Gossamer Bio, Inc.

Previous wording

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and Section 27A of the Securities Act of 1933, as amended, or the Securities Act. All statements other than statements of historical facts contained in this quarterly report, including statements regarding our future results of operations and financial position, including performance under the collaboration agreement with Chiesi and the potential future issuance of our common stock to Chiesi pursuant to the equity option, business strategies and plans, research and development plans, the anticipated timing, costs, design and conduct of our ongoing and planned preclinical studies and planned clinical trials for seralutinib, the timing and likelihood of regulatory filings and approvals for seralutinib, timing and likelihood of success, plans and objectives of management for future operations and future results of seralutinib, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Current wording

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and Section 27A of the Securities Act of 1933, as amended, or the Securities Act. All statements other than statements of historical facts contained in this quarterly report, including statements regarding our future results of operations and financial position, including performance under the Chiesi Collaboration Agreement and the potential future issuance of our common stock to Chiesi pursuant to the Equity Option, business strategies and plans, research and development plans, the anticipated timing, costs, design and conduct of our ongoing and planned preclinical studies and planned clinical trials for seralutinib, the timing and likelihood of regulatory filings and approvals for seralutinib, timing and likelihood of success, plans and objectives of management for future operations, the potential of U.S. trade policy, including tariffs, and future results of seralutinib, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Previous wording

We are a clinical-stage biopharmaceutical company focused on the development and commercialization of seralutinib for the treatment of PAH and PH-ILD. Our goal is to be an industry leader in, and to enhance the lives of patients living with PH. In May 2024, we entered into a global collaboration and license agreement, or the collaboration agreement, for seralutinib with Chiesi. In December 2022, we announced positive topline results from the Phase 2 TORREY Study in PAH patients. In the fourth quarter of 2023, we initiated the registrational Phase 3 PROSERA Study in PAH. We expect to report topline data from the PROSERA study in the fourth quarter of 2025. In addition to PAH, we believe that seralutinib holds potential as a therapeutic for the treatment of PH-ILD. We expect to commence a registrational Phase 3 trial in PH-ILD in the middle of 2025. We have assembled a deeply experienced and highly skilled group of industry veterans, scientists, clinicians and key opinion leaders from leading biotechnology and pharmaceutical companies, as well as leading academic centers from around the world. Our employees are a team of highly dedicated, passionate individuals who pride themselves on a culture of respect, humility, transparency, inclusion, dedication, collaboration and fun. Our ultimate goal is to enhance and extend the lives of patients.

Current wording

We are a late-stage, clinical biopharmaceutical company focused on the development and commercialization of seralutinib for the treatment of PH, including PAH and PH-ILD. Our goal is to be an industry leader in, and to enhance the lives of patients living with PH. In May 2024, we entered into the Chiesi Collaboration Agreement focused on the development and commercialization of seralutinib. In December 2022, we announced positive topline results from the Phase 2 TORREY Study in PAH patients. In the fourth quarter of 2023, we initiated the registrational Phase 3 PROSERA Study in PAH. We expect to report topline data from the PROSERA study in February 2026. In addition to PAH, we believe that seralutinib holds potential as a therapeutic for the treatment of PH-ILD. We expect to activate the first clinical sites for the global registrational Phase 3 SERANATA Study for the treatment of PH-ILD in the fourth quarter of 2025. We have assembled a deeply experienced and highly skilled group of industry veterans, scientists, clinicians and key opinion leaders from leading biotechnology and pharmaceutical companies, as well as leading academic centers from around the world. Our employees are a team of highly dedicated, passionate individuals who pride themselves on a culture of respect, humility, transparency, inclusion, dedication, collaboration and fun. Our ultimate goal is to enhance and extend the lives of patients.

Previous wording

We were incorporated in October 2015 and commenced operations in 2017. To date, we have focused primarily on organizing and staffing our company, business planning, raising capital, identifying, acquiring and in-licensing our product candidates and conducting preclinical studies and clinical trials. We have funded our operations primarily through equity and debt financings and the collaboration agreement. We raised $1,394.4 million from October 2017 through September 30, 2024 through the sale of Series A and Series B convertible preferred stock, issuance of convertible notes, proceeds from our

Current wording

We were incorporated in October 2015 and commenced operations in 2017. To date, we have focused primarily on organizing and staffing our company, business planning, raising capital, identifying, acquiring and in-licensing our product candidates and conducting preclinical studies and clinical trials. We have funded our operations primarily through equity and debt financings and the collaboration agreement. As of March 31, 2025, we had $257.9 million in cash, cash equivalents and marketable securities.

Previous wording

We have incurred significant operating losses since our inception and expect to continue to incur significant operating losses for the foreseeable future. For the three months ended September 30, 2024 and 2023, our net loss was $30.8 million and $40.0 million, respectively. For the nine months ended September 30, 2024 and 2023, our net loss was $23.5 million and $131.7 million, respectively. As of September 30, 2024, we had an accumulated deficit of $1,235.5 million. We expect to incur expenses and operating losses for the foreseeable future as we continue our development of and seek regulatory approvals for seralutinib, including the conduct of ongoing and planned clinical trials and other research and development activities; and as we hire additional personnel, protect our intellectual property and incur additional costs associated with being a public company. In addition, as seralutinib progresses through development and toward commercialization, we will need to make milestone payments to Pulmokine from whom we have in-licensed seralutinib. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending in particular on the timing of our clinical trials and preclinical studies and our expenditures on other research and development activities.

Current wording

We have incurred significant operating losses since our inception and expect to continue to incur significant operating losses for the foreseeable future. For the three months ended March 31, 2025 and 2024, our net loss was $36.6 million and $41.9 million, respectively. As of March 31, 2025, we had an accumulated deficit of $1,305.2 million. We expect to incur expenses and operating losses for the foreseeable future as we continue our development of and seek regulatory approvals for seralutinib, including the conduct of ongoing and planned clinical trials and other research and development activities; and as we hire additional personnel, protect our intellectual property and incur additional costs associated with being a public company. In addition, as seralutinib progresses through development and toward commercialization, we will need to make milestone payments to Pulmokine from whom we have in-licensed seralutinib. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending in particular on the timing of our clinical trials and preclinical studies and our expenditures on other research and development activities.

Previous wording

On May 3, 2024, we announced a strategic global partnership with Chiesi. Under the terms of the collaboration agreement, we granted Chiesi exclusive licenses for the worldwide development, manufacture and commercialization of seralutinib and licensed products and an equity option to purchase our common stock. The total potential transaction value includes the one-time $160.0 million development cost reimbursement payment for licenses, research and development funding, and certain regulatory and commercial milestones. The Company is also eligible for double-digit royalties in the mid-to-high teens percentage on tiers of annual net sales outside of the U.S. and to an equal share of profits and losses from the commercialization of seralutinib and licensed products in the U.S.

Current wording

On May 3, 2024, we announced a strategic global partnership with Chiesi. Under the terms of the Chiesi Collaboration Agreement, we granted Chiesi exclusive licenses for the worldwide development, manufacture and commercialization of seralutinib and Licensed Products and an Equity Option to purchase our common stock. The total potential transaction value includes the one-time $160.0 million development cost reimbursement payment for licenses, research and development funding, and certain regulatory and commercial milestones. We and Chiesi share equally in the costs of ongoing global seralutinib clinical development and the costs of commercialization in the U.S. Territory, with the exception of the PROSERA Phase 3 study, for which we bear all costs. We are also eligible for double-digit royalties in the mid-to-high teens percentage on tiers of annual net sales outside of the U.S. Territory and to an equal share of profits and losses from the commercialization of seralutinib and licensed products in the U.S. Territory.

Previous wording

We do not expect to generate any revenue from product sales unless and until we successfully complete development and obtain regulatory approval for seralutinib, which we expect will take a number of years. If we obtain regulatory approval for seralutinib, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, until such time as we can generate substantial product revenues to support our cost structure, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to raise additional capital when needed, we could be forced to delay, limit, reduce or terminate seralutinib development or future commercialization efforts or grant additional rights to develop and market seralutinib even if we would otherwise prefer to retain such rights.

Current wording

We do not expect to generate any revenue from product sales unless and until we successfully complete development and obtain regulatory approval for seralutinib, which we expect will take a number of years. If we obtain regulatory approval for seralutinib, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, until such time as we can generate substantial product revenues to support our cost structure, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to raise additional capital when needed, we could be forced to delay, limit, reduce or terminate seralutinib development or future commercialization efforts or grant additional rights to develop and market seralutinib even if we would otherwise prefer to retain such right.

Previous wording

To date, we have generated all of our revenues from our collaboration agreement with Chiesi. Our revenue consists of a one-time development cost reimbursement payment for licenses and ongoing cost-sharing payments for performance of research and development services.

Current wording

To date, we have generated all of our revenue from Chiesi Collaboration Agreement. Our revenue consists of a one-time development cost reimbursement payment for licenses and ongoing cost-sharing payments for performance of research and development services classified as revenue from contracts with collaborators.

Previous wording

In the future, we may generate revenue from a combination of license fees and other upfront payments, other funded research and development agreements, milestone payments, product sales, other third-party funding, US profit/loss share and royalties in connection with strategic alliances. We expect that any revenue we generate will fluctuate from quarter-to-quarter as a result of the timing of performance of research and development services, the timing of our achievement of regulatory and commercialization milestones, the timing and amount of payments relating to such milestones and the extent to which any of our products are approved and successfully commercialized. If we are unable to fund our development costs or we are unable to develop product candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenues and our results of operations and financial position would be adversely affected.

Current wording

In the future, we may generate revenue from a combination of license fees and other upfront payments, other funded research and development agreements, milestone payments, product sales, other third-party funding, U.S. profit/loss share and royalties in connection with strategic alliances. We expect that any revenue we generate will fluctuate from quarter-to-quarter as a result of the timing of performance of research and development services, the timing of our achievement of regulatory and commercialization milestones, the timing and amount of payments relating to such milestones and the extent to which any of our products are approved and successfully commercialized. If we are unable to fund our development costs or we are unable to develop product candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenues and our results of operations and financial position would be adversely affected.

Previous wording

Research and development expenses relate primarily to preclinical and clinical development of seralutinib and discovery efforts, as well as our discontinued clinical product candidates. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

Current wording

Research and development expenses relate primarily to preclinical and clinical development of seralutinib, as well as our discontinued clinical product candidates. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

Previous wording

•external research and development expenses incurred under agreements with contract research organizations, or CROs, investigative sites and consultants to conduct our clinical trials and preclinical and non-clinical studies;

Current wording

•external research and development expenses incurred under agreements with contract research organizations ("CROs") investigative sites and consultants to conduct our clinical trials and preclinical and non-clinical studies;

Previous wording

•the costs incurred as a result of the COVID-19 pandemic and clinical site staff shortages, including clinical trial delays;

Current wording

•the costs incurred as a result of health epidemics and pandemics and clinical site staff shortages, including clinical trial delays;

Previous wording

Other income, net consists of (1) interest income on our cash, cash equivalents and marketable securities, (2) investment accretion, (3) interest expense related to our Credit Facility and our 2027 Notes, (4) research and development tax credit and (5) other miscellaneous income.

Current wording

Other income, net consists of (1) interest income on our cash, cash equivalents and marketable securities, (2) investment accretion, (3) interest expense related to our Credit Facility prior to its termination and the 2027 Notes, (4) research and development tax credit and (5) other miscellaneous income (expense).

Previous wording

Our management’s discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenue, expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. Other than our accounting for the collaborative arrangements and revenue recognition discussed below, during the nine months ended September 30, 2024, there have been no significant changes in our critical accounting policies and estimates as discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K filed with the SEC on March 5, 2024.

Current wording

Our management’s discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenue, expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. During the three months ended March 31, 2025, there have been no significant changes in our critical accounting policies and estimates as discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K filed with the SEC on March 13, 2025.

Previous wording

Results of Operations – Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

Current wording

Results of Operations – Comparison of the Three Months Ended March 31, 2025 and 2024

Previous wording

For the three and nine months ended September 30, 2024, our revenue was $9.5 million and $105.3 million, respectively. Our revenue is generated from our ongoing collaboration with Chiesi and consists of a one-time development cost reimbursement payment for the licenses and ongoing cost-sharing payments for performance of research and development services.

Current wording

For the three months ended March 31, 2025, our revenue was $9.9 million. Our revenue is generated from our ongoing collaboration with Chiesi and consists of a one-time development cost reimbursement payment for the licenses and ongoing cost-sharing payments for performance of research and development and pre-commercial services.

Previous wording

Research and development expenses were $34.9 million for the three months ended September 30, 2024, compared to $31.2 million for the three months ended September 30, 2023, for an increase of $3.7 million, which was primarily attributable to an increase of $5.7 million of costs associated with preclinical studies and clinical trials for seralutinib, offset by a decrease of $2.0 million of costs associated with preclinical studies and clinical trials for terminated programs.

Current wording

Research and development expenses were $38.0 million for the three months ended March 31, 2025, compared to $32.4 million for the three months ended March 31, 2024, for an increase of $5.6 million, which was primarily attributable to an increase of $6.5 million of costs associated with preclinical studies and clinical trials for seralutinib, offset by a decrease of $0.9 million of costs associated with preclinical studies and clinical trials for terminated programs.

Previous wording

The following table shows our research and development expenses by program for the three and nine months ended September 30, 2024 and 2023:

Current wording

The following table shows our research and development expenses by program for the three months ended March 31, 2025 and 2024:

Previous wording

General and administrative expenses were $8.5 million for the three months ended September 30, 2024, compared to $9.3 million for the three months ended September 30, 2023, for a decrease of $0.8 million, which was primarily attributable to a $0.4 million decrease in stock-based compensation expense and a decrease of $0.4 million in legal expense.

Current wording

General and administrative expenses were $8.7 million for the three months ended March 31, 2025, compared to $9.6 million for the three months ended March 31, 2024, for a decrease of $0.9 million, which was primarily attributable to a $1.6 million decrease in stock-based compensation expense, offset by an increase of $0.4 million in compensation expense and an increase of $0.1 million in professional services expense.

Previous wording

Other income, net was $2.0 million for the three months ended September 30, 2024, compared to other income, net of $0.5 million for the three months ended September 30, 2023, for an increase of $1.5 million, which was primarily attributable to a $0.9 million increase in investment accretion and $0.6 million decrease in interest expense.

Current wording

Other income, net was $0.2 million for the three months ended March 31, 2025, compared to an insignificant amount of other income, net for the three months ended March 31, 2024, for an increase of $0.1 million, which was primarily attributable to a $0.4 million decrease in interest expense, offset by a $0.4 million in investment accretion.

Previous wording

We have incurred substantial operating losses since our inception and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of September 30, 2024, we had an accumulated deficit of $1,235.5 million.

Current wording

We have incurred substantial operating losses since our inception and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of March 31, 2025, we had an accumulated deficit of $1,305.2 million.

Previous wording

Under our license agreement with Pulmokine, we have payment obligations that are contingent upon future events such as our achievement of specified development, regulatory and commercial milestones and are required to make royalty payments in connection with the sale of products developed under the agreement. As of September 30, 2024, we were unable to estimate the timing or likelihood of achieving the milestones or making future product sales. Other contractual obligations include future payments under our 2027 Notes and existing operating leases.

Current wording

Under our license agreement with Pulmokine, we have payment obligations that are contingent upon future events such as our achievement of specified development, regulatory and commercial milestones and are required to make royalty payments in connection with the sale of products developed under the agreement. As of March 31, 2025, we were unable to estimate the timing or likelihood of achieving the milestones or making future product sales. Other contractual obligations include future payments under the 2027 Notes and existing operating leases.

Previous wording

From our inception through September 30, 2024, our operations have been financed primarily by proceeds of $1,394.4 million from the sale of Series A and Series B convertible preferred stock, proceeds from our IPO, proceeds from our 2027 Notes, proceeds from issuance of common stock in May 2020 and July 2022, proceeds from issuance of common stock and accompanying warrants in July 2023 and the collaboration agreement with Chiesi. As of September 30, 2024 we had cash, cash equivalents and marketable securities of $327.0 million. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to capital preservation and liquidity.

Current wording

From our inception through March 31, 2025, our operations have been financed primarily by proceeds of $1,393.2 million from the sale of Series A and Series B convertible preferred stock, proceeds from our IPO, proceeds from the 2027 Notes, proceeds from issuance of common stock in May 2020 and July 2022, proceeds from issuance of common stock and accompanying warrants in July 2023 and the Chiesi Collaboration Agreement. In addition, we have received $13.2 million as of March 31, 2025 through reimbursement related to the Chiesi Collaboration Agreement. As of March 31, 2025 we had cash, cash equivalents and marketable securities of $257.9 million. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to capital preservation and liquidity.

Previous wording

The following table shows a summary of our cash flows for each of the nine months ended September 30, 2024 and 2023, respectively:

Current wording

The following table shows a summary of our cash flows for each of the three months ended March 31, 2025 and 2024, respectively:

Previous wording

During the nine months ended September 30, 2024, operating activities provided approximately $32.0 million of cash, primarily resulting from changes in contract liabilities of $64.1 million and changes in stock-based compensation expense of $15.7 million, reduced by the net loss of $23.5 million, changes in amortization of premium on investments, net of accretion of discount, of $9.7 million, changes in accrued expenses of $9.8 million and changes in accounts payable of $4.7 million.

Current wording

During the three months ended March 31, 2025, operating activities used approximately $39.7 million of cash, primarily resulting from the net loss of $36.6 million and changes in accrued compensation and benefits of $5.8 million, reduced by changes in stock-based compensation expense of $2.4 million.

Previous wording

During the nine months ended September 30, 2023, operating activities used approximately $125.7 million of cash, primarily resulting from a net loss of $131.7 million and changes in prepaid expenses and other current liabilities of $6.4 million, changes in amortization of premium on investments of $5.9 million and changes in accrued compensation and benefits of $4.5 million, reduced by stock-based compensation expense of $22.5 million.

Current wording

During the three months ended March 31, 2024, operating activities used approximately $52.3 million of cash, primarily resulting from a net loss of $41.9 million and changes in accrued expenses of $9.3 million, changes in amortization of premium on marketable securities, net of accretion of premium of $3.0 million and changes in accrued compensation and benefits of $4.6 million, reduced by stock-based compensation expense of $5.8 million.

Previous wording

During the nine months ended September 30, 2024, investing activities used approximately $24.2 million of cash, primarily resulting from the purchases of marketable securities of $411.1 million, offset by the maturities of marketable securities of $386.9 million.

Current wording

During the three months ended March 31, 2025, investing activities provided approximately $22.1 million of cash, primarily resulting from the maturities of marketable securities of $123.1 million, offset by the purchases of marketable securities of $101.0 million.

Previous wording

During the nine months ended September 30, 2023, investing activities used approximately $96.6 million of cash, primarily resulting from the purchases of marketable securities of $321.4 million, offset by the maturities of marketable securities of $224.8 million.

Current wording

During the three months ended March 31, 2024, investing activities provided approximately $61.7 million of cash, primarily resulting from the maturities of marketable securities of $147.8, offset by the purchases of marketable securities of $86.1 million.

Previous wording

During the nine months ended September 30, 2023, financing activities provided $193.1 million of cash, primarily resulting from proceeds from the issuance of common stock and warrants in a private offering of $201.3 million and the proceeds from issuance of common stock pursuant to the ESPP of $0.4 million, reduced by the principal repayments of long-term debt of $8.7 million.

Current wording

During the three months ended March 31, 2025, financing activities provided $0.5 million of cash, primarily resulting from the proceeds from issuance of common stock pursuant to the ESPP of $0.4 million and the proceeds from the exercise of stock options of $0.1 million.

Previous wording

During the nine months ended September 30, 2024, financing activities used $11.5 million of cash, primarily resulting from the principal repayments of long-term debt of $12.6 million, reduced by the proceeds from the grant of an equity option pursuant to the Chiesi Collaboration Agreement of $0.5 million and the proceeds from issuance of common stock pursuant to the ESPP of $0.6 million.

Current wording

During the three months ended March 31, 2024, financing activities used $2.6 million of cash, primarily resulting from the principal repayments of long-term debt of $2.9 million, reduced by the proceeds from issuance of common stock pursuant to the ESPP of $0.3 million.