Foghorn Therapeutics(FHTX) - 2020 Q4 - Annual Report

Part I Business Foghorn Therapeutics is a clinical-stage biopharmaceutical company focused on developing medicines for cancer by targeting the chromatin regulatory system, with lead candidates FHD-286 and FHD-609 - Foghorn is pioneering medicines targeting the chromatin regulatory system, associated with over 50% of all cancers, potentially impacting over 2.5 million patients[19] - The company's proprietary Gene Traffic Control platform offers an integrated understanding of the chromatin regulatory system for drug target identification and validation[19][21] - Lead product candidate FHD-286 is in Phase 1 studies for metastatic uveal melanoma and AML, while FHD-609 is a protein degrader for synovial sarcoma with an IND planned for Q2 2021[19][27] - In July 2020, Foghorn collaborated with Merck for oncology therapeutics, receiving a $15.0 million upfront payment and eligible for up to $410.0 million in milestones plus royalties[30][169] - As of December 31, 2020, the company had 95 full-time employees, with 79 in research and development[31][277] Risk Factors The company faces significant risks including a limited operating history, substantial financial losses, dependence on early-stage product candidates and an unproven platform, and challenges in clinical trials, intellectual property, and third-party reliance - The company has a limited operating history, no approved products, and incurred significant losses since inception, with an accumulated deficit of $162.9 million as of December 31, 2020[285][288] - The business is heavily dependent on the success of its early-stage product candidates, FHD-286 and FHD-609, which face a high risk of failure[303][313] - The company's Gene Traffic Control platform approach to drug discovery is unproven and may not successfully build a commercially valuable pipeline[328] - The company's intellectual property portfolio is in early stages, with no issued patents for lead candidates FHD-286 and FHD-609, relying on difficult-to-protect trade secrets for its core platform technology[359][361][371] - The company relies on third parties for manufacturing, preclinical studies, and clinical trials, increasing vulnerability to delays, quality issues, and non-compliance[336][397] - The COVID-19 pandemic poses a risk of disrupting the supply chain, manufacturing, clinical trials, and regulatory processes, potentially adversely affecting business operations[356] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None[454] Properties The company's corporate headquarters in Cambridge, Massachusetts, comprises approximately 81,441 square feet of leased office and laboratory space, with the lease expiring in September 2028 - The company leases approximately 81,441 square feet of office and laboratory space for its corporate headquarters at 500 Technology Square, Cambridge, MA[455] - The current lease term expires in September 2028, with a five-year extension option[455] Legal Proceedings The company is not currently a party to any legal proceedings expected to have a material adverse effect on its business - The company is not currently a party to any material litigation or legal proceedings[457] Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[458] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock began trading on Nasdaq under 'FHTX' on October 23, 2020, raising approximately $122.1 million net proceeds from its IPO - The company's common stock began trading on the Nasdaq Global Market under the symbol "FHTX" on October 23, 2020[461] - The company closed its IPO on October 27, 2020, receiving aggregate net proceeds of approximately $122.1 million after the underwriters' option exercise[465][467] - As of December 31, 2020, approximately $12.1 million of the net IPO proceeds had been used to advance product candidates and for working capital[468] Selected Financial Data As a smaller reporting company, Foghorn Therapeutics is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide the information under this item[470] Management's Discussion and Analysis of Financial Condition and Results of Operations For 2020, the company reported an increased net loss of $68.8 million driven by higher R&D and G&A expenses, with $185.8 million in cash expected to fund operations into Q3 2022 Results of Operations (in thousands) | | Year Ended December 31, 2020 | Year Ended December 31, 2019 | Change | |:---|---:|---:|---:| | Collaboration revenue | $430 | $0 | $430 | | Research and development | $57,715 | $44,362 | $13,353 | | General and administrative | $11,246 | $6,722 | $4,524 | | Loss from operations | ($68,531) | ($51,084) | ($17,447) | | Net loss | ($68,800) | ($51,128) | ($17,672) | Research and Development Expenses (in thousands) | Category | Year Ended December 31, 2020 | Year Ended December 31, 2019 | Change | |:---|---:|---:|---:| | FHD-286 | $5,570 | $5,458 | $112 | | FHD-609 | $7,137 | $5,266 | $1,871 | | Platform and other early stage | $13,707 | $13,522 | $185 | | Personnel related | $17,822 | $13,176 | $4,646 | | Facility related and other | $13,479 | $6,940 | $6,539 | | Total R&D Expenses | $57,715 | $44,362 | $13,353 | - As of December 31, 2020, the company had cash, cash equivalents, and marketable securities of $185.8 million, which management believes are sufficient to support operations into the third quarter of 2022[525][537] Cash Flows (in thousands) | | Year Ended December 31, 2020 | Year Ended December 31, 2019 | |:---|---:|---:| | Cash used in operating activities | ($31,286) | ($46,335) | | Cash used in investing activities | ($108,914) | ($964) | | Cash provided by financing activities | $217,473 | $23,969 | Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Foghorn Therapeutics is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide the information under this item[541] Consolidated Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for 2020 and 2019, along with the independent auditor's report from Deloitte & Touche LLP Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2020 | Dec 31, 2019 | |:---|---:|---:| | Assets | | | | Cash, cash equivalents & marketable securities | $185,770 | $14,981 | | Total current assets | $190,687 | $16,885 | | Total assets | $255,594 | $22,342 | | Liabilities & Equity | | | | Total current liabilities | $18,846 | $12,652 | | Total liabilities | $109,407 | $23,814 | | Total stockholders' equity (deficit) | $146,187 | ($88,016) | | Total liabilities & stockholders' equity (deficit) | $255,594 | $22,342 | Consolidated Statement of Operations Data (in thousands) | | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | |:---|---:|---:| | Collaboration revenue | $430 | $0 | | Total operating expenses | $68,961 | $51,084 | | Loss from operations | ($68,531) | ($51,084) | | Net loss | ($68,800) | ($51,128) | | Net loss per share | ($6.23) | ($12.20) | - The independent registered public accounting firm is Deloitte & Touche LLP, serving as the company's auditor since 2018[549] Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[696] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of December 31, 2020, with no material changes to internal controls during Q4 2020 - Management concluded that as of December 31, 2020, the company's disclosure controls and procedures were effective at the reasonable assurance level[697] - The annual report does not include a management assessment or auditor attestation on internal control over financial reporting, as permitted for newly public companies[698] - No material changes in internal control over financial reporting occurred during the quarter ended December 31, 2020[699] Other Information The company reports no other information for this item - None[700] Part III Directors, Executive Officers and Corporate Governance Information for this item will be incorporated by reference from the company's definitive proxy statement for its 2021 Annual Meeting of Stockholders - Information is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Stockholders[702] Executive Compensation Information for this item will be incorporated by reference from the company's definitive proxy statement for its 2021 Annual Meeting of Stockholders - Information is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Stockholders[703] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information for this item will be incorporated by reference from the company's definitive proxy statement for its 2021 Annual Meeting of Stockholders - Information is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Stockholders[704] Certain Relationships and Related Transactions, and Director Independence Information for this item will be incorporated by reference from the company's definitive proxy statement for its 2021 Annual Meeting of Stockholders - Information is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Stockholders[705] Principal Accounting Fees and Services Information for this item will be incorporated by reference from the company's definitive proxy statement for its 2021 Annual Meeting of Stockholders - Information is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Stockholders[706] Part IV Exhibits, Financial Statement Schedules This section lists the financial statements and exhibits filed with the Form 10-K, noting the omission of financial statement schedules as not required or applicable - A list of the financial statements included in the report is provided on page 103[708] - Financial statement schedules have been omitted because they are not required or applicable[709] - Required exhibits are listed in the Exhibit Index and incorporated by reference[710] Form 10-K Summary The company reports no Form 10-K summary - None[711]