C4 Therapeutics(CCCC) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The company presents its unaudited condensed consolidated financial statements as of September 30, 2022 Condensed Consolidated Financial Statements The company's net loss increased while cash and total assets decreased during the first nine months of 2022 Condensed Consolidated Balance Sheet Data (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $49,551 | $76,124 | | Marketable securities | $316,460 | $375,355 | | Total current assets | $325,456 | $325,689 | | Total assets | $461,439 | $506,765 | | Total current liabilities | $45,267 | $51,246 | | Total liabilities | $143,260 | $117,159 | | Total stockholders' equity | $318,179 | $389,606 | Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Revenue from collaboration agreements | $28,242 | $25,707 | | Research and development expense | $87,189 | $68,114 | | General and administrative expense | $32,294 | $24,472 | | Loss from operations | $(91,241) | $(66,879) | | Net loss | $(90,990) | $(68,234) | | Net loss per share | $(1.86) | $(1.51) | Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(76,811) | $(61,294) | | Net cash provided by (used in) investing activities | $49,138 | $(129,923) | | Net cash provided by financing activities | $1,100 | $170,934 | Notes to Unaudited Condensed Consolidated Financial Statements Key disclosures detail the company's liquidity, collaboration revenues, debt, and confirmation of sufficient cash for future operations - The company is a clinical-stage biopharmaceutical firm with a net loss of $91.0 million for the nine months ended September 30, 2022[42][43] - As of September 30, 2022, the company had $366.0 million in cash, cash equivalents, and marketable securities, which is expected to fund operations for at least the next twelve months[43] - The company has a $12.5 million term loan outstanding with an interest rate of 12.07% as of September 30, 2022[79] - Total stock-based compensation expense was $23.1 million for the nine months ended September 30, 2022, compared to $15.2 million for the same period in 2021[88] Revenue from Collaboration Agreements (in thousands) | Agreement | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Roche Agreement | $4,548 | $7,416 | | Biogen Agreement | $18,350 | $9,647 | | Calico Agreement | $5,344 | $8,644 | | Total | $28,242 | $25,707 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial results, clinical pipeline progress, rising expenses, and confirms a cash runway through the end of 2024 Business Overview The company provides updates on its clinical-stage pipeline, including progress on CFT7455, CFT8634, and CFT1946 - CFT7455, for multiple myeloma and non-Hodgkin lymphomas, is in an ongoing Phase 1/2 clinical trial[97] - CFT8634, for synovial sarcoma, dosed its first patient in a Phase 1/2 clinical trial in May 2022[97] - An IND was submitted for CFT1946 for BRAF-V600 mutant solid tumors in August 2022, with a Phase 1/2 trial expected to begin by the end of 2022[97] Results of Operations Revenue increased due to the Biogen agreement, while R&D and G&A expenses rose significantly from higher personnel and clinical trial costs Comparison of Results for the Nine Months Ended September 30 (in thousands) | Item | 2022 | 2021 | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $28,242 | $25,707 | +$2,535 | +$8.8M from Biogen agreement, offset by decreases from Calico (-$3.3M) and Roche (-$2.9M) | | R&D Expense | $87,189 | $68,114 | +$19,075 | +$9.8M in personnel, +$5.1M in clinical expenses (CFT7455 & CFT8634), +$4.0M in facilities | | G&A Expense | $32,294 | $24,472 | +$7,822 | +$6.4M in personnel expenses | Liquidity and Capital Resources The company holds $366.0 million in cash and equivalents, sufficient to fund operations through the end of 2024 - As of September 30, 2022, the company had cash, cash equivalents and marketable securities of approximately $366.0 million[111] - Management believes that existing funds will be sufficient to fund the company's operating plan through the end of 2024[134] Summary of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(76,811) | $(61,294) | | Net cash provided by (used in) investing activities | $49,138 | $(129,923) | | Net cash provided by financing activities | $1,100 | $170,934 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate changes affecting its marketable securities portfolio - The company is exposed to interest rate risk on its marketable securities portfolio of $316.5 million as of September 30, 2022[122] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of the end of the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[125] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings - The company was not a party to any material legal proceedings as of the date of the report[130] Item 1A. Risk Factors The company faces significant risks related to its financial losses, unproven platform, third-party reliance, and competition - The company is a clinical-stage biopharmaceutical company with a limited operating history, a net loss of $91.0 million for the nine months ended September 30, 2022, and an accumulated deficit of $358.7 million[132] - The company's TORPEDO platform is an unproven approach, making it difficult to predict the time, cost, and likelihood of success[146] - The company relies on third parties (CMOs and CROs) for manufacturing and conducting clinical trials, which increases risks related to supply, quality, and timelines[169][170] - The company faces substantial competition from other biotechnology and pharmaceutical companies[158][159] - The company's Credit Agreement contains restrictive covenants that limit operational flexibility, including restrictions on asset sales, acquisitions, and incurring additional debt[143] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities and no material change in the use of IPO proceeds - There has been no material change in the planned use of proceeds from the company's initial public offering[243] Other Items (Items 3, 4, 5, 6) The company reports no defaults, mine safety issues, or other material events for the period - The company reported no defaults upon senior securities, no mine safety disclosures, and no other information for the period[244][245]