement of operations for the three and nine months ended September 30, 2022.
The Company accounts for contingent consideration payable upon achievement of certain regulatory, development or sales milestones in such asset acquisitions when the underlying contingency is met.
License from Pulmokine, Inc. (Seralutinib)
On October 2, 2017, the Company entered into a license agreement with Pulmokine, Inc. under which it was granted an exclusive worldwide license and sublicense to certain intellectual property rights owned or controlled by Pulmokine to develop and commercialize seralutinib and certain backup compounds for the treatment, prevention and diagnosis of any and all diseases or conditions. The Company also has the right to sublicense its rights under the license agreement, subject to certain conditions. The assets acquired are in the early stages of the 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 $58.0 million, 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. 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 paid in January 2021. As of September 30, 2022, no other milestones had been accrued as the underlying contingencies had not yet been met.
License from Aadi Biosciences, Inc. (GB004)
On June 24, 2018, the Company entered into a license agreement with Aerpio Pharmaceuticals, Inc., now known as Aadi Biosciences, Inc. ("Aadi"), under which the Company was granted an exclusive worldwide license and sublicense to certain intellectual property rights owned or controlled by Aadi to develop and commercialize GB004, and certain other related compounds for all applications. On July 24, 2022, the license agreement was terminated. As of September 30, 2022, no milestones had been accrued as the underlying contingencies had not yet been met.
Note 7 - Stockholders’ Equity
Common Stock
Each share of common stock is entitled to one vote. Common stock owners are entitled to dividends when funds are legally available and declared by the Board.
Private Placement Financing
On July 15, 2022, we completed a private placement of 16,649,365 shares of our 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.

Shares of Common Stock Subject to Repurchase
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 $4,100 (the "founder shares"). On January 4,
17

Table of Contents
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. These shares are subject to repurchase by the Company upon a founder's termination of employment or service to the Company.
Pursuant to the employment agreements with the Company’s founders executed January 4, 2018, the Company provided for certain potential additional issuances of common stock (the “anti-dilution shares”) to each of the founders to ensure the total number of shares of common stock held by them and their affiliates (inclusive of any shares subject to equity awards granted by the Company) would represent 15% of the Company’s fully-diluted capitalization until such time as the Company raised $300.0 million in equity capital, including the capital raised in the Series A financing.
In furtherance of this obligation, on May 21, 2018, the Company issued 251,547 shares of common stock to the founders for services rendered to the Company, valued at $2.61 per share with an additional 251,547 shares of restricted stock subject to the same vesting restrictions and vesting period as the founder shares. In addition, on September 6, 2018, the Company issued 1,795,023 shares of common stock to the founders for services rendered to the Company, valued at $9.63 per share, with an additional 1,795,023 shares of restricted stock subject to the same vesting restrictions and vesting period as the founder shares.
During the nine months ended September 30, 2022, no shares were forfeited due to termination of employment. During the year ended December 31, 2021, 25,383 shares were forfeited due to termination of 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 September 30, 2022 and December 31, 2021, 220,902 and 717,927 shares of common stock, respectively, were subject to repurchase by the Company. The unvested stock liability related to these awards is immaterial to all periods presented.
Note 8 - Equity Incentive Plans
2019 Equity Incentive Plan
In January 2019, the Company’s board of directors and stockholders approved and adopted the 2019 Incentive Award Plan (the “2019 Plan”). The 2019 Plan became effective on February 6, 2019, the day prior to the effectiveness of the registration statement filed in connection with the IPO. Under the 2019 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or cash-based awards to individuals who are then employees, officers, directors or consultants of the Company, and employees and consultants of the Company’s subsidiaries. A total of 5,750,000 shares of common stock were approved to be initially reserved for issuance under the 2019 Plan. The number of shares that remained available for issuance under the 2017 Plan (as defined below) as of the effective date of the 2019 Plan were, and shares subject to outstanding awards under the 2017 Plan as of the effective date of the 2019 Plan that are subsequently canceled, forfeited or repurchased by the Company will be, added to the shares reserved under the 2019 Plan. In addition, the number of shares of common stock available for issuance under the 2019 Plan will be automatically increased on the first day of each calendar year during the ten-year term of the 2019 Plan, beginning with 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 31 of the preceding calendar year or such lesser amount as determined by the Company’s board of directors. As of September 30, 2022, an aggregate of 5,189,165 shares of common stock were available for issuance under the 2019 Plan. As of September 30, 2022 and December 31, 2021, 11,810,964 and 8,402,621 shares of common stock, respectively, were subject to outstanding awards under the 2019 Plan.
2019 Employee Stock Purchase Plan
In January 2019, the Company’s board of directors and stockholders approved and adopted the 2019 Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective as of February 6, 2019, the day prior to the effectiveness of the registration statement filed in connection with the IPO. The ESPP permits participants to purchase common stock through payroll deductions of up to 20% of their eligible compensation. A total of 700,000 shares of common stock were approved to be initially reserved for issuance under the ESPP. In addition, the number of shares of common stock available for issuance under the ESPP will be automatically increased on the first day of each calendar year during the first ten 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 31 of the preceding calendar year or such lesser amount as determined by the Company’s board of directors. During the nine months ended September 30, 2022, 157,858 shares were issued pursuant to the ESPP. As of September 30, 2022, an aggregate of 2,450,855 shares of common stock were available for issuance under the ESPP.
18

Table of Contents
2017 Equity Incentive Plan
The Company’s 2017 Equity Incentive Plan (the “2017 Plan”) permitted the granting of incentive stock options, non-statutory stock options, restricted stock, restricted stock units and other stock-based awards. Subsequent to the adoption of the 2019 Plan, no additional equity awards can be made under the 2017 Plan. As of September 30, 2022 and December 31, 2021, 2,614,198 and 2,875,330 shares of common stock, respectively, were subject to outstanding options under the 2017 Plan. As of September 30, 2022, no shares of restricted stock awards granted under the 2017 Plan were unvested.
Stock Options
The fair value of each employee and non-employee stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company uses its own volatility to the extent it has sufficient trading history, and for awards in which sufficient trading history is not available, a peer 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.
The following table summarizes stock option activity during the nine months ended September 30, 2022:
Shares Subject to
Options Outstanding
Weighted-
Average
 
SharesWeighted-
Average
Exercise
Price
Remaining
Contractual
Life
(Years)
Aggregate
Intrinsic Value
(in thousands)
Outstanding as of December 31, 20219,434,660 $12.24 7.4$15,822 
Options granted4,447,720 $11.50 
Options exercised(269,103)$6.40 
Options forfeited/cancelled(823,901)$15.77 
Outstanding as of September 30, 202212,789,376