In April 2018, the Company entered into the Series A Share Purchase Agreement (the “ Series A SPA”), pursuant to which the investors committed to invest an aggregate amount of up to $60.0 million for the issuance of shares of Series A convertible preferred stock at a price of $1.00 per share.

The initial closing occurred on April 16, 2018, and the Company issued 14,900,000 shares of Series A convertible preferred stock at a price per share of $1.00 for net cash proceeds of $14.7 million. The investors also committed to purchase 15,000,000 and 30,000,000 shares of Series A convertible preferred stock at a price of $1.00 per share in second and third closings, respectively, contingent upon the achievement by the Company of certain development milestones and approval by the board of directors.

The investors’ commitment to purchase and the Company’s commitment to sell shares of Series A convertible preferred stock represent a freestanding instrument accounted for at fair value and re-measured at each reporting date. The Company estimates the fair value of this commitment using the Black-Scholes option pricing model. On the date of the initial closing, the Company recorded the commitments associated with the second and third closings of the Series A convertible preferred stock at a net value of $638,000. For the year ended December 31, 2019 and for the period from January 18, 2018 (inception) to December 31, 2018, the Company recorded an expense of $30.6 million and $1.0 million, respectively, for the revaluation of the convertible preferred stock liability, within other expenses (income), net in the consolidated statements of operations and comprehensive loss.

In December 2018, the Series A convertible preferred stockholders partially accelerated the second closing and the Company issued 9,000,000 shares of Series A convertible preferred stock at a price of $1.00 per share and received net proceeds of $9.0 million.

In June 2019, the Company and the Series A convertible preferred stockholders agreed to issue the remaining 6,000,000 shares of Series A convertible preferred stock at a price of $1.00 per share related to the second closing, and to partially accelerate 14,000,000 shares of Series A convertible preferred stock at a price of $1.00 per share related to the third closing. The shares were issued and the aggregate net proceeds of $20.0 million were received in June and July 2019.

In September 2019, the Company completed an internal reorganization transaction pursuant to which 89Bio Ltd. became a wholly owned subsidiary of 89bio, Inc. As part of the Reorganization, all outstanding convertible preferred shares of 89Bio Ltd. were exchanged into shares of convertible preferred stock of 89bio, Inc.

On October 25, 2019, the Company and the Series A preferred stockholders amended the Series A SPA, and the parties agreed that the Series A SPA would terminate upon consummation of the Company’s IPO.

Upon the completion of the Company’s IPO on November 13, 2019, the remaining 16,000,000 shares of convertible preferred stock that were previously issuable under the third closing were no longer issuable. Accordingly, the preferred stock liability was extinguished and because the transaction occurred between related parties, the resulting $25.6 million was accounted for as a capital contribution by the preferred stockholders.

Additionally, immediately prior to the completion of the Company’s IPO, all outstanding shares of convertible preferred stock automatically converted into 7,077,366 shares of common stock and the related carrying value was reclassified to common stock and additional paid-in capital. Accordingly, there were no shares of convertible preferred stock outstanding as of December 31, 2019.

			Shares
	Shares		Issued and		Carrying		Liquidation
	Authorized		Outstanding		Value		Value
Series A		60,000,000		24,000,000	$	23,073,000	$	24,000,000
Total		60,000,000		24,000,000	$	23,073,000	$	24,000,000

The Company’s certificate of incorporation did not provide redemption rights to the holders of the Series A convertible preferred stock. In the event of a liquidation event, all the funds and assets of the Company available for distribution among all the stockholders would be distributed in the following order of preference: (a) the holders of the Series A convertible preferred stock would be entitled to receive an amount per share equal to $1.00 per each Series A convertible preferred stock (less the amount of distributions actually received in any prior liquidation event, plus all declared but unpaid dividends) and (b) the remaining assets of the Company available for distribution to stockholders would be distributed among the holders of common stock and to the holders of the Series A convertible preferred stock on an as-converted and pro rata basis.

Although the convertible preferred stock was not redeemable, in the event of certain “deemed liquidation events” that were not solely within the Company’s control (including merger, acquisition, or sale of all or substantially all of the Company’s assets), the holders of the convertible preferred stock would be entitled to preference amounts paid before distribution to other stockholders and hence effectively redeeming the preference amount. As of December 31, 2018, the convertible preferred stock was classified outside of stockholders’ equity (deficit) as a result of these in-substance contingent redemption rights and the Company did not adjust the carrying values of the convertible preferred stock to the deemed liquidation values of such shares since a liquidation event was not probable of occurring.