goss-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 10-Q

_________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to_________.

Commission File Number: 001-38796

_________________________

GOSSAMER BIO, INC.

(Exact name of Registrant as specified in its charter).

_________________________


Delaware			47-5461709
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

3013 Science Park Road	San Diego	California	92121
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (858) 684-1300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

GOSS

Nasdaq Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

As of November 3, 2023, the registrant had 225,409,314 shares of common stock ($0.0001 par value) outstanding.

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TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

	Item 1	Condensed Consolidated Financial Statements (unaudited)	4
		Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022	4
		Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months ended September 30, 2023 and 2022 (unaudited)	5
		Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Nine Months ended September 30, 2023 and 2022 (unaudited)	6
		Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2023 and 2022 (unaudited)	8
		Notes to Unaudited Condensed Consolidated Financial Statements	9
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	31
	Item 4	Controls and Procedures	32

PART II. OTHER INFORMATION

	Item 1	Legal Proceedings	33
	Item 1A	Risk Factors	33
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	33
	Item 3	Defaults Upon Senior Securities	33
	Item 4	Mine Safety Disclosures	34
	Item 5	Other Information	34
	Item 6	Exhibits	34
		Exhibit Index	35
		Signatures	36

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PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

GOSSAMER BIO, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and par value amounts)


	September 30, 2023		December 31, 2022
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	82,609	$	111,973
Marketable securities	246,279		143,705

Prepaid expenses and other current assets	12,602		6,202
Total current assets	341,490		261,880
Property and equipment, net	1,941		3,981
Operating lease right-of-use assets	3,845		5,909
Other assets	649		680
Total assets	$	347,925	$	272,450
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	1,251	$	1,459
Accrued research and development expenses	11,990		15,626
Current portion of long-term debt	11,613		11,613
Accrued expenses and other current liabilities	17,462		20,532
Total current liabilities	42,316		49,230
Long-term convertible senior notes	196,366		195,709
Long-term debt	3,634		11,988
Operating lease liabilities - long-term	992		3,446
Total liabilities	243,308		260,373
Commitments and contingencies (Note 9)
Stockholders' equity
Common stock, $0.0001 par value; 700,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 225,409,315 shares issued and outstanding as of September 30, 2023, and 94,478,405 shares issued and 94,423,181 shares outstanding as of December 31, 2022	23		10
Additional paid-in capital	1,269,104		1,044,864
Accumulated deficit	(1,163,892)		(1,032,223)
Accumulated other comprehensive loss	(618)		(574)
Total stockholders' equity	104,617		12,077
Total liabilities and stockholders' equity	$	347,925	$	272,450

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GOSSAMER BIO, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share amounts)


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Operating expenses:
Research and development	$	31,200	$	44,509	$	105,334	$	129,411
In process research and development	—		15		—		50
General and administrative	9,290		11,497		29,398		34,775
Total operating expenses	40,490		56,021		134,732		164,236
Loss from operations	(40,490)		(56,021)		(134,732)		(164,236)
Other income (expense)
Interest income	405		465		1,687		989
Interest expense	(3,343)		(3,475)		(10,272)		(10,423)
Other income (expense), net	3,420		(332)		11,648		56
Total other income (expense), net	482		(3,342)		3,063		(9,378)
Net loss	$	(40,008)	$	(59,363)	$	(131,669)	$	(173,614)
Other comprehensive income (loss):
Foreign currency translation	(170)		(173)		(146)		(319)
Unrealized gain (loss) on marketable securities	33		102		102		(311)
Other comprehensive loss	(137)		(71)		(44)		(630)
Comprehensive loss	(40,145)		(59,434)		(131,713)		(174,244)
Net loss per share, basic and diluted	$	(0.21)	$	(0.65)	$	(1.03)	$	(2.14)
Weighted average common shares outstanding, basic and diluted	192,883,209		91,181,427		128,092,499		81,304,089

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GOSSAMER BIO, INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(Unaudited)

(in thousands, except share amounts)


	Common stock			Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total stockholders' equity (deficit)
	Shares	Amount
Balance as of December 31, 2022	94,423,181	$	10	$	1,044,864	$	(1,032,223)	$	(574)	$	12,077

Vesting of restricted stock	55,225	—		—		—		—		—

Stock-based compensation	—	—		8,127		—		—		8,127
Issuance of common stock pursuant to Employee Stock Purchase Plan	249,623	—		367		—		—		367
Issuance of common stock for restricted stock units vested	716,067	—		—		—		—		—
Net loss	—	—		—		(49,165)		—		(49,165)
Other comprehensive income	—	—		—		—		138		138
Balance as of March 31, 2023	95,444,096	$	10	$	1,053,358	$	(1,081,388)	$	(436)	$	(28,456)


Stock-based compensation	—	—		8,197		—		—		8,197
Issuance of common stock for restricted stock units vested	8,607	—		—		—		—		—
Net loss	—	—		—		(42,496)		—		(42,496)
Other comprehensive loss	—	—		—		—		(45)		(45)
Balance as of June 30, 2023	95,452,703	$	10	$	1,061,555	$	(1,123,884)	$	(481)	$	(62,800)
Issuance of common stock and accompanying warrants in connection with a private offering, net of offering costs of $10,779	129,869,440	13		201,310		—		—		201,323


Stock-based compensation	—	—		6,162		—		—		6,162
Issuance of common stock pursuant to Employee Stock Purchase Plan	87,172	—		77		—		—		77

Net loss	—	—		—		(40,008)		—		(40,008)
Other comprehensive loss	—	—		—		—		(137)		(137)
Balance as of September 30, 2023	225,409,315	$	23	$	1,269,104	$	(1,163,892)	$	(618)	$	104,617

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	Common stock			Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive income (loss)		Total stockholders' equity
	Shares	Amount
Balance as of December 31, 2021	75,752,664	$	8	$	932,944	$	(811,534)	$	45	$	121,463
Cumulative-effect adjustment from change in accounting principle	—	—		(53,527)		8,689		—		(44,838)
Vesting of restricted stock	165,675	—		—		—		—		—
Exercise of stock options	39,525	—		126		—		—		126
Stock-based compensation	—	—		10,983		—		—		10,983
Issuance of common stock pursuant to Employee Stock Purchase Plan	77,496	—		595		—		—		595
Issuance of common stock for restricted stock units vested	518,577	—		—		—		—		—
Net loss	—	—		—		(57,785)		—		(57,785)
Other comprehensive loss	—	—		—		—		(385)		(385)
Balance as of March 31, 2022	76,553,937	$	8	$	891,121	$	(860,630)	$	(340)	$	30,159
Vesting of restricted stock	165,675	—		—		—		—		—
Exercise of stock options	8,005	—		21		—		—		21
Stock-based compensation	—	—		9,999		—		—		9,999
Issuance of common stock for restricted stock units vested	8,607	—		—		—		—		—
Net loss	—	—		—		(56,466)		—		(56,466)
Other comprehensive income	—	—		—		—		(174)		(174)
Balance as of June 30, 2022	76,736,224	$	8	$	901,141	$	(917,096)	$	(514)	$	(16,461)
Issuance of common stock in connection with a private offering, net of offering costs of $184	16,649,365	2		119,926		—		—		119,928
Vesting of restricted stock	165,676	—		—		—		—		—
Exercise of stock options	219,573	—		1,576		—		—		1,576
Stock-based compensation	—	—		10,122		—		—		10,122
Issuance of common stock pursuant to Employee Stock Purchase Plan	80,362	—		620		—		—		620
Issuance of common stock for restricted stock units vested	63,000	—		—		—		—		—
Net loss	—	—		—		(59,363)		—		(59,363)
Other comprehensive loss	—	—		—		—		(71)		(71)
Balance as of September 30, 2022	93,914,200	$	10	$	1,033,385	$	(976,459)	$	(585)	$	56,351

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GOSSAMER BIO, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Nine months ended September 30,
	2023		2022
Cash flows from operating activities
Net loss	$	(131,669)	$	(173,614)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	1,315		1,372
Stock-based compensation expense	22,486		31,104
In process research and development expenses	—		50
Amortization of operating lease right-of-use assets	2,064		1,934
Amortization of long-term debt discount and issuance costs	1,013		893
Amortization of discount on marketable securities, net of accretion of discounts	(5,868)		(261)
Loss on disposal of property and equipment	726		—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(6,400)		(1,151)
Other assets	31		451
Operating lease liabilities	(2,216)		(2,030)
Accounts payable	(272)		(2,098)
Accrued expenses and other current liabilities	(1,255)		(1,561)
Accrued research and development expenses	(3,636)		4,541
Accrued compensation and benefits	(4,483)		(1,415)
Accrued interest expense	2,430		2,483
Net cash used in operating activities	(125,734)		(139,302)
Cash flows from investing activities
Research and development asset acquisitions, net of cash acquired	—		(50)
Purchase of marketable securities	(321,404)		(160,641)
Maturities of marketable securities	224,800		151,500
Purchase of property and equipment	—		(308)
Net cash used in investing activities	(96,604)		(9,499)
Cash flows from financing activities
Proceeds from issuance of common stock and common warrants in a private offering, net of offering costs	201,323		119,928
Proceeds from issuance of common stock pursuant to Employee Stock Purchase Plan	444		1,215
Proceeds from the exercise of stock options	—		1,723
Principal repayments of long-term debt	(8,710)		(2,903)
Net cash provided by financing activities	193,057		119,963
Effect of exchange rate changes on cash and cash equivalents	(83)		(1,152)
Net decrease in cash and cash equivalents	(29,364)		(29,990)
Cash, cash equivalents and restricted cash, at the beginning of the period	111,973		183,467
Cash, cash equivalents and restricted cash, at the end of the period	$	82,609	$	153,477

Supplemental disclosure of cash flow information:
Cash paid for interest	$	6,831	$	7,042

Supplemental disclosure of noncash investing and financing activities:
Operating lease right-of-use asset obtained in exchange for lease liability	$	—	$	3,029

Change in unrealized gain (loss) on marketable securities, net	$	102	$	(311)
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities	$	—	$	49

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GOSSAMER BIO, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 - 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 discovering, acquiring, developing and commercializing therapeutics in the disease areas of immunology, inflammation and oncology. The Company was incorporated in the state of Delaware on October 25, 2015 (originally as FSG Bio, Inc.) and is based in San Diego, California.

The unaudited condensed consolidated financial statements include the accounts of Gossamer Bio, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions among the consolidated entity have been eliminated upon consolidation.

Liquidity and Capital Resources

The Company has incurred significant operating losses since its inception. As of September 30, 2023, the Company had an accumulated deficit of $1,163.9 million. From the Company’s inception through September 30, 2023, the Company has funded its operations primarily through equity and debt financings. The Company raised $1,263.2 million from October 2017 through September 30, 2023 through the sale of Series A and Series B convertible preferred stock, issuance of convertible notes, its initial public offering ("IPO"), the Credit Facility and 2027 Notes (as defined in Note 5 below), issuance of common stock in May 2020 and July 2022 and issuance of common stock and accompanying warrants in July 2023 (see Note 7).

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 will have an exercise price per share of $2.04, will be 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 approximately $212.1 million, before deducting offering expenses, which equaled approximately $10.7 million.

The Company expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. As a result, the Company will need to raise additional capital through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. Management believes that it has sufficient working capital on hand to fund operations through at least the next 12 months from the date these condensed consolidated financial statements were available to be issued. There can be no assurance that the Company will be successful in acquiring additional funding, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions of the Securities and Exchange Commission (“SEC”) on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, the condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 17, 2023. 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, 2022, has been derived from the audited financial statements at that date.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the

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reporting period. The most significant estimates in the Company’s condensed consolidated financial statements relate to accrued research and development expenses. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results could differ from those estimates.

Net Loss Per Share

Basic net loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. The Company uses the if-converted method for assumed conversion of the 2027 Notes to compute the weighted average shares of common stock outstanding for diluted net loss per share. Diluted net loss per share excludes the potential impact of the Company’s common stock options, warrants for the purchase of common stock, unvested shares of restricted stock and the potential shares issuable upon conversion of the 2027 Notes because their effect would be anti-dilutive due to the Company’s net loss. Since the Company had a net loss in each of the periods presented, basic and diluted net loss per common share are the same.

The table below provides potentially dilutive securities not included in the calculation of the diluted net loss per share because to do so would be anti-dilutive:


	As of September 30,
	2023	2022
2027 Notes	12,321,900	12,321,900
Shares issuable upon exercise of stock options	18,358,583	12,789,376
Shares issuable upon exercise of warrants	32,467,360	—
Non-vested shares under restricted stock grants	431,531	1,856,688
Total potentially dilutive securities	63,579,374	26,967,964

Note 3 - Balance Sheet Accounts and Supplemental Disclosures

Property and Equipment

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


	Estimated Useful Life (in years)	September 30, 2023		December 31, 2022
Office equipment	3-7	$	1,097	$	1,097
Computer equipment	5	123		123
Software	3	52		130
Lab equipment	2-5	3,168		6,098
Leasehold improvements	6-7	2,562		2,562
Construction in process	N/A	—		83
Total property and equipment		7,002		10,093
Less: accumulated depreciation		(5,061)		(6,112)
Property and equipment, net		$	1,941	$	3,981

For the three months ended September 30, 2023 and 2022 the Company recorded approximately $0.4 million and $0.5 million, respectively, in depreciation expense, and for the nine months ended September 30, 2023 and 2022, the Company recorded approximately $1.3 million and $

SEC Form 10-Q filed by Gossamer Bio Inc.