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What changed in Foghorn Therapeutics Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Foghorn Therapeutics Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+276 added−342 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-07)

Top changes in Foghorn Therapeutics Inc.'s 2024 10-K

276 paragraphs added · 342 removed · 236 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

104 edited+22 added−63 removed262 unchanged
Biggest changeThird-party payors may seek to control costs and manage utilization by, for example, excluding products from lists of approved covered products (known as “formularies”), imposing step edits that require patients to try alternative treatments before authorizing payment for products, limiting the types of diagnoses for which coverage will be provided, requiring pre-approval (known as “prior authorization”) for coverage of a prescription for each patient (to allow the payor to assess medical necessity) or imposing a moratorium on coverage for products while the payor makes a coverage decision.
Biggest changeThird-party payors may seek to control costs and manage utilization by, for example, excluding products from lists of approved covered products (known as “formularies”), imposing step edits that require patients to try alternative treatments before authorizing payment for products, limiting the types of diagnoses for which coverage will be provided, requiring pre-approval (known as “prior authorization”) for coverage of a prescription for each patient (to allow the payor to assess medical necessity) or imposing a moratorium on coverage for products while the payor makes a coverage decision. 33 Table of Contents In order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the product, which will require additional expenditure above and beyond the costs required to obtain FDA or other comparable regulatory approvals.
One important role for this system is to control the accessibility of chromatin which in turn determines if other factors necessary for gene expression can access the genetic material. In addition, the system controls the structure, modification, and repair of chromatin which are all necessary for proper control of gene expression.
One important role for this system is to control the accessibility of chromatin which in turn determines if other factors necessary for gene expression can access the genetic material. In addition, the system controls the structure, modification, and repair of chromatin which are all necessary for the proper control of gene expression.
In the United States, these laws include, without limitation, federal and state fraud and abuse laws, transparency laws, and patient data privacy and security laws and regulations, including but not limited to those described below, some of which will not apply to us unless or until we have a marketed product. • The federal Anti-Kickback Statute, which prohibits, among other things, persons from offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual for, or the purchase or ordering of, a good or service for which payment may be made under federal healthcare programs such as Medicare and Medicaid; • Federal false claims, false statement and civil monetary penalties laws prohibiting, among other things, any person from knowingly presenting, or causing to be presented, a false claim for payments of government funds or knowingly making, or causing to be made, a false statement material to a false claim; 34 Table of Contents • The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”),which, in addition to privacy protections applicable to healthcare providers and other entities, prohibits executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; • So-called federal “sunshine” law, or Open Payments, which requires pharmaceutical and medical device companies to report information related to certain payments and transfers of value provided to certain healthcare providers to CMS, as well as ownership and investment interests held by physicians and their immediate family members; • Federal consumer protection and unfair competition laws broadly regulate marketplace activities and activities that potentially harm consumers. • The Federal Food, Drug, and Cosmetic Act, which among other things, strictly regulates drug product and medical device marketing, prohibits manufacturers from marketing such products prior to approval or for unapproved indications and regulates the distribution of samples; • Federal laws, including the Medicaid Drug Rebate Program, that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs; and • Analogous state and foreign laws and regulations, such as state anti-kickback, anti-bribery and false claims laws, which may apply to healthcare items or services that are reimbursed by non-governmental third-party payors, including private insurers, as well as other state laws that require companies to comply with specific compliance standards, restrict financial interactions between companies and healthcare providers, require companies to report information related to payments to healthcare providers, marketing expenditures or pricing or require the licensing or registration of sales representatives.
In the United States, these laws include, without limitation, federal and state fraud and abuse laws, transparency laws, and patient data privacy and security laws and regulations, including but not limited to those described below, some of which will not apply to us unless or until we have a marketed product. • The federal Anti-Kickback Statute, which prohibits, among other things, persons from offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual for, or the purchase or ordering of, a good or service for which payment may be made under federal healthcare programs such as Medicare and Medicaid; 32 Table of Contents • Federal false claims, false statement and civil monetary penalties laws prohibiting, among other things, any person from knowingly presenting, or causing to be presented, a false claim for payments of government funds or knowingly making, or causing to be made, a false statement material to a false claim; • The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”),which, in addition to privacy protections applicable to healthcare providers and other entities, prohibits executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; • So-called federal “sunshine” law, or Open Payments, which requires pharmaceutical and medical device companies to report information related to certain payments and transfers of value provided to certain healthcare providers to CMS, as well as ownership and investment interests held by physicians and their immediate family members; • Federal consumer protection and unfair competition laws broadly regulate marketplace activities and activities that potentially harm consumers. • The Federal Food, Drug, and Cosmetic Act, which among other things, strictly regulates drug product and medical device marketing, prohibits manufacturers from marketing such products prior to approval or for unapproved indications and regulates the distribution of samples; • Federal laws, including the Medicaid Drug Rebate Program, that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs; and • Analogous state and foreign laws and regulations, such as state anti-kickback, anti-bribery and false claims laws, which may apply to healthcare items or services that are reimbursed by non-governmental third-party payors, including private insurers, as well as other state laws that require companies to comply with specific compliance standards, restrict financial interactions between companies and healthcare providers, require companies to report information related to payments to healthcare providers, marketing expenditures or pricing or require the licensing or registration of sales representatives.
The process required by the FDA before our product candidates are approved as drugs for therapeutic indications and may be marketed in the United States generally involves the following: • completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with good laboratory practice (“GLP”) requirements; • completion of the manufacture, under cGMP conditions, of the drug substance and drug product that the sponsor intends to use in human clinical trials along with required analytical and stability testing; • submission to the FDA of an IND, which must become effective before clinical trials may begin; • approval by an institutional review board (“IRB”) or independent ethics committee at each clinical trial site before each trial may be initiated; • performance of adequate and well-controlled clinical trials in accordance with applicable IND regulations, good clinical practice (“GCP”) requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication; • submission to the FDA of a New Drug Application (“NDA”); • a determination by the FDA within 60 days of its receipt of an NDA, to accept the filing for review; 27 Table of Contents • satisfactory completion of one or more FDA pre-approval inspections of the manufacturing facility or facilities where the drug will be produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; • potentially, satisfactory completion of FDA audit of the clinical trial sites that generated the data in support of the NDA; • payment of user fees for FDA review of the NDA; and • FDA review and approval of the NDA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug in the United States.
The process required by the FDA before our product candidates are approved as drugs for therapeutic indications and may be marketed in the United States generally involves the following: • completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with good laboratory practice (“GLP”) requirements; • completion of the manufacture, under cGMP conditions, of the drug substance and drug product that the sponsor intends to use in human clinical trials along with required analytical and stability testing; • submission to the FDA of an IND, which must become effective before clinical trials may begin; • approval by an institutional review board (“IRB”) or independent ethics committee at each clinical trial site before each trial may be initiated; 25 Table of Contents • performance of adequate and well-controlled clinical trials in accordance with applicable IND regulations, good clinical practice (“GCP”) requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication; • submission to the FDA of a New Drug Application (“NDA”); • a determination by the FDA within 60 days of its receipt of an NDA, to accept the filing for review; • satisfactory completion of one or more FDA pre-approval inspections of the manufacturing facility or facilities where the drug will be produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; • potentially, satisfactory completion of FDA audit of the clinical trial sites that generated the data in support of the NDA; • payment of user fees for FDA review of the NDA; and • FDA review and approval of the NDA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug in the United States.
Other potential consequences include, among other things: • restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; • the issuance of safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product; • fines, warning letters or holds on post-approval clinical trials; 32 Table of Contents • refusal of the FDA to approve applications or supplements to approved applications, or suspension or revocation of product approvals; • product seizure or detention, or refusal to permit the import or export of products; • injunctions or the imposition of civil or criminal penalties; and • consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; or mandated modification of promotional materials and labeling and issuance of corrective information.
Other potential consequences include, among other things: • restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; 30 Table of Contents • the issuance of safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product; • fines, warning letters or holds on post-approval clinical trials; • refusal of the FDA to approve applications or supplements to approved applications, or suspension or revocation of product approvals; • product seizure or detention, or refusal to permit the import or export of products; • injunctions or the imposition of civil or criminal penalties; and • consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; or mandated modification of promotional materials and labeling and issuance of corrective information.
As seen in Figure 13 below, the degrader denoted as FHT-CBPd-9 appears well-tolerated based on the limited mouse body weight percentage changes and achieves tumor growth inhibition in the bladder model and tumor regression in the gastric model. FHT-CBPd-8, a slightly earlier version of the CBP degrader, achieves tumor growth inhibition in a colorectal model.
As seen in Figure 8 below, the degrader denoted as FHT-CBPd-9 appears well-tolerated based on the limited mouse body weight percentage changes and achieves tumor growth inhibition in the bladder model and tumor regression in the gastric model. FHT-CBPd-8, a slightly earlier version of the CBP degrader, achieves tumor growth inhibition in a colorectal model.
These studies are typically designed to test the safety, dosage tolerance, absorption, metabolism and distribution of the investigational product in humans, excretion the side effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness. 28 Table of Contents • Phase 2 —Phase 2 clinical trials typically involve administration of the investigational product to a limited patient population with a specified disease or condition to evaluate the drug’s potential efficacy, to determine the optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks. • Phase 3 —Phase 3 clinical trials typically involve administration of the investigational product to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites.
These studies are typically designed to test the safety, dosage tolerance, absorption, metabolism and distribution of the investigational product in humans, excretion the side effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness. • Phase 2 —Phase 2 clinical trials typically involve administration of the investigational product to a limited patient population with a specified disease or condition to evaluate the drug’s potential efficacy, to determine the optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks. • Phase 3 —Phase 3 clinical trials typically involve administration of the investigational product to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites.
Our Leadership We have assembled a team with deep scientific, clinical, manufacturing, business, and leadership expertise in biotechnology, platform research, drug discovery, and development. Our management team has extensive experience discovering, developing, and commercializing drugs to treat patients with serious diseases. Adrian Gottschalk, our President and Chief Executive Officer, has more than 15 years of experience as a biopharmaceutical executive.
Our Leadership We have assembled a team with deep scientific, clinical, manufacturing, business, and leadership expertise in biotechnology, platform research, drug discovery, and development. Our management team has extensive experience discovering, developing, and commercializing drugs to treat patients with serious diseases. Adrian Gottschalk, our President and Chief Executive Officer, has more than 20 years of experience as a biopharmaceutical executive.
Any U.S. or ex-U.S. patent that may issue from these patent applications would be scheduled to expire between 2039-2044, excluding any additional term for patent term adjustment or patent term extension, if applicable. In addition to patent applications, we rely on unpatented trade secrets, know-how and continuing technological innovation to develop and maintain our competitive position.
Any U.S. or ex-U.S. patent that may issue from these patent applications would be scheduled to expire between 2039-2045, excluding any additional term for patent term adjustment or patent term extension, if applicable. In addition to patent applications, we rely on unpatented trade secrets, know-how and continuing technological innovation to develop and maintain our competitive position.
These candidates are either heterobifunctional or molecular glue degraders which serve to specifically recruit a target to an E3 ligase component, resulting in the removal of the target protein by the cell’s native protein degradation system. • Transcription factor disruptors . These candidates will be direct small-molecule disruptors of the protein-protein interactions between transcription factors and chromatin remodeling complexes.
These candidates are either heterobifunctional or molecular glue degraders which serve to specifically recruit a target to an E3 ligase component, resulting in the removal of the target protein by the cell’s native protein degradation system. • Transcription factor disruptors . These candidates are direct small-molecule disruptors of the protein-protein interactions between transcription factors and chromatin remodeling complexes.
Under the Lilly Collaboration Agreement, Lilly made an upfront payment of $300.0 million , and a concurrent $80.0 million equity investment in Foghorn. We are eligible to receive a share of U.S. profits for co-commercialized products. Lilly and Foghorn will share 50/50 in the U.S. economics for products directed to the BRM-selective program and one other undisclosed target.
Under the Lilly Collaboration Agreement, Lilly made an upfront payment of $300.0 million , and a concurrent $80.0 million equity investment in Foghorn. We are eligible to receive a share of U.S. profits for co-commercialized products. Lilly and Foghorn will share 50/50 in the U.S. economics for products directed to the SMARCA2-selective program and one other undisclosed target.
In December 2021, we entered into a strategic collaboration with Lilly to create novel oncology medicines. The Lilly collaboration includes a co-development and co-commercialization agreement for the selective BRM oncology program and an additional undisclosed oncology target. In addition, the collaboration includes three additional discovery programs using Foghorn’s proprietary Gene Traffic Control platform.
In December 2021, we entered into a strategic collaboration with Lilly to create novel oncology medicines. The Lilly collaboration includes a co-development and co-commercialization agreement for the selective SMARCA2 oncology program and an additional undisclosed oncology target. In addition, the collaboration includes three additional discovery programs using Foghorn’s proprietary Gene Traffic Control platform.
Patent term may be inadequate to protect our competitive position on our products for an adequate amount of time. As of March 1, 2024, we owned more than 10 pending U.S. provisional patent applications, more than 25 pending U.S. non-provisional patent applications, more than 10 pending PCT applications, and more than 100 pending ex-U.S. patent applications.
Patent term may be inadequate to protect our competitive position on our products for an adequate amount of time. As of March 1, 2025, we owned more than 10 pending U.S. provisional patent applications, more than 25 pending U.S. non-provisional patent applications, more than 10 pending PCT applications, and more than 100 pending ex-U.S. patent applications.
Our platform has the unique ability to purify and synthesize chromatin remodeling complexes such as the BAF complex, as well as mutant forms of these complexes. We also produce and screen full length version of transcription factors and other chromatin regulatory system components. • Structural Biology.
Our platform has the unique ability to purify and synthesize chromatin remodeling complexes such as the BAF complex, as well as mutant forms of these complexes. We also produce and screen full length versions of transcription factors and other chromatin regulatory system components. • Structural Biology.
Within our workforce, 88 employees are engaged in research and development and 28 are engaged in business development, finance, legal, and general management and administration. None of our employees are represented by labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good.
Within our workforce, 84 employees are engaged in research and development and 28 are engaged in business development, finance, legal, and general management and administration. None of our employees are represented by labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good.
We could see a reduction or elimination in our commercial opportunity if our competitors develop and commercialize drugs that are safer, more effective, have fewer or less severe side effects, are more convenient to administer, are less expensive or with more favorable labeling than our product candidates, regardless of whether they target the chromatin regulatory system as a mechanism of action.
We could see a reduction or elimination in our commercial opportunity if our competitors develop and commercialize drugs that are safer, more effective, have fewer or less severe side effects, are more convenient to administer, are less expensive or with more favorable labeling than our product candidates, regardless of whether they target the chromatin regulatory system as 22 Table of Contents a mechanism of action.
Further work in the field has highlighted the association of this system in other therapeutic areas, including virology, autoimmune disease and neurology, implying even greater potential for therapeutic intervention. Vulnerabilities in Cancer Created by Genetic Dependencies on the Chromatin Regulatory System Cancer cells often contain many different mutations that lead to their abnormal growth and proliferation.
Further work in the field has highlighted the association of this system in other therapeutic areas, including virology, autoimmune disease and neurology, implying even greater potential for therapeutic intervention. 8 Table of Contents Vulnerabilities in Cancer Created by Genetic Dependencies on the Chromatin Regulatory System Cancer cells often contain many different mutations that lead to their abnormal growth and proliferation.
Figure 13. Selective degraders of CBP and EP300 demonstrate that they do not reduce platelet counts as compared to a dual inhibitor of both CBP and EP300. Selective EP300 Degrader for EP300 Dependent Cancers and CBP Mutated Cancers We are developing a selective EP300 degrader targeting EP300 dependent cancers and CBP mutant cancers.
Selective degraders of CBP and EP300 demonstrate that they do not reduce platelet counts as compared to a dual inhibitor of both CBP and EP300. Selective EP300 Degrader for EP300 Dependent Cancers and CBP Mutated Cancers We are developing a selective EP300 degrader targeting EP300 dependent cancers and CBP mutant cancers.
However, the UK government recently announced its intention to adopt a more flexible approach to the regulation of data, and as a result, there remains a risk of future divergence between the EU and UK data protection regimes. In addition, we may be subject to the California Consumer Privacy Act (“CCPA”) and other U.S. privacy laws.
However, the UK government recently announced its intention to adopt a more flexible approach to the regulation of data, and as a result, there remains a risk of future divergence between the EU and UK data protection regimes. In addition, we may be subject to the 35 Table of Contents California Consumer Privacy Act (“CCPA”) and other U.S. privacy laws.
Therefore, it may be possible to block the interaction of a specific transcription factor with the BAF complex without blocking the interactions of other transcription factors. Figure 19 . Illustrative locations of the binding sites of multiple transcription factors to the BAF complex.
Therefore, it may be possible to block the interaction of a specific transcription factor with the BAF complex without blocking the interactions of other transcription factors. Figure 13 . Illustrative locations of the binding sites of multiple transcription factors to the BAF complex.
We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates undergoing preclinical testing, as well as for clinical testing and commercial manufacture if our product candidates receive marketing approval. 26 Table of Contents All of our drug candidates are small molecules and are manufactured in synthetic processes from available starting materials.
We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates undergoing preclinical testing, as well as for clinical testing and commercial manufacture if our product candidates receive marketing approval. All of our drug candidates are small molecules and are manufactured in synthetic processes from available starting materials.
Clinical trials to evaluate therapeutic indications to support NDAs for marketing approval are typically conducted in three sequential phases, which may overlap. • Phase 1 —Phase 1 clinical trials involve initial introduction of the investigational product into healthy human volunteers or patients with the target disease or condition.
Clinical trials to evaluate therapeutic indications to support NDAs for marketing approval are typically conducted in three sequential phases, which may overlap. 26 Table of Contents • Phase 1 —Phase 1 clinical trials involve initial introduction of the investigational product into healthy human volunteers or patients with the target disease or condition.
Specifically, we use mouse xenograft models with inducible CRISPR / shRNA to validate that knockdown of our target of interest results in tumor growth inhibition. We also apply epi-genome sequencing tools in the animal model setting to identify potential biomarkers.
Specifically, we use mouse xenograft models with inducible CRISPR / shRNA (short hairpin RNA) to validate that knockdown of our target of interest results in tumor growth inhibition. We also apply epi-genome sequencing tools in the animal model setting to identify potential biomarkers.
In addition, the actual protection afforded by a patent varies on a product-by-product basis, from country-to-country, and depends upon many factors, including the type of patent, the scope of its coverage, the 25 Table of Contents availability of regulatory-related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent.
In addition, the actual protection afforded by a patent varies on a product-by-product basis, from country-to-country, and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent.
Discovery and Optimization of Chemical Matter We perform proprietary high throughput screens that leverage our ability to produce the chromatin regulatory system components at scale. An example screen is the use of the fully assembled BAF complex which is specific to its mutated or disease relevant form (e.g., screening the BRM form of BAF which corresponds to BRG1 mutated cancer).
Discovery and Optimization of Chemical Matter We perform proprietary high throughput screens that leverage our ability to produce chromatin regulatory system components at scale. An example screen is the use of the fully assembled BAF complex which is specific to its mutated or disease relevant form (e.g., screening the SMARCA2 form of BAF which corresponds to SMARCA4 mutated cancer).
We have repeatably been able to determine three dimensional structures for various chromatin regulatory system targets, including x-ray 10 Table of Contents structures of the enzymes targets, ternary structures of protein degrader targets, and mass spectrometry mapping of transcription factor - chromatin remodeling complex interactions.
We have repeatably been able to determine three dimensional structures for various chromatin regulatory system targets, including x-ray structures of the enzymes targets, ternary structures of protein degrader targets, and mass spectrometry mapping of transcription factor - chromatin remodeling complex interactions.
The Selective EP300 program has potential in various cancers which include androgen receptor, or AR, positive prostate cancer, bladder cancer, NSCLC, various lymphomas and leukemias and could provide a new therapeutic option for potentially more than 100,000 patients a year. 21 Table of Contents Figure 14.
The Selective EP300 program has potential in various cancers which include androgen receptor, or AR, positive prostate cancer, bladder 18 Table of Contents cancer, NSCLC, various lymphomas and leukemias and could provide a new therapeutic option for potentially more than 100,000 patients a year. Figure 10.
Under the terms of the Lilly Collaboration Agreement, the parties will seek to leverage our platform technology to research, discover and develop therapeutic molecules directed to the selective BRM target and an additional undisclosed oncology target, and to three additional discovery programs.
Under the terms of the Lilly Collaboration Agreement, the parties will seek to leverage our platform technology to research, discover and develop therapeutic molecules directed to the SMARCA2 target and an additional undisclosed oncology target, and to three additional discovery programs.
ITEM 1. BUSINESS Overview Foghorn is a clinical stage, precision therapeutics biotechnology company pioneering a new class of medicines that treat serious diseases by correcting abnormal gene expression through selectively targeting the chromatin regulatory system, an untapped opportunity for therapeutic intervention in oncology and with potential in a wide spectrum of other diseases including virology, autoimmune diseases and neurology.
ITEM 1. BUSINESS Overview Foghorn is a clinical stage, precision therapeutics biotechnology company pioneering a new class of medicines that treat serious diseases by correcting abnormal gene expression through selectively targeting the chromatin regulatory system, an untapped opportunity for therapeutic intervention in oncology and with potential in a wide spectrum of other diseases, including immunology and inflammation.
Our strategy is to disrupt the interaction between transcription factors and chromatin remodeling complexes. Our initial focus is on disrupting transcription factor interactions with the BAF complex. We believe that there are over 100 transcription factors in oncology that would be amenable to this new approach.
Our strategy is to disrupt the interaction between transcription factors and chromatin remodeling complexes. Our initial focus is on disrupting transcription factor interactions with the BAF complex. We believe that there are over 100 transcription factors in 21 Table of Contents oncology that would be amenable to this new approach.
Transcription factors, helicases and other chromatin related factors, on the other hand, while linked decades ago to cancer and 8 Table of Contents understood as relevant targets, have led to few approved oncology drugs, as companies seeking to drug these targets have historically lacked a systematic approach to doing so.
Transcription factors, helicases and other chromatin related factors, on the other hand, while linked decades ago to cancer and understood as relevant targets, have led to few approved oncology drugs, as companies seeking to drug these targets have historically lacked a systematic approach to doing so.
We are currently developing selective modulators of BRM to target this genetic dependency in BRG1 mutated cancers. In December 2021, we entered into a strategic collaboration with Lilly to create novel oncology medicines. The Lilly collaboration includes a co-development and co-commercialization agreement for the selective BRM oncology program.
We are currently developing selective modulators of SMARCA2 to target this genetic dependency in SMARCA4 mutated cancers. In December 2021, we entered into a strategic collaboration with Lilly to create novel oncology medicines. The Lilly collaboration includes a co-development and co-commercialization agreement for the selective SMARCA2 oncology program.
The FDA reviews an NDA to determine, among other things, whether the drug is safe and 29 Table of Contents effective for the indications sought and whether the facility in which it is manufactured, processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity.
The FDA reviews an NDA to determine, among other things, whether the drug is safe and effective for the indications sought and whether the facility in which it is manufactured, processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity.
We believe our platform will allow us to continue to build a long-term pipeline of novel product candidates to address areas of high unmet medical need. • Continue to enhance our platform to extend our leading position in developing novel therapeutics targeting the chromatin regulatory system.
We believe our platform will allow us to continue to build a long-term pipeline of novel product candidates to address areas of high unmet medical need in oncology and other therapeutic areas. • Continue to enhance our platform to extend our leading position in developing novel therapeutics targeting the chromatin regulatory system.
Our Gene Traffic Control platform encompasses the following: • Target Identification and Validation • Production of Chromatin Regulatory System Components at Scale and Proprietary Assays • Discovery and Optimization of Chemical Matter • Targeted Protein Degradation • Translation to Clinic and Identification of Biomarkers The key features and capabilities of our platform are described below: Target Identification and Validation We use genomic screens and a suite of epi-genome sequencing and computational tools to characterize, identify and validate targets within the chromatin regulatory system.
Our Gene Traffic Control platform encompasses the following: • Target Identification and Validation • Production of Chromatin Regulatory System Components at Scale and Proprietary Assays • Discovery and Optimization of Chemical Matter 9 Table of Contents • Development of Targeted Protein Degraders • Translation to Clinic and Identification of Biomarkers The key features and capabilities of our platform are described below: Target Identification and Validation We use genomic screens and a suite of epi-genome sequencing and computational tools to characterize, identify and validate targets within the chromatin regulatory system.
We develop both heterobifunctional degraders and non-cereblon based molecular glues that serve to bridge an interaction between an E3 ligase and target protein of interest. This induced proximity results in driving the target protein of interest for degradation via the ubiquitin-proteasome pathway.
We develop both heterobifunctional degraders and E3-agnostic molecular glues that serve to bridge an interaction between an E3 ligase and target protein of interest. This induced proximity results in driving the target protein of interest for degradation via the ubiquitin-proteasome pathway.
Competitors, however, may receive approval of different 30 Table of Contents therapeutic agents for the indication for which the orphan product has exclusivity or obtain approval for the same therapeutic agent for a different indication than that for which the orphan product has exclusivity.
Competitors, however, may receive approval of different therapeutic agents for the indication for which the orphan product has exclusivity or obtain approval for the same therapeutic agent for a different indication than that for which the orphan product has exclusivity.
Our Approach to Drugging the Chromatin Regulatory System We are focused on developing small molecule product candidates that target the chromatin regulatory system through the use of enzyme inhibitors, protein degraders and transcription factor disruptors. • Enzyme inhibitors . These candidates have the potential to act on targets such as the ATPases BRG1 and BRM of the BAF complex.
Our Approach to Drugging the Chromatin Regulatory System We are focused on developing small molecule product candidates that target the chromatin regulatory system through the use of enzyme inhibitors, protein degraders and transcription factor disruptors. • Enzyme inhibitors . These candidates have the potential to act on targets such as the ATPase SMARCA2 of the BAF complex.
FDA must approve an NDA before a drug may be marketed in the United States. The FDA reviews all submitted NDAs before it accepts them for filing and may request additional information rather than accepting the NDA for filing.
FDA must approve an NDA before a drug may be marketed in the United States. 27 Table of Contents The FDA reviews all submitted NDAs before it accepts them for filing and may request additional information rather than accepting the NDA for filing.
We intend to use our platform to consistently develop novel product candidates to further deepen our precision oncology pipeline and have the potential to file six INDs over the next four years. • Harness our platform to develop novel product candidates to address therapeutic areas beyond oncology.
We intend to use our platform to develop novel product candidates to further deepen our precision oncology pipeline and believe we have the potential to file four INDs over the next two years. • Harness our platform to develop novel product candidates to address therapeutic areas beyond oncology.
Medical devices, including companion diagnostics, 33 Table of Contents may be marketed only for the uses and indications for which they are cleared or approved. Device manufacturers must also establish registration and device listings with the FDA.
Medical devices, including companion diagnostics, may be marketed only for the uses and indications for which they are cleared or approved. Device manufacturers must also establish registration and device listings with the FDA.
Our epi-genome sequencing tools allow us to understand 6 Table of Contents the mechanisms of how our drugs are modifying the chromatin structure.
Our epi-genome sequencing tools allow us to understand the mechanisms of how our drugs are modifying the chromatin structure.
We are developing selective CBP degraders and plan to exploit the bi-directional synthetic lethal relationship it shares with its paralog acetyltransferase, EP300, to identify and treat those patients with EP300 mutated cancers. We believe selectively targeting and degrading CBP will potentially offer a tolerability advantage compared with non-selectively degrading both targets.
We are developing selective CBP degraders and plan to exploit the bi-directional synthetic lethal relationship it shares with its paralog acetyltransferase, EP300, to identify and treat those patients with EP300 mutated cancers. We believe selectively targeting and degrading CBP will potentially offer increased anti-tumor activity resulting from the tolerability advantage compared with non-selectively degrading both targets.
Beyond NSCLC, the MSK-IMPACT study highlighted BRG1 mutations in over thirty different types of tumors. In many cases, these mutations lead to a loss of enzymatic activity in the BRG1 subunit, creating a genetically determined dependency on BRM. This loss of BRG1 and subsequent dependency on BRM leads to a drugging opportunity.
Beyond NSCLC, the MSK-IMPACT study highlighted SMARCA4 mutations in over 30 different types of tumors. In many cases, these mutations lead to a loss of enzymatic activity in the SMARCA4 subunit, creating a genetically determined dependency on SMARCA2. This loss of SMARCA4 and subsequent dependency on SMARCA2 leads to a drugging opportunity.
We utilize both broad and specific genomic screens to identify dependencies and relationships associated with the chromatin regulatory system. We use a mix of internal and external data sets that apply CRISPR and shRNA technology to understand relationships across and within a range of cancer cell lines. • Perform broad epi-genome sequencing to validate dependencies in vitro .
We utilize both broad and specific genomic screens to identify dependencies and relationships associated with the chromatin regulatory system. We use a mix of internal and external data sets to understand relationships and synthetic lethality across and within a range of cancer cell lines. • Perform broad epi-genome sequencing to validate dependencies in vitro .
At present, we are working on more than 10 programs with one clinical-stage drug candidate currently in Phase 1 development and one drug candidate anticipated to begin clinical development this year. We have discovered highly selective chemical matter for some of the most challenging targets in oncology including BRM, CBP, EP300 and ARID1B, as well as other undisclosed targets.
At present, we are working on more than eight programs with one clinical-stage drug candidate 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.
In cells, these protein degrader molecules bring their target into proximity of the E3 ligase which marks these target proteins for destruction by the cell’s ubiquitin proteasome degradation system. We have shown that it is possible to identify protein degraders that lead to the destruction of BRM while leaving BRG1 untouched. Selective Degradation of BRM Figure 9.
In cells, these protein degrader molecules bring their target into proximity of the E3 ligase which marks these target proteins for 15 Table of Contents destruction by the cell’s ubiquitin proteasome degradation system. We have shown that it is possible to identify protein degraders that lead to the destruction of SMARCA2 while leaving SMARCA4 untouched.
FHD-286 As of March 1, 2024, we owned two U.S. patents, seven pending U.S. provisional patent applications, ten pending U.S. non-provisional patent applications and PCT patent applications, and more than 25 pending ex-U.S. patent applications that relate to FHD-286, including its composition and various methods of use.
As of March 1, 2025, we owned three U.S. patents, one pending U.S. provisional patent applications, fifteen pending U.S. non-provisional patent applications and PCT patent applications, and more than 25 pending ex-U.S. patent applications that relate to FHD-286, including its composition and various methods of use.
In addition, Lilly will pay the Company tiered royalties on product sales on a country-by-country and product-by-product basis (1) at royalty rates ranging from low-double digits to the twenties on ex-U.S. sales for products directed to the BRM-selective program and one other undisclosed target and (2) at royalty rates ranging from mid-single digits to low-double digits on sales outside the U.S. for products directed to the Discovery Programs, during the applicable royalty term and subject to certain royalty step-down provisions.
In addition, Lilly will pay the Company tiered royalties on product sales on a country-by-country and product-by-product basis (1) at royalty rates ranging from low-double digits to the twenties on ex-U.S. sales for products directed to the SMARCA2-selective program and one other undisclosed target and (2) at royalty rates ranging from mid-single digits to low-double digits on sales outside the U.S. for products directed to the Discovery Programs, during the applicable royalty term and subject to certain royalty step-down provisions. 24 Table of Contents Manufacturing We do not have any manufacturing facilities or personnel.
In a screen of over 400 cancer cell lines, inactivation of the EP300 gene resulted in selective growth inhibition of cell lines containing mutations in CBP, establishing the dependency on EP300 in these cell lines. CBP and EP300 are chromatin regulators and histone acetyltransferases and are highly homologous with similar domain structure and architecture.
Figure 7. In a screen of over 1,000 cancer cell lines, CRISPR knockout of the CBP gene resulted in selective growth inhibition of cell lines containing mutations in EP300, establishing the dependency on CBP in these cell lines. CBP and EP300 are paralog chromatin regulators and histone acetyltransferases with highly homologous domain structure and architecture.
As seen in Figure 16 below, the degrader denoted as FHT-EP300d appears well-tolerated based on the limited mouse body weight percentage changes and achieves tumor growth 22 Table of Contents inhibition in the prostate and DLBCL models.
As seen in Figure 11, the degrader denoted as FHT-EP300d appears well-tolerated based on the limited mouse body weight percentage changes and achieves tumor growth inhibition in the multiple myeloma, DLBCL models, and prostate models.
The FDA also issued a draft guidance in July 2016 setting forth the principles for co-development of an in vitro companion diagnostic device with a therapeutic product. The draft guidance describes principles to guide the development and contemporaneous marketing authorization for the therapeutic product and its corresponding in vitro companion diagnostic.
The FDA also issued a draft guidance in July 2016 setting forth the principles for co-development of an in vitro companion diagnostic device with a therapeutic product.
Once cleared or approved, the companion diagnostic device must adhere to post-marketing requirements including the requirements of the FDA’s QSR, which cover the methods and documentation of the design, testing, production, processes, controls, quality assurance, labeling, packaging, and shipping of all medical devices, as well as adverse event reporting, recalls and corrections along with product marketing requirements and limitations.
The draft guidance describes principles to guide the development and contemporaneous marketing authorization for the therapeutic product and its corresponding in vitro companion diagnostic. 31 Table of Contents Once cleared or approved, the companion diagnostic device must adhere to post-marketing requirements including the requirements of the FDA’s QSR, which cover the methods and documentation of the design, testing, production, processes, controls, quality assurance, labeling, packaging, and shipping of all medical devices, as well as adverse event reporting, recalls and corrections along with product marketing requirements and limitations.
BRM-Selective Modulators Overview Broad cancer sequencing initiatives have shown that BRG1 is one of the most highly mutated subunits of the BAF complex. BRG1 was found to be mutated in approximately five percent of tumors sequenced as part of the Memorial Sloan Kettering Cancer Center MSK-IMPACT study, and in up to ten percent of Non-Small Cell Lung Cancer (“NSCLC”) tumors.
Selective SMARCA2 Inhibitor and Degrader Overview Broad cancer sequencing initiatives have shown that SMARCA4 is one of the most highly mutated subunits of the BAF complex. SMARCA4 was found to be mutated in approximately five percent of tumors sequenced as part of the Memorial Sloan Kettering Cancer Center MSK-IMPACT study, and in up to 10 percent of NSCLC tumors.
We consider our employees to be our greatest asset and have assembled a team with deep scientific, clinical, manufacturing, business, and leadership expertise in biotechnology, platform research, drug discovery, and development. 54 of our employees have M.D. or Ph.D. degrees.
Human Capital Resources As of December 31, 2024, we had 112 full-time employees. We consider our employees to be our greatest asset and have assembled a team with deep scientific, clinical, manufacturing, business, and leadership expertise in biotechnology, platform research, drug discovery, and development. 57 of our employees have M.D. or Ph.D. degrees.
This know-how and capabilities include: • Proprietary library of linkers and E3 ligase binders for heterobifunctional degrader development; • Proprietary screening strategy for novel non-cereblon based molecular glue discovery; • Biochemical, biophysical, and cellular assays that characterize protein degrader mechanism of action and guide optimization, including degradation kinetics, ubiquitination, and permeability; • Ternary complex structural determination and molecular modeling; • Global proteomics and mass spectrometry to measure selectivity in an unbiased fashion; • Exploration of novel ligases; • Long-acting formulation of protein degraders which enhances route of administration and frequency of delivery; and • Degraders that may be used in conjunction with antibody technology.
This know-how and capabilities include: • Proprietary library of linkers and E3 ligase binders for heterobifunctional degrader development; • Proprietary screening strategy for novel unbiased and E3-agnostic based molecular glue discovery; • Biochemical, biophysical, and cellular assays that characterize protein degrader mechanism of action and guide optimization, including degradation kinetics, ubiquitination, and permeability; • Biochemical and cellular ternary complex assays, ternary complex structural determination and molecular modeling; • Global proteomics and mass spectrometry to measure selectivity in an unbiased fashion; • Induced proximity and proximity labeling capabilities for exploration of novel ligases; • Oral and long-acting formulation of protein degraders which enhances route of administration and/or frequency of delivery; • Degraders compatible with antibody conjugation and delivery as degrader antibody conjugates; and • Development of a new ligase, UBR5, which has potential to degrade transcription factors and other important factors.
The conduct of such a clinical trial could be expensive and result in delays in commercialization. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any products, if approved in those countries. Other U.S.
There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any products, if approved in those countries. Other U.S.
Potential subsets of tumor types that harbor a mutation in EP300 and therefore would be reliant on CBP for their survival include but may not be limited to bladder cancer, melanoma, endometrial, gastric, breast, NSCLC, colorectal, and pancreatic. 20 Table of Contents Figure 12.
Potential subsets of tumor types that harbor a mutation in EP300 and therefore would be reliant on CBP for their survival include but may not be limited to bladder, melanoma, endometrial, gastric, breast, NSCLC, colorectal, and pancreatic cancers. 17 Table of Contents Figure 8. Selective CBP Degradation Results in Significant Anti-Tumor Activity in EP300mut Solid Tumor Models.
Our Gene Traffic Control platform encompasses the following: • Target Identification and Validation— We use genomic screens, and a suite of epi-genome sequencing and computational tools, including aspects of artificial intelligence and machine learning, to characterize, identify, and validate targets within the chromatin regulatory system.
While initially focused in oncology, we believe our platform is broadly applicable across other disease areas. 6 Table of Contents Our Gene Traffic Control platform encompasses the following: • Target Identification and Validation— We use genomic screens, and a suite of epi-genome sequencing and computational tools, including aspects of artificial intelligence and machine learning, to characterize, identify, and validate targets within the chromatin regulatory system.
We utilize both proprietary and publicly available chemical libraries in our screens. Once we find hits from our screens, we use our unique suite of biophysical assays involving the relevant component of the chromatin regulatory system to characterize, validate, and optimize our chemical matter. These assays provide us with biologically relevant insights that guide our medicinal chemistry efforts.
We utilize both proprietary and publicly available chemical libraries in our screens. 10 Table of Contents Once we find hits from our screens, we use our unique suite of biophysical assays involving the relevant component of the chromatin regulatory system to characterize, validate, and optimize our chemical matter.
We combine our genomic and epi-genomic tools, our proprietary high throughput screening technology and our expertise in medicinal chemistry to develop enzymatic inhibitors, protein degraders and transcription factor disruptors that target the chromatin regulatory system. While initially focused in oncology, we believe our platform is broadly applicable across other disease areas.
We combine our genomic and epi-genomic tools, our proprietary high throughput screening technology and our expertise in medicinal chemistry to develop enzymatic inhibitors, protein degraders and transcription factor disruptors that target the chromatin regulatory system.
Up to two thirds of NSCLC patients who are ineligible for or resistant to treatment with EGFR or ALK targeted therapies have tumors that express PD-L1 and are candidates for checkpoint inhibitor therapies, which lead to significant improvements in progression free survival and overall survival compared to standard chemotherapy.
Up to two thirds of NSCLC patients who are ineligible for or resistant to treatment with EGFR or ALK targeted therapies have tumors that express PD-L1 and are candidates for checkpoint inhibitor therapies with or without conventional chemotherapy.
Our approach is to identify and drug genetically determined dependencies within the chromatin regulatory system. Our initial focus is in cancer with a precision oncology approach. Every program we have pursued to date is based on a genetic dependency on the chromatin regulatory system.
Our approach is to identify and drug genetically determined dependencies within the chromatin regulatory system. Our initial focus is in cancer with a precision oncology approach.
In December 2021, we entered into a strategic collaboration agreement with Lilly (the “Lilly Collaboration Agreement”). Under the terms of the Lilly Collaboration Agreement, we are leveraging our pl atf orm technology to research, discover and develop therapeutic molecules directed to the selective BRM target and an additional undisclosed oncology target, and up to three additional discovery programs.
Under the terms of the Lilly Collaboration Agreement, we are leveraging our pl atf orm technology to discover and develop therapeutic molecules directed to the SMARCA2 target and an additional undisclosed oncology target, and up to three additional discovery programs.
In a retrospective analysis conducted by MSKCC it was observed that among patients with BRG1-deficient NSCLC who received first-line platinum doublet chemotherapy or chemotherapy plus immunotherapy, median progression-free survival was 38 days and 35 days, respectively. Prognosis is poor in patients with BRG1-deficient NSCLC, highlighting the importance of developing novel therapeutics that address this unmet need.
In a retrospective analysis conducted by MSKCC it was observed that among patients with SMARCA4-deficient NSCLC who received first-line platinum doublet chemotherapy or chemotherapy plus immunotherapy, median progression-free survival was 38 days and 35 days, respectively.
If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to a seven-year period of marketing exclusivity during which the FDA may not approve any other applications to market the same therapeutic agent for the same indication, except in limited circumstances, such as a subsequent product’s showing of clinical superiority over the product with orphan drug exclusivity or where the original applicant cannot produce sufficient quantities of product.
Orphan designation does not convey any advantage in or shorten the duration of the regulatory review and approval process, though companies developing orphan products are eligible for certain incentives, including tax credits for qualified clinical testing and waiver of application fees. 28 Table of Contents If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to a seven-year period of marketing exclusivity during which the FDA may not approve any other applications to market the same therapeutic agent for the same indication, except in limited circumstances, such as a subsequent product’s showing of clinical superiority over the product with orphan drug exclusivity or where the original applicant cannot produce sufficient quantities of product.
FDORA also expands the expedited withdrawal procedures already available to the FDA to allow the agency to use expedited procedures if a sponsor fails to conduct any required post-approval study of the product with due diligence including with respect to “conditions specified by the Secretary [of HHS].” FDORA also adds the failure of a sponsor of a product approved under Accelerated Approval to conduct with due diligence any required post-approval study with respect to such product or to submit timely reports with respect to such product to the list of prohibited acts in the FD&C Act.
FDORA also expands the expedited withdrawal procedures already available to the FDA to allow the agency to use expedited procedures if a sponsor fails to conduct any required post-approval study of the product with due diligence including with respect to “conditions specified by the Secretary [of HHS].” FDORA also adds the failure of a sponsor of a product approved under Accelerated Approval to conduct with due diligence any required post-approval study with respect to such product or to submit timely reports with respect to such product to the list of prohibited acts in the FD&C Act. 29 Table of Contents Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or the time period for FDA review or approval may not be shortened.
NSCLC accounts for 80 to 85 percent of lung cancer cases. Genetic profiling of tumors has identified a number of genes that are altered in NSCLC. The standard of care for NSCLC has included conventional chemotherapy with or without a checkpoint inhibitor.
NSCLC accounts for 80 to 85 percent of lung cancer cases. Genetic profiling of tumors has identified a number of genes that are altered in NSCLC.
Pricing of prescription pharmaceuticals is subject to government control in many countries. Pricing negotiations with government authorities can extend well beyond the receipt of regulatory approval for a product and may require a clinical trial that compares the cost-effectiveness of a product to other available therapies.
Pricing negotiations with government authorities can extend well beyond the receipt of regulatory approval for a product and may require a clinical trial that compares the cost-effectiveness of a product to other available therapies. The conduct of such a clinical trial could be expensive and result in delays in commercialization.
In a screen of over 400 cancer cell lines, inactivation of the CBP gene resulted in selective growth inhibition of cell lines containing mutations in EP300, establishing the dependency on CBP in these cell lines.
In a screen of over 1,000 cancer cell lines, CRISPR knockout of the ARID1B gene resulted in selective growth inhibition of cell lines containing mutations in ARID1A, establishing the dependency on ARID1B in these cell lines.
In the figure, we show that a dual bromodomain inhibitor which inhibits both CBP and EP300 causes a meaningful drop in platelets. In contrast, our degraders of EP300 and CBP, FHT-EP300d and FHT-CBPd respectively, do not cause a drop in platelets at doses that are relevant and achieve efficacy in the animal models shown in Figure 12 and Figure 16.
In contrast, our selective degraders of EP300 and CBP, FHT-EP300d and FHT-CBPd respectively, do not cause a drop in platelets at doses that are relevant and achieve efficacy in the animal models shown in Figure 8 (FHT-CBPd) and Figure 11 (FHT-EP300d). Figure 9.
We use these assays to discover and optimize novel small molecule chemical matter which include enzymatic inhibitors, protein degraders, and transcription factor disruptors to various targets within the chromatin regulatory system.
We use these assays to discover and optimize novel small molecule chemical matter which include enzymatic inhibitors, protein degraders, and transcription factor disruptors to various targets within the chromatin regulatory system. To our knowledge, we are the only company that has the ability to study the chromatin regulatory system at scale, in context, and in an integrated way.
We cannot, however, predict the ultimate content, timing or effect of any federal and state reform efforts. There is no assurance that federal or state health care reform will not adversely affect our future business and financial results. Outside the United States, ensuring coverage and adequate payment for a product also involves challenges.
There is no assurance that federal or state health care reform will not adversely affect our future business and financial results. Outside the United States, ensuring coverage and adequate payment for a product also involves challenges. Pricing of prescription pharmaceuticals is subject to government control in many countries.
Any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented and/or any significant taxes or fees that may be imposed on us could have an adverse impact on our results of operations. 36 Table of Contents Adoption of new legislation at the federal or state level could affect demand for, or pricing of, our current or future products if approved for sale.
Any significant spending reductions affecting 34 Table of Contents Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented and/or any significant taxes or fees that may be imposed on us could have an adverse impact on our results of operations.
Targeted Protein Degradation For targets in the portfolio whose biology demonstrates that degradation could offer a therapeutic advantage, we develop small molecule heterobifunctional or non-cereblon based molecular glue degraders. Many of our targets play important scaffolding roles in chromatin remodeling complexes and/or are not enzymes. Therefore, inhibition would not be effective or possible.
These assays provide us with biologically relevant insights that guide our medicinal chemistry efforts. Development of Targeted Protein Degraders For targets in the portfolio whose biology demonstrates that degradation could offer a therapeutic advantage, we develop small molecule heterobifunctional or E3-agnostic molecular glue degraders. Many of our targets play important scaffolding roles in chromatin remodeling complexes and/or are not enzymes.
Selective CBP Degrader for EP300 Mutated Cancers CREB binding protein serves as a critical co-activator for transcription factors involved in signaling pathways in a subset of cancers including bladder, colorectal, breast, gastric and lung. 18 Table of Contents Figure 10.
Selective SMARCA2 degrading molecules led to the degradation of over 75 percent of SMARCA2 while leaving the levels of SMARCA4 virtually unchanged. 16 Table of Contents Selective CBP Degrader for EP300 Mutated Cancers CREB binding protein serves as a critical co-activator for transcription factors involved in signaling pathways in a subset of cancers including bladder, endometrial, colorectal, breast, gastric and lung.
Based on our unique insights and understanding of the chromatin regulatory system, we continue to develop proprietary selective inhibitors, protein degraders and disruptors that modulate various components of the chromatin regulatory system.
Based on our unique insights and understanding of the chromatin regulatory system, we continue to develop proprietary selective inhibitors, protein degraders and disruptors that modulate various components of the chromatin regulatory system. For example, using our proprietary platform, we have disclosed four distinct targets: SMARCA2, ARID1B, CBP and EP300, that have genetically determined dependencies within the chromatin regulatory system.
We face competition from segments of the pharmaceutical, biotechnology and other related markets that pursue the development of therapies that target broad genetic expression mechanisms, including the chromatin regulatory system.
We face competition from segments of the pharmaceutical, biotechnology and other related markets that pursue the development of therapies that target broad genetic expression mechanisms, including the chromatin regulatory system. In addition, we may face competition from companies developing product candidates that utilize protein degradation approaches, including Arvinas, Inc., C4 Therapeutics, Inc., Kymera Therapeutics, Inc., and Nurix Therapeutics, Inc.
Although the CCPA does not apply directly to our clinical trials, it does impact our collection of information regarding investigators, business contacts, website users and other 37 Table of Contents data subjects.
Although the CCPA does not apply directly to our clinical trials, it does impact our collection of information regarding investigators, business contacts, website users and other data subjects. As currently written, the CCPA may impact our business activities and exemplifies the vulnerability of our business to the evolving regulatory environment related to personal data and protected health information.
In the AR+ prostate model, FHD-EP300d achieves better tumor growth inhibition than enzalutamide, an androgen receptor inhibitor that is presently used to treat patients with prostate cancer. Figure 16. A selective degrader of EP300 tested in a CDX model of AR+ Prostate Cancer and in a CDX model of DLBCL demonstrates tumor growth inhibition.
In the AR+ prostate model, FHD-EP300d achieves better tumor growth inhibition than enzalutamide, an androgen receptor inhibitor that is presently used to treat patients with prostate cancer. Selective ARID1B Degrader for ARID1A Mutated Cancers The ARID1A subunit is the most mutated subunit within the BAF complex. Mutations in ARID1A confer a dependency on the ARID1B subunit of the BAF complex.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

80 edited+8 added−31 removed303 unchanged
Biggest changeWe have one product candidate, FHD-286, in Phase 1 clinical development and anticipate that Lilly will file an IND and begin a Phase 1 for our partnered product candidate, FHD-909, later this year; our other product candidates are in preclinical 43 Table of Contents development, and their risk of failure is high.
Biggest changeWe have one product candidate, FHD-909, which is partnered with Lilly, in Phase 1 clinical development; our other product candidates are in preclinical development, and, as a result, their risk of failure is high. We are unable to predict when or if any of our product candidates will prove effective or safe in humans or will receive marketing approval.
Restrictions under applicable federal and state healthcare laws and regulations include the following, some of which will not apply unless or until we have a marketed product: • federal Anti-Kickback Statute, which prohibits, among other things, persons from offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual for, or the purchasing or ordering of, a good or service for which payment may be made under federal healthcare programs such as Medicare and Medicaid; • federal false claims, false statements and civil monetary penalties laws prohibiting, among other things, any person from knowingly presenting, or causing to be presented, a false claim for payment of government funds or knowingly making, or causing to be made, a false statement material to a false claim; • HIPAA, which, in addition to privacy protections applicable to healthcare providers and other entities, prohibits executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; • the so-called federal “sunshine” law, or Open Payments, which requires pharmaceutical and medical device companies to report information related to certain payments and transfers of value to certain healthcare providers 57 Table of Contents to the Center for Medicare & Medicaid Services, as well as ownership and investment interests held by physicians and their immediate family members; • federal consumer protection and unfair competition laws broadly regulate marketplace activities and activities that potentially harm consumers; • the Federal Food, Drug, and Cosmetic Act, which among other things, strictly regulates drug product and medical device marketing, prohibits manufacturers from marketing such products prior to approval or for unapproved indications and regulates the distribution of samples; • federal laws, including the Medicaid Drug Rebate Program, that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs; and • analogous state and foreign laws and regulations, such as state anti-kickback, anti-bribery and false claims laws, which may apply to healthcare items or services that are reimbursed by non-governmental third-party payors, including private insurers, as well as other state laws that require companies to comply with specific compliance standards, restrict financial interactions between companies and healthcare providers, require companies to report information related to payments to health care providers, marketing expenditures or pricing, or require the licensing or registration of sales representatives.
Restrictions under applicable federal and state healthcare laws and regulations include the following, some of which will not apply unless or until we have a marketed product: • federal Anti-Kickback Statute, which prohibits, among other things, persons from offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual for, or the purchasing or ordering of, a good or service for which payment may be made under federal healthcare programs such as Medicare and Medicaid; • federal false claims, false statements and civil monetary penalties laws prohibiting, among other things, any person from knowingly presenting, or causing to be presented, a false claim for payment of government funds or knowingly making, or causing to be made, a false statement material to a false claim; • HIPAA, which, in addition to privacy protections applicable to healthcare providers and other entities, prohibits executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; • the so-called federal “sunshine” law, or Open Payments, which requires pharmaceutical and medical device companies to report information related to certain payments and transfers of value to certain healthcare providers 55 Table of Contents to the Center for Medicare & Medicaid Services, as well as ownership and investment interests held by physicians and their immediate family members; • federal consumer protection and unfair competition laws broadly regulate marketplace activities and activities that potentially harm consumers; • the Federal Food, Drug, and Cosmetic Act, which among other things, strictly regulates drug product and medical device marketing, prohibits manufacturers from marketing such products prior to approval or for unapproved indications and regulates the distribution of samples; • federal laws, including the Medicaid Drug Rebate Program, that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs; and • analogous state and foreign laws and regulations, such as state anti-kickback, anti-bribery and false claims laws, which may apply to healthcare items or services that are reimbursed by non-governmental third-party payors, including private insurers, as well as other state laws that require companies to comply with specific compliance standards, restrict financial interactions between companies and healthcare providers, require companies to report information related to payments to health care providers, marketing expenditures or pricing, or require the licensing or registration of sales representatives.
Some of the factors that may cause the market price of our common stock to fluctuate include: • the success of existing or new competitive product candidates or technologies; • the timing and results of preclinical studies and clinical trials for any product candidates that we may develop; • the failure or discontinuation of any of our product development and research programs; • results of preclinical studies, clinical trials, or regulatory approvals of product candidates of our competitors, or announcements about new research programs or product candidates of our competitors; • commencement or termination of collaborations for our product development and research programs; • regulatory or legal developments in the United States and other countries; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • the level of expenses related to any of our research programs or product candidates that we may develop; 59 Table of Contents • the results of our efforts to develop additional product candidates or products; • actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • the announcement or expectation of additional financing efforts; • sales of our common stock by us, our insiders or other stockholders; • expiration of market stand-off or lock-up agreements; • the effects of geopolitical crises and the outbreak or worsening of wars or other armed conflicts; • variations in our financial results or those of companies that are perceived to be similar to us; • changes in estimates or recommendations by securities analysts, if any, that cover our stock; • changes in the structure of healthcare payment systems; • market conditions in the pharmaceutical and biotechnology sectors; • general economic, industry and market conditions; and • the other factors described in this “Risk Factors” section.
Some of the factors that may cause the market price of our common stock to fluctuate include: • the success of existing or new competitive product candidates or technologies; • the timing and results of preclinical studies and clinical trials for any product candidates that we may develop; • the failure or discontinuation of any of our product development and research programs; • results of preclinical studies, clinical trials, or regulatory approvals of product candidates of our competitors, or announcements about new research programs or product candidates of our competitors; • commencement or termination of collaborations for our product development and research programs; • regulatory or legal developments in the United States and other countries; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • the level of expenses related to any of our research programs or product candidates that we may develop; 57 Table of Contents • the results of our efforts to develop additional product candidates or products; • actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • the announcement or expectation of additional financing efforts; • sales of our common stock by us, our insiders or other stockholders; • expiration of market stand-off or lock-up agreements; • the effects of geopolitical crises and the outbreak or worsening of wars or other armed conflicts; • variations in our financial results or those of companies that are perceived to be similar to us; • changes in estimates or recommendations by securities analysts, if any, that cover our stock; • changes in the structure of healthcare payment systems; • market conditions in the pharmaceutical and biotechnology sectors; • general economic, industry and market conditions; and • the other factors described in this “Risk Factors” section.
Moreover, we may experience numerous unforeseen events during, or as a result of, clinical trials, that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including: • delays in discussions with or obtaining alignment with regulators regarding trial design; • the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate, including as a result of delays in the testing, validation, manufacturing and delivery of product candidates to the clinical sites by us or by third parties with whom we have contracted to perform certain of those functions; • we may experience delays in reaching, or may fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; • we may experience delays in enrolling patients or may compete with other trials to enroll patients; • regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • we may experience difficulty in designing clinical trials and in selecting endpoints for diseases that have not been well-studied and for which the natural history and course of the disease is poorly understood; • the selection of certain clinical endpoints may require prolonged periods of clinical observation or analysis of the resulting data; • the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate; • we may fail to perform clinical trials in accordance with the FDA’s or any other regulatory authority’s good clinical practices (“GCP”) requirements, or regulatory guidelines in other countries; • our product candidates may have undesirable side effects or other unexpected characteristics, or adverse events associated with the product candidate may occur which are viewed to outweigh its potential benefits, causing us or our investigators, regulators or institutional review boards to suspend or terminate the trials; • we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks; • our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • regulators or institutional review boards may require that we or our investigators suspend or terminate clinical trials for various reasons, including noncompliance with regulatory requirements; • clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • the cost of clinical trials of our product candidates may be greater than we anticipate; and • we could be required to conduct additional clinical trials or testing of our product candidates beyond those that we currently contemplate, which may result in a delay in our market approval, limitation of approval for patient populations, distribution limitations, or not obtaining marketing approval at all.
Moreover, we may experience numerous unforeseen events during, or as a result of, clinical trials, that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including: • delays in discussions with or obtaining alignment with regulators regarding trial design; 41 Table of Contents • the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate, including as a result of delays in the testing, validation, manufacturing and delivery of product candidates to the clinical sites by us or by third parties with whom we have contracted to perform certain of those functions; • we may experience delays in reaching, or may fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; • we may experience delays in enrolling patients or may compete with other trials to enroll patients; • regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • we may experience difficulty in designing clinical trials and in selecting endpoints for diseases that have not been well-studied and for which the natural history and course of the disease is poorly understood; • the selection of certain clinical endpoints may require prolonged periods of clinical observation or analysis of the resulting data; • the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate; • we may fail to perform clinical trials in accordance with the FDA’s or any other regulatory authority’s good clinical practices (“GCP”) requirements, or regulatory guidelines in other countries; • our product candidates may have undesirable side effects or other unexpected characteristics, or adverse events associated with the product candidate may occur which are viewed to outweigh its potential benefits, causing us or our investigators, regulators or institutional review boards to suspend or terminate the trials; • we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks; • our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • regulators or institutional review boards may require that we or our investigators suspend or terminate clinical trials for various reasons, including noncompliance with regulatory requirements; • clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • the cost of clinical trials of our product candidates may be greater than we anticipate; and • we could be required to conduct additional clinical trials or testing of our product candidates beyond those that we currently contemplate, which may result in a delay in our market approval, limitation of approval for patient populations, distribution limitations, or not obtaining marketing approval at all.
For example: • aspects of our Gene Traffic Control platform are protected by trade secrets, which may be inadequate to safeguard our competitive advantage, and some aspects of our platform may not be protectable by intellectual property rights at all; • others may be able to make products that are similar to our product candidates or utilize similar technology but that are not covered by the claims of any patents that may issue to us, our licensors or our collaborator; • we or our licensors or collaborators, might not have been the first to make the inventions covered by our pending patent applications, or any patents that may issue in the future; • we or our licensors or collaborators, might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing or misappropriating our intellectual property rights; • it is possible that our present or future pending patent applications will not lead to issued patents; • issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; 53 Table of Contents • our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • changes to the patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates; • the patents of others may harm our business; and • we may choose not to file a patent application in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.
For example: • aspects of our Gene Traffic Control platform are protected by trade secrets, which may be inadequate to safeguard our competitive advantage, and some aspects of our platform may not be protectable by intellectual property rights at all; • others may be able to make products that are similar to our product candidates or utilize similar technology but that are not covered by the claims of any patents that may issue to us, our licensors or our collaborator; • we or our licensors or collaborators, might not have been the first to make the inventions covered by our pending patent applications, or any patents that may issue in the future; • we or our licensors or collaborators, might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing or misappropriating our intellectual property rights; • it is possible that our present or future pending patent applications will not lead to issued patents; • issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; • our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • changes to the patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates; • the patents of others may harm our business; and • we may choose not to file a patent application in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.
Disruptions at the FDA and other government agencies caused by funding shortages could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
Disruptions at the FDA and other government agencies caused by funding shortages or personnel cuts could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
To obtain the requisite regulatory approvals to market and sell any of our product candidates, including FHD-286 and FHD-909, and any other future product candidates, we must demonstrate through extensive preclinical studies and clinical trials that our products are safe and effective in humans.
To obtain the requisite regulatory approvals to market and sell any of our product candidates, including FHD-909, and any other future product candidates, we must demonstrate through extensive preclinical studies and clinical trials that our products are safe and effective in humans.
The success of our product candidates will depend on several factors, including but not limited to the following: • successful completion of preclinical studies; • successful submission of INDs and initiation of clinical trials; • establishing an acceptable safety profile of the products and maintaining such a profile following approval; • achieving desirable therapeutic properties for our product candidates’ intended indications; • making arrangements with third-party manufacturers, or establishing manufacturing capabilities, both for clinical and commercial supplies of our product candidates; • receipt and related terms of marketing approvals from applicable regulatory authorities; • obtaining and maintaining patent and trade secret protection and regulatory exclusivity of our product candidates; • establishing sales, marketing and distribution capabilities and launching commercial sales of our products; if and when approved, whether alone or in collaboration with others; acceptance of our products, if and when approved, by patients, the medical community and third-party payors; • obtaining and maintaining third-party coverage and adequate reimbursement; 41 Table of Contents • effectively competing with other therapies; and • sufficiency of our financial and other resources.
The success of our product candidates will depend on several factors, including but not limited to the following: • successful completion of preclinical studies; • successful submission of INDs and initiation and enrollment of clinical trials; • establishing an acceptable safety profile of the products and maintaining such a profile following approval; • achieving desirable therapeutic properties for our product candidates’ intended indications; • making arrangements with third-party manufacturers, or establishing manufacturing capabilities, both for clinical and commercial supplies of our product candidates; • receipt and related terms of marketing approvals from applicable regulatory authorities; • obtaining and maintaining patent and trade secret protection and regulatory exclusivity of our product candidates; 39 Table of Contents • establishing sales, marketing and distribution capabilities and launching commercial sales of our products; if and when approved, whether alone or in collaboration with others; acceptance of our products, if and when approved, by patients, the medical community and third-party payors; • obtaining and maintaining third-party coverage and adequate reimbursement; • effectively competing with other therapies; and • sufficiency of our financial and other resources.
Patient enrollment is also affected by other factors, including: • severity of the disease under investigation; • size of the patient population and process for identifying patients; • design of the trial protocol; • availability and efficacy of approved medications for the disease under investigation; • convenience and ease of administration compared to approved or other investigational medications for the disease under investigation and the willingness of patients to undergo the surgical procedures necessary to administer our product candidates, such as biopsy; • ability to obtain and maintain patient informed consent; • risk that enrolled patients will drop out before completion of the trial; • eligibility and exclusion criteria for the trial in question; • perceived risks and benefits of the product candidate under trial; • efforts to facilitate timely enrollment in clinical trials; • patient referral practices of physicians; • ability to monitor patients adequately during and after treatment; 45 Table of Contents • proximity and availability of clinical trial sites for prospective patients; and • factors we may not be able to control, such as current or potential pandemics that may limit patients, principal investigators or staff or clinical site availability.
Patient enrollment is also affected by other factors, including: • severity of the disease under investigation; • size of the patient population and process for identifying patients; • design of the trial protocol; • availability and efficacy of approved medications for the disease under investigation; • convenience and ease of administration compared to approved or other investigational medications for the disease under investigation and the willingness of patients to undergo the surgical procedures necessary to administer our product candidates, such as biopsy; • ability to obtain and maintain patient informed consent; • risk that enrolled patients will drop out before completion of the trial; • eligibility and exclusion criteria for the trial in question; • perceived risks and benefits of the product candidate under trial; • efforts to facilitate timely enrollment in clinical trials; • patient referral practices of physicians; • ability to monitor patients adequately during and after treatment; • proximity and availability of clinical trial sites for prospective patients; and • factors we may not be able to control, such as current or potential pandemics that may limit patients, principal investigators or staff or clinical site availability.
We cannot provide any assurances that any of our pending patent applications will issue, or that any of our pending patent applications that mature into issued patents will include claims with a scope sufficient to protect FHD-286 or our other current or future product candidates.
We cannot provide any assurances that any of our pending patent applications will issue, or that any of our pending patent applications that mature into issued patents will include claims with a scope sufficient to protect FHD-286, FHD-909, or our other current or future product candidates.
We anticipate that our expenses will increase substantially if and as we: • advance our FHD-286 product candidate and continue our preclinical and clinical development of product candidates from our current research programs, including those partnered with Lilly; • identify additional research programs and additional product candidates; • initiate preclinical testing for any new product candidates we identify and develop; • obtain, maintain, expand, enforce, defend and protect our trade secrets and intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio; • hire additional research and development personnel; • add operational, legal, compliance, financial and management information systems and personnel to support our research, product development and operations as a public company; • expand the capabilities of our platform; • acquire or in-license product candidates, intellectual property and technologies; • operate as a public company; • seek marketing approvals for any of our product candidates that successfully complete clinical trials; and • ultimately establish a sales, marketing, and distribution infrastructure to commercialize any products for which we may obtain marketing approval.
We anticipate that our expenses will increase substantially if and as we: • continue our preclinical and clinical development of product candidates from our current research programs, including those partnered with Lilly; • identify additional research programs and additional product candidates; • initiate preclinical testing for any new product candidates we identify and develop; • obtain, maintain, expand, enforce, defend and protect our trade secrets and intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio; • hire additional research and development personnel; • add operational, legal, compliance, financial and management information systems and personnel to support our research, product development and operations as a public company; • expand the capabilities of our platform; • acquire or in-license product candidates, intellectual property and technologies; • operate as a public company; • seek marketing approvals for any of our product candidates that successfully complete clinical trials; and • ultimately establish a sales, marketing, and distribution infrastructure to commercialize any products for which we may obtain marketing approval.
This concentration of ownership may have the effect of delaying or preventing a change in control of our company and might adversely affect the market price of our common stock. 60 Table of Contents We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.
This concentration of ownership may have the effect of delaying or preventing a change in control of our company and might adversely affect the market price of our common stock. 58 Table of Contents We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.
The FDA’s application of its orphan drug regulations post- Catalyst could be the subject of future legislation or to further challenges in court, which could impact our ability to obtain or seek to work around orphan exclusivity, and might affect our ability to retain 56 Table of Contents orphan exclusivity that the FDA previously has recognized for our products.
The FDA’s application of its orphan drug regulations post- Catalyst could be the subject of future legislation or to further challenges in court, which could impact our ability to obtain or seek to work around orphan exclusivity, and might affect our ability to retain 54 Table of Contents orphan exclusivity that the FDA previously has recognized for our products.
Our directors and executive officers and their affiliates beneficially own shares representing approximately 39% of our outstanding common stock. As a result, these stockholders, if they act together, will be able to influence our management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions.
Our directors and executive officers and their affiliates beneficially own shares representing approximately 30% of our outstanding common stock. As a result, these stockholders, if they act together, will be able to influence our management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions.
A suspension or termination may be imposed due to a number of 44 Table of Contents factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or comparable foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product or treatment, failure to establish or achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
A suspension or termination may be imposed due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or comparable foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product or treatment, failure to establish or achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
We may also be required to conduct additional 42 Table of Contents preclinical testing prior to filing or acceptance of an IND for any of our product candidates, and the results of any such additional preclinical testing may not be positive. Further, we may experience manufacturing delays or other delays with IND-enabling studies.
We may also be required to conduct additional preclinical testing prior to filing or acceptance of an IND for any of our product candidates, and the results of any such additional preclinical testing may not be positive. 40 Table of Contents Further, we may experience manufacturing delays or other delays with IND-enabling studies.
In addition, because we are incorporated in the State of Delaware, we are governed by the provisions of Section 203 of the General Corporation Law of the State of Delaware (the “DGCL”) which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
In addition, because we are incorporated in the State of Delaware, we are governed by the provisions of Section 203 of the General Corporation Law of the State of Delaware (the “DGCL”) which prohibits a person who owns in excess of 15% of our 59 Table of Contents outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition. 62 Table of Contents ITEM 1B.
Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition. ITEM 1B.
The ability of the FDA to review, make decisions relating to development, and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions.
The ability of the FDA to review, make decisions relating to development, and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s ability 44 Table of Contents to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions.
Our ability to obtain coverage and adequate reimbursement for our product candidates by governmental healthcare programs, private health insurers, and other third-party payors will have an effect on our ability to successfully commercialize our product 58 Table of Contents candidates.
Our ability to obtain coverage and adequate reimbursement for our product candidates by governmental healthcare programs, private health insurers, and other third-party payors will have an effect on our ability to successfully commercialize our product 56 Table of Contents candidates.
If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, or we are not able to effectively build out new facilities to accommodate this expansion, we may not be able to successfully implement the tasks necessary to further develop and 47 Table of Contents commercialize our product candidates and, accordingly, may not achieve our research, development and commercialization goals.
If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, or we are not able to effectively build out new facilities to accommodate this expansion, we may not be able to successfully implement the tasks necessary to further develop and commercialize our product candidates and, accordingly, may not achieve our research, development and commercialization goals.
If any of the events or developments described below were to occur, our business, prospects, operating results and financial condition could suffer materially, the trading price of our common stock could decline and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we face.
If any of the events or developments described below were to occur, our business, prospects, operating results and financial condition could suffer materially, the trading price of our common stock could decline and you could lose all or part of your investment. The risks and 36 Table of Contents uncertainties described below are not the only ones we face.
If patients are unwilling to participate in our studies because of negative publicity from adverse events related to the biotechnology field, competitive clinical trials for similar patient populations or for other reasons, the timeline for recruiting patients, conducting studies and obtaining regulatory approval of FHD-286 or any other product candidates may be delayed.
If patients are unwilling to participate in our studies because of negative publicity from adverse events related to the biotechnology field, competitive clinical trials for similar patient populations or for other reasons, the timeline for recruiting patients, conducting studies and obtaining regulatory approval of our product candidates may be delayed.
In addition, third parties may initiate legal proceedings against us to assert such challenges to our intellectual property rights. The outcome of any such proceeding is generally unpredictable. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly.
In addition, third parties may initiate legal proceedings against us to assert such challenges to our intellectual property rights. The outcome of any such proceeding is generally unpredictable. 49 Table of Contents An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly.
Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects. Changes to the patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.
Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects. 51 Table of Contents Changes to the patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.
In addition, certain of our CDMOs and CROs located in China may experience adverse legal and regulatory restrictions, which could adversely affect their ability to provide services to Foghorn and, thereby, harm our business.
In addition, certain of our CDMOs and CROs located in China may experience adverse legal and regulatory restrictions, which could adversely affect their ability to provide services to us and, thereby, harm our business.
This will require us to be successful in a range of challenging 39 Table of Contents activities, including identifying product candidates, completing preclinical testing and clinical trials of product candidates, obtaining marketing approval for these product candidates, manufacturing, marketing, and selling those medicines for which we may obtain marketing approval, and satisfying any post-marketing requirements.
This will require us to be successful in a range of challenging activities, including identifying product candidates, completing preclinical testing and clinical trials of product candidates, obtaining marketing approval for these product candidates, manufacturing, marketing, and selling those medicines for which we may obtain marketing approval, and satisfying any post-marketing requirements.
If we have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit, or terminate clinical trials for FHD-286 or our other product candidates, or expand to additional jurisdictions, which could impose additional challenges on our company and expose us to risks.
If we have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit, or terminate clinical trials for our product candidates, or expand to additional jurisdictions, which could impose additional challenges on our company and expose us to risks.
If any of the collaborators, scientific advisors, employees and consultants who are parties to these agreements breaches or violates the terms of any of these agreements, we may not have adequate remedies for any such breach or violation, and we could lose our trade secrets as a result.
If any of the collaborators, scientific advisors, employees and consultants who are parties to these agreements breaches or violates the terms of any of these agreements, we may not have adequate remedies for any such breach or violation, and we could lose our trade 47 Table of Contents secrets as a result.
Although our research and development efforts to date have resulted in our discovery and preclinical development of FHD-286, FHD- 909 and FHD-609 for the treatment of cancer, FHD-286, FHD-909 and FHD-609 may not be safe or effective as cancer treatments, and we may not be able to develop any other product candidates.
Although our research and development efforts to date have resulted in our discovery and preclinical development of FHD- 909, FHD-286, and FHD-609 for the treatment of cancer, FHD-909 and any other cancer product candidates we may advance into the clinic may not be safe or effective as cancer treatments, and we may not be able to develop any other product candidates.
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our product candidates could be delayed.
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or 45 Table of Contents inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our product candidates could be delayed.
Our commercial success depends upon our ability and the ability of our collaborators and licensors to develop, manufacture, market, and sell any product candidates that we may develop and use our proprietary technologies without infringing, 50 Table of Contents misappropriating, or otherwise violating the intellectual property and proprietary rights of third parties.
Our commercial success depends upon our ability and the ability of our collaborators and licensors to develop, manufacture, market, and sell any product candidates that we may develop and use our proprietary technologies without infringing, misappropriating, or otherwise violating the intellectual property and proprietary rights of third parties.
Disputes regarding ownership or inventorship of intellectual property can also arise in other contexts, such as collaborations and sponsored research. If we are subject to an inventorship dispute, such dispute may lead to litigation which could be expensive and time-consuming.
Disputes regarding ownership or inventorship of intellectual property can also 50 Table of Contents arise in other contexts, such as collaborations and sponsored research. If we are subject to an inventorship dispute, such dispute may lead to litigation which could be expensive and time-consuming.
In recent years, many such changes have been made and changes are likely to continue to occur in the future. Future changes in tax laws could have a material adverse effect on our business, cash flow, financial condition or results of operations.
In recent years, many such 38 Table of Contents changes have been made and changes are likely to continue to occur in the future. Future changes in tax laws could have a material adverse effect on our business, cash flow, financial condition or results of operations.
Even if our patent portfolio is unchallenged, it may not provide us with any meaningful protection or prevent competitors from designing around our patent claims to circumvent our owned or licensed patents by developing similar or alternative 49 Table of Contents technologies or products in a non-infringing manner.
Even if our patent portfolio is unchallenged, it may not provide us with any meaningful protection or prevent competitors from designing around our patent claims to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner.
We have two issued U.S. patents related to FHD-286. In order to continue to pursue protection based on provisional patent applications, we will need to file PCT, foreign applications and/or U.S. non-provisional patent applications prior to applicable deadlines.
We have three issued U.S. patents related to FHD-286 and one issued U.S. patent related to FHD-909. In order to continue to pursue protection based on provisional patent applications, we will need to file PCT, foreign applications and/or U.S. non-provisional patent applications prior to applicable deadlines.
Our results of operations could be adversely affected by general conditions in the global economy and financial markets, including inflation, rising interest rates, economic sanctions, natural disasters, pandemics, political instability, armed conflicts and wars, including the Russia-Ukraine war, the Israeli-Palestine Conflict, and attacks in the Red Sea.
Our results of operations could be adversely affected by general conditions in the global economy and financial markets, including inflation, rising interest rates, economic sanctions or other restrictions on international commerce, natural disasters, pandemics, political instability, armed conflicts and wars, including the Russia-Ukraine war, the Israeli-Palestine Conflict, and attacks in the Red Sea.
We may need to grow the size of our organization, and we may experience difficulties in managing this growth and other issues relating to our employees. As of December 31, 2023, we had 116 full-time employees.
We may need to grow the size of our organization, and we may experience difficulties in managing this growth and other issues relating to our employees. As of December 31, 2024, we had 112 full-time employees.
As a result, our business, financial condition, results of operations and prospects could be materially harmed. Currently, our patent portfolio, including our portfolio related to our product candidate FHD-286, primarily consists of provisional patent applications and patent applications filed pursuant to the Patent Cooperation Treaty (the “PCT”), both of which do not themselves issue as patents.
As a result, our business, financial condition, results of operations and prospects could be materially harmed. Currently, our patent portfolio primarily consists of provisional patent applications and patent applications filed pursuant to the Patent Cooperation Treaty (the “PCT”), both of which do not themselves issue as patents.
Enrollment delays in our clinical trials may result in increased development costs for FHD-286 or any other product candidates, which would cause the value of our company to decline and limit our ability to obtain additional financing.
Enrollment delays in our clinical trials may result in increased development costs for our product candidates, which would cause the value of our company to decline and limit our ability to obtain additional financing.
We may in the future seek orphan drug status for FHD-286 and some of our other future product candidates, but we may be unable to obtain such designations or to maintain the benefits associated with orphan drug status, including market exclusivity, which may cause our future revenue, if any, to be reduced.
We may in the future seek orphan drug status for our product candidates, but we may be unable to obtain such designations or to maintain the benefits associated with orphan drug status, including market exclusivity, which may cause our future revenue, if any, to be reduced.
We expect our expenses to increase in connection with our ongoing activities, particularly as we identify, continue the research and development of, initiate clinical trials of, and seek marketing approval for, our product candidates. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.
We expect our expenses to increase in connection with our ongoing activities, particularly as we identify, continue the research and development of, initiate clinical trials of, and seek marketing approval for, our product candidates, including FHD-909, which is in Phase 1 clinical development. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.
We have incurred significant losses since inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability. Since inception, we have incurred significant operating losses. As of December 31, 2023, we had an accumulated deficit of $471.6 million.
We have incurred significant losses since inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability. Since inception, we have incurred significant operating losses. As of December 31, 2024, we had an accumulated deficit of $558.2 million.
We have financed our operations primarily through private placements of our preferred stock and our IPO; our former collaboration agreement with Merck; and our strategic collaboration with Lilly and Lilly's concurrent investment in our equity.
We have financed our operations primarily through private placements of our preferred stock and our IPO; our former collaboration agreement with Merck; our strategic collaboration with Lilly and Lilly’s concurrent investment in our equity; and proceeds from the May 2024 Offering.
Furthermore, while we intend to protect our intellectual property rights in the major markets for our product candidates, we cannot ensure that we will be able to initiate or maintain 52 Table of Contents similar efforts in all jurisdictions in which we may wish to market our product candidates.
Furthermore, while we intend to protect our intellectual property rights in the major markets for our product candidates, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our product candidates. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate.
We may seek Breakthrough Therapy designation from the FDA for FHD-286, and for some or all of our future product candidates.
We may seek Breakthrough Therapy designation from the FDA for some or all of our product candidates.
Changes in regulations, statutes or the interpretation of existing regulations could impact our business in the future by requiring, for example: (i) changes to our manufacturing arrangements, (ii) additions or modifications to product labeling, (iii) the recall or discontinuation of our products or (iv) additional record-keeping requirements.
See “ Business Section—Government Regulation—Current and Future Healthcare Reform Legislation. ” Changes in regulations, statutes or the interpretation of existing regulations could impact our business in the future by requiring, for example: (i) changes to our manufacturing arrangements, (ii) additions or modifications to product labeling, (iii) the recall or discontinuation of our products or (iv) additional record-keeping requirements.
We expect that it will be many years, if ever, before we have a product candidate ready for commercialization. To become and remain profitable, we must succeed in developing, obtaining marketing approval for and commercializing products that generate significant revenue.
We are in the preclinical development stage for our other lead research programs. We expect that it will be many years, if ever, before we have a product candidate ready for commercialization. To become and remain profitable, we must succeed in developing, obtaining marketing approval for and commercializing products that generate significant revenue.
We urge investors to consult with their legal and tax advisers regarding the implications of potential changes in tax laws on an investment in our common stock. 40 Table of Contents Our future ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
We urge investors to consult with their legal and tax advisers regarding the implications of potential changes in tax laws on an investment in our common stock. Our future ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited. We have incurred substantial losses during our history and we may never achieve profitability.
Risks Related to Employee Matters, Managing Growth and Information Technology We are highly dependent on our key personnel. If we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy. We are highly dependent on Adrian Gottschalk, our Chief Executive Officer.
If we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy. We are highly dependent on Adrian Gottschalk, our Chief Executive Officer.
We have incurred substantial losses during our history and we may never achieve profitability. To the extent that we continue to generate taxable losses, unused losses will carry forward to offset a portion of future taxable income, if any, subject to expiration in the case of carryforwards generated prior to January 1, 2018.
To the extent that we continue to generate taxable losses, unused losses will carry forward to offset a portion of future taxable income, if any, subject to expiration in the case of carryforwards generated prior to January 1, 2018.
Significant preclinical study or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates, or could allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates, which may harm our business, results of operations, financial condition and prospects.
Significant preclinical study or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates, or could allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates, which may harm our business, results of operations, financial condition and prospects. 42 Table of Contents We are not be able to exert unilateral control over the development of product candidates when part of a collaboration.
Relying on third-party clinical investigators, CROs and consultants may force us to encounter delays that are outside of our control, including delays and restrictions that may be imposed by legislation or executive order or other administrative action.
In addition, we have relied upon and plan to continue to rely upon third-party clinical investigators, contract research organizations, or CROs, and consultants. Relying on third-party clinical investigators, CROs and consultants may force us to encounter delays that are outside of our control, including delays and restrictions that may be imposed by legislation or executive order or other administrative action.
Similarly, if any third-party manufacturers on which we will rely fail to manufacture quantities of our product candidates at quality levels necessary to meet regulatory requirements and at a scale sufficient to meet anticipated demand at a cost that allows us to achieve profitability, our business, financial condition, results of operations, and prospects could be materially and adversely affected. 46 Table of Contents In addition, we have relied upon and plan to continue to rely upon third-party clinical investigators, contract research organizations, or CROs, and consultants.
Similarly, if any third-party manufacturers on which we will rely fail to manufacture quantities of our product candidates at quality levels necessary to meet regulatory requirements and at a scale sufficient to meet anticipated demand at a cost that allows us to achieve profitability, our business, financial condition, results of operations, and prospects could be materially and adversely affected.
As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Additionally, CROs may lack the capacity to absorb higher workloads or take on additional capacity to support our needs.
In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Additionally, CROs may lack the capacity to absorb higher workloads or take on additional capacity to support our needs.
We are unable to predict when or if any of our product candidates will prove effective or safe in humans or will receive marketing approval. Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans.
Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans.
Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. We may be subject to claims challenging the inventorship or ownership of any intellectual property, including any patents we may own or in-license in the future.
We may be subject to claims challenging the inventorship or ownership of any intellectual property, including any patents we may own or in-license in the future.
Although the impact of the IRA remains uncertain pending ongoing implementation, the IRA it is likely to have a significant effect on the healthcare industry and prescription drug pricing overall. See “ Business Section—Government Regulation—Current and Future Healthcare Reform Legislation ”.
Although the impact of the IRA remains uncertain pending ongoing implementation, the IRA it is likely to have a significant effect on the healthcare industry and prescription drug pricing overall.
Even then, patents may never issue from our patent applications, or the scope of any patent may not be sufficient to provide a competitive advantage. 48 Table of Contents The degree of patent protection we require to successfully commercialize our product candidates may be unavailable or severely limited in some cases and may not adequately protect our rights or permit us to gain or keep any competitive advantage.
The degree of patent protection we require to successfully commercialize our product candidates may be unavailable or severely limited in some cases and may not adequately protect our rights or permit us to gain or keep any competitive advantage.
If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms. Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work.
If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms. Switching or adding additional CROs involves additional cost 52 Table of Contents and requires management time and focus.
Patent prosecution is a lengthy process, during which the scope of the claims initially submitted for examination by the U.S. Patent and Trademark Office (the “USPTO”) have been significantly narrowed by the time they issue, if at all.
Further, with respect to most of the pending patent applications covering our product candidates, prosecution has yet to commence. Patent prosecution is a lengthy process, during which the scope of the claims initially submitted for examination by the U.S. Patent and Trademark Office (the “USPTO”) have been significantly narrowed by the time they issue, if at all.
Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline. We have never generated revenue from product sales and may never be profitable.
Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline. We have never generated revenue from product sales and may never be profitable. We are currently in the Phase 1 clinical development for FHD-909 as part of our collaboration with Lilly.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs or modifications to approved drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs or modifications to approved drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. Risks Related to Employee Matters, Managing Growth and Information Technology We are highly dependent on our key personnel.
A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in later-stage clinical trials even after achieving promising results in the preclinical and early stage clinical trials.
Even product candidates that reach the clinical trial stage may fail to show the desired safety and efficacy in a later stage of clinical development. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in later-stage clinical trials even after achieving promising results in the preclinical and early stage clinical trials.
If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. 61 Table of Contents Provisions in our amended and restated certificate of incorporation, our amended and restated by-laws and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders and may prevent attempts by our stockholders to replace or remove our current management.
Provisions in our amended and restated certificate of incorporation, our amended and restated by-laws and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders and may prevent attempts by our stockholders to replace or remove our current management.
Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our owned or licensed pending patent applications, or that we were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights cannot be predicted with any certainty.
Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our owned or licensed 46 Table of Contents pending patent applications, or that we were the first to file for patent protection of such inventions.
As we generate preclinical results, such results will not ensure that later preclinical studies or clinical trials will demonstrate similar results. There is a high failure rate for drugs and biologics proceeding through clinical trials. Even product candidates that reach the clinical trial stage may fail to show the desired safety and efficacy in a later stage of clinical development.
As we generate preclinical results, such results will not ensure 43 Table of Contents that later preclinical studies or clinical trials will demonstrate similar results. There is a high failure rate for drugs and biologics proceeding through clinical trials.
A loss of key personnel or 51 Table of Contents their work product could hamper or prevent our ability to commercialize our product candidates, which would have an adverse effect on our business, results of operations and financial condition.
Moreover, any such litigation or the threat thereof may adversely affect our ability to hire employees or contract with independent sales representatives. A loss of key personnel or their work product could hamper or prevent our ability to commercialize our product candidates, which would have an adverse effect on our business, results of operations and financial condition.
Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. 38 Table of Contents Risks Related to Our Financial Position and Need for Additional Capital We have a limited operating history and have no products approved for commercial sale, which may make it difficult for you to evaluate our current business and predict our future success and viability.
Risks Related to Our Financial Position and Need for Additional Capital We have a limited operating history and have no products approved for commercial sale, which may make it difficult for you to evaluate our current business and predict our future success and viability. We are a clinical-stage biopharmaceutical company with a limited operating history.
In addition, the patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. Further, with respect to most of the pending patent applications covering our product candidates, prosecution has yet to commence.
As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights cannot be predicted with any certainty. In addition, the patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.
We may initiate or become involved in legal proceedings involving allegations that we are infringing a third party’s intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.
Even if we were able to obtain such a license, it could be granted on non-exclusive terms, thereby providing our competitors and other third parties access to the same technologies licensed to us. 48 Table of Contents We may initiate or become involved in legal proceedings involving allegations that we are infringing a third party’s intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.
We may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
For additional information regarding our competition, see “Business—Competition.” Product development is a lengthy and expensive process with an uncertain outcome. We may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
This may result in delayed and/or diminished visibility and predictability of certain aspects of development strategy, which may impact timelines and ultimate success of the product candidate. If we experience delays or difficulties in the enrollment and dosing of patients in our clinical trials, our receipt of necessary regulatory approvals for our product candidates could be delayed or prevented.
If we experience delays or difficulties in the enrollment and dosing of patients in our clinical trials, our receipt of necessary regulatory approvals for our product candidates could be delayed or prevented. Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success.
Identifying and qualifying patients to participate in clinical trials of FHD-286 or any other product candidates is critical to our success. The timing of our clinical trials depends on our ability to recruit patients to participate in our studies as well as the dosing of such patients and completion of required follow-up periods.
The timing of our clinical trials depends on our ability to recruit patients to participate in our studies as well as the dosing of such patients and completion of required follow-up periods. Our competitors may compete for the same limited patient populations.
In order to continue to pursue protection based on PCT applications, we will need to file national phase applications in the U.S. and ex-U.S. jurisdictions prior to applicable deadlines.
In order to continue to pursue protection based on PCT applications, we will need to file national phase applications in the U.S. and ex-U.S. jurisdictions prior to applicable deadlines. Even then, patents may never issue from our patent applications, or the scope of any patent may not be sufficient to provide a competitive advantage.
Moreover, our business may be adversely affected if any of these third parties violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws. 54 Table of Contents Further, these investigators, CROs and CDMOs are not our employees and we are not able to control, other than by contract, the amount of resources, including time, which they devote to our product candidates and clinical trials.
Further, these investigators, CROs and CDMOs are not our employees and we are not able to control, other than by contract, the amount of resources, including time, which they devote to our product candidates and clinical trials.
We are currently in a Phase 1 clinical trial for FHD-286 and anticipate an IND filing by Lilly for FHD-909 in the second quarter of 2024. Our other product candidates are in preclinical development.
As part of our collaboration with Lilly, we are currently in a Phase 1 dose escalation trial for FHD-909. Our other product candidates are in preclinical development.
Therefore, the reported results of operations contained in our consolidated financial statements may not be directly comparable to those of other public companies. We incur certain costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance initiatives and corporate governance practices. In October 2020, we completed our IPO.
Therefore, the reported results of operations contained in our consolidated financial statements may not be directly comparable to those of other public companies.
We may not be able to exert unilateral control over the development of product candidates when part of a collaboration. Under our Lilly Collaboration Agreement, we influence, but do not control, the development activity of any of the product candidates covered by the Lilly Collaboration Agreement, including FHD-909.
Under our Lilly Collaboration Agreement, we influence, but do not control, the development activity of any of the product candidates covered by the Lilly Collaboration Agreement, including FHD-909. This may result in delayed and/or diminished visibility and predictability of certain aspects of development strategy, which may impact timelines, costs, and ultimate success of the product candidate.
Compliance with applicable environmental laws and regulations is expensive, and current or future environmental regulations may impair our research, development and production efforts, which could harm our business, prospects, financial condition or results of operations. 55 Table of Contents Risks Related to Regulatory and Other Legal Compliance Matters Our clinical trials may fail to demonstrate adequately the safety and efficacy of any of our product candidates, which would delay or prevent further clinical development of those candidates.
If we are unable to obtain or use services from existing service providers or become unable to export or sell our products to any of our customers or service providers, our business could be materially and adversely affected. 53 Table of Contents Risks Related to Regulatory and Other Legal Compliance Matters Our clinical trials may fail to demonstrate adequately the safety and efficacy of any of our product candidates, which would delay or prevent further clinical development of those candidates.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Board and Audit Committee also receive ad hoc reporting as appropriate. Our Vice President of Information Technology, who reports to our Chief Strategy and Business Operations Officer, is primarily responsible for assessing such risks. This individual has over 20 years of information technology and cybersecurity experience in the biotechnology industry.
Biggest changeThe Board and Audit Committee also receive ad hoc reporting as appropriate. Our Vice 60 Table of Contents President of Information Technology, who reports to our Chief Legal Officer, is primarily responsible for assessing such risks. This individual has over 20 years of information technology and cybersecurity experience in the biotechnology industry.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, litigation can have an adverse impact on our business, financial condition, results of operations and prospects because of defense and settlement costs, diversion of management resources and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 63 Table of Contents PART II
Biggest changeRegardless of outcome, litigation can have an adverse impact on our business, financial condition, results of operations and prospects because of defense and settlement costs, diversion of management resources and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 61 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of Our Common Stock As of February 29, 2024, there were approximately 29 holders of record of shares of our common stock. This number does not include stockholders for whom shares are held in “nominee” or “street” name.
Biggest changeHolders of Our Common Stock As of February 28, 2025, there were approximately 25 holders of record of shares of our common stock. This number does not include stockholders for whom shares are held in “nominee” or “street” name.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe increase is attributed to the following: • an increase in platform and other early stage research costs of $10.2 million, including an increase of $2.4 million related to the advancement of Lilly partnered targets, which was due to continued investment and development of our platform and early research pipeline; • an increase in personnel-related costs of $4.1 million, including a $0.4 million increase in stock-based compensation expense, due to higher average headcount in our research and development functions compared to prior year, and $1.4 million in one-time separation costs; and • an increase in facility-related and other expenses of $1.1 million due to the increased costs of supporting our research and development organization and their research efforts; Partially offset by: • a decrease in our FHD-286 program costs of $7.7 million, driven by a decline in development spend in 2023 as the Company’s Phase 1 study in AML/MDS was on clinical hold until June 2023 and the shutdown of the Phase 1 uveal melanoma study beginning in the second quarter of 2023; and • a decrease in our FHD-609 program costs of $3.7 million associated with the partial clinical hold and subsequent shutdown of the Phase 1 clinical trial for FHD-609 in synovial sarcoma and SMARCAB1-loss tumors, which started in the second quarter of 2023.
Biggest changeThe decrease is attributed to the following: • a decrease in personnel-related costs of $9.0 million, including a $1.9 million decrease in stock-based compensation expense, due to decreased headcount in our research and development function compared to prior year; • a decrease in early development and other research external costs of $7.0 million; which was entirely driven by decreased FHD-609 spend due to the shutdown of the Phase 1 clinical trial in synovial sarcoma and SMARCAB1-loss tumors; • a decrease in facilities and IT related expenses of $2.4 million due to decreased headcount in our research and development function compared to prior year; and • an increase in Lilly partnered programs of $3.3 million, primarily driven by initiation of the Phase 1 dose escalation study of FHD-909.
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 and may develop.
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.
Other Income, Net Other income (expense), net consists of sublease income and miscellaneous expense unrelated to our core operations.
Other Income, Net Other income, net consists of sublease income and miscellaneous expense unrelated to our core operations.
The income tax provision is primarily driven by the current federal and state taxes related to the $300.0 million upfront payment for Lilly Collaboration Agreement, which will be recognized as taxable income in the current year, and the required capitalization of research and development costs pursuant to Internal Revenue Code Section 174.
The income tax provision is primarily driven by the current federal and state taxes related to the $300.0 million upfront payment for Lilly Collaboration Agreement, which will be recognized as taxable income in the related year, and the required capitalization of research and development costs pursuant to Internal Revenue Code Section 174.
Concurrent with the Lilly Collaboration Agreement, we also entered into a stock purchase agreement (the “Lilly SPA”) and issued and sold Lilly 4,000,000 shares of our common stock at a price of $20.00 per share, resulting in net proceeds of $80.0 million, of which $42.2 million was allocated to equity upon the issuance of our common stock.
Concurrent with the Lilly Collaboration Agreement, we also entered into a stock purchase agreement (the “Lilly SPA”) with Lilly whereby we issued and sold Lilly 4,000,000 shares of our common stock at a price of $20.00 per share, resulting in net proceeds of $80.0 million, of which $42.2 million was allocated to equity upon the issuance of our common stock.
Financing Activities For the year ended December 31, 2023 and 2022, net cash provided by financing activities was $1.8 million, consisting of net proceeds from the exercise of common stock options and the employee stock purchase plan.
For the year ended December 31, 2023, net cash provided by financing activities was $1.8 million, consisting of proceeds from the exercise of common stock options and the employee stock purchase plan.
Revenue Recognition We received significant non-refundable upfront payments under our collaboration agreements with Merck and Lilly, from which we recognize revenue over time using the cost-to-cost method. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the identified single performance obligation.
Revenue Recognition We received significant non-refundable upfront payments under our collaboration agreements with Lilly, from which we recognize revenue over time using the cost-to-cost method. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the identified single performance obligation.
In December of 2021, we entered into a strategic collaboration with 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 aforementioned selective BRM oncology program and an additional undisclosed oncology target.
In December of 2021, we entered into a strategic collaboration with 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 aforementioned selective SMARCA2 oncology program and an additional undisclosed oncology target.
We believe our current pipeline has the potential to help more than 500,000 cancer patients. We take a 64 Table of Contents small molecule modality agnostic approach to drugging targets which includes protein degraders, allosteric enzymatic inhibitors, and transcription factor disruptors.
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 62 Table of Contents targets which includes protein degraders, allosteric enzymatic inhibitors, and transcription factor disruptors.
For the BRM selective program and the additional undisclosed target program, Foghorn will lead discovery and early research activities, while Lilly will lead development and commercialization activities with participation from Foghorn in operational activities and cost sharing.
For the SMARCA2 selective program and the additional undisclosed target program, Foghorn will lead discovery and early research activities, while Lilly will lead development and commercialization activities with participation from Foghorn in operational activities and cost sharing.
Examples of estimated accrued research and development expenses include those related to fees paid to: • vendors in connection with discovery, preclinical and clinical development activities; 68 Table of Contents • CROs in connection with preclinical studies and testing and clinical trials; and • CDMOs in connection with the process development and scale up activities and the production and manufacturing of materials.
Examples of estimated accrued research and development expenses include those related to fees paid to: • vendors in connection with discovery, preclinical and clinical development activities; • CROs in connection with preclinical studies and testing and clinical trials; and • CDMOs in connection with the process development and scale up activities and the production and manufacturing of materials.
Overview Foghorn is a clinical stage, precision therapeutics biotechnology company pioneering a new class of medicines that treat serious diseases by correcting abnormal gene expression through selectively targeting the chromatin regulatory system, an untapped opportunity for therapeutic intervention in oncology and with potential in a wide spectrum of other diseases including virology, autoimmune diseases and neurology.
Overview Foghorn is a clinical stage, precision therapeutics biotechnology company pioneering a new class of medicines that treat serious diseases by correcting abnormal gene expression through selectively targeting the chromatin regulatory system, an untapped opportunity for therapeutic intervention in oncology and with potential in a wide spectrum of other diseases including immunology and inflammation.
Research and Development Expenses Research and development expenses consist primarily of costs incurred to progress our proprietary and partnered pipeline, including our discovery efforts, which include: • personnel-related costs, including salaries, benefits and stock-based compensation expense, for employees engaged in research and development functions; • expenses incurred in connection with our research programs and preclinical and clinical development of our product candidates, including under agreements with third parties, such as consultants and contractors and CROs; • the cost of manufacturing drug substance and drug product for use in our research and preclinical studies and clinical trials under agreements with third parties, such as consultants and contractors and CDMOs; • laboratory supplies and research materials; • facilities, depreciation and amortization and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance; and • payments made under third-party licensing agreements.
Research and Development Expenses Research and development expenses consist primarily of costs incurred to progress our proprietary and partnered pipeline, including our discovery efforts, which include: • personnel-related costs, including salaries, benefits, and stock-based compensation expense, for employees engaged in research and development functions; • expenses incurred in connection with our research programs and preclinical and clinical development of our product candidates, including under agreements with third parties, such as consultants and contractors, contract research organizations (“CROs”), and our collaboration partner; • the cost of manufacturing drug substance and drug product for use in our research and preclinical studies and clinical trials under agreements with third parties, such as consultants and contractors and contract development and manufacturing organizations (“CDMOs”); • laboratory supplies and research materials; • facilities, depreciation and amortization and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance; and • payments made under third-party licensing agreements.
Any cumulative effect of revisions to the total estimated costs to complete our performance obligation will be recorded in the period in which the changes are identified, and amounts can be reasonably estimated.
Any cumulative effect of revisions to the total estimated costs to complete our performance obligation will be recorded in the period in which the changes are identified, and amounts can be reasonably 66 Table of Contents estimated.
We also anticipate that we will continue to incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance costs and investor and public relations expenses associated with operating as a public company. 67 Table of Contents Other Income (Expense) Interest Income Interest income consists of interest earned on our invested cash balances.
We also anticipate that we will continue to incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance costs and investor and public relations expenses associated with operating as a public company. Other Income, Net Interest Income Interest income consists of interest earned on our invested cash balances.
During the year ended December 31, 2023, we recorded a provision for income taxes related to the $300.0 million upfront payment from the Lilly Collaboration Agreement which will be recognized as taxable income in the current year, and the required capitalization of research and development costs pursuant to Internal Revenue Code Section 174.
During the year ended December 31, 2023, we recorded a provision for income taxes related to the $300.0 million upfront payment from the Lilly Collaboration Agreement which was recognized as taxable income during that year, and the required capitalization of research and development costs pursuant to Internal Revenue Code Section 174.
We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we: • advance FHD-286 and continue preclinical and clinical development of product candidates from our current portfolio, including those partnered with Lilly; • identify and advance additional research programs and additional product candidates; • initiate preclinical testing for any new product candidates we identify and develop; • obtain, maintain, expand, enforce, defend and protect our trade secrets and intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio; • hire additional research and development personnel; • add operational, legal, compliance, financial and management information systems and personnel to support our research, product development and operations; • expand the capabilities of our platform; • acquire or in-license product candidates, intellectual property and technologies; • operate as a public company; • seek marketing approvals for any product candidates that successfully complete clinical trials; and • ultimately establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval. 65 Table of Contents We will not generate revenue from product sales unless and until we successfully commercialize one of our product candidates, after completing clinical development and obtaining regulatory approval.
We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we: • advance FHD-909 and other product candidates partnered with Lilly, and continue preclinical and clinical development of product candidates from our current portfolio; • identify and advance additional research programs and additional product candidates; • initiate preclinical testing for any new product candidates we identify and develop; • obtain, maintain, expand, enforce, defend and protect our trade secrets and intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio; • hire additional research and development personnel; • add operational, legal, compliance, financial and management information systems and personnel to support our research, product development and operations; • expand the capabilities of our platform; • acquire or in-license product candidates, intellectual property and technologies; • operate as a public company; 63 Table of Contents • seek marketing approvals for any product candidates that successfully complete clinical trials; and • ultimately establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval.
We cannot provide assurances as to the timing of future milestones, royalty payments and economics associated with the strategic collaboration with Lilly, if any. In the third quarter of 2023, we transitioned the BRM Selective inhibitor program to Lilly, for which Lilly will lead and we will participate and share in 50% of the costs until registrational trials.
We cannot provide assurances as to the timing of future milestones, royalty payments and economics associated with the strategic collaboration with Lilly, if any. In the third quarter of 2023, we transitioned the SMARCA2 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.
At present, we are working on more than 10 programs with one clinical-stage drug candidate currently in Phase 1 development and one drug candidate anticipated to begin clinical development this year. We have discovered highly selective chemical matter for some of the most challenging targets in oncology including BRM, CBP, EP300 and ARID1B, as well as other undisclosed targets.
At present, we are working on more than eight programs with one clinical-stage drug candidate 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.
For the years ended December 31, 2023 and 2022, we recognized $17.0 million and $1.8 million, respectively, of revenue under the Merck Collaboration Agreement. As of December 31, 2023, we had no deferred revenue related to the upfront payment and milestone achievement remaining on our consolidated balance sheets.
For the year ended December 31, 2023, we recognized $17.0 million of revenue under the Merck Collaboration Agreement. As of December 31, 2024 and 2023, we had no deferred revenue related to the upfront payment and milestone achievement remaining on our consolidated balance sheets.
Provision for income taxes For the year ended December 31, 2023, we recorded an income tax provision of $4.2 million .
Provision for income taxes For the year ended December 31, 2024, we did not record an income tax provision. For the year ended December 31, 2023, we recorded an income tax provision of $4.2 million.
Funding Requirements We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities, initiate clinical trials for our product candidates in development, including those partnered with Lilly, and continue to fund on-going clinical activities.
Funding Requirements We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we continue to fund on-going and potential future clinical activities, including the Phase 1 clinical trial of FHD-909 partnered with Lilly, advance preclinical activities, and initiate clinical trials for our product candidates in development, including those partnered with Lilly.
A change in the outcome of any number of variables with respect to product candidates we may develop could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any product candidates we may develop.
A change in the outcome of any number of variables with respect to product candidates we may develop could significantly change the costs and timing associated with the development of that product candidate.
As of December 31, 2023, the Company also had U.S. federal and state research and development tax credit carryforwards of $3.7 million and $2.6 million, respectively, which may be available to offset future tax liabilities and expire at various dates beginning in 2041 and 2037, respectively.
As of December 31, 2024, we also had U.S. federal and state research and development tax credit carryforwards of $7.2 million and $3.7 million, respectively, which may be available to reduce future tax liabilities and expire at various dates beginning in 2043 and 2037, respectively.
Through December 31, 2023, 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 and a payment of $5.0 million received from Merck under the Merck Collaboration Agreement for the achievement of a research milestone.
Through December 31, 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 in the third quarter of 2022 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.
For the years ended December 31, 2023 and 2022, we recognized $17.1 million and $17.4 million, respectively, of revenue under the Lilly Collaboration Agreement and, as of December 31, 2023, we had $302.7 million of deferred revenue related to the above mentioned upfront payment and revenue allocation remaining on our consolidated balance sheets.
For the years ended December 31, 2024 and 2023, we recognized $22.6 million and $17.1 million, respectively, of revenue under the Lilly Collaboration Agreement and, as of December 31, 2024, we had $280.1 million of deferred revenue related to the above 64 Table of Contents mentioned upfront payment and revenue allocation remaining on our consolidated balance sheets.
Investing Activities For the year ended December 31, 2023, net cash provided by investing activities was $144.5 million primarily due to $219.6 million of marketable securities maturing, offset by $73.9 million of purchases of marketable securities and $1.2 million in purchases of property and equipment. 71 Table of Contents For the year ended December 31, 2022, net cash used in investing activities was $244.3 million primarily due to $409.3 million of purchases of marketable securities and $1.2 million in purchases of property and equipment partially offset by $166.2 million of maturities of marketable securities.
For the year ended December 31, 2023, net cash provided by investing activities was $144.5 million primarily due to $219.6 million of marketable securities maturing, offset by $73.9 million of purchases of marketable securities and $1.2 million in purchases of property and equipment.
Collaboration revenue was $34.2 million for the year ended December 31, 2023, compared to $19.2 million for the year ended December 31, 2022.
Collaboration revenue was $22.6 million for the year ended December 31, 2024, compared to $34.2 million for the year ended December 31, 2023.
We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back our development or commercialization plans for one or more of our product candidates.
If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back our development or commercialization plans for one or more of our product candidates.
We did not record a provision for income taxes for the year ended December 31, 2022. Liquidity and Capital Resources 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.
Liquidity and Capital Resources 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.
As of December 31, 2023, the Company had U.S. federal net operating loss carryforwards of $3.0 million which can be carried forward indefinitely but limited to offset 80% of annual taxable income.
As of December 31, 2024, we had federal net operating loss carryforwards of $52.3 million, which may be available to offset future taxable income. The federal net operating loss can be carried forward indefinitely but are limited to offset 80% of annual taxable income.
Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: Year Ended December 31, 2023 2022 (in thousands) Net cash provided by (used in) operating activities $ (118,106) $ 193,612 Net cash provided by (used in) investing activities 144,450 (244,322) Net cash provided by financing activities 1,778 1,763 Net increase (decrease) in cash, cash equivalents and restricted cash $ 28,122 $ (48,947) Operating Activities For the year ended December 31, 2023, operating activities used $118.1 million of cash, resulting from our net loss of $98.4 million to fund our operations and by changes in our operating assets and liabilities of $41.9 million partially offset by net non-cash charges of $22.2 million.
Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: Year Ended December 31, 2024 2023 (in thousands) Net cash used in operating activities $ (100,406) $ (118,106) Net cash provided by (used in) investing activities (29,904) 144,450 Net cash provided by financing activities 105,428 1,778 Net increase (decrease) in cash, cash equivalents and restricted cash $ (24,882) $ 28,122 Operating Activities For the year ended December 31, 2024, operating activities used $100.4 million of cash, resulting from our net loss of $86.6 million to fund our operations and by changes in our operating assets and liabilities of $32.3 million partially offset by net non-cash charges of $18.5 million.
As of December 31, 2023, we had cash, cash equivalents and marketable securities of $234.1 million.
As of December 31, 2024, we had cash, cash equivalents and marketable securities of $243.7 million.
General and Administrative Expenses General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation, for employees engaged in executive, legal, finance and accounting and other administrative functions.
We may never succeed in obtaining regulatory approval for any product candidates we may develop. 65 Table of Contents General and Administrative Expenses General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits, and stock-based compensation, for employees engaged in executive, legal, finance and accounting and other administrative functions.
For the years ended December 31, 2023 and 2022, we reported net losses of $98.4 million and $108.9 million, respectively. As of December 31, 2023, we had an accumulated deficit of $471.6 million. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years.
As of December 31, 2024, we had an accumulated deficit of $558.2 million. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years.
As a result of this re-evaluation, expected future costs increased over the course of the Lilly Collaboration Agreement, resulting in an adjustment that decreased revenue by $3.2 million for the year ended December 31, 2023. 66 Table of Contents In July 2020, we entered into the Merck Collaboration Agreement, pursuant to which we agreed to apply our proprietary Gene Traffic Control platform to discover and develop novel therapeutics.
In September 2023 we re-evaluated our estimates related to the Lilly Collaboration Agreement. As a result of this re-evaluation, expected future costs increased over the course of the Lilly Collaboration Agreement, resulting in an adjustment that decreased revenue by $3.2 million for the year ended December 31, 2023.
During the third quarter of 2023, we transitioned the BRM Selective inhibitor program to Lilly which triggered the 50/50 cost share for the BRM programs. Costs related to the cost-share are included in research and development expenses on the consolidated statements of operations and comprehensive loss.
Costs related to the cost-share are included in research and development expenses on the consolidated statements of operations and comprehensive loss.
As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings and collaborations or licensing arrangements and the Lilly Collaboration Agreement.
Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings and collaborations or licensing arrangements and the Lilly Collaboration Agreement. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all.
Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 The following table summarizes our results of operations for the years ended December 31, 2023 and 2022: Year Ended December 31, Change 2023 2022 (in thousands) Collaboration revenue $ 34,155 $ 19,228 $ 14,927 Operating expenses: Research and development 109,689 105,618 4,071 General and administrative 32,372 30,747 1,625 Total operating expenses 142,061 136,365 5,696 Loss from operations (107,906) (117,137) 9,231 Other income (expense): Interest income 10,875 5,675 5,200 Other income, net 2,831 2,580 251 Total other income, net 13,706 8,255 5,451 Loss before income taxes $ (94,200) $ (108,882) $ 14,682 Provision for income taxes (4,226) — $ (4,226) Net loss $ (98,426) $ (108,882) $ 10,456 Collaboration Revenue Under our collaboration agreements, revenue is recognized based on the work performed during the period.
Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table summarizes our results of operations for the years ended December 31, 2024 and 2023: Year Ended December 31, Change 2024 2023 (in thousands) Collaboration revenue $ 22,602 $ 34,155 $ (11,553) Operating expenses: Research and development 94,528 109,689 (15,161) General and administrative 28,359 32,372 (4,013) Impairment of long-lived assets 2,398 — 2,398 Total operating expenses 125,285 142,061 (16,776) Loss from operations (102,683) (107,906) 5,223 Other income, net: Interest income 11,900 10,875 1,025 Other income, net 4,163 2,831 1,332 Total other income, net 16,063 13,706 2,357 Loss before income taxes $ (86,620) $ (94,200) $ 7,580 Provision for income taxes — (4,226) $ 4,226 Net loss $ (86,620) $ (98,426) $ 11,806 67 Table of Contents Collaboration Revenue Under our collaboration agreements, revenue is recognized based on the work performed during the period.
General and Administrative Expenses The following table summarizes our general and administrative expenses for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 Change (in thousands) Personnel related (including stock-based compensation) $ 20,566 $ 18,243 $ 2,323 Professional and consulting 7,164 6,921 243 Facilities and IT related expenses and other 4,642 5,583 (941) Total general and administrative expenses $ 32,372 $ 30,747 $ 1,625 General and administrative expenses were $32.4 million for the year ended December 31, 2023, compared to $30.7 million for the year ended December 31, 2022.
We expect these costs to continue to increase with increasing enrollment and potential future clinical advancement of FHD-909; General and Administrative Expenses The following table summarizes our general and administrative expenses for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Change (in thousands) Personnel related (including stock-based compensation) $ 17,125 $ 20,566 $ (3,441) Professional and consulting 6,250 7,164 (914) Facilities and IT related expenses and other 4,984 4,642 342 Total general and administrative expenses $ 28,359 $ 32,372 $ (4,013) General and administrative expenses were $28.4 million for the year ended December 31, 2024, compared to $32.4 million for the year ended December 31, 2023.
If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing and distribution. Further, we expect to incur additional costs associated with operating as a public company.
We will not generate revenue from product sales unless and until we successfully commercialize one of our product candidates, after completing clinical development and obtaining regulatory approval. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing and distribution.
The increase is attributed to the following: • an increase in personnel-related costs of $2.3 million, including a $1.4 million increase in stock-based compensation expense, due to higher average headcount in our general and administrative function to support our business; and • a decrease in facility related and other expense of $0.9 million, which was primarily due to a decrease in insurance related expense and less overall purchases of non-capital equipment in 2023. 70 Table of Contents Other Income (Expense) Total other income, net was $13.7 million for the year ended December 31, 2023, compared to $8.3 million for the year ended December 31, 2022.
The decrease is attributed to the following: • a decrease in personnel-related costs of $3.4 million, including a $2.4 million decrease in stock-based compensation expense, due to decreased headcount in our general and administrative function compared to prior year; 68 Table of Contents • a decrease in professional and consulting costs of $0.9 million, primarily due to decreased legal and consultant fees compared to prior year; and • an increase in facility and IT related expense of $0.3 million, primarily due to increased repair and maintenance costs compared to prior year.
For the year ended December 31, 2022, operating activities provided $193.6 million of cash, resulting from net cash provided by changes in our operating assets and liabilities of $281.5 million and by net non-cash charges of $20.9 million partially offset by a net loss of $108.9 million to fund our operations.
Net cash provided by changes in our operating assets and liabilities for the year ended December 31, 2024 consisted primarily of a decrease of $22.6 million in deferred revenue resulting from the recognition of revenue on the upfront payments received in connection with our collaboration agreements, a $7.9 million decrease in operating lease liabilities and a $1.7 million net decrease in working capital. 69 Table of Contents For the year ended December 31, 2023, operating activities used $118.1 million of cash, resulting from our net loss of $98.4 million to fund our operations and by changes in our operating assets and liabilities of $41.9 million partially offset by net non-cash charges of $22.2 million.
The increase in collaboration revenue is attributed to: • an increase in Merck collaboration revenue recognition of $15.2 million, driven by the termination of the Merck Collaboration Agreement in 2023 and the subsequent recognition of the remaining deferred revenue; and • a decrease in Lilly collaboration revenue recognition of $0.3 million due to a change in estimated total costs to satisfy the remaining performance obligation during 2023 offset by increased work performed on Lilly partnered targets. 69 Table of Contents Research and Development Expenses The following table summarizes our research and development expenses for the years ended December 31, 2023 and 2022: Year Ended December 31, Change 2023 2022 (in thousands) Research and development program expenses: FHD-286 $ 11,251 $ 18,906 $ (7,655) FHD-609 6,976 10,674 (3,698) Platform, research and discovery, and unallocated expenses: Platform and other early stage research external costs 32,436 22,214 10,222 Personnel related (including stock-based compensation) 36,702 32,612 4,090 Facilities and IT related expenses and other 22,324 21,212 1,112 Total research and development expenses $ 109,689 $ 105,618 $ 4,071 Research and development expenses were $109.7 million for the year ended December 31, 2023, compared to $105.6 million for the year ended December 31, 2022.
Research and Development Expenses The following table summarizes our research and development expenses for the years ended December 31, 2024 and 2023: Year Ended December 31, Change 2024 2023 (in thousands) Research and development program expenses: FHD-286 $ 11,136 $ 11,251 $ (115) Lilly partnered programs 17,335 14,013 3,322 Platform, research and discovery, and unallocated expenses: Early development and other research external costs 18,407 25,399 (6,992) Personnel related (including stock-based compensation) 27,718 36,702 (8,984) Facilities and IT related expenses and other 19,932 22,324 (2,392) Total research and development expenses $ 94,528 $ 109,689 $ (15,161) Research and development expenses were $94.5 million for the year ended December 31, 2024, compared to $109.7 million for the year ended December 31, 2023.
As part of our collaboration with Loxo Oncology at 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 BRM.
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. During the third quarter of 2023, we transitioned FHD-909 to Lilly which triggered the 50/50 cost share for the SMARCA2 programs.
We are currently conducting a Phase 1 dose escalation study of FHD-286, a selective, allosteric ATPase inhibitor of BRM and BRG1, in combination with either decitabine or cytarabine in relapsed and/or refractory acute myeloid leukemia (“AML”) patients.
In December 2024, we announced our decision to discontinue the independent development of FHD-286 in combination with decitabine in patients with relapsed and/or refractory acute myeloid leukemia.
This was primarily driven by to the $300.0 million of cash received related to our collaboration receivable from Lilly and an increase of $4.3 million in deferred revenue related to the $5.0 million milestone payment from Merck, partially offset by a $18.5 million decrease in deferred revenue resulting from the recognition of revenue on the upfront and milestone payments received in connection with our collaboration agreements and a $7.0 million decrease in operating lease liabilities.
The decrease in collaboration revenue is attributed to: • a decrease in Merck collaboration revenue recognition of $17.0 million, driven by the termination of the Merck Collaboration Agreement in 2023 and the subsequent recognition of the remaining deferred revenue, partially offset by an increase in Lilly collaboration revenue recognition of $5.5 million due to continued advancement of programs under the Lilly Collaboration Agreement.
In the third quarter of 2022, we achieved a research milestone related to a Research Collaboration and Exclusive License Agreement (the “Merck Collaboration Agreement”) with Merck Sharp & Dohme Corp. (“Merck”) and received a $5.0 million milestone payment from Merck. We have incurred significant operating losses since our inception.
In July 2020, we entered into a Research Collaboration and Exclusive License Agreement with Merck Sharp & Dohme Corp. (“Merck”) (the “Merck Collaboration Agreement”), pursuant to which we agreed to apply our proprietary Gene Traffic Control platform to discover and develop novel therapeutics.
Removed
In September 2023 we re-evaluated our estimates related to the Lilly Collaboration Agreement.
Added
In May 2024, the Company entered into an underwriting agreement with Jefferies LLC, TD Securities (USA) LLC and Evercore Group LLC relating to the issuance and sale of an aggregate of 12,743,039 shares of its common stock at a public offering price of $5.51 per share to certain investors.
Removed
The increase in total other income, net was primarily due to an increase in interest income driven by an increase in the average interest rate partially offset by lower average cash balances throughout the year ended December 31, 2023 compared to the year ended December 31, 2022.
Added
In addition, the Company issued and sold to certain investors in lieu of common stock pre-funded warrants to purchase 7,220,794 shares of its common stock (the “Pre-funded Warrants”) at a public offering price of $5.5099 per pre-funded warrant, which represents the public offering price per share of the common stock less the $0.0001 exercise price per share of each pre-funded warrant.
Removed
Net cash provided by changes in our operating assets and liabilities for the year ended December 31, 2022 consisted primarily of a $302.7 million net increase in working capital.
Added
The offering (the “May 2024 Offering”) closed on May 22, 2024, resulting in net proceeds of $102.8 million, after deducting underwriting discounts, commissions and other offering expenses. We have incurred significant operating losses since our inception. For the years ended December 31, 2024 and 2023, we reported net losses of $86.6 million and $98.4 million, respectively.
Added
Further, we expect to incur additional costs associated with operating as a public company. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy.
Added
Due to our history of cumulative net losses since inception and uncertainties surrounding our ability to generate future taxable income, we have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date. We do not expect to have taxable income in the current year.
Added
Impairment of Long-Lived Assets For the year ended December 31, 2024, we 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 10 to our notes to consolidated financial statements included elsewhere in this Annual Report on Form 10-K).
Added
There were no impairment charges for the year ended December 31, 2023. Other Income, net Total other income, net was $16.1 million for the year ended December 31, 2024, compared to $13.7 million for the year ended December 31, 2023.
Added
The increase in total other income, net was primarily due to sublease income related to the new sublease entered into in 2024 of 15,700 square feet at the Company’s main office in Cambridge, MA (see Note 10) and higher average cash balances during the year.
Added
Investing Activities For the year ended December 31, 2024, net cash used in investing activities was $29.9 million primarily due to $261.5 million of purchases of marketable securities and $0.9 million in purchases of property and equipment offset by $232.5 million of marketable securities maturing.
Added
Financing Activities For the year ended December 31, 2024, net cash provided by financing activities was $105.4 million, consisting of net proceeds from the offering of our common stock and pre-funded warrants of $102.8 million, after deducting underwriting discounts, commissions and other offering expenses that have been paid in during the twelve months ended December 31, 2024 and $2.6 million net proceeds from the exercise of common stock options and the employee stock purchase plan.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−9 removed0 unchanged
Biggest changeQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are a smaller reporting company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, for this reporting period and are not required to provide the information required under this item. 72 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Foghorn Therapeutics Inc.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are a smaller reporting company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, for this reporting period and are not required to provide the information required under this item. 70 Table of Contents
Removed
Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Foghorn Therapeutics Inc. and its subsidiary (the " Company " ) , as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders ' equity (deficit) , and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).
Removed
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Removed
Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.
Removed
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Removed
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Removed
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Removed
Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Removed
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
Removed
We believe that our audits provide a reasonable basis for our opinion. /s/ Deloitte & Touche LLP Boston, Massachusetts March 7, 2024 We have served as the Company’s auditor since 2018. 73 Table of Contents

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