0001728117-24-000092 | 10-Q | XBRL Viewer

Equity Incentive Plans

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

2023 Equity Inducement Incentive Plan

In November 2023, the Company approved the 2023 Employment Inducement Incentive Plan (the "2023 Inducement Plan"). The terms of the 2023 Inducement Plan are substantially similar to the terms of the Company’s 2019 Incentive Award

Plan (as described below) with the exception that incentive stock options may not be issued under the 2023 Inducement Plan and awards under the 2023 Inducement Plan may only be issued to eligible recipients under the applicable Nasdaq rules. The 2023 Inducement Plan was adopted without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, awards under the 2023 Inducement Plan may only be made to an employee who has not previously been an employee or member of the board of directors of the Company or any parent or subsidiary, or following a bona fide period of non-employment by the Company or a parent or subsidiary, if he or she is granted such award in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. The Company has initially reserved 6,762,279 shares of the Company’s common stock for issuance pursuant to awards granted under the 2023 Inducement Plan. As of September 30, 2024, an aggregate of 4,556,779 shares of common stock were available for issuance under the 2023 Inducement Plan, and 2,205,500 shares of common stock were subject to outstanding awards under the 2023 Inducement Plan.

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, 2024, an aggregate of 1,225,134 shares of common stock were available for issuance under the 2019 Plan. As of September 30, 2024 and December 31, 2023, 30,784,020 and 20,374,879 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, 2024, 767,125 shares were issued pursuant to the ESPP. As of September 30, 2024, an aggregate of 4,545,812 shares of common stock were available for issuance under the ESPP.

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, 2024 and December 31, 2023, 2,105,880 and 2,178,934 shares of common stock, respectively, were subject to outstanding options under the 2017 Plan. As of September 30, 2024, no shares of restricted stock awards granted under the 2017 Plan were unvested.

Stock Options

The fair value of each employee and non-employee time-vested 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.

On May 5, 2023, the Company granted to its Chairman and Chief Executive Officer 750,000 options with an exercise price of $1.36 per share. This grant contains both service and market based vesting conditions. The awards vest on the later of the date of achievement and the one-year anniversary of the grant date. The market condition becomes satisfied in 50%, 25% and 25% tranches upon achieving the average per-share closing price of the Company's common stock over any 30 consecutive calendar days following the grant date equal to or exceeding $5.00, $7.50 and $10.00, respectively. In the event a stock price tranche has not vested prior to the fourth anniversary of the grant date, any portion of the option attributable to such tranche will be forfeited. Due to the market condition included in this grant, the Company used the Geometric Brownian Motion/Monte Carlo model to value this award. The total stock-based compensation expense related to this award is $0.4 million, which is included in general and administrative expense on the condensed consolidated statements of operations and comprehensive loss. The Company expects to recognize this expense over a weighted average period of approximately 2.2 years.

Effective May 5, 2023, and in accordance with the terms of the 2019 Plan, the Company's board of directors approved a stock option repricing (the “Option Repricing”) whereby the exercise price of each Eligible Option (as defined below) was immediately reduced to $1.36 per share, the closing stock price on May 5, 2023. For purposes of the Option Repricing, “Eligible Options” are 6,817,057 outstanding stock options as of May 5, 2023 (vested or unvested) granted under the 2019 Plan prior to November 30, 2022 and held by those eligible employees of the Company identified by the Company's board of directors, including the Company’s executive officers except for the Company’s Chairman and Chief Executive Officer.

The participation of the executive officers of the Company in the Option Repricing was subject to their 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 his or her Eligible Options, on a grant-by-grant basis. The Cancelled Options were deducted proportionately from the vested and unvested portions of each Repriced Option grant.

To the extent an Eligible Option is exercised prior to the 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 in connection with any exercise of the Eligible Option. The “Premium End Date” means the earliest of (i) May 5, 2024, (ii) the date of a change in control, (iii) the eligible employee’s death or disability, or (iv) if an eligible employee is an executive subject to the cancellation of a portion of Eligible Options and is terminated under circumstances giving rise to severance under his or her employment agreement, the date of such termination. Except for the reduction in the exercise prices of the Eligible Options as described above, the Eligible Options will retain their existing terms and conditions as set forth in the 2019 Plan and the applicable award agreements.

The repricing resulted in $3.4 million of incremental cost, which was calculated using the Black-Scholes option-pricing model, of which $2.0 million of the incremental cost was recognized immediately, and $1.4 million of the incremental cost will be recognized on the straight-line basis over the remaining vesting period of the repriced options. The incremental cost is included in general and administrative expense and research and development expense on the condensed consolidated statements of operations and comprehensive loss.

The following table summarizes stock option activity during the nine months ended September 30, 2024:


	Shares Subject to Options Outstanding			Weighted- Average
	Shares	Weighted- Average Exercise Price		Remaining Contractual Life (Years)	Aggregate Intrinsic Value
					(in thousands)
Outstanding as of December 31, 2023	23,626,115	$	2.52	7.9	$	369
Options granted	12,602,228	$	0.96
Options exercised	—	$	—
Options forfeited/cancelled	(1,132,943)	$	1.85
Outstanding as of September 30, 2024	35,095,400	$	1.98	7.7	$	1,212
Options vested and expected to vest as of September 30, 2024	35,095,400	$	1.98	7.7	$	1,212
Options exercisable as of September 30, 2024	12,484,553	$	3.55	5.9	$	19

The aggregate intrinsic value in the above table is calculated as the difference between fair value of the Company’s common stock price on September 30, 2024 and the exercise price of the stock options. There was no aggregate intrinsic value of stock options exercised during each of the nine months ended September 30, 2024 and 2023 since no stock options were exercised during these periods.

The weighted-average grant date fair value per share for the stock option grants during the nine months ended September 30, 2024 and 2023 was $0.78 and $5.38, respectively.

The aggregate fair value of stock options that vested during the nine months ended September 30, 2024 and 2023 was $12.0 million and $17.1 million, respectively.

Warrants

On July 24, 2023, the Company completed a private placement of 129,869,440 shares of the Company’s common stock and accompanying warrants to purchase up to 32,467,360 shares of the Company's common stock at a combined purchase price of $1.63125 per share and accompanying warrant, or with respect to any purchaser that was an officer, director, employee or consultant of the Company, $1.85125 per share and accompanying warrant. Each warrant has an exercise price per share of $2.04, was immediately exercisable on the date of issuance and will expire five years from the closing of the private placement.

Given that the warrants are indexed to the Company's shares of common stock (and otherwise meet the requirements to be classified in equity), the Company recorded the consideration received from the issuance of the warrants as additional paid-in capital on the Company's unaudited condensed consolidated balance sheets.

As of September 30, 2024, there were 32,467,360 warrants outstanding.

Restricted Stock

The summary of the Company’s restricted stock activity during the nine months ended September 30, 2024 is as follows:


	Number of Restricted Stock Units Outstanding	Weighted- Average Grant Date Fair Value
Nonvested at December 31, 2023	427,698	$	10.92
Granted	—	—
Vested	(427,698)	10.92
Forfeited	—	—
Nonvested at September 30, 2024	—	$	—

As of September 30, 2024, there was no unrecognized stock-based compensation expense related to the unvested restricted stock awards.

Stock-Based Compensation Expense

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 September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Research and development	$	2,329	$	3,250	$	7,752	$	12,661
General and administrative	2,513		2,912		7,902		9,825
Total stock-based compensation expense	$	4,842	$	6,162	$	15,654	$	22,486

As of September 30, 2024, the total unrecognized compensation expense related to the unvested stock option awards granted was $18.9 million, which the Company expects to recognize over a weighted-average period of approximately 2.7 years.

As of September 30, 2024, the total unrecognized compensation expense related to the ESPP was $0.9 million, which the Company expects to recognize over a weighted-average period of approximately 0.9 years.

Fair Value Measurements and Available for Sale Investments (Tables)

9 Months Ended

Sep. 30, 2024

Fair Value Measurements And Available For Sale Investments [Abstract]

Schedule of Assets Measured at Fair Value on Recurring Basis

The following table presents the hierarchy for assets measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 (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, 2024
Money market funds	$	25,338	$	25,338	$	—	$	—
U.S. Treasury and agency securities	71,561		71,561		—		—
Commercial paper	207,182		—		207,182		—
Corporate debt securities	19,827		—		19,827		—
As of December 31, 2023
Money market funds	$	25,222	$	25,222	$	—	$	—
U.S. Treasury and agency securities	92,309		92,309		—		—
Commercial paper	168,534		—		168,534		—
Corporate debt securities	3,473		—		3,473		—

Schedule of Available for Sale Investments by Security Type

The aggregate market value, cost basis, and gross unrealized gains and losses of available-for-sale investments by security type, classified in marketable securities and long-term investments as of September 30, 2024 and December 31, 2023 are as follows (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Total Fair Value
As of September 30, 2024
U.S. Treasury and agency securities	$	71,539	$	22	$	—	$	71,561
Corporate debt securities	19,789		38		—		19,827
Commercial paper	206,813		375		(6)		207,182
Total marketable securities	$	298,141	$	435	$	(6)	$	298,570
Number of securities with unrealized losses					4

As of December 31, 2023
U.S. Treasury and agency securities	$	92,294	$	20	$	(5)	$	92,309
Corporate debt securities	3,467		6		—		3,473
Commercial paper	168,488		76		(30)		168,534
Total marketable securities	$	264,249	$	102	$	(35)	$	264,316
Number of securities with unrealized losses					12

Schedule of Contractual Maturities of Available for Sale Debt Securities

Contractual maturities of available-for-sale debt securities, as of September 30, 2024, were as follows (in thousands):


	Estimated Fair Value
Less than one year	$	298,570
Greater than one year	—
Total	$	298,570

Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Parenthetical) $ in Thousands	3 Months Ended
	Sep. 30, 2023 USD ($)
Statement of Stockholders' Equity [Abstract]
Offering costs	$ 10,779

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2024
Accounting Policies [Abstract]
Segment Reporting	Segment Reporting Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the chief operating decision-maker ("CODM") in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment.
Basis of Presentation	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 unaudited 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 unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 5, 2024. 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, 2023, has been derived from the audited consolidated financial statements at that date.
Use of Estimates	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, liabilities, revenues, expenses and related disclosures. 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.
Collaborative Arrangements	Collaborative Arrangements The Company assesses whether its licensing and other agreements are collaborative arrangements based on whether they involve joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. For arrangements that the Company determines are collaborations, it identifies each unit of account, and then determines whether a customer relationship exists for that unit of account. If the Company determines a performance obligation within the collaborative arrangement to be with a customer, it applies its revenue recognition accounting policy. If a portion of a distinct bundle of goods or services within the collaborative arrangement is not with a customer, the Company applies recognition and measurement based on an analogy to authoritative accounting literature or, if there is no appropriate analogy, a reasonable, rational and consistently applied accounting policy election. To the extent the arrangement is within the scope of ASC 808, the Company assesses whether aspects of the arrangement between the Company and the collaboration partner are within the scope of other accounting literature. If the Company concludes that some or all aspects of the arrangement represent a transaction with a customer, the Company accounts for those aspects of the arrangement within the scope of ASC Topic 606, Revenue from Contracts with Customers (ASC 606). See Note 10, "Significant Agreements and Contracts," for more information.
Revenue Recognition	Revenue Recognition The Company recognizes revenue when a customer obtains control of promised goods or services in a contract for an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. For contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. As part of the accounting for contracts with customers, the Company develops assumptions that require judgment to determine the standalone selling price of each performance obligation identified in the contract. In addition, variable consideration such as milestone payments are evaluated to determine if they are constrained and, therefore, excluded from the transaction price. The Company then allocates the total transaction price proportionally to each performance obligation based on their estimated standalone selling prices, unless an allocation exception applies. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. In a contract with multiple performance obligations, the Company must develop estimates and assumptions that require judgment to determine the underlying standalone selling price for each performance obligation, which determines how the transaction price is allocated among the performance obligations. The estimation of the stand-alone selling price(s) may include estimates regarding forecasted revenues or costs, development timelines, discount rates, and probabilities of technical and regulatory success. The Company evaluates each performance obligation to determine if it can be satisfied at a point in time or over time. Any change made to estimated progress towards completion of a performance obligation and, therefore, revenue recognized will be recorded as a change in estimate. In addition, variable consideration must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price. If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in a contract, the Company recognizes revenues from the transaction price allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from the allocated transaction price. The Company evaluates the measure of progress at each reporting period and, if necessary, adjusts the measure of performance and related revenue or expense recognition as a change in estimate. At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being reached. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s or a collaboration partner’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company re-evaluates the probability of achievement of milestones that are within its or a collaboration partner’s control, such as operational developmental milestones and any related constraint, and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which will affect revenue from sale of licenses and revenue from contracts with collaborators in the period of adjustment. Revisions to the Company’s estimate of the transaction price may also result in negative revenue from sale of licenses and revenue from contracts with collaborators in the period of adjustment. For arrangements that include sales-based royalties, including commercial milestone payments based on the level of sales, and a license is deemed to be the predominant item to which the royalties relate, the Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied, or partially satisfied. To date, the Company has not recognized any royalty revenue from collaborative arrangements.
Recently Issued Accounting Pronouncements Not Yet Adopted	Recently Issued Accounting Pronouncements Not Yet Adopted In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures (“Topic 280”), which modifies the disclosure and presentation requirements of reportable segments. The amendments in the update require the disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit and loss. The amendments also require disclosure of all other segment items by reportable segment and a description of its composition. Additionally, the amendments require disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Lastly, the amendment requires that a public entity that has a single reportable segment provide all the disclosures required by ASU 2023-07 and all existing segment disclosures in Topic 280. This update is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on the presentation of its condensed consolidated financial statements and accompanying notes. In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.
Net Loss Per Share	Net Loss Per Share The Company follows the guidance in FASB ASC 260, Earnings per Share, or ASC 260, which establishes standards regarding the computation of earnings per share, or EPS, by companies that have issued securities other than common stock that contractually entitle the holder to participate in dividends and earnings of a company. The guidance requires earnings to be hypothetically allocated between the common, preferred, and other participating stockholders based on their respective rights to receive non-forfeitable dividends, whether or not declared. Basic and diluted net loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. In loss periods, basic net loss per share and diluted net loss per share are identical because the otherwise dilutive potential common shares become anti-dilutive and are therefore excluded.

- Definition

Disclosure of accounting policy for segment reporting.

+ References

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+ Details

Fair Value Measurements and Available for Sale Investments - Additional Information (Details) - USD ($) $ in Millions	Sep. 30, 2024	Dec. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest receivable	$ 0.1	$ 0.0
Cash equivalents, at carrying value	25.3	25.2
2027 Notes \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of convertible senior notes	$ 106.5	$ 74.9

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2024
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes We calculate the interim income tax provision in accordance with Accounting Standards Codification Topic 270, Interim Reporting, ("ASC 270"), and Topic 740, Accounting for Income Taxes, ("ASC 740"). At the end of each interim period, we estimate our annual effective tax rate and apply that rate to our ordinary quarterly earnings to calculate the tax related to ordinary income. The tax effects for other items that are excluded from ordinary income are discretely calculated and recognized in the period in which they occur. The income from the Chiesi Collaboration Agreement is a discrete item and not included in our annual effective tax rate based on the determination that it is significant, unusual and infrequent in nature as defined in ASC 270 and ASC 740. Our annual effective tax rate from continuing operations was 5.2% and 4.0% the three and nine months ended September 30, 2024 and 0% for each of the three and nine months ended September 30, 2023 due to a full valuation. We recorded income tax expense discretely for the three months ended June 30, 2024, related to the treatment of the Chiesi income and a partial release of the valuation allowance. Total tax benefit for the three months ended September 30, 2024 was $1.1 million, and total tax expense for the nine months ended September 30, 2024 was $3.3 million. Tax benefit will be recorded in the quarter ended December 31, 2024 related to the forecasted net operating losses and tax credits. The effective income tax rate was (3.5)% and 0% during the three months ended September 30, 2024 and 2023, respectively, and (16.4)% and 0% during the nine months ended September 30, 2024 and 2023, respectively. The provision for income taxes during interim quarterly reporting periods is based on our estimates of the effective tax rates for the full fiscal year. The effective tax rate in any quarter can also be affected positively or negatively by adjustments that are required to be reported discretely in the quarter. The effective tax rate for the three months ended September 30, 2024 was favorably impacted by an increase in pre-tax book loss.

- Definition

The entire disclosure for income tax.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Licenses, Asset Acquisitions and Contingent Consideration (Details) - Pulmokine, Inc. - License Agreement - In Process Research and Development Seralutinib - USD ($)		1 Months Ended
	Oct. 02, 2017	Oct. 31, 2017	Sep. 30, 2024	Jan. 31, 2024	Jan. 31, 2021
Business Acquisition [Line Items]
Product license term (in years)	10 years
Upfront payment		$ 5,500,000
Milestones accrued			$ 0	$ 10,000,000	$ 5,000,000
Maximum
Business Acquisition [Line Items]
Development and regulatory milestone payments	$ 48,000,000
Development and regulatory milestone payments, due upon the initiation of a Phase 3 clinical trial	5,000,000
Commercial milestone payments, payable	45,000,000.0
Sales milestone payments, payable	$ 190,000,000.0

Stockholders' Equity	9 Months Ended
Stockholders' Equity	Sep. 30, 2024
Equity [Abstract]
Stockholders' Equity	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 Company's board of directors. Private Placement Financing On July 24, 2023, the Company completed a private placement of 129,869,440 shares of the Company’s common stock and accompanying warrants to purchase up to 32,467,360 shares of the Company's common stock at a combined purchase price of $1.63125 per share and accompanying warrant, or with respect to any purchaser that was an officer, director, employee or consultant of the Company, $1.85125 per share and accompanying warrant. Each warrant has an exercise price per share of $2.04, was immediately exercisable on the date of issuance and will expire five years from the closing of the private placement. The aggregate gross proceeds for the private placement were $212.1 million, before deducting offering expenses, which equaled $10.8 million. On August 18, 2023, the Company filed a registration statement on Form S-3 registering the shares of common stock and shares of common stock issuable upon the exercise of warrants issued in the private placement, which registration statement was declared effective on August 28, 2023. Chiesi Equity Option On May 3, 2024, pursuant to the Chiesi Collaboration Agreement (as defined in Note 10 below) the Company granted to Chiesi (as defined in Note 10 below) an option to purchase directly from the Company, on one or more occasions, up to an aggregate number of shares of the Company’s common stock (the "Equity Option") such that immediately following such issuance, Chiesi’s beneficial ownership of the Company’s common stock shall not exceed 9.9% of the total number of issued and outstanding shares of the Company’s common stock. The Equity Option shall be exercisable by Chiesi, in whole or in part, at any time prior to the earliest to occur of the date on which (a) the last patient is last dosed in either (i) the PROSERA Phase 3 study for PAH or (ii) a Phase 3 clinical trial for the PH-ILD Indication, (b) any third party commences a tender offer or exchange offer for more than 50% of the outstanding shares of the Company’s common stock, and (c) the Company publicly announces its intent to consummate a GB002, Inc. change of control. The purchase price of each share the Company’s common stock subject to the Equity Option shall be equal to 107.5% of the daily volume-weighted average per share price of the Company’s common stock on The Nasdaq Stock Market over the 30-trading day period ending on and including the last trading day prior to the date on which Chiesi delivers an exercise notice to the Company; provided that such purchase price shall be no less than $1.63 per share. The shares of the Company’s common stock to be issued will be issued in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, for transactions by an issuer not involving any public offering, pursuant to the terms of a stock issuance agreement to be entered into between the Company and Chiesi in connection with each such exercise of the Equity Option. The Company evaluated the Equity Option granted to Chiesi as consideration payable to a customer and determined it qualified under ASC 718. Due to the market condition included in the Equity Option, the company used the Geometric Brownian Motion/Monte Carlo model to determine fair market value. The value of the Equity Option is $0.5 million, which is included in additional paid-in capital on the Company's condensed consolidated balance sheets.

- Definition

The entire disclosure for equity.

+ References

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+ Details

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Effective Income Tax Rate Reconciliation [Line Items]
Effective income tax rate percent	(3.50%)	0.00%	(16.40%)	0.00%
Income tax expense (benefit)	$ (1,132)	$ 0	$ 3,303	$ 0
Continuing Operations
Effective Income Tax Rate Reconciliation [Line Items]
Effective income tax rate percent	4.00%	0.00%	5.20%	0.00%

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

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+ Details

Summary of Significant Accounting Policies - Schedule of Potentially Dilutive Securities not Included in Calculation of Diluted Net Loss Per Share (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities not included from calculation of diluted net loss per share (in shares)	102,318,469	63,579,374	102,318,469	63,579,374
2027 Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities not included from calculation of diluted net loss per share (in shares)	12,321,900	12,321,900	12,321,900	12,321,900
Shares issuable upon exercise of stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities not included from calculation of diluted net loss per share (in shares)	35,095,400	18,358,583	35,095,400	18,358,583
Shares issuable upon exercise of Equity Option granted to Chiesi
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities not included from calculation of diluted net loss per share (in shares)	22,433,809	0	22,433,809	0
Shares issuable upon exercise of warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities not included from calculation of diluted net loss per share (in shares)	32,467,360	32,467,360	32,467,360	32,467,360
Non-vested shares under restricted stock grants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities not included from calculation of diluted net loss per share (in shares)	0	431,531	0	431,531

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Schedule of Lease Costs

Lease costs were comprised of the following (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Operating lease cost	$	1,012	$	778	$	2,569	$	2,335
Short-term lease cost	9		13		30		39
Total lease cost	$	1,021	$	791	$	2,599	$	2,374

Schedule of Gross Future Minimum Annual Rental Commitments

Gross future minimum annual rental commitments as of September 30, 2024, were as follows (in thousands):


	Undiscounted Rent Payments
Year ending December 31
2024 (remaining 3 months)	$	1,197
2025	1,519
2026	1,397
2027	1,406
2028	1,448
2029	1,237
Total undiscounted rent payments	$	8,204

Present value discount	(1,863)
Present value of lease payments	$	6,341
Current portion of operating lease liabilities (included as a component of accrued expenses and other current liabilities)	1,748
Operating lease liabilities - long-term	4,593
Total operating lease liability	$	6,341

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

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 unaudited 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 unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 5, 2024. 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, 2023, has been derived from the audited consolidated 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, liabilities, revenues, expenses and related disclosures. 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.

Collaborative Arrangements

The Company assesses whether its licensing and other agreements are collaborative arrangements based on whether they involve joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. For arrangements that the Company determines are collaborations, it identifies each unit of account, and then determines whether a customer relationship exists for that unit of account. If the Company determines a performance obligation within the collaborative arrangement to be with a customer, it applies its revenue recognition accounting policy. If a portion of a distinct bundle of goods or services within the collaborative arrangement is not with a customer, the Company applies recognition and measurement based on an analogy to authoritative accounting literature or, if there is no appropriate analogy, a reasonable, rational and consistently applied accounting policy election. To the extent the arrangement is within the scope of ASC 808, the Company assesses whether aspects of the arrangement between the Company and the collaboration partner are within the scope of other accounting literature. If the Company concludes that some or all aspects of the arrangement represent a transaction with a customer, the Company accounts for those aspects of the arrangement within the scope of ASC Topic 606, Revenue from Contracts with Customers (ASC 606). See Note 10, "Significant Agreements and Contracts," for more information.

Revenue Recognition

The Company recognizes revenue when a customer obtains control of promised goods or services in a contract for an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. For contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. As part of the accounting for contracts with customers, the Company develops assumptions that require judgment to determine the standalone selling price of each performance obligation identified in the contract. In addition, variable consideration such as milestone payments are evaluated to determine if they are constrained and, therefore, excluded from the transaction price. The Company then allocates the total transaction price proportionally to each performance obligation based on their estimated standalone selling prices, unless an allocation exception applies. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

In a contract with multiple performance obligations, the Company must develop estimates and assumptions that require judgment to determine the underlying standalone selling price for each performance obligation, which determines how the transaction price is allocated among the performance obligations. The estimation of the stand-alone selling price(s) may include estimates regarding forecasted revenues or costs, development timelines, discount rates, and probabilities of technical and regulatory success. The Company evaluates each performance obligation to determine if it can be satisfied at a point in time or over time. Any change made to estimated progress towards completion of a performance obligation and, therefore, revenue recognized will be recorded as a change in estimate. In addition, variable consideration must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.

If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in a contract, the Company recognizes revenues from the transaction price allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from the allocated transaction price. The Company evaluates the measure of progress at each reporting period and, if necessary, adjusts the measure of performance and related revenue or expense recognition as a change in estimate.

At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being reached. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s or a collaboration partner’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company re-evaluates the probability of achievement of milestones that are within its or a collaboration partner’s control, such as operational developmental milestones and any related constraint, and,

if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which will affect revenue from sale of licenses and revenue from contracts with collaborators in the period of adjustment. Revisions to the Company’s estimate of the transaction price may also result in negative revenue from sale of licenses and revenue from contracts with collaborators in the period of adjustment.

For arrangements that include sales-based royalties, including commercial milestone payments based on the level of sales, and a license is deemed to be the predominant item to which the royalties relate, the Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied, or partially satisfied. To date, the Company has not recognized any royalty revenue from collaborative arrangements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures (“Topic 280”), which modifies the disclosure and presentation requirements of reportable segments. The amendments in the update require the disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit and loss. The amendments also require disclosure of all other segment items by reportable segment and a description of its composition. Additionally, the amendments require disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Lastly, the amendment requires that a public entity that has a single reportable segment provide all the disclosures required by ASU 2023-07 and all existing segment disclosures in Topic 280. This update is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on the presentation of its condensed consolidated financial statements and accompanying notes.

In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

Net Loss Per Share

The Company follows the guidance in FASB ASC 260, Earnings per Share, or ASC 260, which establishes standards regarding the computation of earnings per share, or EPS, by companies that have issued securities other than common stock that contractually entitle the holder to participate in dividends and earnings of a company. The guidance requires earnings to be hypothetically allocated between the common, preferred, and other participating stockholders based on their respective rights to receive non-forfeitable dividends, whether or not declared.

Basic and diluted net loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. In loss periods, basic net loss per share and diluted net loss per share are identical because the otherwise dilutive potential common shares become anti-dilutive and are therefore excluded.

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 (in common stock equivalent shares):


	Three and nine months ended September 30,
	2024	2023
2027 Notes	12,321,900	12,321,900
Shares issuable upon exercise of stock options	35,095,400	18,358,583
Shares issuable upon exercise of Equity Option granted to Chiesi	22,433,809	—
Shares issuable upon exercise of warrants	32,467,360	32,467,360
Non-vested shares under restricted stock grants	—	431,531
Total potentially dilutive securities	102,318,469	63,579,374

Equity Incentive Plans - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands		9 Months Ended	12 Months Ended
	May 05, 2023	Sep. 30, 2024	Dec. 31, 2023
Shares Subject to Options Outstanding, Shares
Outstanding as of beginning balance (in shares)		23,626,115
Options granted (in shares)	750,000	12,602,228
Option exercised (in shares)		0
Options forfeited/cancelled (in shares)		(1,132,943)
Outstanding as ending balance (in shares)		35,095,400	23,626,115
Options vested and expected to vest as of ending balance (in shares)		35,095,400
Options exercisable as of ending balance (in shares)		12,484,553
Shares Subject to Options Outstanding, Weighted Average Exercise Price
Outstanding as of beginning balance (in dollars per share)		$ 2.52
Options granted (in dollars per share)	$ 1.36	0.96
Option exercised (in dollars per share)		0
Options forfeited/cancelled (in dollars per share)		1.85
Outstanding as of ending balance (in dollars per share)		1.98	$ 2.52
Options vested and expected to vest as of ending balance (in dollars per share)		1.98
Options exercisable as of ending balance (in dollars per share)		$ 3.55
Weighted-Average Remaining Contractual Life (in years)		7 years 8 months 12 days	7 years 10 months 24 days
Weighted-Average Remaining Contractual Life (in years), Options vested and expected to vest as of end of period		7 years 8 months 12 days
Weighted-Average Remaining Contractual Life (in years), Options exercisable as of end of period		5 years 10 months 24 days
Aggregate Intrinsic Value		$ 1,212	$ 369
Aggregate Intrinsic Value, Options vested and expected to vest as of end of period		1,212
Aggregate Intrinsic Value, Options exercisable as of end of period		$ 19

Fair Value Measurements and Available for Sale Investments - Schedule of Available for Sale Investments by Security Type (Details) $ in Thousands	Sep. 30, 2024 USD ($) security	Dec. 31, 2023 USD ($) security
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	$ 298,141	$ 264,249
Gross Unrealized Gains	435	102
Gross Unrealized Losses	(6)	(35)
Total Fair Value	$ 298,570	$ 264,316
Number of securities with unrealized losses \| security	4	12
U.S. Treasury and agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	$ 71,539	$ 92,294
Gross Unrealized Gains	22	20
Gross Unrealized Losses	0	(5)
Total Fair Value	71,561	92,309
Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	19,789	3,467
Gross Unrealized Gains	38	6
Gross Unrealized Losses	0	0
Total Fair Value	19,827	3,473
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	206,813	168,488
Gross Unrealized Gains	375	76
Gross Unrealized Losses	(6)	(30)
Total Fair Value	$ 207,182	$ 168,534

- Definition

Amount of investment in debt security measured at fair value with change in fair value recognized in other comprehensive income (available-for-sale).

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 103
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482078/820-10-55-103

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
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-Name Accounting Standards Codification
-Section 55
-Paragraph 100
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482078/820-10-55-100

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 820
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-Paragraph 2
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-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
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-Name Accounting Standards Codification
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-Subparagraph (bbb)(2)
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Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
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-URI https://asc.fasb.org/1943274/2147481830/320-10-45-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 942
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-Paragraph 1
-Subparagraph (SX 210.9-03(6))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478546/942-210-S99-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 326
-SubTopic 30
-Name Accounting Standards Codification
-Section 45
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479130/326-30-45-1

+ Details

Stockholders' Equity (Details) $ / shares in Units, $ in Thousands		9 Months Ended
	Jul. 24, 2023 USD ($) $ / shares shares	Sep. 30, 2024 USD ($) vote	Sep. 30, 2023 USD ($)	May 03, 2024 USD ($) day
Stockholders Equity [Line Items]
Common stock number of votes per share \| vote		1
Warrant term	5 years
Proceeds from issuance of common stock and common warrants in a private offering, net of offering costs \| $	$ 212,100	$ 0	$ 201,323
Chiesi
Stockholders Equity [Line Items]
Tender offer or exchange offer, percentage of shares outstanding				50.00%
Purchase price of each share subject to equity option, percentage of daily volume-weighted average per share price				107.50%
Purchase price of each share subject to equity option, number of trading days \| day				30
Purchase price of each share subject to equity option, minimum price threshold (in dollars per share)				163.00%
Contract with customer, liability, fair value of equity option \| $				$ 500
Maximum \| Chiesi
Stockholders Equity [Line Items]
Equity option owned by Chiesi				9.90%
Private Placement
Stockholders Equity [Line Items]
Private placement, number of shares (in shares) \| shares	129,869,440
Offering price (in dollars per share) \| $ / shares	$ 1.63125
Exercise price of warrants (in dollars per share) \| $ / shares	$ 2.04
Warrant term	5 years
Payments of stock issuance costs \| $	$ 10,800
Private Placement \| Officer, Director, Employee or Consultant
Stockholders Equity [Line Items]
Offering price (in dollars per share) \| $ / shares	$ 1.85125
Private Placement \| Maximum
Stockholders Equity [Line Items]
Number of warrants (in shares) \| shares	32,467,360

Significant Agreements and Contracts (Tables)

9 Months Ended

Sep. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Contract Liability Activity

The following table presents a summary of the activity in the Company's contract liabilities related to the Chiesi Collaboration Agreement (recorded as contract liabilities on the balance sheet) during the nine months ended September 30, 2024 (in thousands):


Balance, December 31, 2023	$	—
Payments received in advance	160,000
Revenue from sale of US license	(76,686)
Revenue from sale of ROW license	(12,050)
Revenue from PAH research and development service performance obligations satisfied during reporting period	(8,132)
Revenue from PH-ILD research and development service performance obligations satisfied during reporting period	(217)
Equity Option granted to Chiesi	(464)
Effect of exchange rate changes on contract liabilities	1,656
Balance, September 30, 2024	$	64,107

Schedule of Contract Revenues Disaggregated by Timing of Revenue Recognition and Excludes Royalty Revenue

The following table presents our contract revenues from Chiesi Collaboration Agreement disaggregated by timing of revenue recognition and excluding royalty revenue (in thousands):


	Three Months Ended September 30, 2024		Nine Months ended September 30, 2024
Revenue from Chiesi Collaboration Agreement:
Point in Time:
US License	$	—	$	76,686
ROW License	—		12,050
Over Time:
Revenue from PAH research and development service performance obligation satisfied during reporting period	4,735		8,133
Revenue from PH-ILD research and development service performance obligation satisfied during reporting period	157		217
Revenue from PAH research and development costs subject to reimbursement	3,516		6,812
Revenue from PH-ILD research and development costs subject to reimbursement	1,086		1,419
Effect of exchange rate changes on revenue	(14)		5
Total revenue from Chiesi Collaboration Agreement	$	9,480	$	105,322

Indebtedness

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Indebtedness

Credit Facility

On May 2, 2019, the Company entered into a credit, guaranty and security agreement, as amended on September 18, 2019, July 2, 2020, December 7, 2022 and February 14, 2023 (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, 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. On May 3, 2024, the Credit Facility was terminated and the Company recorded a $7.7 million payment of the outstanding debt balance in full and discharged, which released the Company from the obligations under the Credit Facility, and Lenders’ security interests in the Company’s assets and property were released. Unamortized debt discount

and issuance costs were written off and recorded in interest expense on the condensed consolidated statements of operations and comprehensive loss.

Since the Credit Facility was terminated on May 3, 2024, there was no debt outstanding as of September 30, 2024. As of December 31, 2023 the debt outstanding consisted of the following (in thousands):


	December 31, 2023
Debt, current portion	$	11,613
Debt, non-current portion	968
Total debt	12,581
Less: unamortized debt discount and issuance costs	(154)
Debt, net	$	12,427

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. As of September 30, 2024, the Company has not redeemed the 2027 Notes. 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 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, 2024, 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, 2024, 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.

The Company recorded $0.4 million of the debt issuance costs related to the 2027 Notes as a reduction to the liability and amortizes these costs to interest expense over the term of the 2027 Notes.

The net carrying amount of the 2027 Notes was as follows (in thousands):


	September 30, 2024		December 31, 2023
Principal amount	$	200,000	$	200,000
Unamortized debt discount	(2,544)		(3,194)
Unamortized debt issuance cost	(171)		(215)
Net carrying amount	$	197,285	$	196,591

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,
	2024		2023		2024		2023
Contractual interest expense	$	2,500	$	2,500	$	7,500	$	7,500
Amortization of debt discount	219		208		650		615
Amortization of debt issuance cost	15		14		44		41
Total interest expense related to the 2027 Notes	$	2,734	$	2,722	$	8,194	$	8,156

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481544/470-10-50-6

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-URI https://asc.fasb.org/1943274/2147481544/470-10-50-6

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/1943274/2147477092/405-40-50-1

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1C

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1C

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1E

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1I

Reference 20: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1I

Reference 21: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1I

+ Details

Balance Sheet Accounts and Supplemental Disclosures - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 4,027		$ 4,027		$ 7,080
Less: accumulated depreciation	(3,725)		(3,725)		(5,432)
Property and equipment, net	302		302		1,648
Depreciation and amortization expense	200	$ 400	725	$ 1,315
Office equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 1,097		$ 1,097		1,097
Office equipment \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (in years)	3 years		3 years
Office equipment \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (in years)	7 years		7 years
Computer equipment
Property, Plant and Equipment [Line Items]
Estimated Useful Life (in years)	5 years		5 years
Total property and equipment	$ 123		$ 123		123
Software
Property, Plant and Equipment [Line Items]
Estimated Useful Life (in years)	3 years		3 years
Total property and equipment	$ 52		$ 52		52
Lab equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 193		$ 193		3,246
Lab equipment \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (in years)	2 years		2 years
Lab equipment \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (in years)	5 years		5 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 2,562		$ 2,562		$ 2,562
Leasehold improvements \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (in years)	6 years		6 years
Leasehold improvements \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (in years)	7 years		7 years

Commitments and Contingencies - Schedule of Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Operating lease cost	$ 1,012	$ 778	$ 2,569	$ 2,335
Short-term lease cost	9	13	30	39
Total lease cost	$ 1,021	$ 791	$ 2,599	$ 2,374

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Schedule of Potentially Dilutive Securities not Included in Calculation of Diluted Net Loss Per Share

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 (in common stock equivalent shares):


	Three and nine months ended September 30,
	2024	2023
2027 Notes	12,321,900	12,321,900
Shares issuable upon exercise of stock options	35,095,400	18,358,583
Shares issuable upon exercise of Equity Option granted to Chiesi	22,433,809	—
Shares issuable upon exercise of warrants	32,467,360	32,467,360
Non-vested shares under restricted stock grants	—	431,531
Total potentially dilutive securities	102,318,469	63,579,374

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	700,000,000	700,000,000
Common stock, issued (in shares)	226,604,138	225,409,315
Common stock, outstanding (in shares)	226,604,138	225,409,315

Significant Agreements and Contracts - Summary of Contract Liability Activity (Details) - Chiesi $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Contract With Customer, Liability [Rollforward]
Opening balance	$ 0
Payments received in advance	160,000
Equity Option granted to Chiesi	(464)
Effect of exchange rate changes on contract liabilities	1,656
Ending balance	64,107
Revenue from sale of US license
Contract With Customer, Liability [Rollforward]
Revenue	(76,686)
Revenue from sale of ROW license
Contract With Customer, Liability [Rollforward]
Revenue	(12,050)
Revenue from PAH research and development service performance obligation satisfied during reporting period
Contract With Customer, Liability [Rollforward]
Revenue	(8,132)
Revenue from PH-ILD research and development service performance obligation satisfied during reporting period
Contract With Customer, Liability [Rollforward]
Revenue	$ (217)

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenue:
Total revenue	$ 9,480	$ 0	$ 105,322	$ 0
Operating expenses:
Research and development	34,897	31,200	102,375	105,334
General and administrative	8,502	9,290	26,738	29,398
Total operating expenses	43,399	40,490	129,113	134,732
Loss from operations	(33,919)	(40,490)	(23,791)	(134,732)
Other income (expense)
Interest income	430	405	2,523	1,687
Interest expense	(2,734)	(3,343)	(8,779)	(10,272)
Other income, net	4,288	3,420	9,851	11,648
Total other income, net	1,984	482	3,595	3,063
Loss before provision (benefit) for income taxes	(31,935)	(40,008)	(20,196)	(131,669)
Provision (benefit) for income taxes	(1,132)	0	3,303	0
Net loss	(30,803)	(40,008)	(23,499)	(131,669)
Other comprehensive income (loss):
Foreign currency translation	(2,260)	(170)	(2,244)	(146)
Unrealized gain on marketable securities	547	33	363	102
Other comprehensive loss	(1,713)	(137)	(1,881)	(44)
Comprehensive loss	$ (32,516)	$ (40,145)	$ (25,380)	$ (131,713)
Net loss per share, basic (in dollars per share)	$ (0.14)	$ (0.21)	$ (0.10)	$ (1.03)
Net loss per share, diluted (in dollars per share)	$ (0.14)	$ (0.21)	$ (0.10)	$ (1.03)
Weighted average common shares outstanding, basic (in shares)	226,346,058	192,883,209	226,101,727	128,092,499
Weighted average common shares outstanding, diluted (in shares)	226,346,058	192,883,209	226,101,727	128,092,499
Revenue from sale of licenses
Revenue:
Total revenue	$ 0	$ 0	$ 88,751	$ 0
Revenue from contracts with collaborators
Revenue:
Total revenue	$ 9,480	$ 0	$ 16,571	$ 0

Commitments and Contingencies - Additional Information (Details) $ in Thousands		3 Months Ended		9 Months Ended
	Jul. 09, 2024 USD ($) ft²	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)
Lessee, Lease, Description [Line Items]
Weighted average remaining lease term (in years)		4 years 6 months		4 years 6 months
Cash paid for operating lease liabilities		$ 700	$ 600	$ 2,700	$ 2,500
Rent expense		$ 1,100	$ 900	$ 2,800	$ 2,600
Non-cancelable Lease Agreement Entered in August 2018
Lessee, Lease, Description [Line Items]
Operating sublease, annual increase percentage for base rent				3.00%
Operating lease, weighted average discount rate		7.00%		7.00%
Lease Agreement Entered in August 2024
Lessee, Lease, Description [Line Items]
Operating sublease, annual increase percentage for base rent	3.00%
Leased area \| ft²	18,421
Operating lease, term of contract	63 months
Base rent	$ 109,605
Extension term	1 year
Operating lease, weighted average discount rate		12.40%		12.40%

Balance Sheet Accounts and Supplemental Disclosures - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Balance Sheets Accounts And Supplemental Disclosures [Abstract]
Accrued compensation and benefits	$ 10,004	$ 10,294
Operating lease liabilities	1,748	3,302
Accrued consulting fees	633	643
Accrued interest	3,333	968
Accrued legal fees	19	385
Accrued accounting fees	144	234
Accrued in process research and development	0	10,000
Accrued income tax	1,103	0
Accrued other	439	854
Total accrued expenses and other current liabilities	$ 17,423	$ 26,680

Indebtedness - Additional Information (Details)	May 03, 2024 USD ($)	May 21, 2020 USD ($) tradingDay $ / shares	May 02, 2019 USD ($) tranche
Term Loan \| Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 150,000,000.0
Amount funded			30,000,000.0
Remaining borrowing capacity			$ 120,000,000.0
Number of additional tranches \| tranche			2
Repayment of debt	$ 7,700,000
Term Loan \| Tranche One \| Credit Facility
Debt Instrument [Line Items]
Remaining borrowing capacity			$ 60,000,000.0
Term Loan \| Tranche Two \| Credit Facility
Debt Instrument [Line Items]
Remaining borrowing capacity			$ 60,000,000.0
2027 Notes
Debt Instrument [Line Items]
Interest rate		5.00%
Debt instrument aggregate principal amount		$ 200,000,000.0
Proceeds from convertible debt		$ 193,600,000
Debt instrument conversion ratio		0.0616095
Convertible notes, initial conversion price (in dollars per share) \| $ / shares		$ 16.23
Convertible notes, percentage of conversion price		130.00%
Debt conversion, converted instrument		$ 1,000
Debt instrument, redemption term, threshold trading days		50 days
Convertible notes, redemption percentage		100.00%
Percentage of repurchase price is equal to principal amount of convertible notes		100.00%
Percentage in aggregate principal amount (not less than)		0.25
Debt issuance costs		$ 400,000
2027 Notes \| Maximum
Debt Instrument [Line Items]
Convertible notes, percentage of last reported sale price of common stock		98.00%
2027 Notes \| 130% Applicable Conversion Price \| Minimum
Debt Instrument [Line Items]
Convertible notes, consecutive trading days \| tradingDay		20
2027 Notes \| 130% Applicable Conversion Price \| Maximum
Debt Instrument [Line Items]
Convertible notes, consecutive trading days \| tradingDay		30
2027 Notes \| 98% Applicable Conversion Price \| Minimum
Debt Instrument [Line Items]
Convertible notes, consecutive trading days \| tradingDay		5
2027 Notes \| 98% Applicable Conversion Price \| Maximum
Debt Instrument [Line Items]
Convertible notes, consecutive trading days \| tradingDay		10

Significant Agreements and Contracts - Additional Information (Details) $ in Thousands		3 Months Ended			9 Months Ended
	May 03, 2024 USD ($) performanceObligation license	Sep. 30, 2024 USD ($)	Jun. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)
Effect of exchange rate changes on revenue
Total revenue		$ 9,480		$ 0	$ 105,322	$ 0
Deferred revenue, current		20,327			20,327		$ 0
Long-term contract liabilities		43,780			43,780		0
Accounts receivable		6,588			6,588		0
Chiesi
Effect of exchange rate changes on revenue
Number of significant distinct performance obligations \| performanceObligation	4
Number of licenses granted \| license	2
Commercial efforts contribution, percentage	50.00%
Commercialization activities performance, percentage	50.00%
Up-front, nonrefundable payment received	$ 160,000
Loyalty term, expiration period	10 years
Development cost reimbursement payment	$ 160,000
Contract with customer, liability, fair value of equity option	$ 500
Total revenue		9,480			105,322
Contract Liability		$ 64,107			$ 64,107		$ 0
Revenue recognition period		4 years 3 months 18 days			4 years 3 months 18 days
Accounts receivable		$ 6,600			$ 6,600
Chiesi \| US License
Effect of exchange rate changes on revenue
Number of significant distinct performance obligations \| performanceObligation	2
Total revenue			$ 88,800
Chiesi \| Revenue from PAH research and development service performance obligation satisfied during reporting period
Effect of exchange rate changes on revenue
Total revenue		$ 9,500			$ 16,600
Chiesi \| Maximum
Effect of exchange rate changes on revenue
Collaboration agreement, regulatory milestones receivable	$ 146,000
Collaboration agreement, sales milestones receivable	$ 180,000

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2024	Nov. 04, 2024
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	001-38796
Entity Registrant Name	GOSSAMER BIO, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-5461709
Entity Address, Address Line One	3115 Merryfield Row, Suite 120
Entity Address, City or Town	San Diego
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92121
City Area Code	858
Local Phone Number	684-1300
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Trading Symbol	GOSS
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		226,604,137
Amendment Flag	false
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001728117
Current Fiscal Year End Date	--12-31
Former Address
Document Information [Line Items]
Entity Address, Address Line One	3013 Science Park Road
Entity Address, City or Town	San Diego
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92121

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Commitments and Contingencies

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Leases

The Company leases certain office and laboratory space under a non-cancelable operating lease expiring in January 2025 for the initial leased space and for the expansion space leased pursuant to an amendment to the lease agreement entered into in August 2018. 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.

On July 9, 2024, the Company entered into a lease agreement for office space located at 3115 Merryfield Row, Suite 120, San Diego, CA 92121, consisting of approximately 18,421 square feet. The term of the lease is 63 months commencing on August 1, 2024. The base rent is $109,605 per month effective October 1, 2024, and it is subject to a 3% annual increase every October. The lease expires on October 31, 2029 with an option for a one-year extension and an option to terminate on December 1, 2027 with the payment of a termination fee equal to four months of the then-current base rent upon the termination date.

Monthly rent expense is recognized on a straight-line basis over the term of the leases. The operating leases are included in the condensed consolidated balance sheets at the present value of the lease payments at an incremental borrowing rate of 7% for each of the initial leased space and expansion space and 12.4% for the office lease commenced on August 1, 2024 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.

As of September 30, 2024, the weighted average remaining lease term was 4.5 years.

Lease costs were comprised of the following (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Operating lease cost	$	1,012	$	778	$	2,569	$	2,335
Short-term lease cost	9		13		30		39
Total lease cost	$	1,021	$	791	$	2,599	$	2,374

Cash paid for amounts included in the measurement of operating lease liabilities for the three months ended September 30, 2024 and 2023 was $0.7 million and $0.6 million, respectively, and cash paid for amounts included in the measurement of operating lease liabilities for the nine months ended September 30, 2024 and 2023 was $2.7 million and $2.5 million, respectively.

Gross future minimum annual rental commitments as of September 30, 2024, were as follows (in thousands):


	Undiscounted Rent Payments
Year ending December 31
2024 (remaining 3 months)	$	1,197
2025	1,519
2026	1,397
2027	1,406
2028	1,448
2029	1,237
Total undiscounted rent payments	$	8,204

Present value discount	(1,863)
Present value of lease payments	$	6,341
Current portion of operating lease liabilities (included as a component of accrued expenses and other current liabilities)	1,748
Operating lease liabilities - long-term	4,593
Total operating lease liability	$	6,341

For the three months ended September 30, 2024 and 2023, the Company recorded $1.1 million and $0.9 million, respectively, in rent expense. For the nine months ended September 30, 2024 and 2023, the Company recorded approximately $2.8 million and $2.6 million, respectively, in rent expense. Rent expense is included in research and development and general and administrative expense on the condensed consolidated statements of operations and comprehensive loss.

Balance Sheet Accounts and Supplemental Disclosures (Tables)

9 Months Ended

Sep. 30, 2024

Balance Sheets Accounts And Supplemental Disclosures [Abstract]

Schedule of Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):


	Estimated Useful Life (in years)	September 30, 2024		December 31, 2023
Office equipment	3-7	$	1,097	$	1,097
Computer equipment	5	123		123
Software	3	52		52
Lab equipment	2-5	193		3,246
Leasehold improvements	6-7	2,562		2,562

Total property and equipment		4,027		7,080
Less: accumulated depreciation		(3,725)		(5,432)
Property and equipment, net		$	302	$	1,648

Schedule of Accrued Expenses

Accrued expenses and other current liabilities consisted of the following (in thousands):


	As of
	September 30, 2024		December 31, 2023
Accrued compensation and benefits	$	10,004	$	10,294
Operating lease liabilities	1,748		3,302
Accrued consulting fees	633		643
Accrued interest	3,333		968
Accrued legal fees	19		385

Accrued accounting fees	144		234
Accrued in process research and development	—		10,000
Accrued income tax	1,103		—
Accrued other	439		854
Total accrued expenses and other current liabilities	$	17,423	$	26,680

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities
Net loss	$ (23,499)	$ (131,669)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense	725	1,315
Stock-based compensation expense	15,654	22,486
Amortization of operating lease right-of-use assets	2,351	2,064
Amortization of long-term debt discount and issuance costs	848	1,013
Amortization of premium on marketable securities, net of accretion of discounts	(9,698)	(5,868)
Loss on disposal of property and equipment	621	726
Changes in operating assets and liabilities:
Receivable from contracts with collaborators	(6,588)	0
Prepaid expenses and other current assets	(552)	(6,400)
Other assets	335	31
Operating lease liabilities	(2,351)	(2,216)
Accounts payable	(4,736)	(272)
Accrued expenses and other current liabilities	(9,778)	(1,255)
Accrued research and development expenses	2,499	(3,636)
Accrued compensation and benefits	(290)	(4,483)
Contract liabilities	64,107	0
Accrued interest expense	2,365	2,430
Net cash provided by (used in) operating activities	32,013	(125,734)
Cash flows from investing activities
Purchase of marketable securities	(411,093)	(321,404)
Maturities of marketable securities	386,900	224,800
Net cash used in investing activities	(24,193)	(96,604)
Cash flows from financing activities
Proceeds from issuance of common stock and common warrants in a private offering, net of offering costs	0	201,323
Proceeds from issuance of common stock pursuant to Employee Stock Purchase Plan	629	444
Proceeds from grant of equity option pursuant to Chiesi Collaboration Agreement	464	0
Principal repayments of long-term debt	(12,581)	(8,710)
Net cash provided by (used in) financing activities	(11,488)	193,057
Effect of exchange rate changes on cash and cash equivalents	23	(83)
Net decrease in cash and cash equivalents	(3,645)	(29,364)
Cash and cash equivalents, at the beginning of the period	32,109	111,973
Cash and cash equivalents, at the end of the period	28,464	82,609
Supplemental disclosure of cash flow information:
Cash paid for interest	5,561	6,831
Supplemental disclosure of noncash investing and financing activities:
Operating lease right-of-use asset obtained in exchange for lease liability	5,246	0
Change in unrealized gain on marketable securities, net	$ 363	$ 102

Commitments and Contingencies - Schedule of Gross Future Minimum Annual Rental Commitments (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
2024 (remaining 3 months)	$ 1,197
2025	1,519
2026	1,397
2027	1,406
2028	1,448
2029	1,237
Total undiscounted rent payments	8,204
Present value discount	(1,863)
Present value of lease payments	6,341
Current portion of operating lease liabilities (included as a component of accrued expenses and other current liabilities)	1,748	$ 3,302
Operating lease liabilities - long-term	4,593	$ 144
Total operating lease liability	$ 6,341

Equity Incentive Plans - Schedule of Restricted Stock Activity (Details) - Restricted Stock	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Number of Restricted Stock Units Outstanding
Nonvested beginning balance (in shares) \| shares	427,698
Granted (in shares) \| shares	0
Vested (in shares) \| shares	(427,698)
Forfeited (in shares) \| shares	0
Nonvested ending balance (in shares) \| shares	0
Weighted- Average Grant Date Fair Value
Nonvested beginning balance (in dollars per share) \| $ / shares	$ 10.92
Granted (in dollars per share) \| $ / shares	0
Vested (in dollars per share) \| $ / shares	10.92
Forfeited (in dollars per share) \| $ / shares	0
Nonvested ending balance (in dollars per share) \| $ / shares	$ 0

Fair Value Measurements and Available for Sale Investments - Schedule of Contractual Maturities of Available for Sale Debt Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Fair Value Measurements And Available For Sale Investments [Abstract]
Less than one year	$ 298,570
Greater than one year	0
Total	$ 298,570	$ 264,316

- Definition

Amount of investment in debt security measured at fair value with change in fair value recognized in other comprehensive income (available-for-sale).

+ References

+ Details

Fair Value Measurements and Available for Sale Investments - Schedule of Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury and agency securities and corporate debt securities	$ 298,570	$ 264,316
U.S. Treasury and agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury and agency securities and corporate debt securities	71,561	92,309
Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury and agency securities and corporate debt securities	19,827	3,473
Recurring Basis \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	25,338	25,222
Recurring Basis \| U.S. Treasury and agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury and agency securities and corporate debt securities	71,561	92,309
Recurring Basis \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Commercial paper	207,182	168,534
Recurring Basis \| Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury and agency securities and corporate debt securities	19,827	3,473
Recurring Basis \| Quoted Market Prices for Identical Assets (Level 1) \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	25,338	25,222
Recurring Basis \| Quoted Market Prices for Identical Assets (Level 1) \| U.S. Treasury and agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury and agency securities and corporate debt securities	71,561	92,309
Recurring Basis \| Quoted Market Prices for Identical Assets (Level 1) \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Commercial paper	0	0
Recurring Basis \| Quoted Market Prices for Identical Assets (Level 1) \| Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury and agency securities and corporate debt securities	0	0
Recurring Basis \| Significant Other Observable Inputs (Level 2) \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	0	0
Recurring Basis \| Significant Other Observable Inputs (Level 2) \| U.S. Treasury and agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury and agency securities and corporate debt securities	0	0
Recurring Basis \| Significant Other Observable Inputs (Level 2) \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Commercial paper	207,182	168,534
Recurring Basis \| Significant Other Observable Inputs (Level 2) \| Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury and agency securities and corporate debt securities	19,827	3,473
Recurring Basis \| Significant Unobservable Inputs (Level 3) \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	0	0
Recurring Basis \| Significant Unobservable Inputs (Level 3) \| U.S. Treasury and agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury and agency securities and corporate debt securities	0	0
Recurring Basis \| Significant Unobservable Inputs (Level 3) \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Commercial paper	0	0
Recurring Basis \| Significant Unobservable Inputs (Level 3) \| Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury and agency securities and corporate debt securities	$ 0	$ 0

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets
Cash and cash equivalents	$ 28,464	$ 32,109
Marketable securities	298,570	264,316
Receivable from contracts with collaborators	6,588	0
Prepaid expenses and other current assets	10,646	10,094
Total current assets	344,268	306,519
Property and equipment, net	302	1,648
Operating lease right-of-use assets	6,026	3,131
Other assets	283	618
Total assets	350,879	311,916
Current liabilities
Accounts payable	3,057	5,526
Accrued research and development expenses	10,278	7,779
Current portion of long-term debt	0	11,613
Current contract liabilities	20,327	0
Accrued expenses and other current liabilities	17,423	26,680
Total current liabilities	51,085	51,598
Long-term convertible senior notes	197,285	196,591
Long-term debt	0	814
Operating lease liabilities - long-term	4,593	144
Long-term contract liabilities	43,780	0
Total liabilities	296,743	249,147
Commitments and contingencies (Note 9)
Stockholders' equity
Common stock, $0.0001 par value; 700,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 226,604,138 shares issued and outstanding as of September 30, 2024, and 225,409,315 shares issued and outstanding as of December 31, 2023	23	23
Additional paid-in capital	1,291,883	1,275,136
Accumulated deficit	(1,235,539)	(1,212,040)
Accumulated other comprehensive loss	(2,231)	(350)
Total stockholders' equity	54,136	62,769
Total liabilities and stockholders' equity	$ 350,879	$ 311,916

Equity Incentive Plans - Additional Information (Details) $ / shares in Units, $ in Thousands				3 Months Ended		9 Months Ended
	Jul. 24, 2023 $ / shares shares	May 05, 2023 USD ($) $ / shares shares	Feb. 06, 2019 shares	Sep. 30, 2024 USD ($) shares	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) $ / shares shares	Sep. 30, 2023 USD ($) $ / shares	Dec. 31, 2023 shares	Nov. 30, 2023 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares outstanding awarded (in shares)				35,095,400		35,095,400		23,626,115
Options granted (in shares)		750,000				12,602,228
Options granted (in dollars per share) \| $ / shares		$ 1.36				$ 0.96
Share-based payment arrangement, expense \| $		$ 2,000		$ 4,842	$ 6,162	$ 15,654	$ 22,486
Exercise price (in dollars per share) \| $ / shares		$ 1.36
Share-based payment arrangement, option, exercise price range, shares outstanding		6,817,057
Share-based payment arrangement, plan modification, incremental cost \| $		$ 3,400
Share-based payment arrangement, cancellation percentage		0.33
Share-based payment arrangement, nonvested award, cost not yet recognized, amount \| $		$ 1,400
Warrant term	5 years
Warrants outstanding (in shares)				32,467,360		32,467,360
Private Placement
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Private placement, number of shares (in shares)	129,869,440
Offering price (in dollars per share) \| $ / shares	$ 1.63125
Exercise price of warrants (in dollars per share) \| $ / shares	$ 2.04
Warrant term	5 years
Private Placement \| Officer, Director, Employee or Consultant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Offering price (in dollars per share) \| $ / shares	$ 1.85125
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense \| $				$ 0		$ 0
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield						0.00%
Award vesting period		1 year
Award vesting rights, threshold consecutive days		30 days
Share-based payment arrangement, expense \| $		$ 400
Weighted-average period of cost expects to recognize (in years)		2 years 2 months 12 days				2 years 8 months 12 days
Aggregate intrinsic value, options vested in period \| $						$ 0
Weighted-average grant date fair value (in dollars per share) \| $ / shares						$ 0.78	$ 5.38
Aggregate fair value of stock options vested during period \| $						$ 12,000	$ 17,100
Unrecognized compensation expense \| $				$ 18,900		$ 18,900
Stock Options \| Tranche 1
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights, percentage		50.00%
Award vesting rights, threshold share price \| $ / shares		$ 5.00
Stock Options \| Tranche 2
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights, percentage		25.00%
Award vesting rights, threshold share price \| $ / shares		$ 7.50
Stock Options \| Tranche 3
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights, percentage		25.00%
Award vesting rights, threshold share price \| $ / shares		$ 10.00
Maximum \| Private Placement
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of warrants (in shares)	32,467,360
2023 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (in shares)									6,762,279
Common stock available for issuance (in shares)				4,556,779		4,556,779
Shares reserved for issuance on granting of outstanding awards				2,205,500		2,205,500
2019 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (in shares)			5,750,000
Common stock available for issuance (in shares)				1,225,134		1,225,134
Term of awards (in years)			10 years
Percentage of amount increase in outstanding shares			5.00%
Shares outstanding awarded (in shares)				30,784,020		30,784,020		20,374,879
2019 Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (in shares)			700,000
Common stock available for issuance (in shares)				4,545,812		4,545,812
Term of awards (in years)			10 years
Percentage of amount increase in outstanding shares			1.00%
Number of share issued under ESPP						767,125
Weighted-average period of cost expects to recognize (in years)						10 months 24 days
Unrecognized compensation expense \| $				$ 900		$ 900
2019 Employee Stock Purchase Plan \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Purchase of common stock through payroll deductions, percentage			20.00%
2017 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares outstanding awarded (in shares)				2,105,880		2,105,880		2,178,934
2017 Equity Incentive Plan \| Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards granted (in shares)				0		0

Indebtedness - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Debt, current portion	$ 0	$ 11,613
Debt, non-current portion	$ 0	814
Credit Facility
Debt Instrument [Line Items]
Debt, current portion		11,613
Debt, non-current portion		968
Total debt		12,581
Less: unamortized debt discount and issuance costs		(154)
Debt, net		$ 12,427

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 835
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-Name Accounting Standards Codification
-Section 55
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Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
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-Paragraph 1
-Subparagraph (SX 210.4-08(f))
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 27: http://www.xbrl.org/2009/role/commonPracticeRef
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-URI https://asc.fasb.org/1943274/2147482900/835-30-50-1

+ Details

- Definition

Amount of unamortized debt discount (premium) and debt issuance costs.

+ References + Details

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Equity Incentive Plans - Stock-Based Compensation Expense Reported in Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	May 05, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 2,000	$ 4,842	$ 6,162	$ 15,654	$ 22,486
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense		2,329	3,250	7,752	12,661
General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense		$ 2,513	$ 2,912	$ 7,902	$ 9,825

Licenses, Asset Acquisitions and Contingent Consideration	9 Months Ended
	Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]
Licenses, Asset Acquisitions and Contingent Consideration	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 statements of operations and comprehensive loss. 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 disease 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 $48.0 million, which includes a payment of $5.0 million due upon the initiation of a Phase 3 clinical trial in a second indication, 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. The Company made a milestone payment of $5.0 million in connection with the initiation of the first Phase 2 clinical trial of seralutinib in January 2021 and made a milestone payment of $10.0 million in connection with the initiation of the Phase 3 clinical trial of seralutinib in January 2024. The Company recognized these milestone payments as research and development expense on its condensed consolidated statements of operations and comprehensive loss. As of September 30, 2024, no other milestones had been accrued as the underlying contingencies had not yet been met.

Significant Agreements and Contracts - Summary of Revenues Disaggregated by Timing of Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Effect of exchange rate changes on revenue
Total revenue from Chiesi Collaboration Agreement	$ 9,480	$ 0	$ 105,322	$ 0
Chiesi
Effect of exchange rate changes on revenue
Total revenue from Chiesi Collaboration Agreement	9,480		105,322
Revenue from sale of US license \| Point in Time: \| Chiesi
Effect of exchange rate changes on revenue
Total revenue from Chiesi Collaboration Agreement	0		76,686
Revenue from sale of ROW license \| Point in Time: \| Chiesi
Effect of exchange rate changes on revenue
Total revenue from Chiesi Collaboration Agreement	0		12,050
Revenue from PAH research and development service performance obligation satisfied during reporting period \| Over Time: \| Chiesi
Effect of exchange rate changes on revenue
Total revenue from Chiesi Collaboration Agreement	4,735		8,133
Revenue from PH-ILD research and development service performance obligation satisfied during reporting period \| Over Time: \| Chiesi
Effect of exchange rate changes on revenue
Total revenue from Chiesi Collaboration Agreement	157		217
Revenue from PAH research and development costs subject to reimbursement \| Over Time: \| Chiesi
Effect of exchange rate changes on revenue
Total revenue from Chiesi Collaboration Agreement	3,516		6,812
Revenue from PH-ILD research and development costs subject to reimbursement \| Over Time: \| Chiesi
Effect of exchange rate changes on revenue
Total revenue from Chiesi Collaboration Agreement	1,086		1,419
Effect of exchange rate changes on revenue \| Over Time: \| Chiesi
Effect of exchange rate changes on revenue
Total revenue from Chiesi Collaboration Agreement	$ (14)		$ 5

Equity Incentive Plans (Tables)

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Option Activity

The following table summarizes stock option activity during the nine months ended September 30, 2024:


	Shares Subject to Options Outstanding			Weighted- Average
	Shares	Weighted- Average Exercise Price		Remaining Contractual Life (Years)	Aggregate Intrinsic Value
					(in thousands)
Outstanding as of December 31, 2023	23,626,115	$	2.52	7.9	$	369
Options granted	12,602,228	$	0.96
Options exercised	—	$	—
Options forfeited/cancelled	(1,132,943)	$	1.85
Outstanding as of September 30, 2024	35,095,400	$	1.98	7.7	$	1,212
Options vested and expected to vest as of September 30, 2024	35,095,400	$	1.98	7.7	$	1,212
Options exercisable as of September 30, 2024	12,484,553	$	3.55	5.9	$	19

Schedule of Restricted Stock Activity

The summary of the Company’s restricted stock activity during the nine months ended September 30, 2024 is as follows:


	Number of Restricted Stock Units Outstanding	Weighted- Average Grant Date Fair Value
Nonvested at December 31, 2023	427,698	$	10.92
Granted	—	—
Vested	(427,698)	10.92
Forfeited	—	—
Nonvested at September 30, 2024	—	$	—

Schedule of Stock-Based Compensation Expense Reported in Condensed Consolidated Statements of Operations

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 September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Research and development	$	2,329	$	3,250	$	7,752	$	12,661
General and administrative	2,513		2,912		7,902		9,825
Total stock-based compensation expense	$	4,842	$	6,162	$	15,654	$	22,486

Indebtedness - Schedule of Net Carrying Amount of 2027 Notes (Details) - 2027 Notes - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Principal amount	$ 200,000	$ 200,000
Unamortized debt discount	(2,544)	(3,194)
Unamortized debt issuance cost	(171)	(215)
Debt, net	$ 197,285	$ 196,591

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Indebtedness - Schedule of Interest Expense Recognized (Details) - 2027 Notes - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Debt Instrument [Line Items]
Contractual interest expense	$ 2,500	$ 2,500	$ 7,500	$ 7,500
Amortization of debt discount	219	208	650	615
Amortization of debt issuance cost	15	14	44	41
Total interest expense related to the 2027 Notes	$ 2,734	$ 2,722	$ 8,194	$ 8,156

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Description of Business	9 Months Ended
Description of Business	Sep. 30, 2024
Accounting Policies [Abstract]
Description of Business	Description of Business Gossamer Bio, Inc. (including its subsidiaries, referred to as "we," "us," "our,", or the “Company”) is a clinical-stage biopharmaceutical company focused on the development and commercialization of seralutinib for the treatment of pulmonary arterial hypertension, or PAH, and pulmonary hypertension associated with interstitial lung disease, or PH-ILD. 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, 2024, the Company had an accumulated deficit of $1,235.5 million. From the Company’s inception through September 30, 2024, the Company has funded its operations primarily through equity and debt financings and the Chiesi Collaboration Agreement (as defined in Note 10 below). 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 unaudited 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. Segment Reporting Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the chief operating decision-maker ("CODM") in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment.

Indebtedness (Tables)

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Schedule of Long-term Debt

As of December 31, 2023 the debt outstanding consisted of the following (in thousands):


	December 31, 2023
Debt, current portion	$	11,613
Debt, non-current portion	968
Total debt	12,581
Less: unamortized debt discount and issuance costs	(154)
Debt, net	$	12,427

Schedule of Net Carrying Amount of 2027 Notes

The net carrying amount of the 2027 Notes was as follows (in thousands):


	September 30, 2024		December 31, 2023
Principal amount	$	200,000	$	200,000
Unamortized debt discount	(2,544)		(3,194)
Unamortized debt issuance cost	(171)		(215)
Net carrying amount	$	197,285	$	196,591

Schedule of Interest Expense Recognized

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,
	2024		2023		2024		2023
Contractual interest expense	$	2,500	$	2,500	$	7,500	$	7,500
Amortization of debt discount	219		208		650		615
Amortization of debt issuance cost	15		14		44		41
Total interest expense related to the 2027 Notes	$	2,734	$	2,722	$	8,194	$	8,156

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net income (loss)	$ (30,803)	$ 49,232	$ (41,928)	$ (40,008)	$ (42,496)	$ (49,165)	$ (23,499)	$ (131,669)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

Description of Business (Details) $ in Thousands	9 Months Ended
Description of Business (Details) $ in Thousands	Sep. 30, 2024 USD ($) segment	Dec. 31, 2023 USD ($)
Accounting Policies [Abstract]
Accumulated deficit \| $	$ 1,235,539	$ 1,212,040
Number of operating segments \| segment	1

- Definition

Amount of accumulated undistributed earnings (deficit).

+ References + Details

Condensed Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Total	Common stock	Additional paid-in capital	Accumulated deficit	Accumulated other comprehensive loss
Beginning balance (in shares) at Dec. 31, 2022		94,423,181
Beginning balance at Dec. 31, 2022	$ 12,077	$ 10	$ 1,044,864	$ (1,032,223)	$ (574)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	8,127		8,127
Vesting of restricted stock (in shares)		55,225
Issuance of common stock pursuant to Employee Stock Purchase Plan (in shares)		249,623
Issuance of common stock pursuant to Employee Stock Purchase Plan	367		367
Issuance of common stock for restricted stock units vested (in shares)		716,067
Net income (loss)	(49,165)			(49,165)
Other comprehensive income (loss)	138				138
Ending balance (in shares) at Mar. 31, 2023		95,444,096
Ending balance at Mar. 31, 2023	(28,456)	$ 10	1,053,358	(1,081,388)	(436)
Beginning balance (in shares) at Dec. 31, 2022		94,423,181
Beginning balance at Dec. 31, 2022	12,077	$ 10	1,044,864	(1,032,223)	(574)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(131,669)
Other comprehensive income (loss)	(44)
Ending balance (in shares) at Sep. 30, 2023		225,409,315
Ending balance at Sep. 30, 2023	104,617	$ 23	1,269,104	(1,163,892)	(618)
Beginning balance (in shares) at Mar. 31, 2023		95,444,096
Beginning balance at Mar. 31, 2023	(28,456)	$ 10	1,053,358	(1,081,388)	(436)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	8,197		8,197
Issuance of common stock for restricted stock units vested (in shares)		8,607
Net income (loss)	(42,496)			(42,496)
Other comprehensive income (loss)	(45)				(45)
Ending balance (in shares) at Jun. 30, 2023		95,452,703
Ending balance at Jun. 30, 2023	(62,800)	$ 10	1,061,555	(1,123,884)	(481)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	6,162		6,162
Issuance of common stock pursuant to Employee Stock Purchase Plan (in shares)		87,172
Issuance of common stock pursuant to Employee Stock Purchase Plan	77		77
Issuance of common stock in connection with a private offering, net of offering costs (in shares)		129,869,440
Issuance of common stock in connection with a private offering, net of offering costs	201,323	$ 13	201,310
Net income (loss)	(40,008)			(40,008)
Other comprehensive income (loss)	(137)				(137)
Ending balance (in shares) at Sep. 30, 2023		225,409,315
Ending balance at Sep. 30, 2023	$ 104,617	$ 23	1,269,104	(1,163,892)	(618)
Beginning balance (in shares) at Dec. 31, 2023	225,409,315	225,409,315
Beginning balance at Dec. 31, 2023	$ 62,769	$ 23	1,275,136	(1,212,040)	(350)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	5,811		5,811
Issuance of common stock pursuant to Employee Stock Purchase Plan (in shares)		390,246
Issuance of common stock pursuant to Employee Stock Purchase Plan	348		348
Issuance of common stock for restricted stock units vested (in shares)		419,092
Net income (loss)	(41,928)			(41,928)
Other comprehensive income (loss)	(278)				(278)
Ending balance (in shares) at Mar. 31, 2024		226,218,653
Ending balance at Mar. 31, 2024	$ 26,722	$ 23	1,281,295	(1,253,968)	(628)
Beginning balance (in shares) at Dec. 31, 2023	225,409,315	225,409,315
Beginning balance at Dec. 31, 2023	$ 62,769	$ 23	1,275,136	(1,212,040)	(350)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(23,499)
Other comprehensive income (loss)	$ (1,881)
Ending balance (in shares) at Sep. 30, 2024	226,604,138	226,604,138
Ending balance at Sep. 30, 2024	$ 54,136	$ 23	1,291,883	(1,235,539)	(2,231)
Beginning balance (in shares) at Mar. 31, 2024		226,218,653
Beginning balance at Mar. 31, 2024	26,722	$ 23	1,281,295	(1,253,968)	(628)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	5,001		5,001
Issuance of common stock for restricted stock units vested (in shares)		8,606
Grant of equity option pursuant to Chiesi Collaboration Agreement	464		464
Net income (loss)	49,232			49,232
Other comprehensive income (loss)	110				110
Ending balance (in shares) at Jun. 30, 2024		226,227,259
Ending balance at Jun. 30, 2024	81,529	$ 23	1,286,760	(1,204,736)	(518)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	4,842		4,842
Issuance of common stock pursuant to Employee Stock Purchase Plan (in shares)		376,879
Issuance of common stock pursuant to Employee Stock Purchase Plan	281		281
Net income (loss)	(30,803)			(30,803)
Other comprehensive income (loss)	$ (1,713)				(1,713)
Ending balance (in shares) at Sep. 30, 2024	226,604,138	226,604,138
Ending balance at Sep. 30, 2024	$ 54,136	$ 23	$ 1,291,883	$ (1,235,539)	$ (2,231)

Balance Sheet Accounts and Supplemental Disclosures

9 Months Ended

Sep. 30, 2024

Balance Sheets Accounts And Supplemental Disclosures [Abstract]

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, 2024		December 31, 2023
Office equipment	3-7	$	1,097	$	1,097
Computer equipment	5	123		123
Software	3	52		52
Lab equipment	2-5	193		3,246
Leasehold improvements	6-7	2,562		2,562

Total property and equipment		4,027		7,080
Less: accumulated depreciation		(3,725)		(5,432)
Property and equipment, net		$	302	$	1,648

For the three months ended September 30, 2024 and 2023 the Company recorded approximately $0.2 million and $0.4 million, respectively, in depreciation expense, and for the nine months ended September 30, 2024 and 2023, the Company recorded approximately $0.7 million and $1.3 million, respectively, in depreciation expense, which is included in general and administrative expense and research and development expense on the condensed 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, 2024		December 31, 2023
Accrued compensation and benefits	$	10,004	$	10,294
Operating lease liabilities	1,748		3,302
Accrued consulting fees	633		643
Accrued interest	3,333		968
Accrued legal fees	19		385

Accrued accounting fees	144		234
Accrued in process research and development	—		10,000
Accrued income tax	1,103		—
Accrued other	439		854
Total accrued expenses and other current liabilities	$	17,423	$	26,680

Significant Agreements and Contracts

9 Months Ended

Sep. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Significant Agreements and Contracts

On May 3, 2024, the Company, GB002, Inc., a Delaware corporation and wholly-owned subsidiary of the Company and Gossamer Bio 002 Ltd., a corporation organized and existing under the laws of Ireland and indirect wholly-owned subsidiary of the Company, entered into a global collaboration and license agreement (the “Chiesi Collaboration Agreement”) with Chiesi Farmaceutici S.p.A and Chiesi USA, Inc. (collectively, “Chiesi”). The Company concluded that there were four distinct performance obligations under the Chiesi Collaboration Agreement: the U.S. Territory license (as defined below), the ROW Territory license (as defined below), and the research and development services of both PAH and PH-ILD clinical development. Revenue associated with the licenses was recognized upon delivery in May 2024. In addition, the Company granted to Chiesi an option to purchase the Equity Option, as described in Note 7. "Stockholders Equity."

The collaboration is focused on the development and commercialization of seralutinib and licensed products including seralutinib and related licensed compounds (“Licensed Products”) in the U.S. (“U.S. Territory”) and the rest of the world (“ROW Territory”), for therapeutic, prophylactic and diagnostic uses in humans and animals, for the treatment of PAH and PH-ILD and other indications, as may be permitted under the Chiesi Collaboration Agreement.

Pursuant to the Chiesi Collaboration Agreement, the Company granted two exclusive, sublicensable (with the Company’s consent required in the U.S. Territory for third party sublicenses) licenses to Chiesi under intellectual property rights controlled by the Company relating to seralutinib and Licensed Products, for the worldwide development, manufacture and commercialization of seralutinib and Licensed Products. The licenses granted to Chiesi are subject to retained rights of the Company for the worldwide development and manufacture of seralutinib and Licensed Products, commercialization of Licensed Products in the U.S. Territory, and performance of its obligations and exercise of its rights that may be set forth in the global development plan and US commercialization plan, in each case in accordance with the Chiesi Collaboration Agreement.

The parties agreed to use commercially reasonable efforts to conduct development and commercialization activities in relation to seralutinib and Licensed Products, under the global development plan and US commercialization plan in accordance with the timelines therein. The Company will continue to lead global development of seralutinib in PAH and PH-ILD, and the parties will equally share the costs for the activities included in the global development plan for all Licensed Products, with the exception of the PROSERA Phase 3 study, which the Company will be solely responsible for conducting at the Company’s own

cost and expense. With respect to each country in the ROW Territory, such obligation to equally share such development costs shall end when regulatory approval is received for a Licensed Product in such country. With respect to U.S. Territory, the development costs incurred following regulatory approval shall continue to be shared equally. The Company will lead commercialization for PAH and PH-ILD in the US, with both parties contributing 50 percent of commercial efforts, including performing 50 percent of the commercialization activities. Chiesi will lead commercialization in the US Territory in additional indications, and Chiesi will have the exclusive right to commercialize Licensed Products in the ROW Territory. Chiesi further agreed to use commercially reasonable efforts to commercialize Licensed Products in certain specified countries in the ROW Territory following receipt of regulatory approvals. Generally, the Company will have the right to lead in manufacturing commercial supply of seralutinib and Licensed Products for the U.S. Territory for PAH and PH-ILD, and, subject to any existing obligations of the Company to third party manufacturers, Chiesi will have the right to lead in manufacturing commercial supply of seralutinib and Licensed Products in the ROW Territory, in each case in accordance with the Chiesi Collaboration Agreement.

Pursuant to the Chiesi Collaboration Agreement, neither party nor its affiliates is permitted to develop or commercialize any compound or product throughout the term whose primary mechanism of action is inhibition of a tyrosine kinase for the treatment of PAH or PH-ILD in the U.S. Territory or ROW Territory, subject to certain restrictions for the EU and UK.

In consideration and as reimbursement for the Company’s development costs, Chiesi agreed to pay the Company an up-front, nonrefundable payment of $160 million. Additionally, the Company will be eligible to receive up to $146 million in regulatory milestones and $180 million in sales milestones. In the U.S. Territory, the parties agreed to share commercial profits and losses equally. In the ROW Territory, Chiesi will pay the Company an escalating mid-to-high teens percentage royalty on net sales of Licensed Product for PAH and additional indications on a Licensed Product-by-Licensed Product and country-by-country basis with such payment obligations beginning on the first commercial sale of Licensed Product in such country and expiring on a country-by-country basis on the latest of (a) the expiration of a valid claim to a the Company patent right in such country, (b) the expiration of regulatory exclusivity, and (c) the date that is 10 years after the first commercial sale of such Licensed Product in such country.

Potential future payments for variable consideration, such as regulatory and commercial milestones, development costs, and profit sharing U.S. Territory will be recognized when it is probable that, if recorded, a significant reversal will not take place. Potential future royalty payments will be recorded as revenue when the associated sales occur.

Unless earlier terminated, the Chiesi Collaboration Agreement will remain in force until no Licensed Products are being developed or commercialized in the US Territory and in the ROW Territory, on a country-by-country basis, until no royalty terms are in effect for all countries. Either party may terminate the Chiesi Collaboration Agreement for the other party’s material breach, subject to a specified notice and cure periods, or due to an insolvency event of the other party. In lieu of termination upon a party’s material breach due to non-payment of development costs within a specified time the non-breaching party may elect an alternative remedy which may involve modifications to their performance and payment obligations. The Company has the right to terminate by providing written notice in the event Chiesi or its affiliates or sublicensee brings a patent challenge and Chiesi does not take certain steps to withdraw from or cease supporting such challenge. Chiesi may terminate the Chiesi Collaboration Agreement without cause upon prior written notice to the Company, subject to a notice period in which all rights to Licensed Products and Licensed Compounds will revert back to the Company.

The foregoing description of the Chiesi Collaboration Agreement is not complete and is qualified in its entirety by reference to the full text of the Chiesi Collaboration Agreement, a copy of which was filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2024.

The Company concluded that progress towards completion of the research and development services performance obligation related to the Chiesi Collaboration Agreement is best measured in an amount proportional to the collaboration expenses incurred and the total estimated collaboration expenses. The Company periodically reviews and updates the estimated collaboration expenses, when appropriate, which may adjust revenue recognized for the period. While such changes to the Company’s estimates have no impact on the Company’s reported cash flows, the amount of revenue recorded in the period could be materially impacted. The transaction price to be recognized as revenue from sale of licenses and revenue from contracts with collaborators under the Chiesi Collaboration Agreement consists of the one-time non-refundable and non-creditable development cost reimbursement payment and research and development costs. The transaction price was reduced by the fair value of the Equity Option.

Revenue Recognition

The Company determined the transaction price pursuant to the Chiesi Collaboration Agreement is equal to the one-time development cost reimbursement payment of $160.0 million less the fair market value of the Equity Option of $0.5 million. The

price allocated for the Equity Option was determined to be at fair market value utilizing the Geometric Brownian Motion/Monte Carlo model and was considered a reduction in the transaction price. The transaction price was allocated to the performance obligations on the basis of the relative stand-alone selling price estimated for each performance obligation. In estimating the stand-alone selling price for each performance obligation, the Company developed assumptions that require judgment and included forecasted revenues or costs, expected development timelines, discount rates and probabilities of technical and regulatory success. A description of the distinct performance obligations identified under the Chiesi Collaboration Agreement, as well as the amount of revenue allocated to each distinct significant performance obligation, is as follows:

Licenses of Intellectual Property. The license to the Company’s intellectual property, bundled with the associated know-how, represents two distinct performance obligations. The licenses and associated know-how were transferred to Chiesi in June 2024, therefore the Company recognized the full revenue related to this performance obligation in the amount of $88.8 million during the quarter ended June 30, 2024 as revenue from sale of licenses on its condensed consolidated statements of operations and comprehensive loss.

Research and Development Services. The progress towards completion of the performance obligations related to the research and development services for the Licensed Products is measured in an amount proportional to the research and development expenses incurred and the total estimated research and development expenses. In addition, the Company and Chiesi share equally in the costs of ongoing global seralutinib clinical development, with the exception of the PROSERA Phase 3 study, and the costs of commercialization in the US. The Company records the revenue from performing research and development services and the cost-sharing payments due from Chiesi as revenue from contracts with collaborators on its condensed consolidated statements of operations and comprehensive loss. For the three and nine months ended September 30, 2024, the Company recognized $9.5 million and $16.6 million, respectively, for the PAH and PH-ILD research and development performance obligations.

Milestone Payments. The Company determined that as of September 30, 2024, all the potential milestone payments are probable of significant revenue reversal as their achievement is highly dependent on factors outside the Company's control or are otherwise constrained under the sales and usage based royalty exception. Therefore, these payments have been fully constrained and are therefore not included in the transaction price. At the end of each subsequent reporting period, the Company will re-evaluate the probability of achievement of each milestone and any related constraint. No milestone payments were recognized during the three and nine months ended September 30, 2024.

Royalties. As the licenses are deemed to be the predominant item to which sales-based royalties relate, the Company will recognize revenue when the related sales occur. No royalty revenue was recognized during the three and nine months ended September 30, 2024.


Balance, December 31, 2023	$	—
Payments received in advance	160,000
Revenue from sale of US license	(76,686)
Revenue from sale of ROW license	(12,050)
Revenue from PAH research and development service performance obligations satisfied during reporting period	(8,132)
Revenue from PH-ILD research and development service performance obligations satisfied during reporting period	(217)
Equity Option granted to Chiesi	(464)
Effect of exchange rate changes on contract liabilities	1,656
Balance, September 30, 2024	$	64,107

As of September 30, 2024, the contract liability amount of $64.1 million represents the aggregate transaction price allocated to performance obligations that are unsatisfied under the Chiesi Collaboration Agreement. This amount is expected to be recognized over 4.3 years, which represents the remaining research period under the Chiesi Collaboration Agreement. As of September 30, 2024, the current contract liability balance of $20.3 million is classified as a current liability since the rights to the research and development service are expected to be satisfied within one year, and the remaining contract liability balance of $43.8 million is classified as a long-term liability.

As of September 30, 2024, the Company recorded $6.6 million in accounts receivable associated with the Chiesi Collaboration Agreement.

The following table presents our contract revenues from Chiesi Collaboration Agreement disaggregated by timing of revenue recognition and excluding royalty revenue (in thousands):


	Three Months Ended September 30, 2024		Nine Months ended September 30, 2024
Revenue from Chiesi Collaboration Agreement:
Point in Time:
US License	$	—	$	76,686
ROW License	—		12,050
Over Time:
Revenue from PAH research and development service performance obligation satisfied during reporting period	4,735		8,133
Revenue from PH-ILD research and development service performance obligation satisfied during reporting period	157		217
Revenue from PAH research and development costs subject to reimbursement	3,516		6,812
Revenue from PH-ILD research and development costs subject to reimbursement	1,086		1,419
Effect of exchange rate changes on revenue	(14)		5
Total revenue from Chiesi Collaboration Agreement	$	9,480	$	105,322

Fair Value Measurements and Available for Sale Investments

9 Months Ended

Sep. 30, 2024

Fair Value Measurements And Available For Sale Investments [Abstract]

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 classified as Level 2 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, 2024 and December 31, 2023 (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, 2024
Money market funds	$	25,338	$	25,338	$	—	$	—
U.S. Treasury and agency securities	71,561		71,561		—		—
Commercial paper	207,182		—		207,182		—
Corporate debt securities	19,827		—		19,827		—
As of December 31, 2023
Money market funds	$	25,222	$	25,222	$	—	$	—
U.S. Treasury and agency securities	92,309		92,309		—		—
Commercial paper	168,534		—		168,534		—
Corporate debt securities	3,473		—		3,473		—

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, 2024 and December 31, 2023, the carrying amounts of the Company’s financial instruments, which include 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-term maturities.

There was $0.1 million of interest receivable as of September 30, 2024, and there was no significant interest receivable as of December 31, 2023. Interest receivable is recorded as a component of prepaid expenses and other current assets on the condensed balance sheets.

As of September 30, 2024 and December 31, 2023, the fair value of the Company’s 2027 Notes was $106.5 million and $74.9 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, net 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.


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Total Fair Value
As of September 30, 2024
U.S. Treasury and agency securities	$	71,539	$	22	$	—	$	71,561
Corporate debt securities	19,789		38		—		19,827
Commercial paper	206,813		375		(6)		207,182
Total marketable securities	$	298,141	$	435	$	(6)	$	298,570
Number of securities with unrealized losses					4

As of December 31, 2023
U.S. Treasury and agency securities	$	92,294	$	20	$	(5)	$	92,309
Corporate debt securities	3,467		6		—		3,473
Commercial paper	168,488		76		(30)		168,534
Total marketable securities	$	264,249	$	102	$	(35)	$	264,316
Number of securities with unrealized losses					12

As of September 30, 2024 and December 31, 2023, the Company classified $25.3 million and $25.2 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, 2024 and December 31, 2023, 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, 2024, were as follows (in thousands):


	Estimated Fair Value
Less than one year	$	298,570
Greater than one year	—
Total	$	298,570

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.