Foghorn Therapeutics Inc.

Notes to Condensed Consolidated Financial Statements

1. Nature of Business, Going Concern and Basis of Presentation

Nature of Business

Foghorn Therapeutics Inc. (the “Company”) is a clinical-stage biopharmaceutical company discovering and developing a new class of medicines targeting genetically determined dependencies within the chromatin regulatory system. The Company uses its proprietary Gene Traffic Control platform to identify, validate and potentially drug targets within the system. The Company was founded in October 2015 as a Delaware corporation. The Company is headquartered in Watertown, Massachusetts.

The Company is subject to risks similar to those of other clinical-stage companies in the biopharmaceutical industry, including dependence on key individuals, the need to develop commercially viable products, competition from other companies, many of whom are larger and better capitalized, and the need to obtain adequate additional financing to fund the development of its products. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be maintained, that any products developed will obtain required regulatory approval or that any approved products will be commercially viable. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from the sale of its products.

Going concern

The accompanying unaudited condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. Since inception, the Company has funded its operations primarily with proceeds from sales of preferred stock, upfront and milestone payments from collaboration agreements, public offerings and a stock purchase agreement. The Company has incurred recurring losses, including net losses of $19.9 million and $18.8 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the Company had an accumulated deficit of $652.3 million. The Company expects to continue to generate operating losses in the foreseeable future. As of the issuance date of these interim unaudited condensed consolidated financial statements the Company expects that its cash, cash equivalents and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months.

The Company will need to obtain additional funding through public or private equity offerings, debt financings, collaborations, strategic alliances and/or licensing arrangements to continue to fund its operations. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into collaborative or strategic alliances or licensing arrangements. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. Arrangements with collaborators or others may require the Company to relinquish rights to certain of its technologies or programs. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs, pipeline expansion or commercialization efforts, which could adversely affect its business prospects. Although management will continue to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding in the future on terms acceptable to the Company to fund continuing operations when needed or at all.

Basis of presentation

The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

2. Summary of Significant Accounting Policies

The accounting policies of the Company are set forth in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements contained in the Company’s 2025 Annual Report on Form 10-K, and the accounting policies followed by the Company for interim financial reporting are consistent with the accounting policies therein.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures, which is intended to improve disclosures about a public company’s expenses including the disclosure of certain expenses included and aggregated in captions such as cost of sales, selling general & administrative and research and development expenses on the consolidated financial statements on an interim and annual basis. The standard is effective for annual periods beginning after December 15, 2026 and interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the standard on the presentation of its condensed consolidated financial statements and footnotes.

3. Marketable Securities and Fair Value Measurements

As of March 31, 2026, available for sale marketable securities by security type consisted of (in thousands):

As of December 31, 2025, available for sale marketable securities by security type consisted of (in thousands):

The following tables present the Company’s fair value hierarchy for its assets and liabilities, which are measured at fair value on a recurring basis (in thousands):

For the three months ended March 31, 2026 and 2025, there were no transfers between Level 1, Level 2 and Level 3.

4. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

Depreciation and amortization expense was $0.2 million and $0.8 million for the three months ended March 31, 2026 and 2025, respectively.

5. Accrued Expenses and Other Current Liabilities

Accrued expenses consisted of the following (in thousands):

6. Common Stock and Net Loss Per Share

Common Stock

Each share of common stock, par value $0.0001 per share (“Common Stock”), entitles the holder toone vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are not entitled to receive dividends, unless declared by the board of directors.

On January 9, 2026, the Company entered into securities purchase agreements (the “Purchase Agreements”) with certain leading life sciences investors (the “Investors”), relating to the issuance and sale of 2,030,314 shares of its Common Stock and, in lieu of Common Stock, pre-funded warrants to purchase 5,421,250 shares of Common Stock (the “Pre-Funded Warrants”). The Company sold the shares of Common Stock and Pre-Funded Warrants together with two series of warrants, Series 1 Warrants and Series 2 Warrants, to purchase an aggregate of 7,451,564 shares of the Common Stock (the “Series Warrants”). The Pre-Funded Warrants were exercisable immediately upon issuance at an initial exercise price of $0.0001 per share and have a term of 20 years. The shares of Common Stock, or Pre-Funded Warrants, and the accompanying Series Warrants were immediately separable and were issued separately, but they were purchased together in the offering.

The offering price for the shares of Common Stock is $6.71 per share (or $6.7099 for each Pre-Funded Warrant, which equals the price per share of the Common Stock less the exercise price of the Pre-Funded Warrants). The aggregate gross proceeds to the Company from this offering were approximately $50.0 million before any offering expenses, and excluding any proceeds the Company may receive upon exercise of the Pre-Funded Warrants and Series Warrants. The Company incurred offering costs of approximately $0.3 million, which were treated as a reduction to equity. No underwriter or placement agent participated in the offering. As the Pre-funded Warrants are indexed to the Company’s common stock (and otherwise meet the requirements to be classified in equity), the Pre-Funded Warrants were classified as a component of permanent equity on the Company’s condensed consolidated balance sheets and statements of stockholder’s deficit.

The Series Warrants are also immediately exercisable. Each of the 3,725,782 Series 1 Warrants have an initial exercise price of $13.42 per share of Common Stock, subject to certain customary anti-dilution adjustments, and expires on June 30, 2027. Each of the 3,725,782 Series 2 Warrants have an initial exercise price of $20.13 per share of Common Stock, subject to certain customary anti-dilution adjustments, and expires on December 31, 2030. For the Series Warrants, the Investor may elect to receive, in lieu of shares of Common Stock, pre-funded warrants to purchase an equivalent number of shares of Common Stock.

If, prior to the expiration date of the Series Warrant, the Company sells additional capital stock or derivative securities convertible into or exercisable for capital stock (other than Exempted Securities as defined by the Series Warrant) in one or more related transactions primarily for the purpose of raising capital at a Weighted-Average Price (as described below) below $13.42 per share, then the initial exercise price of the Series Warrants will be automatically reset upon exercise to an exercise price (the “Adjusted Exercise Price”) that is the midpoint between the initial exercise price and the lowest Weighted-Average Price per share at which the Company sells capital stock or derivative securities convertible into or exercisable for capital stock in a subsequent offering prior to the exercise date; provided, however, that the Adjusted Exercise Price will not be reduced below $6.71 per share. The Weighted-Average Price shall be calculated as the weighted-average common stock equivalent price of the equity securities sold in such transaction(s) (excluding any derivative securities with an exercise or conversion price that is above the closing sale price as of the time of pricing such offering(s)). In no event will the exercise price for the Series Warrants be adjusted more than once pursuant to this adjustment mechanism.

The Series Warrants (and the Pre-Funded Warrants) may not be exercised by the holder to the extent that the holder, together with its affiliates, would beneficially own, after such exercise more than 9.99% of the shares of the Company’s common stock then outstanding (subject to the right of the holder to increase or decrease such beneficial ownership limitation upon notice to the Company, provided that such limitation cannot exceed 19.99%) and provided that any increase in the beneficial ownership limitation shall not be effective until 61 days after such notice is delivered. As of March 31, 2026, no Pre-Funded or Series Warrants have been exercised.

The Series Warrants are also indexed to the Company’s common stock (and otherwise meet the requirements to be classified in equity) and were classified as a component of permanent equity on the Company’s condensed consolidated balance sheets and statements of stockholder’s deficit.

Because each of the instruments issued are classified within permanent equity, The Company allocated the financing proceeds among the Common Stock, Pre-Funded Warrants, and Series Warrants based on each instrument’s relative fair value. The Company valued the Series Warrants at issuance using Monte Carlo Simulation model and determined the fair value of the 7,451,564 Series Warrants to be $12.2 million. The key inputs to the valuation model included the weighted average volatility of 88.2% and the weighted average expected term of 4.13 years.

On April 15, 2022, the Company entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”) with respect to an at-the-market offering (the “ATM Offering”) pursuant to which the Company, at its discretion, may offer and sell shares of its Common Stock having an aggregate offering price of up to $200.0 million from time to time through Cowen as its sales agent. Sales of Common Stock through Cowen, if any, will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. The Company will pay Cowen a commission of up to 3.0% of the gross sales price of any Common Stock sold through Cowen under the Sales Agreement.

On March 20, 2025, the Company and TD Securities (USA) LLC, as successor to Cowen (“TD Cowen”) entered into amended the sales agreement (the “Amended Sales Agreement”), which, among other things, reduced the amount of shares of Common Stock that may be sold under the ATM Offering to up to $100 million of shares of Common Stock.

During the three months ended March 31, 2026, the Company issued and sold no shares of its Common Stock under the ATM Facility.

Net Loss Per Share

The following pre-funded warrants outstanding at each period end were included in the basic and diluted net loss per share calculation:

During the three months ended March 31, 2026 and 2025, no pre-funded warrants were exercised.

The following common stock equivalents presented based on amounts outstanding at each period end have been excluded from the calculation of diluted net loss per share because including them would have had an anti-dilutive impact:

7. Stock-Based Compensation

2020 Equity Incentive Plan

The Company’s 2020 Equity Incentive Plan (the “2020 Plan”) provides for the grant of incentive stock options, non-qualified options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. The number of shares initially reserved for issuance under the 2020 Plan was (i)2,200,000 shares (the “share pool”), plus (ii) the number of shares of common stock available for issuance under the Company’s 2016 Stock Incentive Plan (the “2016 Plan”) as of the effective date of the 2020 Plan, plus the number of shares of Common Stock underlying awards under the 2016 Plan that on or after the date of adoption expire or become unexercisable without delivery of shares, are forfeited to, or repurchased for cash, are settled in cash, or otherwise become available again for grant under the 2016 Plan, in each case, in accordance with its terms (up to an aggregate of 5,078,295 shares). As of March 31, 2026,2,162,136 shares remained available for future grant under the 2020 Plan.

The share pool will automatically increase on January 1 of each year from 2021 to 2030 by the lesser of (i)four percent of the number of shares of our Common Stock outstanding as of the close of business on the immediately preceding December 31 and (ii) the number of shares determined by the board of directors on or prior to such date for such year. The number of shares reserved for issuance under the 2020 Plan was increased by 2,266,293 shares effective January 1, 2026.

The 2020 Plan is administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, or its committee if so delegated. Stock options granted with service-based vesting conditions generally vest over four years and expire afterten years. The exercise price for stock options granted is not less than the fair value of Common Stock on the date of grant. The Company bases fair value of common stock on the quoted market price.

2020 Employee Stock Purchase Plan

On October 21, 2020, the Company’s board of directors adopted and its stockholders approved the 2020 Employee Stock Purchase Plan (the “ESPP”), which became effective on October 21, 2020. The aggregate number of shares of Common Stock available for purchase pursuant to the exercise of options under the ESPP is 360,000 shares, plus an automatic annual increase, as of January 1 of each year from 2021 to 2030, equal to the lesser ofone percent of the number of shares of Common Stock outstanding as of the close of business on the immediately preceding December 31 and (ii) the number of shares determined by the board of directors on or prior to such date for such year (up to a maximum of 3,220,520 shares). The number of shares reserved for issuance under the ESPP was increased by 566,573 shares effective January 1, 2026. As of March 31, 2026,2,633,981 shares remained available for future grant under the ESPP.

Eligible employees may authorize payroll deductions of up to 15% of their eligible compensation during an offering period. The purchase of shares is done at a 15% discount on the lesser of (i) the Fair Market Value of a share of Stock on the first day of the offering period and (ii) the Fair Market Value of a share of Stock on the last day of the offering period. The Company currently holdstwo offering periods, September 1 and March 1, respectively. The Company recognized a de minimis amount of expense related to the ESPP for the three months ended March 31, 2026 and 2025.

Stock-Based Compensation

Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

As of March 31, 2026, total unrecognized compensation cost related to unvested options was $24.8 million, which is expected to be recognized over a weighted average period of 3.0 years.

8. Collaboration Agreement

Lilly Collaboration Agreement and Stock Purchase Agreement

In December 2021, the Company entered into a collaboration agreement (the “Lilly Collaboration Agreement”) with Eli Lilly and Company (“Lilly”) to create novel oncology medicines by applying Foghorn’s proprietary Gene Traffic Control platform. The collaboration includes a co-development and co-commercialization agreement for the Company’s selective SMARCA2 (BRM) oncology target, consisting oftwo programs, andone additional undisclosed oncology target (collectively, the “Joint Programs”). The collaboration also includes three additional discovery targets or programs (collectively, the “Discovery Programs”) for a total ofsix programs directed atfive targets.

With respect to the Joint Programs, the Company will lead discovery and early research activities through the successful completion of dose finding toxicity studies for the identified compound, while Lilly will lead development and commercialization activities of the identified compound with participation from the Company in development activities and 50% cost sharing until registrational clinical trials. The Company and Lilly may jointly develop and commercialize the Joint Program compound though the Company may, in its sole discretion, opt-out on a program-by-program basis of further participation in the development and commercialization efforts prior to the first registrational clinical trial. If the Company does not opt-out, Lilly and the Company will continue to share in the costs to further develop and commercialize the Joint Program compound on a worldwide basis, equally share in the U.S. profits on product sales, subject to certain adjustments and receive royalties on sales outside of the United States (“Ex-U.S.”) at royalty rates ranging from low double digits to high twenties. If the Company opts-out of further development and commercialization efforts, it will have no further obligations to share in the development and commercialization costs, will receive royalties rather than profit share on U.S. sales and will receive royalties at a lower rate on Ex-U.S. sales.

With respect to the Discovery Programs, the Company will lead discovery and early research activities through the successful completion of dose finding toxicity studies for the identified compounds. The Company may, in its sole discretion, opt-in on a program-by-program basis after the successful completion of dose finding toxicity to participate in the further development and commercialization efforts of the Discovery Program compounds. If the Company opts-in to the development and commercialization of the Discovery Program compounds, it will be eligible to receive milestone payments of up to $10.0 million per program upon specified research and development milestones and up to $180.0 million per program upon achievement of specified regulatory and commercial milestones and will also be eligible to share in the U.S. profits at pre-determined percentages on product sales. The Company would also be eligible to receive tiered Ex-U.S. royalty rates, calculated on a product-by-product and country-by-country basis, on net sales outside of the United States, if any, ranging from low single digits to low double digits, but less then teens. If the Company does not opt-in to further development and commercialization efforts for the Discovery Programs, it will be eligible to receive milestone payments of up to $70.0 million per program upon specified research and development milestones and up to $360.0 million per program upon achievement of specified regulatory and commercial milestones per approved product, if any. The Company would also be eligible to receive tiered royalties on net sales of products worldwide at royalty rates ranging from low single digits to low double digits, but less than teens.

Lilly has the right to make substitutions for each of the five targets during the research term of each program, subject to certain limitations. Pursuant to the Lilly Collaboration Agreement, the Company will also participate in joint decision-making through the joint steering committee and subcommittees. Unless terminated earlier, the Lilly Collaboration Agreement will continue on a product-by-product basis until the expiration of all royalty obligations under the Lilly Collaboration Agreement and when neither the Company nor Lilly is developing, commercializing or manufacturing any product under the Lilly Collaboration Agreement. The Company or Lilly may terminate the Lilly Collaboration Agreement upon an uncured material breach by the other party. Lilly may also terminate the Lilly Collaboration Agreement in its entirety or on a target-by-target, program-by-program or product-by-product basis for any reason upon certain notice to the Company.

The Company determined that (1) the research activities performed by the Company for both the Joint Programs and the Discovery Programs (2) the development activities and cost sharing for the Joint Program development efforts after dose finding toxicity until registrational clinical trials (3) the research, development, manufacture and commercialization licenses and (4) service on the joint steering committee and subcommittees represent a single performance obligation under the Lilly Collaboration Agreement. The Company determined that Lilly cannot benefit from the licenses separately from the research activities, the development activities until registrational clinical trials and participation on the joint steering committee and subcommittees because these services are specialized and rely on the Company’s expertise such that these activities are highly interrelated and therefore not distinct. Accordingly, the promised goods and services represent one combined performance obligation, and the entire transaction price was allocated to that single combined performance obligation. The performance obligation will be satisfied over time as the Company performs the research activities, participates and shares in the cost of the development activities for the Joint Programs and participates in a joint steering committee and subcommittees to oversee these activities.

The Company’s options to share in further development and commercialization efforts via its opt-in/opt-out rights will be assessed and accounted for as separate units of accounting under the relevant guidance if, and when, such options are exercised by the Company.

During the third quarter of 2023, the Company transitioned the SMARCA2 (BRM) Selective inhibitor, FHD-909, into development activities for which Lilly leads and the Company participates and shares 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.

As of March 31, 2026, the aggregate amount of the transaction price related to the unsatisfied portion of the performance obligation was $245.9 million, which is expected to be recognized as revenue through 2029 or beyond depending on the timing of certain clinical development activities. The Company does not expect collaboration revenue to be recognized evenly over this period as it will be recognized on a percentage of completion basis (using cost-to-cost method) as the Company performs the research and development activities and participates on the joint steering committee and subcommittees, which will likely vary from period to period. In estimating the total costs to satisfy its single performance obligation pursuant to the Lilly Collaboration Agreement, the Company is required to make significant estimates including the expected time and expected costs to fulfill the performance obligation. If estimates of the total estimated cost change, or if contract amendments change the scope of the performance obligations, the impacts could be material. The cumulative effect of revisions to the total estimated costs to complete the Company’s single performance obligation will be recorded in the period in which the changes are identified, and amounts can be reasonably estimated. A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods and the classification of deferred revenue between short-term and long-term.

For the three months ended March 31, 2026 and 2025, the Company recorded $3.3 million and $6.0 million, respectively, of revenue under the Lilly Collaboration Agreement, which was included in deferred revenue at the beginning of the respective periods. As of March 31, 2026 and December 31, 2025, the Company had a payable to Lilly of $1.0 million, recorded in accrued expenses and other current liabilities on the Company’s condensed consolidated balance sheets.

9. Leases

The Company leases laboratory and office space under a non-cancelable operating lease (the “Operating Lease”). There have been no material changes to the Company's Operating Lease during the three months ended March 31, 2026. For additional information, see Note 10, Leases, to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

The components of lease expense were as follows for the three months ended March 31, 2026 and 2025 (in thousands):

Supplemental disclosure of cash flow information related to leases was as follows (in thousands):

The weighted average remaining lease term and discount rate was as follows:

Future annual minimum lease payments under the Office Lease as of March 31, 2026 were as follows (in thousands):

Sublease agreements

Through December 2025, the Company had subleased portions of premises under a previous office lease in Cambridge, Massachusetts. For additional information, see Note 10, Leases, to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

For the three months ended March 31, 2025, the Company recorded other income of $1.4 million, related to its subleases. For the three months ended March 31, 2026, the Company recorded no other income related to subleases as the Company has no subleases as of March 31, 2026

10. Commitments and Contingencies

Leases

The Company’s commitments under its lease are described in Note 9.

License agreements

The Company has entered into various exclusive and non-exclusive license agreements for certain technologies. Under the terms of these license agreements, the Company could be required to reimburse the licensors for patent expenses and remit amounts in the low single-digit as sales-based royalties upon the occurrence of specific events as outlined in the corresponding license agreements. The Company is also required to make annual license maintenance fees of less than $0.1 million and pay up to $1.1 million in regulatory milestones on each licensed product upon the occurrence of specific events as outlined in one of the license agreements. None of our current product candidates utilizes technologies covered by these licenses.

Indemnification agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, contract research organizations, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and its executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. The Company has not incurred any material costs as a result of such indemnifications and is not currently aware of any indemnification claims.

Legal Proceedings

From time to time, the Company may become involved in litigation or other legal proceedings. The Company is not currently a party to any material litigation or legal proceedings.

Income Tax Matters

During the three months ended March 31, 2026, the Company was notified that it is currently under IRS audit related to the tax year ended December 31, 2023. The Company is currently evaluating the scope and potential outcomes of the tax audit.

11. Related Parties

In October 2015, the Company entered into afive-year consulting agreement with a scientific founder of the Company who is also a shareholder. This agreement was amended and extended to January 1, 2027 and is subject to automaticone-year renewal terms until terminated if notice is provided more than 30 days before the current end of term date. During the three months ended March 31, 2026 and 2025, the Company paid the scientific founder a de minimis amount. As of March 31, 2026 and December 31, 2025, the Company hadno accounts payable due to the scientific founder.

On December 10, 2021, we entered into the Lilly Collaboration Agreement with Lilly. Concurrent with the Lilly Collaboration Agreement the Company also entered into a stock purchase agreement with Lilly (the “Lilly SPA”) where the Company issued and sold Lilly 4,000,000 shares of our Common Stock at a price of $20.00 per share, making them a 5% or greater shareholder in the Company for the three months ended March 31, 2026 and 2025. We are obligated to make certain payments to Lilly pursuant to the Lilly Collaboration Agreement. During the three months ended March 31, 2026 and 2025, the Company paid Lilly $1.0 million and $0.6 million, respectively. As of March 31, 2026 and December 31, 2025, the Company had a payable of $1.0 million due to Lilly.

On January 9, 2026, funds affiliated with Flagship Pioneering, Inc. (“Flagship”), a 5% or greater shareholder in the Company, participated in the January 2026 Offering, purchasing pre-funded warrants to purchase 2,235,468 shares of its Common Stock at a public offering price of $6.71 per pre-funded warrant, with an exercise price of $0.0001 per share of each pre-funded warrant. The Company sold the pre-funded Warrants together with two series of warrants, Series 1 Warrants and Series 2 Warrants, to purchase an aggregate of 2,235,468 shares of the Common Stock (See Note 6 for additional information on the Series Warrants). Flagship’s participation in the January 2026 Offering resulted in total gross proceeds to the Company of $15.0 million.

On January 9, 2026, BVF Partners LP (“BVF”), a 5% or greater shareholder in the Company, participated in the January 2026 Offering, purchasing 540,000 shares of its Common Stock at a public offering price of $6.71 per share as well as pre-funded warrants to purchase 3,185,782 shares of its Common Stock at a public offering price of $6.7099 per pre-funded warrant, with an exercise price of $0.0001 per share of each pre-funded warrant. The Company sold the shares of Common Stock and pre-funded warrants together with two series of warrants, Series 1 Warrants and Series 2 Warrants, to purchase an aggregate of 3,725,782 shares of the Common Stock (See Note 6 for additional information on the Series Warrants). BVF’s participation in the January 2026 Offering resulted in total gross proceeds to the Company of $25.0 million.

On January 9, 2026, Deerfield Management Co. LP (“Deerfield”), a 5% or greater shareholder in the Company, participated in the January 2026 Offering, purchasing 745,156 shares of its Common Stock at a public offering price of $6.71 per share. The Company sold the shares of Common Stock together with two series of warrants, Series 1 Warrants and Series 2 Warrants, to purchase an aggregate of 745,156 shares of the Common Stock (See Note 6 for additional information on the Series Warrants). Deerfield’s participation in the January 2026 Offering resulted in total gross proceeds to the Company of $5.0 million.

On January 9, 2026, FMR LLC (“FMR”), a 5% or greater shareholder in the Company, participated in the January 2026 Offering, purchasing 745,158 shares of its Common Stock at a public offering price of $6.71 per share. The Company sold the shares of Common Stock together with two series of warrants, Series 1 Warrants and Series 2 Warrants, to purchase an aggregate of 745,158 shares of the Common Stock (See Note 6 for additional information on the Series Warrants). FMR’s participation in the January 2026 Offering resulted in total gross proceeds to the Company of $5.0 million.

12. Segment Reporting

Operating segments are defined as components of an entity for which separate discrete financial information is made available and that is regularly evaluated by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company manages its operations as a single segment (the “Segment”) for the purposes of assessing performance and making operating decisions. The CODM of the Segment is the Company’s chief executive officer. The Segment is focused on pioneering the discovery and development of a new class of medicines targeting genetically determined dependencies within the chromatin regulatory system. The Segment’s revenue is derived entirely from the recognition of deferred revenue related to our collaboration agreement upfront and milestone payment and funds received under the Lilly SPA (see Note 8, Collaboration Agreement).

The CODM assesses the performance of the Segment and decides how to allocate resources based on net loss that is reported on the condensed consolidated statements of operations and comprehensive loss. Further, the following represents information about segment revenue, segment loss and significant segment expenses (in thousands):

(1) Inclusive of $2.4 million and $2.7 million of stock compensation expense for the three months ended March 31, 2026 and 2025, respectively; $0.2 million and $0.8 million of depreciation and amortization expense for the three months ended March 31, 2026 and 2025, respectively.