BridgeBio Pharma Inc.

02/24/2026 | Press release | Distributed by Public on 02/24/2026 15:52

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
You should read the following discussion and analysis of our financial condition and results of operations together with the financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In some cases, you can identify these statements by forward-looking words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "should," "estimate," or "continue," and similar expressions or variations. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in Part I, Item 1A, "Risk Factors" in this Annual Report on Form 10-K. The forward-looking statements in this Annual Report on Form 10-K represent our views as of the date of this Annual Report on Form 10-K. Except as may be required by law, we assume no obligation to update these forward-looking statements or the reasons that results could differ from these forward-looking statements. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Annual Report on Form 10-K.
Overview
BridgeBio Pharma, Inc. ("BridgeBio," the "Company," or "we"), is a commercial-stage, multi-product biopharmaceutical company organized around a portfolio operating model to discover, develop, and deliver medicines for patients with genetic diseases. We seek to translate advances in genetic science into therapies for patient populations with significant unmet medical needs.
As described in Part I, Item 1. "Business" of this Annual Report on Form 10-K, we currently generate material revenues from one commercial product and have multiple product candidates in late-stage development. Acoramidis received FDA approval on November 22, 2024 as Attruby, and it received approval as Beyonttra from (i) the European Commission ("EC") on February 10, 2025, (ii) the Japanese Ministry of Health, Labour and Welfare on March 27, 2025 (pricing approval from the National Health Insurance in Japan was subsequently obtained on May 21, 2025), and (iii) the United Kingdom Medicines and Healthcare Products Regulatory Agency in the UK in April 2025. In Part I, Item 1. "Business" you can also find a summary of key events in 2024 and 2025 to date related to our commercial product and our late-stage development programs.
Since our inception in 2015, we have focused substantially all of our efforts and financial resources on acquiring and developing product and technology rights, building our intellectual property portfolio and conducting research and development activities for our product candidates and commercial product, and driving commercialization of acoramidis within our wholly-owned subsidiaries and controlled entities, including partially-owned subsidiaries and subsidiaries we consolidate based on our deemed majority control of such entities as determined using either the variable interest entity ("VIE model"), or the voting interest entity ("VOE model"). To support these activities, we and our wholly-owned subsidiary, BridgeBio Services, Inc., (i) identify and secure new programs, (ii) set up new wholly-owned subsidiaries or controlled entities, (iii) recruit key management team members, (iv) raise and allocate capital across the portfolio and (v) provide certain shared services, including accounting, legal, information technology, administrative, and human resources, as well as workspaces. To date, we have funded our operations with proceeds from the sale of our equity securities, issuance of convertible notes, debt borrowings, royalty monetization, cash proceeds from net product revenue and royalty revenue, and upfront and milestone payments received from licensing arrangements.
We have incurred significant operating losses since our inception. For the years ended December 31, 2025 and 2024, we incurred net losses of $732.9 million and $543.3 million, respectively. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the success of our commercialization strategy for Attruby and Beyonttra, and the development and eventual commercialization of our product candidates at our wholly-owned subsidiaries and controlled entities. Further, we may not realize the anticipated efficiencies and other benefits of our past and any future restructuring initiatives. Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending may have a material adverse effect on our ability to achieve our intended business objectives. We expect to continue to incur operating and net losses for at least the next several years.
On January 21, 2026, we issued an aggregate of $632.5 million principal amount of our 0.75% Convertible Senior Notes due 2033 (the "2033 Notes"), pursuant to an Indenture dated January 21, 2026 (the "2033 Notes Indenture"), between us and U.S. Bank Trust Company, National Association, as trustee (the "2033 Notes Trustee"), in a private offering to qualified institutional buyers (the "2026 Note Offering") pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). The 2033 Notes issued in the 2026 Note Offering include $82.5 million aggregate principal amount of the 2033 Notes sold to the initial purchasers of the 2033 Notes (the "2033 Notes Initial Purchasers") pursuant to the exercise in full of the 2033 Notes Initial Purchasers' option to purchase additional 2033 Notes. We received net proceeds from the 2026 Note Offering of approximately $619.3 million, after deducting the 2033 Notes Initial Purchasers' discount and offering costs. We used approximately $82.5 million of the net proceeds from the 2026 Note Offering to pay for the repurchase of 1,081,825 shares of BridgeBio's common stock. We intend to use the remainder of the net proceeds from the 2026 Note Offering to settle future conversion obligations in respect of or repay at maturity a portion of our 2.50% Convertible Senior Notes due 2027 (the "2027 Notes"), on or before the maturity date of the 2027 Notes and for general corporate purposes, which may include working capital, capital expenditures and/or debt repayment.
On June 27, 2025 (the "Closing Date"), we and our subsidiary, Eidos Therapeutics, Inc. ("Eidos"), entered into a Royalty Interest Purchase and Sale Agreement (the "Royalty Purchase Agreement") with Acoramidis Royalty SPV, LP ("ARS"), an affiliate of HealthCare Royalty Management, LLC ("HCRx"), as a purchaser and the purchaser representative (in such capacity, the "Purchaser Representative"), and LSI Financing Fund, LP, an affiliate of Blue Owl Capital Corporation, as a purchaser (together with ARS as a purchaser and any future permitted assignees of a purchaser, the "Royalty Agreement Purchasers"). Subsequent to the Closing Date, on July 30, 2025, KKR & Co. Inc., a beneficial holder of our common equity and a related party, acquired a majority ownership interest in HCRx. Accordingly, HCRx became our related party following KKR & Co. Inc.'s acquisition of HCRx.
Pursuant to the Royalty Purchase Agreement, Eidos sold to the Royalty Agreement Purchasers certain of Eidos' right to receive certain royalty payments ("Purchased Royalty Payment") on net sales of certain products containing acoramidis (the "Licensed Products") made in the European Union ("EU") and all member and extension states of the European Patent Organization (the "Licensed Territory") under (i) an exclusive license agreement, dated as of March 1, 2024, by and among Bayer Consumer Care AG ("Bayer"), Eidos and our other subsidiaries party thereto, as amended from time to time (the "Bayer License Agreement") and (ii) an amended and restated license agreement, effective as of June 30, 2023, by and between Eidos and our other subsidiary, BridgeBio International GmbH. As consideration for the sale of the Purchased Royalty Payment, the Royalty Agreement Purchasers agreed to pay Eidos $300.0 million in cash (the "Purchase Price"), which was funded in full on the Closing Date. The Royalty Agreement Purchasers' rights to the Purchased Royalty Payment are subject to (a) an annual cap equal to 60% of all royalty payments paid by Bayer to Eidos and its affiliates under the Bayer License Agreement on the first $500.0 million of annual net sales of Licensed Products in the Licensed Territory under the Bayer License Agreement and (b) an initial hard cap equal to 145% of the Purchase Price. Refer to Liquidity and Capital Resourcessection for additional details regarding this agreement.
On February 28, 2025, we issued an aggregate of $575.0 million principal amount of our 2031 Notes pursuant to an Indenture dated February 28, 2025 (the "2031 Notes Indenture"), between us and U.S. Bank Trust Company, National Association, as trustee (the "2031 Notes Trustee"), in a private offering to qualified institutional buyers (the "2025 Note Offering") pursuant to Rule 144A under the Securities Act. The 2031 Notes issued in the 2025 Note Offering include $75.0 million aggregate principal amount of 2031 Notes sold to the initial purchasers (the "2031 Notes Initial Purchasers") pursuant to the exercise in full of the 2031 Notes Initial Purchasers' option to purchase additional 2031 Notes. We received net proceeds from the 2025 Note Offering of approximately $563.0 million, after deducting the 2031 Notes Initial Purchasers' discount and offering costs. We used approximately $48.3 million of the net proceeds from the 2025 Note Offering to pay for the repurchase of 1,405,411 shares of BridgeBio's common stock and used a portion of the net proceeds from the 2025 Note Offering to repay all outstanding borrowings under, and terminate, the Financing Agreement, as defined below, and pay any fees related thereto.
On March 1, 2024, our subsidiaries, Eidos, BridgeBio International GmbH and BridgeBio Europe B.V. (collectively, "the Seller Parties"), entered into an exclusive license agreement (the "Bayer License Agreement") with Bayer Consumer Care AG, a wholly-owned subsidiary of Bayer AG ("Bayer"), to develop and commercialize acoramidis as a treatment for transthyretin amyloidosis in the EU and all member and extension states of the European Patent Organization (the "Licensed Territory"). Under the terms of the Bayer License Agreement, the Seller Parties granted Bayer an exclusive license on March 26, 2024 to certain of the Seller Parties' intellectual property rights to develop, manufacture and commercialize acoramidis (previously known as AG10) in the Licensed Territory. In consideration for the license grant, the Seller Parties are entitled to receive an upfront payment of $135.0 million, which was received in full in May 2024, and will be eligible to receive up to $150.0 million in regulatory and sales milestone payments through 2026 (of which a regulatory milestone of $75.0 million was achieved in February 2025 upon EC approval of acoramidis under the brand name Beyonttra and received in April 2025), and additional payments up to $450.0 million subject to the achievement of certain sales milestones. In addition, the Seller Parties are entitled to receive royalties according to a tiered structure starting in the low-thirties percent on net sales by Bayer of acoramidis in the Licensed Territory, subject to reduction under certain circumstances as provided in the Bayer License Agreement.
On January 17, 2024, we and our subsidiaries, Eidos, BridgeBio Europe B.V. and BridgeBio International GmbH (collectively, the "Seller Parties"), entered into a Funding Agreement (the "Funding Agreement") with LSI Financing 1 Designated Activity Company and CPPIB Credit Europe S.à r.l. (together and with any future permitted assignees of a seller party, the "Funding Agreement Purchasers"), and Alter Domus (US) LLC, as the collateral agent. In connection with the Royalty Purchase Agreement described above, the Funding Agreement was amended on June 27, 2025. All terms and conditions of the Funding Agreement remain substantially unchanged. Refer to Liquidity and Capital Resourcessection for additional details regarding this agreement.
On January 17, 2024, we entered into a Financing Agreement with each of the guarantors, which was amended on February 12, 2024 (the "Financing Agreement") and June 20, 2024 (the Financing Agreement, as amended by the Second Amendment, the "Amended Financing Agreement"), with the lenders party thereto (the "Lenders") and Blue Owl Capital Corporation, as administrative agent for the Lenders (the "Administrative Agent"). On February 28, 2025, we fully repaid the Amended Financing Agreement for $467.0 million, which consisted of $450.0 million for the outstanding principal, $9.0 million for the prepayment fee, and $8.0 million in accrued interest using the proceeds from the 2031 Notes and recognized a loss on extinguishment of debt of $21.2 million. Refer to Note 9 of our notes to the consolidated financial statement section for additional details regarding this agreement and transaction. Refer to Liquidity and Capital Resourcessection for additional details regarding this agreement.
In September 2019, Eidos, entered into an exclusive license agreement with Alexion Pharma International Operations Limited Company, a subsidiary of Alexion Pharmaceuticals, Inc. (together, "Alexion") (the "Eidos-Alexion License Agreement"), to develop, manufacture, and commercialize in Japan the compound known as acoramidis (previously known as AG10) and any of its various chemical forms and any pharmaceutical products containing acoramidis. Under the Eidos-Alexion License Agreement, Eidos received an upfront nonrefundable payment of $25.0 million, and following pricing approval from the National Health Insurance in Japan in May 2025, the regulatory milestone was fully achieved and recognized as license and services revenue, and in June 2025, Eidos received the $30.0 million regulatory milestone payment. Under the Eidos-Alexion License Agreement, Eidos is eligible to receive royalties in the low-teens based on net sales of acoramidis in Japan.
Due to the inherently unpredictable nature of preclinical and clinical development, and given our novel therapeutic approaches and the stage of development of our product candidates, we cannot determine and are unable to estimate with certainty the timelines we will require and the costs we will incur for the development of our product candidates. Clinical and preclinical development timelines and costs, and the potential of development success, can differ materially from expectations due to a variety of factors.
We continuously evaluate our restructuring initiatives to streamline our operations and are committed to a restructuring program designed to drive operational changes, improve efficiencies and achieve cost savings to advance our corporate strategy and development programs. Our restructuring initiatives could include, among other components, consolidation and rationalization of our facilities, reprioritization of development programs and the reduction in our workforce. Our estimate of the costs is subject to certain assumptions and actual results may differ from those estimates or assumptions. We may also incur additional costs that are not currently foreseeable as we continue to evaluate our restructuring alternatives to drive operational changes in business processes, efficiencies and cost savings. During the years ended December 31, 2025 and 2024, our restructuring, impairment, and related charges amounted to $21.3 million and $15.6 million, respectively, which consisted primarily of winding down costs, exit and other related costs, and severance and employee-related costs.
Results of Operations
The following table summarizes the results of our operations for the periods indicated:
Years Ended December 31,
2025 2024
(in thousands)
Total revenues, net $ 502,076 $ 221,902
Total cost of revenues $ 20,962 $ 3,878
Research and development $ 451,953 $ 506,461
Selling, general and administrative $ 531,225 $ 288,931
Restructuring, impairment, and related charges $ 21,347 $ 15,605
Loss from operations $ (523,411) $ (592,973)
Interest income $ 19,854 $ 17,249
Interest expense $ (53,103) $ (90,991)
Noncash interest expense on deferred royalty obligations (1) $ (125,138) $ (8,299)
Gain on deconsolidation of subsidiaries $ - $ 178,321
Loss on extinguishments of debt $ (21,155) $ (26,590)
Net loss from equity method investments $ (72,608) $ (31,183)
Other income, net $ 43,058 $ 12,272
Provision for income taxes $ 435 $ 1,153
Net loss $ (732,938) $ (543,347)
Net loss attributable to redeemable convertible noncontrolling interests and
noncontrolling interests 		$ 8,007 $ 7,585
Net loss attributable to common stockholders of BridgeBio $ (724,931) $ (535,762)
(1)Including a related party amount of $(10,944) for the year ended December 31, 2025 (as described in Note 10 to our consolidated financial statements).
Cash, Cash Equivalents and Marketable Securities
The following table summarizes our cash, cash equivalents and marketable securities as of the following periods:
December 31, 2025 December 31, 2024
(in thousands)
Cash and cash equivalents $ 570,119 $ 681,101
Marketable securities 17,363 -
Total cash, cash equivalents and marketable securities $ 587,482 $ 681,101
As of December 31, 2025, we had cash, cash equivalents and marketable securities of $587.5 million, compared to cash and cash equivalents of $681.1 million as of December 31, 2024.
Revenues, Net
The following table summarizes our revenues for the following periods:
Years Ended December 31,
2025 2024 Change
(in thousands)
Net product revenue $ 362,368 $ 2,884 $ 359,484
License and services revenue 128,322 218,849 (90,527)
Royalty revenue 11,386 169 11,217
Total revenues, net $ 502,076 $ 221,902 $ 280,174
Total revenues, net increased by $280.2 million for the year ended December 31, 2025, compared to 2024, which consisted of an increase of $359.5 million in net product revenue, a decrease of $90.5 million in license and services revenue, and an increase of $11.2 million in royalty revenue.
Net product revenue for the year ended December 31, 2025 was $362.4 million. This revenue was generated from the commercial sale of Attruby in the U.S. following FDA approval in November 2024.
License and services revenue decreased for the year ended December 31, 2025, compared to 2024, primarily due to recognition of $207.7 million of upfront license fees and services revenue recognized in 2024 under the Bayer License Agreement and KKC License Agreement. License and services revenue in 2025 primarily consisted of $105.0 million recognized for milestone achievements following approval of Beyonttra in the EU and pricing approval of Beyonttra in Japan. The remaining change in license and services revenue is primarily driven by service revenue recognized on the non-refundable upfront payments received in 2024 and from the sale of clinical and commercial product supply to our collaboration partners.
Royalty revenue for the year ended December 31, 2025 was $11.4 million. This revenue primarily relates to royalties earned from net product sales of Beyonttra in the EU, following EC approval in February 2025, and in Japan, following pricing approval in May 2025.
The level of license and services revenue that we recognize depends in part upon the estimated recognition period of the upfront payments allocated to continuing performance obligations, the achievement of milestones and other contingent events, the level of effort incurred for research and development contracted services, and the impact of entering into new licensing and collaboration agreements, if any. In addition, following the FDA approval of Attruby on November 22, 2024, we commercialized Attruby in the U.S. and anticipate our future revenue to primarily be generated from recurring net product revenue. Furthermore, following the regulatory approvals of Beyonttra in the EU in February 2025, in Japan in March 2025 and in the UK in April 2025, we anticipate significant future royalty revenue to be generated from the commercial sales of Beyonttra by Bayer and Alexion.
Operating Costs and Expenses
Cost of Revenues
The following table summarizes our cost of revenues for the following periods:
Years Ended December 31,
2025 2024 Change
(in thousands)
Cost of goods sold $ 15,687 $ 1,442 $ 14,245
Cost of license, services, and royalty revenue 5,275 2,436 2,839
Total cost of revenues $ 20,962 $ 3,878 $ 17,084
Total cost of revenues increased by $17.1 million for the year ended December 31, 2025, compared to 2024, primarily due to an increase of $14.3 million in cost of goods sold and an increase of $2.8 million in cost of license, services, and royalty revenue.
Cost of goods sold for the years ended December 31, 2025 and 2024 consists of manufacturing costs, transportation and freight-in, and indirect overhead costs (including salary and benefits related and stock-based compensation expenses) associated with the commercial manufacturing and distribution of Attruby, and third-party royalties associated with our net product revenue. We began incurring cost of goods sold following FDA approval and commercial launch of Attruby in November 2024.
Cost of license, services, and royalty revenue for the years ended December 31, 2025 and 2024, consists mainly of third-party royalties associated with commercial sales of Beyonttra, manufacturing costs relating to product supply of Beyonttra to our collaboration partners, and amortization of intangible assets for milestones achieved upon FDA approval from our license and collaboration agreements. We began incurring royalties and manufacturing costs associated with commercial sales of Beyonttra upon its approval in the EU, Japan, and the UK in 2025.
Research and Development Expenses
The following table summarizes our research and development expenses for the following periods:
Years Ended December 31,
2025 2024 Change
(in thousands)
Research and development $ 451,953 $ 506,461 $ (54,508)
Research and development expenses decreased by $54.5 million for the year ended December 31, 2025, compared to 2024. The decrease consisted of a $32.4 million decrease in external costs, a $9.4 million decrease in personnel-related expenses, and a $0.6 million decrease in stock-based compensation expenses, which are collectively primarily driven by decreased R&D activities related to the Attruby and Beyonttra program following regulatory approval and the reprioritization of our R&D programs. In addition, there was a $12.1 million decrease in license fees due to timing of milestones achieved.
Research and development costs consist primarily of external costs, such as fees paid to consultants, contractors, CMOs, and contract research organizations ("CROs"), as well as purchase of APIs in connection with our preclinical, contract manufacturing and clinical development activities; internal costs such as personnel and facility costs, and are tracked on a program-by-program basis. License fees and other costs incurred after a product candidate has been designated and that are directly related to the product candidate are included in the specific program expense. License fees and other costs incurred prior to designating a product candidate are included in early-stage development and research programs, which are presented in the following table in "Other development programs" and "Other research programs," respectively.
The following table summarizes our research and development expenses by program incurred for the following periods:
Years Ended December 31,
2025 2024
(in thousands)
Acoramidis for the treatment of ATTR-CM and primary prevention in
asymptomatic carriers of a pathogenic TTR variant 		$ 116,844 $ 164,782
Infigratinib for achondroplasia and hypochondroplasia 122,685 91,869
BBP-418 for LGMD2I/R9 56,008 40,220
Encaleret for ADH1 59,955 49,091
Other development programs 22,703 71,732
Other research programs 73,758 88,767
Total $ 451,953 $ 506,461
Selling, General and Administrative Expenses
The following table summarizes our selling, general and administrative expenses for the following periods:
Years Ended December 31,
2025 2024 Change
(in thousands)
Selling, general and administrative $ 531,225 $ 288,931 $ 242,294
Selling, general and administrative expenses increased by $242.3 million for the year ended December 31, 2025, compared to 2024. The increase was primarily driven by a $132.9 million increase in external costs and a $88.6 million increase in personnel-related expenses, largely due to activities supporting our commercial launch and ongoing activities of Attruby, as well as a $20.8 million increase in stock-based compensation expenses.
Restructuring, Impairment, and Related Charges
The following table summarizes our restructuring, impairment, and related charges during the periods indicated:
Years Ended December 31,
2025 2024 Change
(in thousands)
Restructuring, impairment, and related charges $ 21,347 $ 15,605 $ 5,742
As discussed in Note 16 to our consolidated financial statements, we continuously evaluate our restructuring initiatives to streamline our operations and are committed to a restructuring program designed to drive operational changes, improve efficiencies and achieve cost savings to advance our corporate strategy and development programs. Our restructuring initiatives could include, among other components, consolidation and rationalization of our facilities, reprioritization of development programs and the reduction in our workforce. Our estimate of the costs is subject to certain assumptions and actual results may differ from those estimates or assumptions. We may also incur additional costs that are not currently foreseeable as we continue to evaluate our restructuring alternatives to drive operational changes in business processes, efficiencies and cost savings.
Other Income (Expense), Net
Interest Income
The following table summarizes our interest income during the periods indicated:
Years Ended December 31,
2025 2024 Change
(in thousands)
Interest income $ 19,854 $ 17,249 $ 2,605
Interest income has historically consisted of interest income earned on our cash, cash equivalents and marketable securities. Generally, increases and decreases in interest income during the years ended December 31, 2025 and 2024 are attributable to changes in the interest-bearing average balances of our cash, cash equivalents, marketable securities, and fluctuations in interest rates.
Interest Expense
The following table summarizes our interest expense during the periods indicated:
Years Ended December 31,
2025 2024 Change
(in thousands)
Interest expense $ (53,103) $ (90,991) $ 37,888
Interest expense consists primarily of interest expense incurred under our 2031 Notes issued in February 2025, our 2029 Notes issued in January 2021, and our 2027 Notes issued in March 2020. Refer to Note 9 to our consolidated financial statements.
Our outstanding term loan principal balance under our Amended Financing Agreement was fully repaid on February 28, 2025 upon receipt of proceeds from the 2031 Notes. Refer to the Liquidity and Capital Resourcessection below and Note 9 to our consolidated financial statements.
Noncash Interest Expense on Deferred Royalty Obligations
The following table summarizes our noncash interest expense on deferred royalty obligations during the periods indicated:
Years Ended December 31,
2025 2024 Change
(in thousands)
Noncash interest expense on deferred royalty obligations $ (125,138) $ (8,299) $ (116,839)
Noncash interest expense consists primarily of interest expense accreted on our deferred royalty obligations, net under the Funding Agreement and Royalty Purchase Agreement. Refer to Note 10 to our consolidated financial statements.
Gain on Deconsolidation of Subsidiaries
The following table summarizes our gain on deconsolidation of subsidiaries during the periods indicated:
Years Ended December 31,
2025 2024 Change
(in thousands)
Gain on deconsolidation of subsidiaries $ - $ 178,321 $ (178,321)
As more fully discussed in Note 6 to our consolidated financial statements, TheRas, Inc. ("Legacy BBOT"), completed a $200.0 million private equity financing with external investors on April 30, 2024. As a result of the private equity financing transaction, we deconsolidated Legacy BBOT on April 30, 2024 and recognized a gain from deconsolidation of $126.3 million for the year ended December 31, 2024.
As more fully discussed in Note 6 to our consolidated financial statements, we deconsolidated GondolaBio, LLC ("GondolaBio"), inclusive of Portal Therapeutics, Inc. and Sub21, Inc., on August 16, 2024, and recognized a gain from deconsolidation of $52.0 million for the year ended December 31, 2024.
Loss on Extinguishments of Debt
The following table summarizes our loss on extinguishments of debt during the periods indicated:
Years Ended December 31,
2025 2024 Change
(in thousands)
Loss on extinguishments of debt $ (21,155) $ (26,590) $ 5,435
On February 28, 2025, upon receipt of proceeds from the 2031 Notes, we fully repaid the term loan under the Amended Financing Agreement and recognized a loss on extinguishment of debt of $21.2 million on our consolidated statements of operations. On January 17, 2024, upon receipt of proceeds from the Financing Agreement, we fully repaid the term loan under the Amended Loan Agreement and recognized a loss on extinguishment of debt of $26.6 million on our consolidated statements of operations. Refer to Note 9 to our consolidated financial statements.
Net Loss from Equity Method Investments
The following table summarizes our share in net loss of equity method investments during the periods indicated:
Years Ended December 31,
2025 2024 Change
(in thousands)
Net loss from equity method investments $ (72,608) $ (31,183) $ (41,425)
Subsequent to the deconsolidation of GondolaBio on August 16, 2024 and Legacy BBOT on April 30, 2024, we account for our investments in GondolaBio and Legacy BBOT (now referred to as "BBOT" as the new combined company as more fully discussed in Note 6 to our consolidated financial statements) using the equity method of accounting. For the year ended December 31, 2025 we recorded net loss from the equity method investments in GondolaBio and BBOT of $35.1 million and $37.5 million, respectively. For the year ended December 31, 2024 we recorded net loss from equity method investments in GondolaBio and Legacy BBOT of $8.5 million and $22.7 million, respectively.
Other Income, Net
The following table summarizes our other income, net during the periods indicated:
Years Ended December 31,
2025 2024 Change
(in thousands)
Other income, net $ 43,058 $ 12,272 $ 30,786
The increase of $30.8 million for the year ended December 31, 2025, compared to 2024, was primarily driven by $19.7 million of other income recorded for the change in fair value of the embedded derivative liability component of our deferred royalty obligation under the Funding Agreement, $8.8 million of noncash income from our equity method investments, and a $7.4 million increase in income recognized under the Transition Service Agreements with GondolaBio and BBOT, partially offset by a $5.8 million decrease in net realized gains from our investment in equity securities.
Provision for Income Taxes
The following table summarizes our provision for income taxes during the periods indicated:
Years Ended December 31,
2025 2024 Change
(in thousands)
Provision for income taxes $ 435 $ 1,153 $ (718)
We are subject to U.S. federal, state and foreign income taxes as a corporation. For U.S. federal income tax purposes, we are required to file a consolidated U.S. federal income tax return for the consolidated entities that meet the requirements as prescribed by the consolidated regulations. Those entities that do not meet the threshold to be included in the consolidated filing continue to file separate U.S. federal income tax returns. To the extent we incur operating losses in the periods in which we are treated as a corporation for tax purposes, net operating loss carryforwards may generally be used by us to offset cash taxes on future taxable income, subject to applicable tax laws.
Current tax law in the U.S. imposes tax on U.S. stockholders for global intangible low-taxed income ("GILTI") earned by certain foreign subsidiaries. The Company is required to make an accounting policy election of either: (1) treating taxes due on future amounts included in the U.S. taxable income related to GILTI as a current period tax expense when incurred ("the period cost method"); or (2) factoring such amounts into the Company's measurement of its deferred tax expense (the "deferred method"). The Company has elected the period cost method for its accounting for GILTI.
Beginning in 2022, the 2017 Tax Cuts and Jobs Act amended Section 174 of the Internal Revenue Code of 1986, as amended, to eliminate current-year deductibility of research and experimentation ("R&E") expenditures and software development costs (collectively, "R&E expenditures") and instead require taxpayers to charge their R&E expenditures to a capital account amortized over five years (15 years for expenditures attributable to R&E activity performed outside the U.S.). The Company generated a deferred tax asset for capitalized R&E expenditures for the year ended December 31, 2024 which was fully offset by a valuation allowance. On July 4, 2025, the current administration signed the One Big Beautiful Bill Act ("OBBBA"), which includes comprehensive U.S. corporate tax legislation. The legislation includes the modification and permanent extension of prior tax law under the Tax Cuts and Jobs Act and the introduction of new provisions such as permanently reinstating the immediate deduction of domestic specified research and experimental expenditures, permanent changes in the limitations for deducting business interest expense, and permanently restoring bonus depreciation allowances. Following the enactment of the OBBBA, we are no longer capitalizing domestic research and experimental expenditures as of December 31, 2025. Due to our valuation allowance on deferred tax assets, this tax law change did not result in a material impact to our consolidated financial statements.
As of December 31, 2025, we have net operating loss carryforwards available to reduce future taxable income, if any, for federal and state income tax purposes of approximately $1.7 billion and $462.2 million, respectively.
The federal net operating losses generated prior to 2018 amounting to $10.8 million will begin to expire in 2036, losses generated after 2018 amounting to $1.6 billion will carry over indefinitely and will be subject to an 80% taxable income limitation in the year utilized. State net operating losses will generally begin to expire in 2036. We also have foreign net operating loss carryforwards of $543.0 million available to reduce future taxable income, if any, which will begin to expire in 2030.
As of December 31, 2025, we have federal research and development and orphan drug credit carryforwards of approximately $141.3 million, which will expire beginning in 2038 if not utilized.
As of December 31, 2025, we have California and other state research and development tax credit carryforwards of $37.4 million. The state research and development tax credits will expire at various dates while the California research and development tax credits will carry over indefinitely.
A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes our historical operating losses and forecast of future losses, we provided a valuation allowance against the U.S. federal, state, and foreign deferred tax assets resulting from the tax losses and credits carried forward.
The valuation allowance increased by $240.7 million, $55.2 million and $138.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Utilization of the net operating loss and credit carryforwards may be subject to a substantial annual limitation due to an ownership change limitation as provided by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. In the event that we have a change of ownership, utilization of the net operating loss and tax credit carryforwards may be restricted.
Net Loss Attributable to Redeemable Convertible Noncontrolling Interests and Noncontrolling Interests
The following table summarizes our net loss attributable to redeemable convertible noncontrolling interests and noncontrolling interests during the periods indicated:
Years Ended December 31,
2025 2024 Change
(in thousands)
Net loss attributable to redeemable convertible noncontrolling interests and
noncontrolling interests 		$ 8,007 $ 7,585 $ 422
Net loss attributable to redeemable convertible noncontrolling interests and noncontrolling interests on our consolidated statements of operations consists of the portion of the net loss of those consolidated entities that is not allocated to us. Changes in the amount of net loss attributable to noncontrolling interests are directly impacted by changes in the net loss of our consolidated entities and are the result of ownership percentage changes. Refer to Note 5 to our consolidated financial statements.
Liquidity and Capital Resources
We have historically financed our operations primarily through the sale of our equity securities, issuance of convertible notes, debt borrowings, royalty monetization, cash proceeds from net product revenue and royalties, and upfront and milestone payments received from licensing arrangements. As of December 31, 2025, we have cash, cash equivalents, and marketable securities of $587.5 million, including funds held by our wholly-owned subsidiaries and controlled entities. As of December 31, 2025, we have outstanding debt of $1.9 billion and deferred royalty obligations of $866.3 million, both of which are net of amortization of debt discount and issuance costs.
Since inception, we have incurred significant operating losses. For the years December 31, 2025 and 2024, we incurred net losses of $732.9 million and $543.3 million, respectively. We incurred net cash outflow from operations of $445.9 million and $520.7 million for the same periods, respectively. We had an accumulated deficit as of December 31, 2025 and 2024 of $3.8 billion and $3.1 billion, respectively. While we have undertaken a restructuring initiative to drive operational change in business processes, efficiencies and cost savings, we expect to continue to incur operating and net losses over the next several years as we continue to fund our drug development and discovery efforts, as well as costs related to commercial launch readiness for our late-stage programs. In particular, to the extent we advance our programs into and through later-stage clinical trials without a partner, we will incur substantial expenses. In addition, we may not be able to generate significant revenues from product sales of any of our product candidates, even if any of our product candidates are approved for commercial sale. Further, we may not realize the anticipated efficiencies and other benefits of our past and any future restructuring initiatives. Our current business plan is also subject to significant uncertainties and risks as a result of, among other factors, our ability to generate net product revenue sufficient to achieve profitability, which will depend heavily on the successful development and eventual commercialization of our product candidates at our consolidated entities as well as our ability to partner in the development of certain late-stage clinical programs.
Our short-term and long-term liquidity requirements include contractual payments related to our 2033 Notes (refer to Note 19 to our consolidated financial statements), 2031 Notes, 2029 Notes, and 2027 Notes (refer to Note 9 to our consolidated financial statements), our deferred royalty obligations, net under the Funding Agreement and Royalty Purchase Agreement (refer to Note 10 to our consolidated financial statements), obligations under our real estate leases (refer to Note 13 to our consolidated financial statements), accounts payable, accrued liabilities and the remaining liabilities under our restructuring initiative (refer to Note 16 to our consolidated financial statements).
We also have performance-based milestone compensation arrangements with certain employees and consultants, whose vesting is contingent upon meeting various regulatory and development milestones, with fixed monetary amounts known at inception that can be settled in the form of cash or equity at our sole election, upon achievement of each contingent milestone (refer to Note 8 to our consolidated financial statements).
Additionally, we have certain contingent payment obligations under various license and collaboration agreements in which we are required to make milestone payments upon successful completion and achievement of certain intellectual property, clinical, regulatory and sales milestones. We also enter into agreements in the normal course of business with CROs and other vendors for clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are generally cancelable upon written notice with potential termination charges.
We continue to evaluate our research and development pipelines and restructure our business to streamline costs and expenses. We also continue to explore business opportunities to partner, divest or delay certain research and development programs to drive operational changes in our business processes, efficiencies and cost savings to advance our corporate strategy and development programs. We expect that these initiatives, including restructuring, will reduce our operating expenses.
We expect our cash, cash equivalents and marketable securities will fund our operations for at least the next 12 months from the date of filing of this Annual Report on Form 10-K based on current operating plans and financial forecasts. If our current operating plans or financial forecasts change, as a result of general market and economic conditions, inflationary pressures, supply chain issues, our commercialization of Attruby/Beyonttra, and timing of commercialization of our product candidates we may require additional funding sooner in the form of public or private equity offerings, debt financings or additional collaborations and licensing arrangements. However, future financing may not be available in amounts or on terms acceptable to us, if at all.
In addition, we are closely monitoring ongoing developments in connection with economic conditions, inflationary pressures, evolving regulatory and policy landscapes, supply chain issues, our commercialization of Attruby/Beyonttra, and timing of commercialization of our product candidates which may negatively impact our financial and operating results. We will continue to assess our operating costs and expenses and our cash and cash equivalents and marketable securities and, if circumstances warrant, we will make appropriate adjustments to our operating plan.
Sources of Liquidity
Revenue from Attruby Sales
We currently generate material revenues from one commercial product, Attruby, which received FDA approval on November 22, 2024, for the treatment of transthyretin amyloidosis. Product sales of Attruby represent an important source of our liquidity and cash inflows beginning in 2025. As commercialization efforts continue to expand and market adoption increases, we expect product sales of Attruby to provide a growing and recurring source of operating cash flow to support our commercial activities and research and development.
Revenue from licensing and collaboration agreements
On March 1, 2024, our subsidiaries, Eidos, BridgeBio International GmbH and BridgeBio Europe B.V. (collectively, "the Seller Parties"), entered into the Bayer License Agreement with Bayer to develop and commercialize acoramidis as a treatment for transthyretin amyloidosis in the EU and all member states of the European Patent Organization (the "Licensed Territory"). Under the terms of the Bayer License Agreement, the Seller Parties granted Bayer an exclusive license on March 26, 2024 to certain of the Seller Parties' intellectual property rights to develop, manufacture and commercialize acoramidis (previously known as AG10) in the Licensed Territory. In consideration for the license grant, the Seller Parties received an upfront payment of $135.0 million in May 2024 and will be eligible to receive up to $150.0 million in regulatory and sales milestone payments through 2026 (of which a regulatory milestone of $75.0 million was achieved and recognized as license and services revenue in February 2025 upon EC approval of acoramidis under the brand name Beyonttra and received in April 2025), and additional payments up to $450.0 million subject to the achievement of certain sales milestones. In addition, the Seller Parties are entitled to receive royalties according to a tiered structure starting in the low-thirties percent on net sales by Bayer of acoramidis in the Licensed Territory, subject to reduction under certain circumstances as provided in the Bayer License Agreement.
On February 7, 2024, our subsidiary, QED, and Kyowa Kirin Co., Ltd ("Kyowa Kirin" or "KKC") entered into a license and collaboration agreement pursuant to which QED granted Kyowa Kirin an exclusive license to develop, manufacture, and commercialize infigratinib for achondroplasia, hypochondroplasia, and other skeletal dysplasias in Japan in accordance with the terms therein (the "KKC License Agreement"). In consideration for the license grant, QED is entitled to receive an upfront payment of $100.0 million, which was received in full in June 2024, and will be eligible to receive development and sales milestone payments up to $81.4 million. In addition, QED is entitled to receive royalties up to the mid-twenties percent on net sales of infigratinib in Japan.
In September 2019, Eidos entered into the Eidos-Alexion License Agreement with Alexion to develop, manufacture, and commercialize in Japan the compound known as acoramidis (previously known as AG10) and any of its various chemical forms and any pharmaceutical products containing acoramidis. Under the Eidos-Alexion License Agreement, Eidos received an upfront nonrefundable payment of $25.0 million, and in June 2025, Eidos received a regulatory milestone payment of $30.0 million following pricing approval from the National Health Insurance in Japan. Under the Eidos-Alexion License Agreement, Eidos is eligible to receive royalties in the low-teens based on net sales of acoramidis in Japan.
Deferred Royalty Obligations, net
Royalty Interest Purchase and Sale Agreement
On June 27, 2025 (the "Closing Date"), we and Eidos entered into a Royalty Interest Purchase and Sale Agreement (the "Royalty Purchase Agreement") with Acoramidis Royalty SPV, LP ("ARS"), an affiliate of HealthCare Royalty Management, LLC ("HCRx"), as a purchaser and the purchaser representative (in such capacity, the "Purchaser Representative"), and LSI Financing Fund, LP, an affiliate of Blue Owl Capital Corporation, as a purchaser (together with ARS as a purchaser and any future permitted assignees of a purchaser, the "Royalty Agreement Purchasers"). Subsequent to the Closing Date, on July 30, 2025, KKR & Co. Inc., a beneficial holder of our common equity and a related party, acquired a majority ownership interest in HCRx. Accordingly, HCRx became our related party following KKR & Co. Inc.'s acquisition of HCRx.
Pursuant to the Royalty Purchase Agreement, Eidos sold to the Royalty Agreement Purchasers certain of Eidos' right to receive certain royalty payments ("Purchased Royalty Payment") on net sales of certain products containing acoramidis (the "Licensed Products") made in the EU and all member and extension states of the European Patent Organization (the "Licensed Territory") under (i) an exclusive license agreement, dated as of March 1, 2024, by and among Bayer (as described in Note 11), Eidos and our other subsidiaries party thereto, as amended from time to time (the "Bayer License Agreement") and (ii) an amended and restated license agreement, effective as of June 30, 2023, by and between Eidos and our other subsidiary, BridgeBio International GmbH. As consideration for the sale of the Purchased Royalty Payment, the Royalty Agreement Purchasers agreed to pay Eidos $300.0 million in cash (the "Purchase Price"), which was funded in full on the Closing Date. The Royalty Agreement Purchasers' rights to the Purchased Royalty Payment are subject to (a) an annual cap equal to 60% of all royalty payments paid by Bayer to Eidos and its affiliates under the Bayer License Agreement on the first $500.0 million of annual net sales of Licensed Products in the Licensed Territory under the Bayer License Agreement and (b) an initial hard cap equal to 145% of the Purchase Price.
In addition, we and our subsidiary, Eidos, granted the Purchaser Representative, for the benefit of the Royalty Agreement Purchasers, a security interest in specific assets related to the Purchased Royalty Payment. The Royalty Purchase Agreement also contains certain representations and warranties, indemnification obligations, events of default and other provisions that are customary for transactions of this nature.
Upon the occurrence of a change of control of the Company, the successor entity has an option to either (a) assume the obligations of the Company and/or Eidos under the Royalty Purchase Agreement or (b) pay the Royalty Agreement Purchasers an amount equal to the then-applicable hard cap, less total payments already made to the Royalty Agreement Purchasers, plus any other amounts payable under the Royalty Purchase Agreement (the "Change of Control Payment"), upon payment of which no further payments will be due to the Royalty Agreement Purchasers or the Purchaser Representative under the Royalty Purchase Agreement.
If an event of default occurs and is continuing, Eidos is required to immediately pay the Change of Control Payment to the Royalty Agreement Purchasers.
Refer to Note 10 to our consolidated financial statements for other details.
Funding Agreement
On January 17, 2024, we and Eidos, BridgeBio Europe B.V. and BridgeBio International GmbH (collectively, the "Seller Parties") entered into a Funding Agreement (the "Funding Agreement") with LSI Financing 1 Designated Activity Company and CPPIB Credit Europe S.à r.l. (together and with any future permitted assignees of a seller party, the "Funding Agreement Purchasers"), and Alter Domus (US) LLC, as the collateral agent.
Pursuant to the Funding Agreement, the Funding Agreement Purchasers agreed to pay us $500.0 million (net of certain transaction expenses) (the "Investment Amount") upon the first FDA approval of acoramidis, subject to certain conditions relating to the FDA approval and other customary conditions (such date of payment, the "Funding Date").
In return, we granted the Funding Agreement Purchasers the right to receive payments (the "Royalty Interest Payments") equal to 5% of the global net sales of acoramidis (the "Net Sales"). Under certain conditions relating to the sales performance of acoramidis, the rate of the Royalty Interest Payments may adjust to a maximum rate of 10% in 2027. Each Royalty Interest Payment will become payable to the Funding Agreement Purchasers on a quarterly basis after the Funding Date. In addition, the Seller Parties granted the collateral agent, for the benefit of the Funding Agreement Purchasers, a security interest in specific assets related to acoramidis.
The Funding Agreement Purchasers' rights to the Royalty Interest Payments and ownership interest in Net Sales will terminate upon the earlier of the Funding Agreement Purchasers' receipt of (a) Royalty Interest Payments equal to $950.0 million (the "Cap Amount") and (b) a buy-out payment ("Buy-Out Payment") in an amount determined in accordance with the Funding Agreement but that will not exceed the Cap Amount. In the event that a change of control (as customarily defined in the Funding Agreement) occurs on or after the effective date of the Funding Agreement, the Purchasers may elect to require the Seller Parties to make the Buy-Out Payment and the Funding Agreement will be terminated upon payment in-full of the Seller Parties' obligations under the Funding Agreement (including the Buy-Out Payment and all reimbursable expenses). The Funding Agreement will also terminate upon customary events.
Following the FDA approval of Attruby on November 22, 2024, and in accordance with the Funding Agreement (as described below), we received net cash proceeds of $472.5 million after deducting debt discount and issuance costs paid of $27.5 million in December 2024.
Under the Funding Agreement, the Seller Parties are required to comply with various covenants, including using commercially reasonable efforts to obtain regulatory approval for and commercialize acoramidis, providing the Funding Agreement Purchasers with certain clinical, commercial, regulatory and intellectual property updates and certain financial statements, and providing notices upon the occurrence of certain events, each as agreed under the Funding Agreement. The Funding Agreement also contains certain representations and warranties, indemnification obligations, put-option events and other provisions that are customary for transactions of this nature.
In connection with the Royalty Purchase Agreement described above, the Funding Agreement was amended on June 27, 2025. All terms and conditions of the Funding Agreement remain substantially unchanged.
Refer to Note 10 to our consolidated financial statements for other details.
Debt
As of December 31, 2025, we have borrowings under the 2031 Notes, the 2029 Notes, and the 2027 Notes, which are discussed below.
2031 Notes, net
On February 28, 2025, we issued an aggregate of $575.0 million principal amount of our 2031 Notes pursuant to the 2031 Indenture dated February 28, 2025 between us and the 2031 Notes Trustee in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act.
The 2031 Notes accrue interest payable semiannually in arrears on March 1 and September 1 of each year, beginning on September 1, 2025, at a rate of 1.75% per year. The 2031 Notes will mature on March 1, 2031, unless earlier converted, redeemed or repurchased. The 2031 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.
We received net proceeds from the 2025 Note Offering of approximately $563.0 million, after deducting the 2031 Notes Initial Purchasers' discount and offering costs. We used approximately $48.3 million to pay for the repurchase of shares of our common stock and used a portion of the net proceeds from the 2025 Note Offering to repay all outstanding borrowings under, and terminate, the Financing Agreement, and pay any fees related thereto.
A holder of 2031 Notes may convert all or any portion of its 2031 Notes at its option at any time prior to the close of business on the business day immediately preceding December 2, 2030 in multiples of $1,000 only under certain circumstances.
We may not redeem the 2031 Notes prior to March 6, 2028. We may redeem for cash all or any portion of the 2031 Notes, at our option, on a redemption date occurring on or after March 6, 2028 and on or before the 41stscheduled trading day immediately before the maturity date, under certain circumstances. No sinking fund is provided for the 2031 Notes. If we undergo a fundamental change (as defined in the 2031 Notes Indenture), holders may require us to repurchase for cash all or any portion of their 2031 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2031 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2031 Notes Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the 2031 Notes Trustee or the holders of not less than 25% in aggregate principal amount of the 2031 Notes then outstanding may declare the entire principal amount of all the Notes plus accrued special interest, if any, to be immediately due and payable. The 2031 Notes are our general unsecured obligations and rank senior in right of payment to all of our indebtedness that is expressly subordinated in right of payment to the 2031 Notes; equal in right of payment with all of our liabilities that are not so subordinated, including our 2029 Notes and 2027 Notes; effectively junior to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.
Refer to Note 9 to our consolidated financial statements for other details, including our future minimum payments under the 2031 Notes.
2029 Notes, net
In January and February 2021, we issued an aggregate principal amount of $747.5 million of our 2029 Notes, pursuant to an Indenture dated January 28, 2021 (the "2029 Notes Indenture"), between us and U.S. Bank National Association, as trustee (the "2029 Notes Trustee"), in a private offering to qualified institutional buyers (the "2021 Note Offering"), pursuant to Rule 144A under the Securities Act.
The 2029 Notes accrue interest payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2021, at a rate of 2.25% per year. The 2029 Notes will mature on February 1, 2029, unless earlier converted, redeemed or repurchased. The 2029 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.
We received net proceeds from the 2021 Note Offering of approximately $731.4 million, after deducting the 2029 Notes Initial Purchasers' discount (there were no direct offering expenses borne by us for the 2029 Notes). We used approximately $61.3 million of the net proceeds from the 2021 Note Offering to pay for the cost of the 2021 Capped Call Transactions and approximately $50.0 million to pay for the repurchase of shares of our common stock.
A holder of 2029 Notes may convert all or any portion of its 2029 Notes at its option at any time prior to the close of business on the business day immediately preceding November 1, 2028 only under certain circumstances.
On or after November 1, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its 2029 Notes at any time.
We may not redeem the 2029 Notes prior to February 6, 2026. We may redeem for cash all or any portion of the 2029 Notes, at our option, on a redemption date occurring on or after February 6, 2026 and on or before the 41stscheduled trading day immediately before the maturity date, under certain circumstances. No sinking fund is provided for the 2029 Notes. If we undergo a fundamental change (as defined in the 2029 Notes Indenture), holders may require us to repurchase for cash all or any portion of their 2029 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2029 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2029 Notes Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the 2029 Notes Trustee or the holders of not less than 25% in aggregate principal amount of the 2029 Notes then outstanding may declare the entire principal amount of all the Notes plus accrued special interest, if any, to be immediately due and payable. The 2029 Notes are our general unsecured obligations and rank senior in right of payment to all of our indebtedness that is expressly subordinated in right of payment to the 2029 Notes; equal in right of payment with all of our liabilities that are not so subordinated, including our 2027 Notes; effectively junior to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.
Refer to Note 9 to our consolidated financial statements for other details, including our future minimum payments under the 2029 Notes.
2027 Notes, net
In March 2020, we issued an aggregate principal amount of $550.0 million of our 2027 Notes, pursuant to an Indenture dated March 9, 2020 (the "2027 Notes Indenture"), between us and U.S. Bank National Association, as trustee (the "2027 Notes Trustee"), in a private offering to qualified institutional buyers (the "2020 Note Offering"), pursuant to Rule 144A under the Securities Act. The 2027 Notes issued in the 2020 Note Offering include $75.0 million in aggregate principal amount of 2027 Notes sold to the initial purchasers (the "2027 Notes Initial Purchasers") resulting from the exercise in full of their option to purchase additional 2027 Notes.
The 2027 Notes are senior, unsecured obligations of BridgeBio and accrue interest payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2020, at a rate of 2.50% per year. The 2027 Notes will mature on March 15, 2027, unless earlier converted or repurchased. Upon conversion, the 2027 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.
We received net proceeds from the 2020 Note Offering of approximately $537.0 million, after deducting the Initial Purchasers' discount and offering expenses. We used approximately $49.3 million of the net proceeds from the 2020 Note Offering to pay for the cost of the Capped Call Transactions, and approximately $75.0 million to pay for the repurchases of shares of our common stock.
A holder of 2027 Notes may convert all or any portion of its 2027 Notes at its option at any time prior to the close of business on the business day immediately preceding December 15, 2026 only under certain circumstances.
On or after December 15, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its 2027 Notes at any time.
We may not redeem the 2027 Notes prior to the maturity date, and no sinking fund is provided for the 2027 Notes. If we undergo a fundamental change (as defined in the Indenture), holders may require us to repurchase for cash all or any portion of their 2027 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2027 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the 2027 Notes then outstanding may declare the entire principal amount of all the Notes plus accrued special interest, if any, to be immediately due and payable. The 2027 Notes are our general unsecured obligations and rank senior in right of payment to all of our indebtedness that is expressly subordinated in right of payment to the 2027 Notes; equal in right of payment with all of our liabilities that are not so subordinated; effectively junior to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.
Refer to Note 9 to our consolidated financial statements for other details, including our future minimum payments under the 2027 Notes.
As of December 31, 2025, the 2029 Notes were not convertible. The holders of the 2027 Notes and 2031 Notes, however, have the right to convert their notes during the period from January 1, 2026 through March 31, 2026 because an early conversion condition relating to the price of BridgeBio's common stock, as discussed above, was met, which resulted in the 2027 Notes and 2031 Notes becoming convertible for a limited period beginning January 1, 2026. Notwithstanding the satisfaction of this conversion condition, the 2027 Notes and 2031 Notes were classified as noncurrent liabilities as of December 31, 2025 because the Company has the ability to settle any conversions in shares of BridgeBio's common stock, as permitted under the terms of the 2027 Notes Indenture and 2031 Notes Indenture, respectively.
Subsequent Event - 2033 Notes, net
On January 21, 2026, we issued an aggregate of $632.5 million principal amount of our 0.75% Convertible Senior Notes due 2033(the "2033 Notes") pursuant to an Indenture dated January 21, 2026 (the "2033 Notes Indenture"), between us and U.S. Bank Trust Company, National Association, as trustee (the "2033 Notes Trustee"), in a private offering to qualified institutional buyers (the "2026 Note Offering") pursuant to Rule 144A under the Securities Act. The 2033 Notes issued in the 2026 Note Offering include $82.5 million aggregate principal amount of 2033 Notes sold to the initial purchasers (the "2033 Notes Initial Purchasers") pursuant to the exercise in full of the 2033 Notes Initial Purchasers' option to purchase additional 2033 Notes. We received net proceeds from the 2026 Note Offering of approximately $619.3million, after deducting the 2033 Notes Initial Purchasers' discount and offering costs. We used approximately $82.5 million of the net proceeds from the 2026 Note Offering to pay for the repurchase of 1,081,825 shares of our common stock and intend to use the remaining net proceeds from the 2026 Note Offering to settle future conversion obligations in respect of or repay at maturity a portion of our 2027 Notes, on or before the maturity date of the 2027 Notes and for general corporate purposes, which may include working capital, capital expenditures and/or debt repayment.
Refer to Note 19 to our consolidated financial statements for further details.
Public offerings
In March 2024, we entered into an Underwriting Agreement (the "2024 Follow-on Agreement") with J.P. Morgan Securities LLC, Cantor Fitzgerald & Co. and Mizuho Securities USA LLC, as representatives of several underwriters (collectively, the "2024 Underwriters"), relating to an underwritten public offering (the "2024 Follow-on offering") of 8,620,690 shares of the our common stock, $0.001 par value per share, at a public offering price of $29.00 per share. We also granted the 2024 Underwriters a 30-day option to purchase, at the public offering price less underwriting discounts and commissions, up to an additional 1,293,103 shares of Common Stock, which the 2024 Underwriters exercised in full on the closing of the 2024 Follow-on offering. We paid the Underwriters a commission of 3.6% of the aggregate gross proceeds received from all sales of the common stock under the Follow-on Agreement. In March 2024, 9,913,793 shares (including the 1,293,103 shares issued upon exercise of the 2024 Underwriters' option to purchase additional shares) were issued under the 2024 Follow-on Agreement, for net proceeds of $276.6 million, after deducting underwriting fees and commissions of $10.3 million and offering costs of $0.6 million.
In May 2023, we filed a shelf registration statement on Form S-3 (the "2023 Shelf"), with the SEC in relation to the registration of common stock, preferred stock, debt securities, warrants and units or any combination thereof. We also concurrently entered into an Equity Distribution Agreement (the "ATM Agreement") with Goldman Sachs & Co. LLC and SVB Securities LLC (collectively, the "ATM Sales Agents"), with respect to an "at-the-market" offering program under which we may issue and sell, from time to time at our sole discretion and pursuant to a prospectus supplement, shares of our common stock, par value $0.001 per share, having an aggregate offering price of up to $450.0 million through the ATM Sales Agents. We will pay the ATM Sales Agents a commission of up to 3.0% of the aggregate gross proceeds received from all sales of the common stock under the ATM Agreement. During the year ended December 31, 2023, 2,171,217 shares were issued under the ATM Agreement, for net proceeds of $65.0 million, after deducting sales agent fees and commissions of $1.0 million. During the year ended December 31, 2024, 1,061,991 shares were issued under the ATM Agreement, for net proceeds of $38.1 million, after deducting sales agent fees and commissions of $0.6 million. During the year ended December 31, 2025, there were no shares issued under the ATM Agreement. As of December 31, 2025, we are still eligible to sell up to $345.3 million of our common stock pursuant to the ATM Agreement under the 2023 Shelf.
Cash Flows
The following table summarizes our cash flows during the periods indicated:
Years Ended December 31,
2025 2024 Change
(in thousands)
Net cash used in operating activities $ (445,910) $ (520,726) $ 74,816
Net cash provided by (used in) investing activities (24,487) 60,781 (85,268)
Net cash provided by financing activities 359,293 748,457 (389,164)
Net increase (decrease) in cash, cash equivalents and
restricted cash 		$ (111,104) $ 288,512 $ (399,616)
Net Cash Flows Used in Operating Activities
Net cash used in operating activities was $445.9 million for the year ended December 31, 2025 and consisted of our net loss of $732.9 million, adjustments for noncash items totaling $338.1 million, and net cash outflow of $51.1 million related to changes in operating assets and liabilities. The adjustments for noncash items totaling $338.1 million primarily included $133.0 million in stock-based compensation expense, $125.1 million in noncash interest expense on deferred royalty obligations, $72.6 million in net loss from equity method investments, $21.2 million in loss on extinguishments of debt from the repayment of the term loan under the Amended Financing Agreement, $6.0 million in amortization of debt discount and issuance costs, and $5.4 million in depreciation and amortization; partially offset by $19.7 million in change in fair value of the embedded derivative associated with the deferred royalty obligation under the Funding Agreement (as described in Note 10 of our consolidated financial statements) and $8.8 million in noncash income from our equity method investments. The net cash outflow of $51.1 million related to changes in operating assets and liabilities was attributed mainly to an increase of $134.7 million in accounts receivable, net primarily related to receivables for net product revenues, an increase of $25.3 million in inventories due to a continuing build-up of Attruby inventory following its commercialization in November 2024, an increase of $8.8 million in prepaid expenses and other current assets primarily due to timing of payments and fluctuations in our operations, and a decrease of $11.4 million in deferred revenue primarily related to the Bayer License Agreement and KKC License Agreement; partially offset by an increase of $26.6 million in accounts payable, an increase of $23.0 million in accrued compensation and benefits, and an increase of $77.8 million in other liabilities, which are collectively primarily due to timing of payments.
Net cash used in operating activities was $520.7 million for the year ended December 31, 2024 and consisted primarily of our net loss of $543.3 million, adjustments for noncash items totaling $9.4 million, and net cash inflow of $32.0 million related to changes in operating assets and liabilities. The adjustments for noncash items totaling $9.4 million primarily included a gain of $178.3 million from the deconsolidation of subsidiaries, and a net gain of $8.1 million from investment in equity securities; partially offset by $95.8 million in stock-based compensation expense, $31.2 million net loss from equity method investments, $26.6 million in loss on extinguishment of debt from the repayment of the term loan under the Amended Loan Agreement, $8.3 million in noncash interest expense on deferred royalty obligations, $7.5 million in accretion of debt, and $6.1 million in depreciation and amortization. The $32.0 million net cash inflow related to changes in operating assets and liabilities was attributed mainly to an increase in deferred revenue of $21.9 million primarily related to the Bayer License Agreement and KKC License Agreement, an increase of $17.0 million in accrued compensation and benefits, and an increase of $8.7 million in accrued research and development liabilities; partially offset by an increase in prepaid expenses and other current assets of $13.9 million, which were collectively primarily due to timing of payments.
Net Cash Flows Provided by (Used in) Investing Activities
Net cash used in investing activities was $24.5 million for the year ended December 31, 2025, attributable primarily to purchases of marketable securities of $28.2 million and the aggregate payments made for intangible assets of $8.5 million; partially offset by maturities of marketable securities of $11.0 million and a special cash dividend from an investment in equity securities of $2.3 million.
Net cash provided by investing activities was $60.8 million for the year ended December 31, 2024, attributable primarily to $95.0 million in proceeds from the maturities of marketable securities, $63.2 million in proceeds from the sale of investments in equity securities, and $25.7 million in special cash dividends received from an investment in equity securities; partially offset by purchases of marketable securities of $93.8 million, purchases of investments in equity securities of $20.3 million and $8.0 million in payments made for intangible assets.
Net Cash Flows Provided by Financing Activities
Net cash provided by financing activities was $359.3 million for the year ended December 31, 2025 and consisted primarily of $575.0 million in proceeds from the issuance of the 2031 Notes, $300.0 million in gross cash proceeds from the royalty obligation under the Royalty Purchase Agreement, and $19.9 million in proceeds from stock option exercises and employee stock purchase plan purchases (net of repurchases); partially offset by the $459.0 million repayment of the term loan under the Amended Financing Agreement, $48.3 million in repurchase of common stock, $12.0 million payment of issuance costs and discounts associated with the 2031 Notes, $15.5 million repayments of deferred royalty obligations, and $3.0 million payment of issuance costs associated with the royalty obligation under the Royalty Purchase Agreement.
Net cash provided by financing activities was $748.5 million for the year ended December 31, 2024 and consisted primarily of $500.0 million in proceeds from the royalty obligation under the Funding Agreement, $450.0 million in proceeds from the term loan under the Amended Financing Agreement, and $314.7 million in net proceeds from the issuance of common stock through public offerings, which includes $276.6 million in net proceeds through the 2024 Follow-on offering and $38.1 million in net proceeds through the ATM offering. These increases were partially offset by the $473.4 million repayment of the term loan under the Amended Loan Agreement, $27.5 million in issuance costs and discount associated with the Funding Agreement, and $16.0 million in issuance costs and discounts associated with the Amended Financing Agreement.
Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as revenues and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements for the periods in this report.
Collaborative Agreements
We enter into collaboration arrangements with partners, under which we may grant licenses to further develop, manufacture and commercialize our drug compounds and/or product candidates. We may also perform research, development, manufacturing, commercialization, and supply activities under our collaboration agreements. Consideration under these arrangements may include, upfront payments, development and regulatory milestones, expense reimbursements, royalties based on net sales of commercial products, and commercial sales milestone payments.
When we enter into collaboration agreements, we assess whether the arrangements fall within the scope of Accounting Standards Codification ("ASC") 808, Collaborative Arrangements, based on whether the arrangements involve joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. To the extent that the arrangement falls within the scope of ASC 808, we assess whether the payments between us and our partner fall within the scope of other accounting literature. If we conclude that payments from the partner to us represent consideration from a customer, such as license fees, contract manufacturing, and research and development activities, we account for those payments within the scope of ASC 606. However, if we conclude that our partner is not a customer for certain activities and associated payments, such as for certain collaborative research, development, manufacturing, and commercial activities, we record such payments as a reduction of research and development expense or selling, general and administrative expense, based on where we present the underlying expense. Additionally, if we reimburse our collaboration partners for these activities, we record such reimbursements as research and development expense or selling, general and administrative expense, depending upon the nature of the underlying expense.
Revenue Recognition
For elements or transactions that we determine should be accounted for under ASC 606, we perform 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) we satisfy our performance obligation. We apply the five-step model to contracts when it is probable that we will collect the consideration to which we are entitled in exchange for the goods or services we transfer to the customer.
At inception of the arrangement, we assess the promised goods or services to identify the performance obligations within the contract. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation, on a relative standalone selling price basis, when (or as) the performance obligation is satisfied, either at a point in time or over time. If the performance obligation is satisfied over time, we recognize revenue based on the use of an input method. As part of the accounting for these arrangements, we develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract. These key assumptions may include forecasted revenue or costs, development timelines, discount rates and probabilities of clinical and regulatory success.
•Net product revenue:Revenue is recognized when our customers, primarily specialty pharmacies and specialty distributors, obtain control of the product and revenue is adjusted to reflect discounts, chargebacks, rebates, returns and other allowances associated with the respective sales as further described below.
•License fees: For arrangements that include a grant of a license to our intellectual property, we consider whether the license grant is distinct from the other performance obligations included in the arrangement. We determine the license to be distinct if the customer is able to benefit from the license with the resources available to it. For licenses that are distinct, we recognize revenues from nonrefundable, upfront license fees and other consideration allocated to the license when the license term has begun and we have provided all necessary information regarding the underlying intellectual property to the customer, which generally occurs at or near the inception of the arrangement. For licenses that are bundled with other promises, we determine whether the combined performance obligation is satisfied over time or at a point in time. If the combined performance obligation is satisfied over time, we use judgment in determining the appropriate method of measuring progress for purposes of recognizing revenue from the upfront license fees. We evaluate the measure of progress for each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.
•Development and regulatory milestone payments: At the inception of each arrangement that includes development and regulatory milestone payments, we evaluate whether the milestones are considered probable of being achieved and estimate the amount to be included in the transaction price using the most likely amount method. We generally include these milestone payments in the transaction price when they are achieved because there is considerable uncertainty in the research and development processes that trigger these payments under our agreements. Similarly, we include approval milestone payments in the transaction price once the product is approved by the applicable regulatory agency. At the end of each subsequent reporting period, we re-evaluate the probability of achieving such development and regulatory milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis.
•Sales-based milestone payments and royalties: For arrangements that include sales-based royalties, including milestone payments based on the volume of sales, we will determine whether the license is deemed to be the predominant item to which the royalties or sales-based milestones relate and if such is the case, we 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). Our partners generally report sales information with a time lag. Thus, we estimate the expected royalty proceeds based on an analysis of historical experience and interim data provided by our partners. Differences between actual and estimated royalty revenues are adjusted in the period in which they become known, typically the following quarter.
•Product supply services: Arrangements that include a promise for the future supply of drug product for either clinical development or commercial supply at the licensee's discretion are generally considered as options. We will assess if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations and recognized when the future goods or services related to the option are provided or the option expires.
•Research and development services: For arrangements that include research and development services, we will recognize revenue over time using an input method, representing the transfer of goods or services as we perform activities over the term of the arrangement.
Revenues from product sales are recorded at the net sales price, or "transaction price", which includes estimates of variable consideration for which reserves are established that result from discounts, returns, chargebacks, rebates, co-pay assistance and other allowances that are offered within contracts between us and our customers, health care providers and other indirect customers relating to the sale of Attruby. These reserves are based on amounts earned or to be claimed on the related sale and are classified as reductions of accounts receivable (if the amount is payable to the customer) or other current liabilities (if the amount is payable to a third party other than a customer). We use the expected value method, which is the sum of probability-weighted amounts in a range of possible consideration amounts, or the most likely amount method, which is the single most likely amount in a range of possible considerations, to estimate variable consideration related to our product revenue. The estimates of reserves established for variable consideration reflect current contractual and statutory requirements, our historical experience, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The amount of variable consideration that is included in the transaction price may be constrained and is included in net product revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results vary from our estimates, we will adjust these estimates prospectively in the period such change in estimate becomes known, which could affect net product revenue and earnings in the period of adjustment.
The following are the components of variable consideration related to net product revenue:
•Chargebacks: Chargebacks result from contractual commitments with the government and other entities to sell products to qualified healthcare providers at prices lower than the list prices charged to our customers. Our customers charge us for the difference between what they pay for the product and the selling price to the qualified healthcare providers. We record reserves and reduce our product revenue for these chargebacks related to product sold to our customers during the reporting period as well as our estimate of product that remains in the distribution channel at the end of the reporting period that we expect will be sold to qualified healthcare providers in future periods. Our established reserve for chargebacks is included as an offset against our "Accounts receivable, net" balance on our consolidated balance sheets.
•Trade discounts and allowances: We provide customary invoice discounts on sales to our U.S. customers for prompt payment. The discounts are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue, and the establishment of a reserve that is offset against our "Accounts receivable, net" balance on our consolidated balance sheets.
•Distribution fees:We receive and pay for various distribution services provided by our customers. These fees are generally accounted for as a reduction of product revenue in the same period the related revenue is recognized, and the establishment of a reserve is offset against our "Accounts receivable, net" balance on our consolidated balance sheets. To the extent that the services received are distinct from the sale of products to our customers, we classify these payments as selling, general and administrative expenses.
•Government rebates: We are subject to discount obligations under government programs, including Medicare and Medicaid programs in the U.S. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements with payers or statutory requirements pertaining to Medicare and Medicaid benefit providers. The allowance for rebates is based on contractual or statutory discount rates, estimated payer mix, and expected utilization. Our estimates for the expected utilization of rebates are based on historical dispense data received from our customers and invoices received. We monitor sales trends and adjust the allowance on a quarterly basis to reflect the most recent rebate experience. Our reserve for these rebates is recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of the liability that is included in "Other current liabilities" on our consolidated balance sheets.
•Other incentives: Other incentives include co-payment assistance that we provide to patients with commercial insurance that have coverage and qualify for co-payment assistance. Co-payment assistance is accrued based on an estimate of the number of co-payment assistance claims and the cost per claim that we expect to receive associated with products that have been recognized as product revenue. The estimate is recorded as a reduction of product revenue in the same period that the related revenue is recognized and also results in the establishment of a liability which is included in "Other current liabilities" on our consolidated balance sheets.
•Product returns:Consistent with industry practice, we offer our customers limited product return rights for damages, shipment errors, and expiring product; provided that the return is within a specified period around the product expiration date as set forth in the applicable individual distribution or customer agreement. In estimating for product returns, we consider historical product returns, the underlying product demand, and industry specific data. We estimate the amount of product sales that may be returned and record the estimate as a reduction of revenue and a refund liability included in "Other current liabilities" on our consolidated balance sheets in the period the related product revenue is recognized.
Accrued Research and Development Liabilities
We record accruals for estimated costs of research and development activities conducted by third-party service providers, which include the conduct of preclinical studies, clinical trials, and contract manufacturing activities. We record the estimated costs of research and development activities based upon the estimated amount of services provided but not yet invoiced, and include these costs in "Accrued research and development liabilities" on the consolidated balance sheets and within "Research and development expenses" on the consolidated statements of operations. These costs are a significant component of our research and development expenses.
Examples of estimated research and development expenses that we accrue include:
•fees paid to CROs in connection with preclinical and toxicology studies and clinical trials;
•fees paid to investigative sites in connection with clinical trials;
•fees paid to CMOs in connection with the production of product and clinical trial materials; and
•professional service fees for consulting and related services.
We base our expense accruals related to clinical trials on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors, such as the successful enrollment of patients and the completion of clinical trial milestones. Our service providers generally invoice us monthly in arrears for services performed. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could differ from our estimates. We record advance payments to service providers as prepaid expenses.
We record accruals for the estimated costs of our contract manufacturing activities performed by third parties. The financial terms of these agreements are subject to negotiation, vary from contract to contract, and may result in uneven payment flows to our vendors. Payments under the contracts include upfront payments and milestone payments, which depend on factors such as the achievement of the completion of certain stages of the manufacturing process. For purposes of recognizing expense, we assess whether we consider the production process sufficiently defined to be considered the delivery of a good or the delivery of a service, where processes and yields are developing and less certain. If we consider the process to be the delivery of a good, we recognize expense when the drug product is delivered, or we otherwise bear risk of loss. If we consider the process to be the delivery of a service, we recognize expense based on our best estimates of the contract manufacturer's progress towards completion of the stages in the contract. We base our estimates on the best information available at the time. However, additional information may become available to us which may allow us to make a more accurate estimate in future periods. In this event, we may be required to record adjustments to research and development expenses in future periods when the actual level of activity becomes more certain. Any increases or decreases in cost are generally considered to be changes in estimates and will be reflected in research and development expenses in the period identified.
To date, we have not experienced significant changes in our estimates of accrued research and development liabilities after a reporting period. However, due to the nature of estimates, there is no assurance that we will not make changes to our estimates in the future as we become aware of additional information about the status or conduct of our clinical studies and other research activities.
Accrued Milestone Compensation Arrangements
We have performance-based milestone compensation arrangements with certain employees and consultants, whose vesting is contingent upon meeting various regulatory and development milestones, with fixed monetary amounts known at inception that can be settled in the form of (1) cash, (2) equity of BridgeBio, or (3) cash or equity of BridgeBio at our sole election, upon achievement of each contingent milestone. For arrangements that involve settlement by cash or equity of BridgeBio at our sole election, we will classify the milestone compensation arrangements as liability-classified awards when it is probable of achievement because of the possible fixed monetary amounts settlement outcomes. The arrangements would also result in settlement with a variable number of shares based on the then-current stock price at achievement date of each contingent milestone should we elect to settle in equity.
We record accruals for the compensation expense arising from each development milestone when the specific contingent development milestone is probable of achievement and such accruals are measured at each reporting period. We estimate the probability of achieving such milestones based on the progression and expected outcome of the related clinical programs. We base our estimates on the best available information at that time. However, additional information may become available to us which may allow us to make a more accurate estimate in future periods. In this event, we may be required to record adjustments to milestone compensation expenses in future periods. Any increases or decreases in such expenses are generally considered to be changes in estimates and will be reflected in the period identified.
To date, we have not experienced significant changes in our estimates of accrued milestone compensation expenses after a reporting period. However, due to the nature of estimates, there is no assurance that we will not make changes to our estimates in the future as we become aware of additional information about the progression and expected outcome of our clinical programs.
Deferred Royalty Obligations, net
We treat the debt obligations to the Royalty Agreement Purchasers and Funding Agreement Purchasers as defined and discussed further in Note 10 as deferred royalty obligations, amortized using the effective interest rate method over the estimated life of the revenue streams. We recognize interest expense thereon using the effective rate, which is based on our current estimates of future net sales over the life of the related arrangements. In connection therewith, we periodically assess our expected net sales using internal projections, impute interest on the carrying value of the deferred royalty obligations, and record interest expense using the imputed effective interest rate. To the extent our estimates of future net sales are greater or less than previous estimates or the estimated timing of such payments is materially different than previous estimates, we will account for any such changes by adjusting the effective interest rate on a prospective basis, with a corresponding impact to the reclassification of our deferred royalty obligations. The assumptions used in determining the expected repayment terms of the deferred royalty obligations and amortization period of the debt discount and issuance costs requires that we make estimates that could impact the classification of such costs, as well as the period over which such costs will be amortized.
Recent Accounting Pronouncements
See Note 2, "Summary of Significant Accounting Policies - Recently Adopted Accounting Pronouncement" to our consolidated financial statements appearing under Part II, Item 8 for more information.
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