Core Viewpoint - Third Harmonic Bio, Inc. has announced positive Phase 1 clinical trial results for THB335, supporting its advancement into Phase 2 trials for chronic spontaneous urticaria (CSU) while also initiating a strategic review to maximize shareholder value [1][2] Clinical Results - The Phase 1 clinical trial included single ascending dose (SAD) with 48 participants and multiple ascending dose (MAD) with 32 participants, evaluating safety, tolerability, pharmacokinetics, and pharmacodynamics of THB335 [3] - THB335 demonstrated a half-life of approximately 40 hours, allowing for once daily dosing, with dose-dependent increases in exposure observed across all cohorts [4] - Significant reductions in serum tryptase, a biomarker for mast cell activation, were noted in MAD cohorts, with reductions ranging from 13% to 84% at Day 15 [5] Safety Profile - THB335 was generally safe and well tolerated, with isolated, transient asymptomatic transaminase elevations observed in three subjects, which management does not believe to be drug-related [6] - Adverse events included hair color changes and reductions in hemoglobin and neutrophil counts, which were dose-dependent and resolved during follow-up [7] Next Steps for THB335 - The company plans to continue development activities for THB335 through the first half of 2025, preparing for a 12-week, placebo-controlled Phase 2 study in CSU by mid-2025 [9] - Ongoing activities include completing subchronic toxicology studies and submitting regulatory filings for Phase 2 initiation [9] Corporate Strategy - In parallel with THB335 Phase 2 readiness, the company is exploring strategic transactions and business combinations to enhance shareholder value, engaging TD Cowen for advisory support [10] - The company is halting all non-THB335 related research and reducing its workforce by approximately 50% [10] Financial Position - As of December 31, 2024, the company reported approximately $285 million in cash and cash equivalents, with an estimated range of $262 million to $267 million expected by June 30, 2025, after accounting for various expenses [11]

Core Viewpoint - Third Harmonic Bio, Inc. (THRD) shows potential for further upside, with a mean price target of $19 indicating a 26.7% upside from the current price of $15 [1] Price Targets - The average price targets range from a low of $15 to a high of $23, with a standard deviation of $3.37, indicating variability among analysts [2] - The most optimistic estimate suggests a potential upside of 53.3%, while the lowest estimate indicates no increase from the current price [2] Analyst Sentiment - Analysts are optimistic about THRD's earnings prospects, as indicated by a positive trend in earnings estimate revisions, which historically correlates with stock price movements [4][9] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 2.9%, with one estimate moving higher and no negative revisions [10] Zacks Rank - THRD holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, suggesting strong potential for upside [11]

Financial Performance - Cash and cash equivalents totaled $296.1 million as of September 30, 2024, an increase from $269.1 million as of December 31, 2023[10] - Net loss for Q3 2024 increased to $13.8 million from $7.3 million in Q3 2023, a rise of 89.0%[6] - Net loss for the nine months ended September 30, 2024, was $32.4 million, compared to $24.0 million for the same period in 2023, an increase of 35.0%[6] - Total assets increased to $304.5 million as of September 30, 2024, from $277.7 million as of December 31, 2023[10] Research and Development - Research and development (R&D) expenses increased to $11.3 million for Q3 2024, up from $6.0 million in Q3 2023, representing an increase of 88.3%[4] - R&D expenses for the nine months ended September 30, 2024, rose to $26.0 million, compared to $18.0 million for the same period in 2023, reflecting a 44.4% increase[4] - The lead product candidate, THB335, is a small-molecule inhibitor currently in Phase 1 clinical trials targeting mast cell-mediated inflammatory diseases[7] - The Phase 1 SAD/MAD clinical trial of THB335 is on track to deliver results in Q1 2025[1] General and Administrative Expenses - General and administrative (G&A) expenses for Q3 2024 were $5.7 million, up from $4.9 million in Q3 2023, a 16.3% increase[5] Cash Flow and Funding - The company expects its existing cash and cash equivalents to fund operations through at least 2026[3]

Financial Performance - The company reported a net loss of $30.8 million for the year ended December 31, 2023, and $32.4 million for the nine months ended September 30, 2024, with an accumulated deficit of approximately $146.6 million as of September 30, 2024[87]. - Total operating expenses increased by 57% to $17.1 million for the three months ended September 30, 2024, compared to $10.8 million for the same period in 2023[96]. - The company expects to continue incurring net operating losses for several years as it advances its product candidates through clinical development[87]. - Net cash used in operating activities for the nine months ended September 30, 2024, was $23.3 million, primarily due to a net loss of $32.4 million[106]. - The company expects to incur significant expenses and operating losses for the foreseeable future, primarily for research and development services and general overhead costs[109]. Research and Development - Research and development expenses rose by 90% to $11.3 million for the three months ended September 30, 2024, from $6.0 million in the prior year[96]. - Total research and development expenses for the nine months ended September 30, 2024, were $26.0 million, an increase of $8.0 million from $18.0 million for the same period in 2023[98]. - The company initiated a Phase 1 clinical trial for THB335, a potent oral small molecule KIT inhibitor, with results expected in Q1 2025[82]. - THB335 demonstrated nanomolar potency against KIT and improved pharmacokinetic profiles compared to the first-generation product candidate THB001[84]. - The company has not generated any revenue from product sales since its inception in 2019 and relies on financing from equity offerings and capital sources[86]. Cash and Funding - The company has $296.1 million in cash and cash equivalents as of September 30, 2024, which is expected to fund operations through at least 2026[94]. - The company sold 3,900,000 shares of common stock through its ATM Facility, generating net proceeds of approximately $48.7 million[103]. - The company filed a shelf registration statement allowing for the offering of up to $400.0 million in various securities, including common stock and debt securities[102]. - The company is obligated to pay Novartis up to $31.7 million upon achieving certain development milestones and $200 million upon achieving specified sales milestones for licensed products[95]. Internal Controls and Compliance - The company identified a material weakness in internal control over financial reporting, which has not been fully remediated since it was first noted in 2021[120]. - The material weakness is attributed to a lack of segregation of duties, system limitations in accounting software, and insufficient internal resources with appropriate accounting and finance expertise[120]. - The company has implemented measures to improve internal controls, including engaging financial consultants and enhancing supervisory reviews by financial management[121]. - The company qualifies as an "emerging growth company" and has elected to delay the adoption of new accounting standards until they apply to private companies[123]. - The company is classified as a "smaller reporting company," with a market value of stock held by non-affiliates less than $700 million and annual revenue below $100 million[124]. Market and Economic Conditions - Interest income is sensitive to changes in U.S. interest rates, and cash equivalents are subject to interest rate risk, which could lead to a decrease in value if market rates increase[128]. - The company is currently not exposed to significant foreign currency exchange risk as all operations and expenses are denominated in U.S. dollars[129]. - Inflation has not materially impacted the company's financial position to date, but rising inflation rates may affect labor and clinical trial costs in the near future[130]. - The company has not had a formal hedging program for foreign currency, and foreign currency transaction gains and losses have not been material to its financial statements[129].

Financial Performance - Net loss for Q2 2024 was $10.7 million, compared to a net loss of $7.6 million in Q2 2023, representing a 40.9% increase[4] - General and administrative (G&A) expenses rose to $5.7 million for Q2 2024, slightly up from $5.4 million in Q2 2023[4] - Total operating expenses for the six months ended June 30, 2024, were $25.4 million, compared to $22.7 million for the same period in 2023[8] Cash Position - Cash and cash equivalents totaled $255.3 million as of June 30, 2024, sufficient to fund operations through at least 2026[3] - Total liabilities increased to $9.1 million as of June 30, 2024, from $8.6 million as of December 31, 2023[7] Research and Development - Research and development (R&D) expenses increased to $8.4 million for Q2 2024, up from $5.3 million in Q2 2023, reflecting a 58.5% increase[3] - R&D expenses for the six months ended June 30, 2024, increased to $14.6 million from $12.1 million for the same period in 2023, a 20.7% increase[3] - The Phase 1 SAD/MAD clinical trial of THB335 is on track to report results in Q1 2025[2] - The company is preparing to move THB335 into a Phase 2 clinical trial for chronic spontaneous urticaria[2] Shareholder Information - The weighted-average common stock outstanding for the six months ended June 30, 2024, was 40,384,338 shares[8]

Financial Performance - The company reported a net loss of $30.8 million for the year ended December 31, 2023, and $18.6 million for the six months ended June 30, 2024, with an accumulated deficit of approximately $132.8 million as of June 30, 2024[71]. - The company has not generated any revenue from product sales and will need substantial additional funding to support ongoing operations and growth strategy[73]. - Net loss for the three months ended June 30, 2024 was $10.7 million, an increase of $3.1 million or 42% compared to the net loss of $7.6 million for the same period in 2023[78]. - The company expects to continue incurring significant expenses and operating losses for the foreseeable future, with existing cash expected to fund operations through at least 2026[89]. - Net cash used in operating activities for the six months ended June 30, 2024 was $15.1 million, primarily due to a net loss of $18.6 million[86]. Cash and Funding - The company has $255.3 million in cash and cash equivalents as of June 30, 2024, which is expected to fund operations through at least 2026[75]. - The company filed a shelf registration statement allowing for the offering of up to $400.0 million in various securities, including $150.0 million in common stock through an Open Market Sales Agreement[84]. - Net cash provided by financing activities increased from $0.1 million in 2023 to $1.4 million in 2024, related to proceeds from the exercise of stock options[88]. - The company has cash and cash equivalents of $255.3 million as of June 30, 2024, primarily in money market funds and U.S. Treasury-backed securities[104]. Research and Development - The FDA has cleared the company's IND application to initiate a first-in-human clinical trial of THB335, with clinical results expected to be reported in Q1 2025[67]. - THB335 is designed to be a potent, highly selective oral small molecule KIT inhibitor, demonstrating nanomolar potency against KIT and improved pharmacokinetic profiles compared to the first-generation product THB001[69]. - The company plans to conduct a Phase 2 trial for THB335 in chronic spontaneous urticaria (CSU) following the Phase 1 trial[67]. - Research and development expenses increased by $3.1 million, from $5.3 million for the three months ended June 30, 2023 to $8.4 million for the three months ended June 30, 2024, representing a 57% increase[80]. Operating Expenses - General and administrative expenses rose by $0.3 million, from $5.4 million for the three months ended June 30, 2023 to $5.7 million for the three months ended June 30, 2024, a 6% increase[81]. - The company has incurred significant operating losses since inception and expects to continue incurring net operating losses for several years[71]. Contracts and Obligations - The company is required to pay Novartis up to $31.7 million upon achieving certain development milestones and $200 million upon achieving specified sales milestones for licensed products[76]. - The company has not paid any royalties to Novartis to date, as there are no commercially approved products for sale, with royalty percentages expected to be in the mid-single digits of sales[92]. Internal Controls and Compliance - The company identified a material weakness in internal control over financial reporting, related to lack of segregation of duties and insufficient internal resources, which has not yet been fully remediated[97]. - The company has implemented measures to improve internal controls, including strengthening supervisory reviews and engaging financial consultants[98]. Market and Economic Conditions - The company is classified as an "emerging growth company" and a "smaller reporting company," with annual revenue less than $100 million and market value of stock held by non-affiliates less than $700 million[101]. - The company does not currently face significant foreign currency exchange risk, as all operations and expenses are denominated in U.S. dollars[105]. - Inflation has not materially impacted the company's financial position to date, but rising inflation rates may affect labor and clinical trial costs in the near future[106]. Manufacturing and Supply Chain - The manufacturing process for THB335 is supported by readily-sourced raw materials and scalability, with current manufacturers expected to supply upcoming clinical trials[74]. - The company has entered into contracts with third-party vendors for research and manufacturing services, most of which do not contain minimum purchase commitments[94]. - The company has not experienced material foreign currency transaction gains or losses and does not have a formal hedging program[105].

Financial Performance - Cash and cash equivalents totaled $262.8 million as of March 31, 2024, sufficient to fund operating expenses through at least 2026[10] - Net loss for Q1 2024 decreased to $7.9 million from $9.1 million in Q1 2023, attributed to increased interest income and decreased operating expenses[13] - The total operating expenses for Q1 2024 were $11.3 million, compared to $12.0 million in Q1 2023[20] Research and Development - Research and development (R&D) expenses decreased to $6.2 million for Q1 2024, down from $6.7 million in Q1 2023, primarily due to the termination of the THB001 program[11] - The U.S. FDA cleared the Investigational New Drug application for THB335, with a Phase 1 clinical trial initiated and results expected in the first half of 2025[2] - The Phase 1 trial of THB335 aims to evaluate safety and pharmacokinetics in healthy volunteers, with a focus on chronic spontaneous urticaria[4] - The company plans to rapidly expand THB335's development into additional mast cell-mediated disorders following the Phase 1 trial[2] Administrative Expenses - General and administrative (G&A) expenses decreased to $5.1 million for Q1 2024, down from $5.3 million in Q1 2023, mainly due to reductions in non-cash stock-based compensation[12] Leadership Changes - The leadership team was strengthened with the appointment of Christopher J. Dinsmore as Chief Scientific Officer and Dennis Dean as Chief Non-Clinical Development Officer[5] Stock Information - The weighted-average common stock outstanding increased to 40,213,158 in Q1 2024 from 39,438,572 in Q1 2023[20]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ Commission File Number: 001-41498 THIRD HARMONIC BIO, INC. (Exact Name of Registrant as Specified in its Charter) Delaw ...

Exhibit 99.1 Third Harmonic Bio Announces Fourth Quarter and Full Year 2023 Financial Results U.S. IND filed for THB335 with anticipated clinical trial start during 2Q'24 Strong financial position with cash and cash equivalents totaling $269.1 million as of December 31, 2023 SAN FRANCISCO, CA, March 26, 2024 (GLOBE NEWSWIRE) -- Third Harmonic Bio, Inc. (Nasdaq: THRD), a biopharmaceutical company focused on advancing the next wave of medicine for inflammatory diseases, today reported financial results for th ...

Preliminary Information [Special Note Regarding Forward-Looking Statements](index=3&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) The report contains forward-looking statements about future operations, financial position, and product development, subject to risks and uncertainties, with no obligation to update publicly - The report contains forward-looking statements regarding future operations, financial position, business strategy, market size, growth opportunities, nonclinical and clinical development, anticipated IND clearance for THB335, efficacy and safety of product candidates, funding, regulatory approvals, and the impact of macroeconomic conditions[9](index=9&type=chunk) - Forward-looking statements are subject to risks, uncertainties, and assumptions, including those detailed in the 'Risk Factors' section, and new risks may emerge in a competitive and rapidly changing environment[10](index=10&type=chunk) - Readers should not rely on forward-looking statements as predictions of future events, and the company undertakes no obligation to update them publicly, except as legally required[11](index=11&type=chunk) [Risk Factor Summary](index=4&type=section&id=Risk%20Factor%20Summary) A summary of principal risks includes limited operating history, significant losses, funding needs, internal control weakness, THB335 dependence, and regulatory uncertainties - The company has a limited operating history, has not completed clinical trials beyond Phase 1, and has no approved products, with a history of significant net losses expected to continue[15](index=15&type=chunk) - Substantial additional funds are required for business objectives, and failure to obtain capital may force delays or termination of product development[15](index=15&type=chunk) - A material weakness in internal control over financial reporting has been identified, which, if not remediated, could affect financial reporting accuracy and stock price[15](index=15&type=chunk) - Future performance is highly dependent on the success of THB335 and the ability to develop future product candidates, with drug development being a lengthy, expensive, and uncertain process[15](index=15&type=chunk) - The company faces significant competition from established pharmaceutical and biotechnology companies and relies heavily on third parties for clinical trials and research[15](index=15&type=chunk) - Obtaining, maintaining, and enforcing patent protection is crucial, and the regulatory approval process is highly uncertain, potentially leading to delays or inability to commercialize products[15](index=15&type=chunk) PART I [Item 1. Business](index=5&type=section&id=Item%201%2E%20Business%2E) Third Harmonic Bio develops oral KIT inhibitors for mast cell-mediated inflammatory diseases, with lead candidate THB335 entering clinical studies in Q2 2024, facing competition and regulatory complexities [Overview](index=5&type=section&id=Overview) Third Harmonic Bio develops oral KIT inhibitors for inflammatory diseases, with lead candidate THB335, designed to mitigate hepatotoxicity, entering clinical studies in Q2 2024 - Third Harmonic Bio is a biopharmaceutical company focused on developing next-generation, highly selective, oral small-molecule inhibitors of KIT for dermal, respiratory, and gastrointestinal inflammatory diseases[17](index=17&type=chunk) - The company recently submitted an IND application for THB335, its new oral KIT inhibitor product candidate, and plans to initiate Phase 1 clinical studies in Q2 2024, with Phase 2 development initially focusing on chronic spontaneous urticaria[18](index=18&type=chunk) - THB335 maintains the nonclinical pharmacology and selectivity of THB001 but includes structural modifications to mitigate hepatotoxicity risk and provide a differentiated metabolic, distribution, and physiochemical profile[18](index=18&type=chunk)[19](index=19&type=chunk) [Our Strategy](index=5&type=section&id=Our%20Strategy) The company's strategy is to develop oral KIT inhibitors for a broad range of mast cell-driven inflammatory diseases, expanding its pipeline through internal discovery and strategic collaborations - The company aims to develop oral KIT inhibitors for a broad range of indications across therapeutic areas where mast cell-driven inflammation can benefit from a highly selective, oral small molecule, such as skin, respiratory, and gastrointestinal tracts[21](index=21&type=chunk) - The strategy includes continuing to innovate and potentially expand the pipeline through internal discovery efforts and selectively evaluating strategic collaborations, building on deep knowledge of oral small molecule KIT inhibition[21](index=21&type=chunk) - The company believes that targeting mast cells directly through highly selective KIT inhibition is key to achieving broad symptomatic relief across various inflammatory disorders, as mast cells are a primary driver of allergic inflammatory responses[23](index=23&type=chunk)[24](index=24&type=chunk) [Overview of Mast Cells and KIT](index=6&type=section&id=Overview%20of%20Mast%20Cells%20and%20KIT) Mast cells, derived from KIT-positive hematopoietic progenitors, are crucial immune cells implicated in inflammatory disorders, making KIT inhibition an optimal therapeutic target for their inactivation and depletion - Mast cells, derived from KIT-positive hematopoietic progenitors, are present throughout the body in connective and vascularized tissues, especially in the skin, respiratory, and gastrointestinal tracts[27](index=27&type=chunk) - Dysfunctional mast cell activity is implicated in a broad range of inflammatory disorders, including urticaria, asthma, and gastrointestinal disorders[27](index=27&type=chunk) - KIT (CD117) is the master regulator of mast cell activity; its inhibition drives mast cell inactivation and depletion, making the KIT-SCF signaling axis an optimal therapeutic intervention point[34](index=34&type=chunk)[36](index=36&type=chunk) [Therapeutic Modulation of the Allergic Response](index=9&type=section&id=Therapeutic%20Modulation%20of%20the%20Allergic%20Response) Direct mast cell targeting via KIT inhibition offers a broader therapeutic approach for allergic responses compared to mediator-specific treatments, addressing unmet needs despite historical challenges with off-target effects - Targeting mast cells directly provides a broader therapeutic approach for mast cell-mediated diseases compared to inhibiting individual mediators, which often require combination therapy and do not provide adequate relief for a large patient population[38](index=38&type=chunk) - Anti-IgE monoclonal antibodies like Omalizumab (Xolair) offer some clinical benefit but do not fully remedy symptoms for most patients, potentially because they don't address IgE-independent mast cell activation[39](index=39&type=chunk) - Directly reducing mast cell activity through KIT inhibition is a novel therapeutic approach, but its advancement has been hindered by the potential risk of off-target adverse effects[40](index=40&type=chunk) [Overview of Urticaria](index=10&type=section&id=Overview%20of%20Urticaria) Urticaria is a common inflammatory disorder, with chronic forms significantly impacting quality of life, and a substantial unmet need exists as current first-line treatments fail to control symptoms for many patients - Urticaria (hives) is a common inflammatory disorder with a lifetime prevalence of up to **25%**, affecting women twice as often as men, and onset peaks between 20 and 40 years old[41](index=41&type=chunk) - Chronic urticaria, characterized by constant or frequently recurring lesions for six or more weeks, negatively impacts patients' quality of life and is associated with psychiatric comorbidities like anxiety and depression[42](index=42&type=chunk) - Approximately **50%** of chronic spontaneous urticaria patients remain uncontrolled despite first-line H1 antihistamine therapy, indicating a large unmet need for more effective treatments[44](index=44&type=chunk) [Our Solution: Oral KIT Inhibitors](index=10&type=section&id=Our%20Solution%3A%20Oral%20KIT%20Inhibitors) The company is developing highly potent and selective oral small molecule wild-type KIT inhibitors, offering refined dose titration and improved patient convenience for mast cell-mediated inflammatory diseases - The company is designing and developing highly potent and selective, oral small molecule wild-type KIT inhibitors for mast cell-mediated inflammatory diseases[45](index=45&type=chunk) - Oral small molecules are anticipated to provide more refined dose titration capabilities than anti-KIT mAbs and offer improved patient convenience by avoiding injection events[45](index=45&type=chunk) [First-Generation Oral KIT Inhibitor: THB001 Clinical Results in Chronic Inducible Urticaria](index=11&type=section&id=First-Generation%20Oral%20KIT%20Inhibitor%3A%20THB001%20Clinical%20Results%20in%20Chronic%20Inducible%20Urticaria) THB001, the first-generation oral KIT inhibitor, was discontinued due to liver transaminitis, despite demonstrating rapid and sustained reduction in serum tryptase and clinical activity in Phase 1b trials - THB001, the first-generation oral KIT inhibitor, was discontinued during Phase 1b development due to observed liver transaminitis in two of five patients[46](index=46&type=chunk) - The trial demonstrated rapid and sustained reduction in serum tryptase (**83.1%** mean change from baseline by week one) and clinical activity, with four of five patients achieving partial or complete Critical Temperature Threshold responses despite early termination[48](index=48&type=chunk) - The transaminitis adverse events were moderate and resolved, and other adverse events were mild and reversible, consistent with known on-target effects of KIT inhibition[47](index=47&type=chunk) [Elucidating the Hepatotoxicity Mechanism of THB001](index=11&type=section&id=Elucidating%20the%20Hepatotoxicity%20Mechanism%20of%20THB001) Mechanistic studies of THB001 identified a reactive intermediate metabolite as the cause of drug-induced liver injury, informing structural modifications in THB335 to mitigate this risk - Extensive mechanistic studies of THB001 identified the formation of a reactive intermediate metabolite as the primary cause of drug-induced liver injury (DILI), which was not predicted by nonclinical toxicology studies[50](index=50&type=chunk) - These studies showed high levels of protein adduct formation and an oxidative stress transcriptomic signature in human liver culture systems, along with glutathione conjugate metabolites in human urine samples[50](index=50&type=chunk) - The mechanistic understanding from these studies led to the selection of THB335, with structural modifications designed to functionally block the site of reactive metabolite formation, supporting its differentiated metabolic profile[50](index=50&type=chunk) [THB335](index=11&type=section&id=THB335) THB335 is the company's next-generation oral KIT inhibitor, designed to mitigate hepatotoxicity while retaining potency and selectivity, with Phase 1 clinical studies planned for Q2 2024 - THB335 is a next-generation oral small molecule wild-type KIT inhibitor, retaining THB001's potency and selectivity, with structural modifications to mitigate hepatotoxicity risk and provide a differentiated metabolic, distribution, and physiochemical profile[51](index=51&type=chunk) - Key attributes of THB335 include nanomolar potency against KIT, high selectivity against related kinases, no evidence of reactive metabolite formation, high oral bioavailability, improved peripheral restriction, and a favorable pharmacokinetic profile[52](index=52&type=chunk)[53](index=53&type=chunk)[56](index=56&type=chunk) - An IND application for THB335 has been submitted to the FDA, with Phase 1 clinical studies planned for Q2 2024, and Phase 2 development expected to initially focus on chronic spontaneous urticaria[56](index=56&type=chunk) [Examples of selected mast cell-mediated diseases potentially addressable with KIT inhibition](index=13&type=section&id=Examples%20of%20selected%20mast%20cell-mediated%20diseases%20potentially%20addressable%20with%20KIT%20inhibition) The company is exploring oral KIT inhibitors for various mast cell-mediated inflammatory diseases beyond urticaria, including respiratory and gastrointestinal conditions, representing attractive markets with unmet needs - The company is exploring development opportunities for oral KIT inhibitors across a range of mast cell-mediated inflammatory diseases, including skin, respiratory, and gastrointestinal conditions like eosinophilic esophagitis and asthma[57](index=57&type=chunk) - They believe KIT inhibition has wide therapeutic utility as mast cells are present in numerous tissue types, and these additional indications represent attractive markets with established development and regulatory pathways and significant unmet needs[57](index=57&type=chunk) - For severe asthma, an estimated **750,000 to one million patients** in the U.S. alone, there have been no new oral therapies since the late 1990s, indicating a substantial unmet need[58](index=58&type=chunk) [Licenses, Partnerships and Collaborations](index=13&type=section&id=Licenses%2C%20Partnerships%20and%20Collaborations) The company holds an exclusive, worldwide license from Novartis for specific patent rights and know-how related to THB001 and THB335, with obligations for development, commercialization, milestones, and royalties - The company has an exclusive, worldwide, sublicensable license agreement with Novartis for specified patent rights and know-how related to three licensed compounds, including THB001 and THB335[59](index=59&type=chunk)[384](index=384&type=chunk) - The company is solely responsible for all research, development, regulatory, and commercialization activities for the Licensed Products and must use commercially reasonable efforts to develop and commercialize at least one product in key markets[59](index=59&type=chunk)[384](index=384&type=chunk) - Novartis Agreement Payment Obligations | Payment Type | Amount (Aggregate) | | :------------- | :----------------- | | Upfront Payment | $0.4 million | | Development Milestones | Up to $31.7 million | | Sales & Commercialization Milestones | Up to $200.0 million | | Royalties | Tiered single-digit percentage on annual net sales | [Manufacturing](index=14&type=section&id=Manufacturing) The company manages third-party CDMOs for clinical trial manufacturing of its oral KIT inhibitor candidates, utilizing readily-sourced raw materials and straightforward scalability, with plans for additional CDMOs for later stages - The company oversees and manages third-party Contract Development and Manufacturing Organizations (CDMOs) for the development and manufacture of oral KIT inhibitor product candidates for clinical trials[63](index=63&type=chunk) - The manufacturing process utilizes readily-sourced raw materials and offers straightforward scalability[63](index=63&type=chunk) - Current manufacturers are believed to be able to supply upcoming clinical trials, with the potential to onboard additional CDMOs for later clinical and commercial development stages[63](index=63&type=chunk) [Competition](index=14&type=section&id=Competition) The company faces substantial competition from well-resourced pharmaceutical and biotechnology entities, whose superior products or faster regulatory approvals could significantly diminish its commercial opportunity - The company faces substantial competition from large and specialty pharmaceutical and biotechnology companies, academic research institutions, and governmental agencies[64](index=64&type=chunk) - Competitors often have significantly greater financial resources and expertise in R&D, manufacturing, regulatory approval, and marketing[66](index=66&type=chunk) - The commercial opportunity could be reduced or eliminated if competitors develop and commercialize products that are safer, more effective, better tolerated, less expensive, or more convenient, or if they obtain regulatory approval more rapidly[67](index=67&type=chunk) [Intellectual Property](index=15&type=section&id=Intellectual%20Property) Intellectual property, including patents and trade secrets, is critical for the company, which protects its technology and product candidates through owned and licensed rights, despite inherent challenges in enforcement and potential patent term limitations - Intellectual property (patents, trade secrets, know-how) is vital for the company, which seeks to protect its technology and product candidates (THB001, THB335, and other KIT inhibitors) through owned and licensed patent rights[68](index=68&type=chunk)[76](index=76&type=chunk) - The overall patent portfolio includes eight patent families with issued patents and pending applications in the U.S. and foreign jurisdictions, covering compositions of matter, methods of use, and pharmaceutical compositions[76](index=76&type=chunk) - Patents for THB001 and additional KIT inhibitor compounds are expected to expire between **2032 and 2043**, not including potential patent term adjustments or extensions[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk)[81](index=81&type=chunk) - The company also relies on trade secrets and confidentiality agreements, but acknowledges the difficulty in enforcing claims and the risk of independent development or disclosure by competitors[74](index=74&type=chunk)[243](index=243&type=chunk) [Government Regulation](index=18&type=section&id=Government%20Regulation) The company's pharmaceutical products are subject to extensive U.S. and international government regulations covering all stages from research to marketing, with stringent approval processes and ongoing compliance requirements [Regulation Within the United States](index=18&type=section&id=Regulation%20Within%20the%20United%20States) Pharmaceutical products in the U.S. are extensively regulated by the FDA, with non-compliance potentially leading to severe administrative or judicial sanctions - Pharmaceutical products in the U.S. are subject to extensive regulation by the FDA, covering research, development, testing, manufacturing, approval, labeling, promotion, distribution, and post-approval monitoring[82](index=82&type=chunk)[83](index=83&type=chunk) - Failure to comply with U.S. requirements can result in administrative or judicial sanctions, including FDA refusal to approve applications, warning letters, product recalls, and criminal prosecution[83](index=83&type=chunk) [FDA Approval Process](index=18&type=section&id=FDA%20Approval%20Process) The FDA approval process is lengthy and expensive, involving nonclinical tests, IND submission, multi-phase clinical trials, NDA submission, and facility inspections, potentially requiring REMS and post-approval testing - Pharmaceutical product development in the U.S. involves nonclinical tests, IND submission, and adequate, well-controlled clinical trials (Phase 1, 2, 3) to establish safety and effectiveness[84](index=84&type=chunk)[85](index=85&type=chunk)[87](index=87&type=chunk) - The FDA review process for NDAs typically takes **10-12 months** for standard review and **6-8 months** for priority review, which can be extended[90](index=90&type=chunk) - Before approval, the FDA inspects clinical sites for GCP compliance and manufacturing facilities for cGMP compliance; approval may require a REMS and substantial post-approval testing[92](index=92&type=chunk)[93](index=93&type=chunk) [Disclosure of Clinical Trial Information](index=20&type=section&id=Disclosure%20of%20Clinical%20Trial%20Information) Sponsors of FDA-regulated clinical trials must register and publicly disclose trial information and results, which can be delayed but may still provide competitors with valuable insights - Sponsors of clinical trials for FDA-regulated products must register and disclose certain clinical trial information publicly[95](index=95&type=chunk) - Results of clinical trials must be disclosed after completion, with potential delays of up to **two years**, which competitors may use to gain knowledge[95](index=95&type=chunk) [Pediatric Information](index=20&type=section&id=Pediatric%20Information) PREA mandates pediatric data submission for NDAs, with possible waivers, while BPCA offers a six-month exclusivity extension for drugs if pediatric studies are conducted in response to an FDA request - PREA requires NDAs to include data on safety and effectiveness for relevant pediatric subpopulations, with provisions for full or partial waivers or deferrals[96](index=96&type=chunk) - BPCA provides a **six-month extension** of exclusivity for drugs if FDA requests pediatric studies and the applicant performs and reports on them within the statutory timeframe[97](index=97&type=chunk) [Post-Approval Requirements](index=20&type=section&id=Post-Approval%20Requirements) Approved products face extensive ongoing FDA regulation, including strict marketing controls, adverse event reporting, and cGMP compliance, with non-compliance potentially leading to recalls or approval withdrawal - Approved products are subject to extensive post-approval requirements, including strict regulation of marketing and promotion, adverse event reporting, and submission of periodic reports[98](index=98&type=chunk)[100](index=100&type=chunk) - The FDA may require post-marketing (Phase 4) testing, REMS, and surveillance, and manufacturing processes must continuously conform to cGMPs, with facilities subject to unannounced inspections[100](index=100&type=chunk) - Product approvals can be withdrawn, or recalls requested, if regulatory standards are not maintained or if problems are identified post-marketing[100](index=100&type=chunk) [The Hatch-Waxman Amendments](index=21&type=section&id=The%20Hatch-Waxman%20Amendments) The Hatch-Waxman Amendments govern generic drug approvals and patent exclusivity, allowing generic challenges to listed patents and providing marketing exclusivity for New Chemical Entities and patent term extensions - NDA applicants must list patents in the FDA's Orange Book, which generic competitors can challenge via Paragraph IV certification in an ANDA, potentially leading to a **30-month stay** on FDA approval[101](index=101&type=chunk)[102](index=102&type=chunk) - New Chemical Entities (NCEs) receive **five years** of marketing exclusivity, and certain changes to a drug can receive **three years** of exclusivity if supported by new clinical investigations[104](index=104&type=chunk) - Owners of relevant drug patents may apply for up to a **five-year patent term extension** to compensate for time lost during the FDA regulatory review process, with a maximum total patent term of **14 years** post-approval[105](index=105&type=chunk) [Regulation Outside of the United States](index=22&type=section&id=Regulation%20Outside%20of%20the%20United%20States) The company is subject to diverse and stringent regulations in various countries for clinical trials, commercial sales, and distribution, with approval processes and requirements varying significantly by jurisdiction - The company is subject to various regulations in other jurisdictions governing clinical trials, commercial sales, and product distribution[106](index=106&type=chunk) - The approval process and requirements vary significantly from country to country, affecting the number and type of studies needed and the time required for approval[106](index=106&type=chunk) [Non-Clinical Studies and Clinical Trials](index=22&type=section&id=Non-Clinical%20Studies%20and%20Clinical%20Trials) In the EU, non-clinical studies must adhere to GLP principles, while clinical trials must comply with EU, national, ICH GCP, and Declaration of Helsinki guidelines, with sponsors typically liable for 'no fault' compensation - Non-clinical studies in the EU must comply with Good Laboratory Practice (GLP) principles, as set forth in EU Directive 2004/10/EC[108](index=108&type=chunk) - Clinical trials in the EU must adhere to EU and national regulations, ICH guidelines on Good Clinical Practice (GCP), and ethical principles from the Declaration of Helsinki[108](index=108&type=chunk) - EU clinical trial sponsors not established in the EU must appoint a legal representative and are generally liable for 'no fault' compensation to injured study subjects[108](index=108&type=chunk) [Marketing Authorization](index=23&type=section&id=Marketing%20Authorization) EU marketing approval requires a Marketing Authorization Application (MAA), often through a centralized procedure, with the EMA assessing quality, safety, and efficacy over a 210-day evaluation period - Marketing approval in the EU requires submitting a Marketing Authorization Application (MAA), often via the centralized procedure for certain medicinal products, which grants EU-wide validity[110](index=110&type=chunk)[111](index=111&type=chunk) - The EMA's CHMP (and CAT for ATMPs) assesses the product's quality, safety, and efficacy, coordinating scientific assessment and preparing draft reports[110](index=110&type=chunk)[112](index=112&type=chunk) - The evaluation period for an MAA by the EMA is **210 days** (excluding clock stops), culminating in a favorable or unfavorable opinion for the European Commission's final decision[113](index=113&type=chunk) [Data and Marketing Exclusivity](index=24&type=section&id=Data%20and%20Marketing%20Exclusivity) The EU provides **eight years** of data exclusivity and **two years** of market exclusivity for reference products, extendable to **eleven years** for new indications, though qualification is not guaranteed - In the EU, reference product candidates generally receive **eight years** of data exclusivity and an additional **two years** of market exclusivity, preventing generic/biosimilar reliance on their data for **ten years**[117](index=117&type=chunk) - The **10-year market exclusivity** can be extended to **eleven years** if a new therapeutic indication with significant clinical benefit is authorized within the first eight years[117](index=117&type=chunk) - There is a special regime for biosimilars, but no specific guidelines for complex biological products like gene or cell therapies, making their biosimilar approval unlikely currently[118](index=118&type=chunk) [Pediatric Development](index=24&type=section&id=Pediatric%20Development) The EU's Pediatric Investigation Plan (PIP) mandates pediatric studies for new medicines, offering rewards like supplementary protection certificate extensions, and the PRIME scheme facilitates accelerated development for unmet medical needs - The EU's Pediatric Investigation Plan (PIP) requires studies in children for new medicines, with rewards including a **six-month extension** of supplementary protection certificates for compliance[119](index=119&type=chunk) - Orphan medicines developed under a PIP receive an additional **two years** of market exclusivity[119](index=119&type=chunk) - The Priority Medicines (PRIME) scheme facilitates accelerated development and regulatory dialogue for product candidates targeting unmet medical needs and of major public health interest[120](index=120&type=chunk) [Post-Approval Requirements](index=25&type=section&id=Post-Approval%20Requirements) EU MAA holders face comprehensive post-approval oversight, including pharmacovigilance, adverse reaction reporting, and strict regulation of advertising and promotion to align with approved product characteristics - MAA holders and manufacturers in the EU are subject to comprehensive regulatory oversight, including pharmacovigilance systems, expedited adverse reaction reporting, and periodic safety update reports (PSURs)[121](index=121&type=chunk) - New MAAs must include a Risk Management Plan (RMP), and regulatory authorities may impose specific post-authorization obligations[122](index=122&type=chunk) - Advertising and promotion of medicinal products are strictly regulated, requiring consistency with approved product characteristics and prohibiting off-label promotion and direct-to-consumer advertising of prescription medicines[123](index=123&type=chunk) [Brexit and the Regulatory Framework in the United Kingdom](index=25&type=section&id=Brexit%20and%20the%20Regulatory%20Framework%20in%20the%20United%20Kingdom) Post-Brexit, the MHRA is the UK's standalone regulator, with separate rules for Great Britain and Northern Ireland, requiring UK marketing authorizations and introducing new national licensing procedures - Post-Brexit, the MHRA is the UK's standalone regulator, with Northern Ireland following the EU regulatory regime and Great Britain (GB) having its own rules[127](index=127&type=chunk) - Existing EU marketing authorizations for centrally authorized products were automatically converted to UK MAs for GB[127](index=127&type=chunk) - UK-established companies can no longer use the EU centralized procedure and must obtain a UK MA through national authorization procedures or post-Brexit international cooperation procedures[127](index=127&type=chunk) [Other Healthcare Laws](index=26&type=section&id=Other%20Healthcare%20Laws) The pharmaceutical industry is subject to various state and federal healthcare laws, including anti-kickback, false claims, and privacy laws, with non-compliance risking significant penalties and costs - The pharmaceutical industry is subject to federal and state anti-kickback, false claims, price transparency, and health information privacy laws (e.g., federal Anti-Kickback Statute, False Claims Act, HIPAA, HITECH)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - These laws restrict marketing practices, prohibit improper payments to induce purchases, and forbid false claims to federal healthcare programs, with violations potentially leading to liability under the federal civil False Claims Act[129](index=129&type=chunk)[130](index=130&type=chunk) - HIPAA and HITECH impose obligations on covered entities and business associates to safeguard individually identifiable health information, requiring breach notifications and carrying increased civil and criminal penalties[132](index=132&type=chunk) - Non-compliance can result in significant penalties, including civil, criminal, and administrative sanctions, damages, fines, imprisonment, and exclusion from government healthcare programs[135](index=135&type=chunk) [Healthcare Reform](index=28&type=section&id=Healthcare%20Reform) Recent healthcare reforms, particularly the Inflation Reduction Act, are significantly impacting the pharmaceutical industry by eliminating the Medicare Part D coverage gap, enabling drug price negotiation, and imposing inflation-based rebates - The Inflation Reduction Act (IRA) of August 2022 will eliminate the Medicare Part D coverage gap by **2025**, requiring manufacturers to subsidize **10-20%** of patient prescription costs[136](index=136&type=chunk) - The IRA allows HHS to directly negotiate selling prices for high-expenditure single-source drugs under Medicare Part B and Part D, with negotiated prices taking effect from **2026**[136](index=136&type=chunk) - The IRA also imposes rebates on Medicare Part D and Part B drugs whose prices increase faster than the rate of inflation[136](index=136&type=chunk) - These provisions, some facing legal challenges, are expected to significantly impact the pharmaceutical industry and drug pricing[136](index=136&type=chunk) [Coverage and Reimbursement](index=28&type=section&id=Coverage%20and%20Reimbursement) Market acceptance of approved products depends heavily on third-party payor coverage and reimbursement, which is a costly and time-consuming process with no uniform policy, potentially hindering profitability - Market acceptance of product candidates, if approved, depends on the extent of third-party coverage and reimbursement from government health programs and private insurers[137](index=137&type=chunk) - Third-party payors are increasingly challenging drug prices, medical necessity, and cost-effectiveness, often limiting coverage to specific formularies[137](index=137&type=chunk) - Obtaining coverage and adequate reimbursement is a time-consuming and costly process, with no uniform policy in the U.S., and rates can change, potentially impacting profitability[137](index=137&type=chunk)[299](index=299&type=chunk)[302](index=302&type=chunk) [Employees and Human Capital Resources](index=29&type=section&id=Employees%20and%20Human%20Capital%20Resources) As of December 31, 2023, the company had **30** full-time employees, with a human capital strategy focused on attracting and retaining talent through equity and cash incentive plans to drive business objectives - As of December 31, 2023, the company had **30** full-time employees, with **18** engaged in research and development activities and **11** holding Ph.D. or M.D. degrees[138](index=138&type=chunk) - Human capital objectives include identifying, recruiting, retaining, incentivizing, and integrating employees, advisors, and consultants[139](index=139&type=chunk) - Equity and cash incentive plans are used to attract, retain, and reward employees, aiming to increase stockholder value and achieve company objectives[139](index=139&type=chunk) [Facilities](index=29&type=section&id=Facilities) The company leases office spaces in Cambridge, Massachusetts, and San Francisco, California, which are considered sufficient for current needs until their leases expire in 2028 - The company leases office space in Cambridge, Massachusetts (**10,356 sq ft**) and San Francisco, California (**4,703 sq ft**)[140](index=140&type=chunk)[354](index=354&type=chunk) - The current office space is considered sufficient to meet needs until the leases expire in **2028**[354](index=354&type=chunk) [Corporate Information and Trademarks](index=29&type=section&id=Corporate%20Information%20and%20Trademarks) Third Harmonic Bio, Inc. was incorporated in Delaware in 2019 and uses its corporate name and logo as trademarks, acknowledging other companies' marks in its report - The company was incorporated in Delaware on April 25, 2019, as Project Ige, Inc., and changed its name to Third Harmonic Bio, Inc. on June 28, 2019[141](index=141&type=chunk) - The mark 'Third Harmonic Bio' is a registered common law trademark, and the report acknowledges other companies' trade names, trademarks, and service marks[12](index=12&type=chunk)[142](index=142&type=chunk) [Additional Information](index=29&type=section&id=Additional%20Information) The company's website provides free access to SEC filings and corporate governance information, with additional filings available on the SEC's website - The company's website (https://thirdharmonicbio.com) provides free access to annual, quarterly, and current reports, including amendments, as filed with the SEC[143](index=143&type=chunk) - Information on corporate governance, board of directors, corporate governance guidelines, code of business conduct, and board committee charters is also available on the company's website[144](index=144&type=chunk) - The SEC's website (www.sec.gov) contains reports, proxy, and information statements for the company[143](index=143&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A%2E%20Risk%20Factors%2E) Significant risks include financial instability, uncertain drug development, intense competition, operational challenges, intellectual property issues, stringent regulations, and stock market volatility [Risks Related to Our Financial Position, Limited Operating History and Need for Additional Capital](index=30&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%2C%20Limited%20Operating%20History%20and%20Need%20for%20Additional%20Capital) The company faces risks from its limited operating history, significant net losses (**$30.8 million in 2023**), accumulated deficit (**$114.2 million**), need for substantial additional funding, and a material weakness in internal financial controls - The company has a limited operating history since **2019**, no products approved for commercial sale, and a history of significant net losses, including **$30.8 million** for the year ended December 31, 2023, and an accumulated deficit of **$114.2 million**[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk) - Substantial additional funds will be needed to pursue business objectives, including advancing THB335 and future product candidates, obtaining regulatory approvals, and establishing commercial capabilities; failure to obtain this capital may force delays or termination of programs[149](index=149&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk)[156](index=156&type=chunk) - Adverse developments in the financial services industry (e.g., liquidity concerns at financial institutions) could negatively affect the company's business operations and financial condition[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk) - A material weakness in internal control over financial reporting has been identified (lack of segregation of duties, system limitations, insufficient resources), which, if not remediated, could lead to inaccurate financial reporting and a decline in stock price[161](index=161&type=chunk)[162](index=162&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) [Risks Related to Discovery, Development and Commercialization](index=36&type=section&id=Risks%20Related%20to%20Discovery%2C%20Development%20and%20Commercialization) The company's success depends on the lengthy and uncertain development of THB335 and future candidates, facing risks of clinical trial delays, adverse events, intense competition, and challenges in market acceptance and commercialization - Future performance is substantially dependent on the success of THB335 and the ability to identify, develop, and commercialize future product candidates, a process that is lengthy, expensive, and inherently uncertain[166](index=166&type=chunk)[172](index=172&type=chunk) - Clinical trials may experience delays, fail to show safety or efficacy, or reveal significant adverse events (e.g., liver transaminitis with THB001), which could inhibit regulatory approval or market acceptance[172](index=172&type=chunk)[173](index=173&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk)[180](index=180&type=chunk) - The company faces substantial competition from large pharmaceutical and biotechnology companies with greater resources, and its commercial opportunity could be reduced if competitors develop superior products or obtain approvals faster[186](index=186&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - Market acceptance of approved products depends on factors like safety, efficacy, convenience, pricing, and reimbursement, and may be limited to smaller patient subsets than estimated[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) - The company currently lacks internal sales and marketing capabilities and may need to build them or rely on third-party collaborations, which, if unsuccessful, could prevent successful commercialization[194](index=194&type=chunk)[195](index=195&type=chunk) [Risks Related to Our Business and Operations](index=47&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Operations) The company faces risks from managing growth, reliance on third-party vendors, cybersecurity threats, product liability, environmental compliance, and potential changes in tax laws - Significant expansion in development, clinical, and regulatory capabilities is expected, which may lead to difficulties in managing growth and recruiting/retaining qualified employees[200](index=200&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) - Reliance on third-party CROs, CDMOs, and other vendors for clinical trials and manufacturing exposes the company to risks if these parties fail to perform, comply with regulations, or meet deadlines[201](index=201&type=chunk) - The business depends on the efficient and uninterrupted operation of IT systems, and those of third parties, making it vulnerable to security breaches, cyber-attacks, and data loss, which could disrupt programs and compromise sensitive information[206](index=206&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[211](index=211&type=chunk) - Product liability risks are significant, potentially causing delays in development, FDA investigations, product recalls, and substantial monetary awards, which may not be fully covered by insurance[213](index=213&type=chunk) - Non-compliance with environmental, health, and safety laws, or disruptions from natural disasters, could adversely affect business operations and financial condition[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) - Changes in tax laws or limitations on the ability to use net operating loss carryforwards could adversely affect financial performance[219](index=219&type=chunk)[220](index=220&type=chunk) [Risks Related to Intellectual Property](index=57&type=section&id=Risks%20Related%20to%20Intellectual%20Property) The company's success depends on obtaining and enforcing patent protection for its technologies and licensed compounds, facing risks of patent invalidation, infringement claims, trade secret loss, and insufficient patent terms - Success depends on obtaining, maintaining, and enforcing patent protection for technologies and product candidates (THB335, other KIT inhibitors), including licensed intellectual property from third parties like Novartis[235](index=235&type=chunk)[236](index=236&type=chunk)[244](index=244&type=chunk) - There is no guarantee that pending patent applications will result in issued patents, that issued patents will be valid or enforceable, or that they will provide sufficient protection from competitors[237](index=237&type=chunk)[241](index=241&type=chunk) - Failure to protect trade secrets or breaches of license agreements could harm the business and competitive position[243](index=243&type=chunk)[245](index=245&type=chunk) - The company may face costly and time-consuming litigation to protect or enforce patents, or defend against third-party infringement claims, which could delay development or commercialization[254](index=254&type=chunk)[259](index=259&type=chunk)[261](index=261&type=chunk)[264](index=264&type=chunk) - Patent terms may be insufficient to protect competitive position for an adequate time, and changes in U.S. and ex-U.S. patent laws could diminish patent value[267](index=267&type=chunk)[271](index=271&type=chunk) [Risks Related to Government Regulation](index=69&type=section&id=Risks%20Related%20to%20Government%20Regulation) The company faces significant risks from the uncertain, costly, and time-consuming regulatory approval process, ongoing post-approval obligations, stringent healthcare laws, and potential adverse impacts from healthcare reforms on pricing and reimbursement - The regulatory approval process for THB335 and future product candidates is highly uncertain, costly, and time-consuming, with no guarantee of U.S. or foreign approval, even if development plans appear successful[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[277](index=277&type=chunk) - Approved products are subject to ongoing regulatory obligations, including manufacturing processes, labeling, post-approval monitoring, and adverse event reporting, with potential for restrictions, market withdrawal, or penalties for non-compliance[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk) - Operations and relationships with healthcare providers are subject to anti-bribery, anti-kickback, fraud and abuse, transparency, and data privacy laws (e.g., federal Anti-Kickback Statute, False Claims Act, HIPAA, GDPR), with violations risking significant penalties[283](index=283&type=chunk)[284](index=284&type=chunk)[285](index=285&type=chunk)[287](index=287&type=chunk)[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk) - Healthcare legislative and regulatory reforms, such as the Inflation Reduction Act, could lead to unfavorable pricing regulations, reduced reimbursement, and increased cost containment pressures, adversely affecting revenue and profitability[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk)[298](index=298&type=chunk)[299](index=299&type=chunk)[300](index=300&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk)[304](index=304&type=chunk) [Risks Related to Our Common Stock](index=78&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) Risks related to common stock include potential lack of liquidity, significant price volatility due to fluctuating operating results, dilution from future sales, concentrated ownership, reduced reporting requirements as an emerging growth company, and internal control deficiencies - An active and liquid trading market for common stock may not be sustained, potentially leading to inability to resell shares at or above purchase price and a decline in market value[305](index=305&type=chunk) - Quarterly and annual operating results are expected to fluctuate significantly, influenced by R&D expenses, clinical trial results, regulatory approvals, and competition, which could cause stock price volatility[306](index=306&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk)[309](index=309&type=chunk)[310](index=310&type=chunk) - Sales of substantial numbers of shares by existing stockholders or future equity offerings could cause dilution and depress the market price of common stock[311](index=311&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk) - Principal stockholders and management own a significant percentage of common stock, enabling them to control matters subject to stockholder approval, which may conflict with other investors' interests[315](index=315&type=chunk) - As an 'emerging growth company' and 'smaller reporting company,' the company benefits from reduced reporting requirements, which may make its common stock less attractive to investors[316](index=316&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk) - Failure to maintain proper and effective internal controls over financial reporting could impair the ability to produce accurate and timely financial statements, leading to a decline in stock price and potential sanctions[320](index=320&type=chunk)[321](index=321&type=chunk) [General Risk Factors](index=85&type=section&id=General%20Risk%20Factors) General risk factors include potential negative impacts from adverse analyst opinions, increased costs and management demands of public company operations, limitations of disclosure controls, and the risk of expensive securities litigation - If securities or industry analysts do not publish research or issue adverse opinions, the stock price and trading volume could decline[330](index=330&type=chunk) - Operating as a public company incurs increased legal, accounting, and other expenses, requiring substantial management time for compliance with regulations like Sarbanes-Oxley[332](index=332&type=chunk) - Disclosure controls and procedures, while designed for reasonable assurance, may not prevent or detect all errors or acts of fraud due to inherent limitations[333](index=333&type=chunk)[334](index=334&type=chunk) - The company may be subject to expensive securities litigation due to stock price volatility, which could divert management attention and seriously harm the business[335](index=335&type=chunk) [Item 1B. Unresolved Staff Comments](index=87&type=section&id=Item%201B%2E%20Unresolved%20Staff%20Comments%2E) There are no unresolved staff comments from the SEC - There are no unresolved staff comments[337](index=337&type=chunk) [Item 1C. Cybersecurity](index=87&type=section&id=Item%201C%2E%20Cybersecurity%2E) The Board oversees a risk-based cybersecurity program, including incident response and insurance, acknowledging ongoing exposure to cyberattacks and potential adverse impacts [The Board's Roles and Responsibilities](index=87&type=section&id=The%20Board%27s%20Roles%20and%20Responsibilities) The Board of Directors, through its Audit Committee, oversees cybersecurity risk, receiving regular updates and guiding the annual cybersecurity roadmap based on third-party assessments - The Board of Directors, through the Audit Committee, oversees and monitors cybersecurity risk, receiving regular updates from management[338](index=338&type=chunk)[339](index=339&type=chunk) - A periodic formal cybersecurity risk assessment, conducted by an expert third party, informs the ongoing cybersecurity roadmap, which is updated at least annually[339](index=339&type=chunk) - The Audit Committee ensures the roadmap supports business objectives and decides on mitigating or accepting specific cybersecurity risks[339](index=339&type=chunk) [Risk Management and Strategy](index=87&type=section&id=Risk%20Management%20and%20Strategy) The company's risk-based cybersecurity program includes assessments, employee training, vendor control evaluations, and an Incident Response Plan, with cybersecurity insurance, despite acknowledging ongoing cyberattack exposure - The cybersecurity program, overseen by the IT Senior Director and reporting to the Audit Committee, uses a risk-based methodology to support the confidentiality, integrity, and availability of digital assets[340](index=340&type=chunk)[341](index=341&type=chunk) - The program includes internal and third-party risk assessments, mandatory annual cybersecurity awareness training for all employees, and periodic testing[342](index=342&type=chunk) - The company evaluates cybersecurity controls of third-party service providers, including annual review of SOC1 reports for critical finance vendors and enhancing vendor selection processes[343](index=343&type=chunk)[344](index=344&type=chunk) - An Incident Response Plan (IRP) is being established to analyze, contain, and remediate cybersecurity incidents, including notifications for material incidents[345](index=345&type=chunk) - Cybersecurity insurance is maintained to manage potential liabilities, but there's no guarantee of full or timely coverage[346](index=346&type=chunk) - Despite implemented security measures, the company is exposed to cyberattacks and interruptions, which could materially disrupt operational systems or result in loss of proprietary information[347](index=347&type=chunk)[348](index=348&type=chunk) [Governance and Management's Responsibilities](index=89&type=section&id=Governance%20and%20Management%27s%20Responsibilities) IT management, led by the Senior Director of IT, is responsible for the cybersecurity program, deploying various technologies and processes, and to date, threats have not materially affected the company's business - The Senior Director of IT is responsible for the cybersecurity program, including prevention, mitigation, detection, and remediation of incidents, with the Chief Administrative Officer as executive sponsor[350](index=350&type=chunk) - The Senior Director of IT monitors cybersecurity incidents using expert technology and security partners, deploying intrusion monitoring, detection and response, patch management, threat hunting, and identity and access management[351](index=351&type=chunk) - The Senior Director of IT has relevant expertise in cybersecurity, including implementing and managing ISO 27001 and extensive SOX IT compliance experience[352](index=352&type=chunk) - Cybersecurity threats have not materially affected the company's business strategy, results of operations, or financial condition to date[353](index=353&type=chunk) [Item 2. Properties](index=89&type=section&id=Item%202%2E%20Properties%2E) The company leases office spaces in Cambridge and San Francisco, deemed sufficient for current needs until 2028 - As of December 31, 2023, the company leases office space in Cambridge, Massachusetts (**10,356 sq ft**) for its corporate headquarters and in San Francisco, California (**4,703 sq ft**)[354](index=354&type=chunk) - The current office space is believed to be sufficient to meet office needs until the expiration of the leases in **2028**[354](index=354&type=chunk) [Item 3. Legal Proceedings](index=89&type=section&id=Item%203%2E%20Legal%20Proceedings%2E) The company is not currently involved in material legal proceedings, but litigation could negatively impact business - The company is not presently a party to any legal proceedings that would have a material adverse effect on its business[355](index=355&type=chunk) - Litigation, regardless of outcome, can adversely impact the company due to defense and settlement costs, diversion of management resources, negative publicity, and reputational harm[355](index=355&type=chunk) [Item 4. Mine Safety Disclosures](index=89&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures%2E) This item is not applicable to the company - This item is not applicable[356](index=356&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=90&type=section&id=Item%205%2E%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities%2E) Common stock began trading on Nasdaq in September 2022; no unregistered securities issued, IPO proceeds used as planned, no dividends paid, and no issuer equity purchases [Stockholders](index=90&type=section&id=Stockholders) The company's common stock began trading on Nasdaq in September 2022, with **8** stockholders of record as of March 22, 2024 - The company's common stock began trading on the Nasdaq Stock Market LLC under the symbol 'THRD' on September 15, 2022[359](index=359&type=chunk) - As of March 22, 2024, there were **8** stockholders of record, but the actual number of holders is greater due to shares held in street name[360](index=360&type=chunk) [Recent Sales of Unregistered Securities](index=90&type=section&id=Recent%20Sales%20of%20Unregistered%20Securities) During the fiscal year ended December 31, 2023, the company did not issue or sell any unregistered securities not previously disclosed - During the year ended December 31, 2023, the company did not issue or sell any unregistered securities not previously disclosed[361](index=361&type=chunk) [Use of Proceeds from Public Offering of Common Stock](index=90&type=section&id=Use%20of%20Proceeds%20from%20Public%20Offering%20of%20Common%20Stock) The company completed its IPO in September 2022, raising approximately **$198.2 million** in net proceeds, with no material change in the planned use of these funds - The company completed its IPO on September 19, 2022, selling **12,535,000 shares** of common stock at **$17.00 per share**[362](index=362&type=chunk) - The aggregate net proceeds from the IPO, after underwriting discounts and offering expenses, were approximately **$198.2 million**[362](index=362&type=chunk) - There has been no material change in the planned use of proceeds from the IPO[363](index=363&type=chunk) [Dividend Policy](index=90&type=section&id=Dividend%20Policy) The company has never declared or paid cash dividends and does not anticipate doing so, intending to finance business growth with future earnings - The company has never declared or paid cash dividends on its common stock and does not anticipate paying any in the foreseeable future[364](index=364&type=chunk) - All available funds and future earnings are intended to finance the growth and development, operation, and expansion of the business[364](index=364&type=chunk) - Future dividend decisions will be at the discretion of the board of directors, dependent on results of operations, financial condition, future prospects, and contractual restrictions[364](index=364&type=chunk) [Securities Authorized for Issuance under Equity Compensation Plans](index=90&type=section&id=Securities%20Authorized%20for%20Issuance%20under%20Equity%20Compensation%20Plans) Information regarding securities authorized for issuance under equity compensation plans is incorporated by reference from the company's Definitive Proxy Statement for the 2024 Annual Meeting of Stockholders - Information regarding securities authorized for issuance under equity compensation plans is incorporated by reference into the Definitive Proxy Statement for the 2024 Annual Meeting of Shareholders[365](index=365&type=chunk) [Issuer Purchases of Equity Securities](index=90&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) The company did not purchase any of its registered equity securities during the period covered by this Annual Report - The company did not purchase any of its registered equity securities during the period covered by this Annual Report[366](index=366&type=chunk) [Item 6. [Reserved]](index=90&type=section&id=Item%206%2E%20%5BReserved%5D) This item is reserved and contains no information - This item is reserved[367](index=367&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=91&type=section&id=Item%207%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%2E) Analysis of financial condition and operations, highlighting significant losses, reliance on IPO proceeds, increasing R&D and G&A expenses, liquidity, and critical accounting policies [Overview](index=91&type=section&id=Overview) Third Harmonic Bio, a biopharmaceutical company, focuses on developing oral KIT inhibitors, with lead candidate THB335 entering clinical studies in Q2 2024, and expects continued losses, requiring additional funding despite **$269.1 million** in cash as of December 31, 2023 - Third Harmonic Bio is a biopharmaceutical company developing next-generation, highly selective, oral small-molecule inhibitors of KIT for dermal, respiratory, and gastrointestinal inflammatory diseases, with an initial focus on chronic spontaneous urticaria[370](index=370&type=chunk) - The company submitted an IND for THB335, its new oral KIT inhibitor, with clinical studies planned for Q2 2024. THB335 is designed to mitigate hepatotoxicity risk observed in the discontinued THB001[371](index=371&type=chunk)[372](index=372&type=chunk)[373](index=373&type=chunk) - Since inception, the company has incurred significant operating losses and negative cash flows, with a net loss of **$30.8 million** in 2023 and an accumulated deficit of **$114.2 million**[376](index=376&type=chunk)[377](index=377&type=chunk) - The company expects to continue incurring net operating losses and substantially increasing R&D and G&A expenses, requiring substantial additional funding[377](index=377&type=chunk)[380](index=380&type=chunk)[381](index=381&type=chunk) - As of December 31, 2023, the company had **$269.1 million** in cash and cash equivalents, projected to fund operations through at least **2026**[384](index=384&type=chunk) [Components of Our Results of Operations](index=96&type=section&id=Components%20of%20Our%20Results%20of%20Operations) The company has no revenue, with operating expenses primarily comprising expensed R&D and G&A costs, while other income is mainly interest, and income tax benefits are not recorded due to net losses [Revenue](index=96&type=section&id=Revenue) The company has not generated revenue since inception and does not anticipate doing so in the near future, with future revenue contingent on successful clinical development or collaboration agreements - The company has not generated any revenue since its inception and does not expect to generate revenue from product sales or other sources in the near future[387](index=387&type=chunk) - Future revenue generation depends on successful development and commercialization of product candidates or entering into collaboration/license agreements[387](index=387&type=chunk) [Operating Expenses](index=96&type=section&id=Operating%20Expenses) Operating expenses primarily consist of expensed R&D costs, including third-party services and employee-related expenses, and G&A expenses, both expected to increase with business expansion and public company operations - Research and development (R&D) expenses are a significant portion of operating expenses, expensed as incurred, and include direct costs for CROs, CDMOs, clinical trial materials, consultants, and licensing payments[388](index=388&type=chunk)[389](index=389&type=chunk)[390](index=390&type=chunk) - Indirect R&D costs primarily consist of employee-related expenses and facilities costs, which are not tracked on a specific program basis[390](index=390&type=chunk) - R&D expenses are expected to continue increasing as the company discovers and develops additional product candidates and expands its headcount and intellectual property portfolio[391](index=391&type=chunk) - General and administrative (G&A) expenses include employee-related costs, legal fees for patent/corporate matters, accounting, consulting, and other professional services, and are expected to increase with business expansion and public company operations[394](index=394&type=chunk)[395](index=395&type=chunk) [Total Other (Income) Expense, Net](index=98&type=section&id=Total%20Other%20%28Income%29%20Expense%2C%20Net) Total other income, net, primarily comprises interest income from interest-bearing money market accounts and U.S. Treasury Securities - Other income primarily consists of interest income generated from interest-bearing money market accounts and U.S. Treasury Securities[396](index=396&type=chunk) [Income Taxes](index=98&type=section&id=Income%20Taxes) The company has not recorded income tax benefits due to net losses and maintains a full valuation allowance against deferred tax assets, with federal and state net operating loss carryforwards of **$44.0 million** and **$43.6 million**, respectively, as of December 31, 2023 - The company has not recorded income tax benefits for net losses or earned R&D tax credits since inception, due to the belief that realization of these tax attributes is unlikely[397](index=397&type=chunk) - As of December 31, 2023, the company had U.S. federal and state net operating loss carryforwards of **$44.0 million** and **$43.6 million**, respectively[397](index=397&type=chunk) - A full valuation allowance has been recorded against deferred tax assets as of December 31, 2022 and 2023[397](index=397&type=chunk) [Results of Operations](index=98&type=section&id=Results%20of%20Operations) The company's net loss decreased by **12%** from **$35.2 million** in 2022 to **$30.8 million** in 2023, driven by increased interest income offsetting higher operating expenses [Comparison of the year ended December 31, 2022 and 2023](index=98&type=section&id=Comparison%20of%20the%20year%20ended%20December%2031%2C%202022%20and%202023) The company's net loss decreased by **12%** from **$35.2 million** in 2022 to **$30.8 million** in 2023, primarily due to a significant increase in net other income offsetting higher total operating expenses - Consolidated Statements of Operations Summary (in thousands) | Metric | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2023 | $ Change | % Change | | :-------------------------- | :---------------------- | :---------------------- | :------- | :------- | | Research and development | $24,407 | $23,964 | $(443) | (2%) | | General and administrative | $13,301 | $19,990 | $6,689 | 50% | | Total operating expenses | $37,708 | $43,954 | $6,246 | 17% | | Loss from operations | $37,708 | $43,954 | $6,246 | 17% | | Total other (income) expense, net | $(2,553) | $(13,130) | $(10,577) | * | | Net loss | $35,155 | $30,824 | $(4,331) | (12%) | [Research and Development Expenses](index=99&type=section&id=Research%20and%20Development%20Expenses) R&D expenses slightly decreased by **$0.4 million** (**2%**) to **$24.0 million** in 2023, driven by reduced THB001 and other discovery costs, partially offset by increased THB335 and employee-related expenses - Research and Development Expenses (in thousands) | Category | Year Ended Dec 31, 2022 | Ye