Foghorn Therapeutics(FHTX) - 2025 Q3 - Quarterly Report

Financial Performance - The company has reported net losses of $52.6 million for the nine months ended September 30, 2025, and $86.6 million for the year ended December 31, 2024, with an accumulated deficit of $610.8 million as of September 30, 2025[90]. - The company has not generated any revenue from product sales to date and does not expect to do so in the near future[95]. - Collaboration revenue for Q3 2025 was $8.2 million, up from $7.8 million in Q3 2024, reflecting a 4.4% increase attributed to advancements under the Lilly Collaboration Agreement[116]. - For the nine months ended September 30, 2025, collaboration revenue reached $21.7 million, compared to $19.7 million in the same period of 2024, marking a 10.1% increase[117]. - Other income, net for Q3 2025 was $2.7 million, down from $4.7 million in Q3 2024, a decrease of 42.6%[123]. - For the nine months ended September 30, 2025, other income, net was $9.9 million, compared to $11.6 million in the same period of 2024, a decrease of 14.7%[124]. Research and Development - The company is currently working on more than seven programs, with one clinical-stage drug candidate in Phase 1 development, targeting over 500,000 cancer patients[83]. - The company expects significant increases in operating expenses as it continues its research and development activities and prepares for commercialization[91][107]. - The company anticipates that its research and development expenses may increase unpredictably due to geopolitical and economic factors[105]. - Research and development expenses for Q3 2025 were $20.0 million, down from $24.7 million in Q3 2024, a decrease of 19%[118]. - For the nine months ended September 30, 2025, research and development expenses totaled $63.4 million, a decrease of 14.3% from $74.0 million in the same period of 2024[119]. - The company expects expenses to increase substantially due to ongoing clinical activities, including the Phase 1 clinical trial of FHD-909 partnered with Lilly[133]. Financial Position and Cash Flow - As of September 30, 2025, the company had cash, cash equivalents, and marketable securities totaling $180.3 million[125]. - Net cash used in operating activities for the nine months ended September 30, 2025, was $63.8 million, an improvement from $75.9 million in the same period of 2024[126]. - For the nine months ended September 30, 2025, operating activities used $63.8 million of cash, compared to $75.9 million for the same period in 2024, reflecting a decrease of 15.5%[127][128]. - The net loss for the nine months ended September 30, 2025, was $52.6 million, down from $67.1 million in the prior year, indicating an improvement of approximately 21.1%[127][128]. - Net cash provided by investing activities for the nine months ended September 30, 2025, was $98.8 million, a significant increase compared to a net cash used of $52.2 million in the same period of 2024[129][130]. - Financing activities generated $0.4 million in net cash for the nine months ended September 30, 2025, a sharp decline from $105.4 million in the prior year[131][132]. - The company may need to seek additional financing sooner than planned due to potential inaccuracies in its cash flow estimates, particularly in light of recent market volatility affecting the biotech industry[133][134]. - If sufficient capital is not raised, the company may have to curtail or discontinue research and development programs or commercialization efforts[134]. - As of the report date, the company anticipates that its cash, cash equivalents, and marketable securities will be sufficient to fund operations for at least twelve months[133]. Collaboration and Agreements - The collaboration with Eli Lilly includes a 50/50 co-development and co-commercialization agreement for the SMARCA2 oncology program, with the potential to receive up to $1.3 billion in development and commercialization milestones[96][98]. - The company received an upfront payment of $300 million from the Lilly Collaboration Agreement and $80 million from the Lilly SPA, totaling $380 million in cash[85][96]. - As of September 30, 2025, the company recognized total deferred revenue of $337.8 million related to the Lilly Collaboration Agreement and the Lilly SPA[101]. - FHD-909, a selective allosteric ATPase inhibitor of SMARCA2, was transitioned to Lilly in Q3 2023, triggering a 50/50 cost share for the SMARCA2 programs[87][100]. General and Administrative Expenses - General and administrative expenses for Q3 2025 were $6.7 million, a decrease of 4.6% from $7.0 million in Q3 2024[120]. - For the nine months ended September 30, 2025, general and administrative expenses were $20.8 million, down from $22.0 million in the same period of 2024, a decrease of 5.5%[121]. Tax and Accounting - The company has recorded a full valuation allowance against its net deferred tax assets due to a history of cumulative net losses and does not expect to have taxable income in the current year[110]. - Recent accounting pronouncements that may impact the company's financial position are disclosed in the quarterly report[137]. Off-Balance Sheet Arrangements - The company currently has no off-balance sheet arrangements as defined by SEC regulations[136].