Foghorn Therapeutics Inc

Previous wording

At present, we are working on more than eight programs with one clinical-stage drug candidate currently in Phase 1 development and one drug candidate with an Investigational New Drug Application (“IND”) submitted in April 2024 and anticipated to enter clinical development later this year. We have discovered highly selective chemical matter for some of the most challenging targets in oncology including SMARCA2 (BRM), CBP, EP300 and ARID1B as well as other undisclosed targets. We believe our current pipeline has the potential to help more than 500,000 cancer patients. We take a small molecule modality agnostic approach to drugging targets which includes protein degraders, allosteric enzymatic inhibitors, and transcription factor disruptors. We are a biology first company which means we focus first on the underlying genetics and biology of a disease relevant target and then leverage the most appropriate drugging approach to impact the disease biology.

Current wording

At present, we are working on more than eight programs with two clinical-stage drug candidates currently in Phase 1 development. We have discovered highly selective chemical matter for some of the most challenging targets in oncology including SMARCA2 (BRM), CBP, EP300 and ARID1B as well as other undisclosed targets. We believe our current pipeline has the potential to help more than 500,000 cancer patients. We take a small molecule modality agnostic approach to drugging targets which includes protein degraders, allosteric enzymatic inhibitors, and transcription factor disruptors. We are a biology first company which means we focus first on the underlying genetics and biology of a disease relevant target and then leverage the most appropriate drugging approach to impact the disease biology.

Previous wording

We are currently conducting a Phase 1 dose escalation study of FHD-286, a selective, allosteric ATPase inhibitor of SMARCA2 (BRM) and SMARCA4 (BRG1), in combination with either decitabine or cytarabine in relapsed and/or refractory acute myeloid leukemia patients. As part of our collaboration with Eli Lilly and Company (“Lilly”), we anticipate that a Phase 1 dose escalation study will start later this year with FHD-909, a selective ATPase inhibitor of SMARCA2 (BRM).

Current wording

We are currently conducting a Phase 1 dose escalation study of FHD-286, a selective, allosteric ATPase inhibitor of SMARCA2 (BRM) and SMARCA4 (BRG1), in combination with either decitabine or cytarabine in relapsed and/or refractory acute myeloid leukemia patients. As part of our collaboration with Eli Lilly and Company (“Lilly”), a Phase 1 dose escalation study dosed its first patient in October of 2024 with FHD-909, a selective allosteric ATPase inhibitor of SMARCA2 (BRM).

Previous wording

We have incurred significant operating losses since our inception. For the six months ended June 30, 2024 and the year ended December 31, 2023, we reported net losses of $48.0 million and $98.4 million, respectively. As of June 30, 2024, we had an accumulated deficit of $519.6 million. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. Our ability to generate any product revenue or product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more product candidates we are developing or may develop.

Current wording

We have incurred significant operating losses since our inception. For the nine months ended September 30, 2024 and the year ended December 31, 2023, we reported net losses of $67.1 million and $98.4 million, respectively. As of September 30, 2024, we had an accumulated deficit of $538.7 million. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. Our ability to generate any product revenue or product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more product candidates we are developing or may develop.

Previous wording

• advance FHD-286 and continue preclinical and clinical development of product candidates from our current portfolio, including FHD-909 and other product candidates partnered with Lilly;

Current wording

• advance FHD-286, FHD-909 and other product candidates partnered with Lilly, and continue preclinical and clinical development of product candidates from our current portfolio;

Previous wording

In the third quarter of 2023, we transitioned the SMARCA2 (BRM) Selective inhibitor, FHD-909, to Lilly, for which Lilly will lead and we will participate and share in 50% of the costs until registrational trials. Costs incurred will continue to be included in research and development expenses on the condensed consolidated statements of operations and comprehensive loss.

Current wording

In the third quarter of 2023, we transitioned the SMARCA2 (BRM) Selective inhibitor, FHD-909, to Lilly, for which Lilly will lead and we will participate and share in 50% of the costs until at least registrational trials. Costs incurred will continue to be included in research and development expenses on the condensed consolidated statements of operations and comprehensive loss.

Previous wording

We recognized total deferred revenue of $337.8 million related to the Lilly Collaboration Agreement and the Lilly SPA, which included the $300.0 million upfront payment under the Lilly Collaboration Agreement as well as $37.8 million allocated to deferred revenue from the gross proceeds of the Lilly SPA to be recognized over the performance period. For the three months ended June 30, 2024 and 2023, the Company had recorded $6.9 million and $5.2 million, respectively, of revenue under the Lilly Collaboration Agreement. For the six months ended June 30, 2024 and 2023, we recognized $11.9 million and $10.0 million, respectively, of revenue under the Lilly Collaboration Agreement. As of June 30, 2024, we had $290.7 million of deferred revenue related to the above mentioned upfront payment and revenue allocation remaining on our condensed consolidated balance sheets.

Current wording

We recognized total deferred revenue of $337.8 million related to the Lilly Collaboration Agreement and the Lilly SPA, which included the $300.0 million upfront payment under the Lilly Collaboration Agreement as well as $37.8 million allocated to deferred revenue from the gross proceeds of the Lilly SPA to be recognized over the performance period. For the three months ended September 30, 2024 and 2023, the Company had recorded $7.8 million and $1.4 million, respectively, of revenue under the Lilly Collaboration Agreement. For the nine months ended September 30, 2024 and 2023, we recognized $19.7 million and $11.3 million, respectively, of revenue under the Lilly Collaboration Agreement. As of September 30, 2024, we had $282.9 million of deferred revenue related to the above mentioned upfront payment and revenue allocation remaining on our condensed consolidated balance sheets.

Previous wording

For the three months ended June 30, 2024 and 2023, we recognized none and $0.4 million, respectively, of revenue under the Merck Collaboration Agreement. For the six months ended June 30, 2024 and 2023, we recognized none and $1.0 million, respectively, of revenue under the Merck Collaboration Agreement. As of June 30, 2024, we had no deferred revenue, and no corresponding deferred revenue remaining, related to the upfront payment and milestone achievement remaining on our condensed consolidated balance sheets.

Current wording

For the three months ended September 30, 2024 and 2023, we recognized none and $16.1 million, respectively, of revenue under the Merck Collaboration Agreement. For the nine months ended September 30, 2024 and 2023, we recognized none and $17.0 million, respectively, of revenue under the Merck Collaboration Agreement. As of September 30, 2024, we had no deferred revenue, and no corresponding deferred revenue remaining, related to the upfront payment and milestone achievement remaining on our condensed consolidated balance sheets.

Previous wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Current wording

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

Previous wording

The following table summarizes our results of operations for three and six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our results of operations for three and nine months ended September 30, 2024 and 2023:

Previous wording

Under our collaboration agreements, revenue is recognized based on the work performed during the period. Collaboration revenue was $6.9 million for the three months ended June 30, 2024, compared to $5.6 million for the three months ended June 30, 2023. The increase in collaboration revenue is attributed to the following:

Current wording

Under our collaboration agreements, revenue is recognized based on the work performed during the period. Collaboration revenue was $7.8 million for the three months ended September 30, 2024, compared to $17.5 million for the three months ended September 30, 2023. The decrease in collaboration revenue is attributed to the following:

Previous wording

•an increase in Lilly collaboration revenue recognition of $1.7 million primarily due to continued advancement of programs under the Lilly Collaboration Agreement.

Current wording

•a decrease in Merck collaboration revenue recognition of $16.1 million driven by the termination of the Merck Collaboration Agreement in 2023, offset by an increase in Lilly collaboration revenue recognition of $6.4 million primarily due to continued advancement of programs under the Lilly Collaboration Agreement.

Previous wording

Collaboration revenue was $11.9 million for the six months ended June 30, 2024, compared to $10.9 million for the six months ended June 30, 2023. The increase in collaboration revenue is attributed to the following:

Current wording

Collaboration revenue was $19.7 million for the nine months ended September 30, 2024, compared to $28.4 million for the nine months ended September 30, 2023. The decrease in collaboration revenue is attributed to the following:

Previous wording

•an increase in Lilly collaboration revenue recognition of $2.0 million primarily due to continued advancement of programs under the Lilly Collaboration Agreement.

Current wording

•a decrease in Merck collaboration revenue recognition of $17.0 million driven by the termination of the Merck Collaboration Agreement in 2023, offset by an increase in Lilly collaboration revenue recognition of $8.4 million primarily due to continued advancement of programs under the Lilly Collaboration Agreement.

Previous wording

The following table summarizes our research and development expenses for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our research and development expenses for the three and nine months ended September 30, 2024 and 2023:

Previous wording

Research and development expenses were $23.8 million for the three months ended June 30, 2024, compared to $29.2 million for the three months ended June 30, 2023. The decrease is attributed to the following:

Current wording

Research and development expenses were $24.7 million for the three months ended September 30, 2024, compared to $26.3 million for the three months ended September 30, 2023. The decrease is attributed to the following:

Previous wording

•a decrease in personnel-related costs of $3.0 million, including a $0.7 million decrease in stock-based compensation expense, due to decreased headcount in our research and development function compared to the prior period;

Current wording

•a decrease in personnel-related costs of $2.7 million, including a $0.5 million decrease in stock-based compensation expense, due to decreased headcount in our research and development function compared to the prior period;

Previous wording

•a decrease in early development and other research external costs of $2.2 million; which was driven by a $2.6 million decrease in FHD-609 spend due to the shutdown of the Phase 1 clinical trial in synovial sarcoma and SMARCAB1-loss tumors, partially offset by the continued investment in and development of our platform and early research pipeline, including an increase of $0.3 million related to the advancement of Lilly partnered targets;

Current wording

•a decrease in early development and other research external costs of $1.4 million; which was primarily driven by a $1.0 million decrease in FHD-609 spend due to the shutdown of the Phase 1 clinical trial in synovial sarcoma and SMARCAB1-loss tumors; and

Previous wording

•a decrease in facilities and IT related expenses of $1.5 million, due to decreased headcount in our research and development function compared to the prior period.

Current wording

•a decrease in facilities and IT related expenses of $0.9 million, due to decreased headcount in our research and development function compared to the prior period.

Previous wording

Research and development expenses were $49.3 million for the six months ended June 30, 2024, compared to $59.2 million for the six months ended June 30, 2023. The decrease is attributed to the following:

Current wording

Research and development expenses were $74.0 million for the nine months ended September 30, 2024, compared to $85.5 million for the nine months ended September 30, 2023. The decrease is attributed to the following:

Previous wording

•a decrease in personnel-related costs of $5.6 million, including a $1.4 million decrease in stock-based compensation expense, due to decreased headcount in our research and development function compared to the prior period;

Current wording

•a decrease in personnel-related costs of $8.4 million, including a $1.9 million decrease in stock-based compensation expense, due to decreased headcount in our research and development function compared to the prior period;

Previous wording

•a decrease in early development and other research external costs of $2.8 million; which was driven by a $4.9 million decrease in FHD-609 spend due to the shutdown of the Phase 1 clinical trial in synovial sarcoma and SMARCAB1- loss tumors, partially offset by the continued investment and development of our platform and early research pipeline, including an increase of $1.2 million related to the advancement of Lilly partnered targets; and

Current wording

•a decrease in early development and other research external costs of $5.4 million; which was driven by a $5.9 million decrease in FHD-609 spend due to the shutdown of the Phase 1 clinical trial in synovial sarcoma and SMARCAB1-loss tumors, partially offset by the continued investment and development of our platform and early research pipeline; and

Previous wording

•a decrease in facilities and IT related expenses of $0.8 million, due to decreased headcount in our research and development function compared to the prior period; and

Current wording

•a decrease in facilities and IT related expenses of $2.4 million, due to decreased headcount in our research and development function compared to the prior period.

Previous wording

The following table summarizes our general and administrative expenses for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our general and administrative expenses for the three and nine months ended September 30, 2024 and 2023:

Previous wording

General and administrative expenses were $7.3 million for the three months ended June 30, 2024, compared to $8.4 million for the three months ended June 30, 2023. The decrease is primarily attributed to a decrease in personnel-related costs of $1.1 million, including a $0.6 million decrease in stock-based compensation expense, which was the result of decreased headcount in our general and administrative function compared to the prior period.

Current wording

General and administrative expenses were $7.0 million for the three months ended September 30, 2024, compared to $8.3 million for the three months ended September 30, 2023. The decrease is primarily attributed to a decrease in personnel-related costs of $0.9 million, including a $0.6 million decrease in stock-based compensation expense, which was the result of decreased headcount in our general and administrative function compared to the prior period.

Previous wording

General and administrative expenses were$15.0 million for thesix months ended June 30, 2024, compared to$17.0 million for thesix months ended June 30, 2023. Thedecrease is primarily attributed to adecrease in personnel-related costs of$2.4 million, including a$1.3 million decrease in stock-based compensation expense, which was the result of decreased headcount in our general and administrative function compared to the prior period.

Current wording

General and administrative expenses were$22.0 million for thenine months ended September 30, 2024, compared to$25.4 million for thenine months ended September 30, 2023. The decrease is primarily attributed to a decrease in personnel-related costs of $3.3 million, including a $1.8 million decrease in stock-based compensation expense, which was the result of decreased headcount in our general and administrative function compared to the prior period.

Previous wording

For the three and six months ended June 30, 2024, the Company recorded a non-cash impairment of long-lived assets charge of $2.4 million related to the sublease of office space at the Company’s main office in Cambridge, MA (see Note 9 to our notes to unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q). There were no impairment charges for the three and six months ended June 30, 2023.

Current wording

For the nine months ended September 30, 2024, the Company recorded a non-cash impairment of long-lived assets charge of $2.4 million related to the sublease of office space at the Company’s main office in Cambridge, MA (see Note 9 to our notes to unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q). There were no impairment charges for the three and nine months ended September 30, 2023.

Previous wording

Other income, net was $3.7 million for the three months ended June 30, 2024, compared to $3.5 million for the three months ended June 30, 2023, which was relatively flat period-over-period.

Current wording

Other income, net was $4.7 million for the three months ended September 30, 2024, compared to $3.5 million for the three months ended September 30, 2023, which was primarily due to increased interest income from higher average interest rates during the period and increased sublease income related to the new sublease entered into in 2024 (see Note 9 to our notes to unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q).

Previous wording

The Company did not record a provision for income taxes the three and six months ended June 30, 2024. The income tax provision for the three and six months ended June 30, 2023 of $0.9 million and $1.5 million, respectively, was primarily driven by the federal and state taxes related to the $300.0 million upfront payment for the Lilly Collaboration Agreement, which were recognized as taxable income in 2023, and the required capitalization of research and development costs pursuant to Internal Revenue Code Section 174.

Current wording

The Company did not record a provision for income taxes the three and nine months ended September 30, 2024. The income tax provision for the three and nine months ended September 30, 2023 of $0.7 million and $2.2 million, respectively, was primarily driven by the federal and state taxes related to the $300.0 million upfront payment for the Lilly Collaboration Agreement, which were recognized as taxable income in 2023, and the required capitalization of research and development costs pursuant to Internal Revenue Code Section 174.

Previous wording

Merck Collaboration Agreement, proceeds we received in December 2021 under the Lilly SPA of $80.0 million; an upfront payment of $300.0 million received in January 2022 under the Lilly Collaboration Agreement; a payment of $5.0 million received from Merck under the Merck Collaboration Agreement for the achievement of a research milestone; and net proceeds of $102.8 million, after deducting underwriting discounts, commissions and other offering expenses, from the May 2024 Offering. As of June 30, 2024, we had cash, cash equivalents and marketable securities of $285.2 million.

Current wording

Since our inception in October 2015, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we support our continued research activities and development of our programs and platform. Through September 30, 2024, we have funded our operations with proceeds from our initial public offering (“IPO”) in October 2020, sales of preferred stock, term loans, an upfront payment of $15.0 million we received in July 2020 under the Merck Collaboration Agreement, proceeds we received in December 2021 under the Lilly SPA of $80.0 million; an upfront payment of $300.0 million received in January 2022 under the Lilly Collaboration Agreement; a payment of $5.0 million received from Merck under the Merck Collaboration Agreement for the achievement of a research milestone; and net proceeds of $102.8 million, after deducting underwriting discounts, commissions and other offering expenses, from the May 2024 Offering. As of September 30, 2024, we had cash, cash equivalents and marketable securities of $267.4 million.

Previous wording

During the six months ended June 30, 2024, operating activities used $54.9 million of cash, resulting from the net cash used to fund our net loss of $48.0 million and changes in our operating assets and liabilities of $18.9 million partially offset by net non-cash charges of $12.0 million. Net cash used by changes in our operating assets and liabilities for the six months ended June 30, 2024 was primarily driven by a $11.9 million decrease in deferred revenue resulting from the recognition of revenue on the upfront payments received in connection with the Lilly Collaboration Agreement, a $4.2 million decrease in operating lease liabilities and a $2.8 million net decrease in working capital.

Current wording

During the nine months ended September 30, 2024, operating activities used $75.9 million of cash, resulting from the net cash used to fund our net loss of $67.1 million and changes in our operating assets and liabilities of $24.1 million partially offset by net non-cash charges of $15.4 million. Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2024 was primarily driven by a $19.7 million decrease in deferred revenue resulting from the recognition of revenue on the upfront payments received in connection with the Lilly Collaboration Agreement and a $6.0 million decrease in operating lease liabilities partially offset by a $1.6 million net increase in working capital.

Previous wording

During the six months ended June 30, 2023, operating activities used $63.4 million of cash, resulting from the net cash used to fund our net loss of $60.0 million and our changes in our operating assets and liabilities of $15.1 million partially offset by net non-cash charges of $11.8 million. Net cash used by changes in our operating assets and liabilities for the six months ended June 30, 2023 consisted primarily of $10.9 million decrease in deferred revenue resulting from the recognition of revenue on the upfront payments received in connection with our collaboration agreements, a $3.6 million decrease in operating lease liabilities and a $0.7 million net increase in working capital.

Current wording

During the nine months ended September 30, 2023, operating activities used $90.6 million of cash, resulting from the net cash used to fund our net loss of $74.3 million and our changes in our operating assets and liabilities of $33.6 million partially offset by net non-cash charges of $17.4 million. Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2023 consisted primarily of $28.4 million decrease in deferred revenue resulting from the recognition of revenue on the upfront payments received in connection with our collaboration agreements, a $5.5 million decrease in operating lease liabilities and a $0.3 million net increase in working capital.

Previous wording

During the six months ended June 30, 2023, net cash provided by investing activities was $68.6 million consisting of $132.9 million of maturities of marketable securities partially offset by $63.2 million of purchases of marketable securities and $1.1 million in purchases of property and equipment.

Current wording

During the nine months ended September 30, 2024, net cash used in investing activities was $52.2 million consisting of $221.8 million of purchases of marketable securities and $0.4 million in purchases of property and equipment, partially offset by $170.1 million of maturities of marketable securities.

Previous wording

During the six months ended June 30, 2024, net cash provided by investing activities was $9.1 million consisting of $106.6 million of maturities of marketable securities partially offset by $97.4 million of purchases of marketable securities and $0.1 million in purchases of property and equipment.

Current wording

During the nine months ended September 30, 2023, net cash provided by investing activities was $107.1 million consisting of $175.3 million of maturities of marketable securities partially offset by $67.1 million of purchases of marketable securities and $1.2 million in purchases of property and equipment.

Previous wording

During the six months ended June 30, 2024, net cash provided by financing activities was $104.4 million consisting of net proceeds from the offering of our common stock and prefunded warrants of $103.2 million, after deducting underwriting discounts, commissions and other offering expenses that have been paid in during the six months ended June 30, 2023, and net proceeds from the exercise of common stock options and the 2020 Employee Stock Purchase Plan (“ESPP”) of $1.2 million.

Current wording

During the nine months ended September 30, 2024, net cash provided by financing activities was $105.4 million consisting of net proceeds from the offering of our common stock and prefunded warrants of $102.8 million, after deducting underwriting discounts, commissions and other offering expenses that have been paid in during the nine months ended September 30, 2024, and net proceeds from the exercise of common stock options and the 2020 Employee Stock Purchase Plan (“ESPP”) of $2.6 million.

Previous wording

During the six months ended June 30, 2023, net cash provided by financing activities was $0.2 million consisting of net proceeds from the exercise of common stock options and the ESPP.

Current wording

During the nine months ended September 30, 2023, net cash provided by financing activities was $1.6 million consisting of net proceeds from the exercise of common stock options and the ESPP.