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What changed in Foghorn Therapeutics Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Foghorn Therapeutics Inc.'s 2022 and 2023 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 2023 report.

+351 added−405 removedSource: 10-K (2024-03-07) vs 10-K (2023-03-09)

Top changes in Foghorn Therapeutics Inc.'s 2023 10-K

351 paragraphs added · 405 removed · 258 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

123 edited+54 added−106 removed252 unchanged
Biggest changeTargeting Transcription Factors: Disrupting Transcription Factor Binding to Chromatin Remodeling Complexes Transcription factors work in concert with chromatin remodeling complexes, BAF as one example, to orchestrate gene expression. In tumor cells, genes encoding transcription factors are often amplified, deleted, rearranged via chromosomal translocation or subjected to point mutations that result in a gain or loss of function.
Biggest changeIn tumor cells, genes encoding transcription factors are often amplified, deleted, rearranged via chromosomal translocation or subjected to point mutations that result in a gain or loss of function. We have developed a set of tools to visualize and study the interactions between transcription factors and chromatin remodeling complexes. To our knowledge, we are the only company with these capabilities.
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 proper control of gene expression.
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; • 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; • 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.
A decision by a third-party payor not to cover a product could reduce physician utilization once the product is approved and have a material adverse effect on sales, our operations and financial condition. The containment of healthcare costs has become a priority of federal, state and foreign governments, and the prices of products have been a focus in this effort.
A decision by a third-party payor not to cover a product could reduce utilization once the product is approved and have a material adverse effect on sales, our operations and financial condition. The containment of healthcare costs has become a priority of federal, state and foreign governments, and the prices of products have been a focus in this effort.
We will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering (“IPO”), (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
We will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering (“IPO”), (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
The chromatin regulatory system orchestrates gene expression — the turning on and off of genes — which is fundamental to how all our cells function. The chromatin regulatory system is implicated in approximately 50% of all cancers, and understanding how this system works could lead to an entirely new class of precision medicines.
The chromatin regulatory system orchestrates gene expression — the turning on and off of genes — which is fundamental to how all our cells function. The chromatin regulatory system is implicated in approximately 50 percent of all cancers, and understanding how this system works could lead to an entirely new class of precision medicines.
Once we identify hits from our screens, we use our unique suite of assays involving the relevant component of the chromatin regulatory system to characterize, validate, and optimize our chemical matter. • Targeted Protein Degradation— We have built extensive targeted protein degrader capabilities encompassing proprietary chemistry, high-throughput cellular screening capabilities, mechanistic assays to triage and rank compounds against multiple parameters, and ternary complex formation understanding through both biophysical structural determination and computational modeling.
Once we identify hits from our screens, we use our unique suite of assays involving the relevant component of the chromatin regulatory system to characterize, validate, and optimize our chemical matter. • Targeted Protein Degradation— We have built extensive targeted protein degrader capabilities encompassing proprietary chemistry, high-throughput cellular screening capabilities, mechanistic assays to triage and rank compounds against multiple parameters including kinetics of degradation, and ternary complex formation understanding through both biophysical structural determination and computational modeling.
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; • 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; • 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.
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 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 virology, autoimmune diseases and neurology.
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.
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.
MSK-IMPACT: BRG-1 Mutated in 10% of NSCLC Figure 15. BRG1 gene alterations are found in 10 percent of NSCLC tumors and have minimal overlap with other actionable mutations present in NSCLC, such as EGFR and ALK. Genomic screening of over 400 cancer cell lines that remove BRM via CRISPR revealed a genetic dependency of certain BRG1-mutated cancers on BRM.
MSK-IMPACT: BRG-1 Mutated in 10% of NSCLC Figure 6. BRG1 gene alterations are found in 10 percent of NSCLC tumors and have minimal overlap with other actionable mutations present in NSCLC, such as EGFR and ALK. Genomic screening of over 400 cancer cell lines that remove BRM via CRISPR revealed a genetic dependency of certain BRG1-mutated cancers on BRM.
Protein degraders recruit target proteins to specific E3 ligase complexes and by doing so, promote the removal of the target protein by harnessing the cell’s ubiquitin and proteasome-based degradation system. This approach results in rapid loss and clearance from the cell of disease driving proteins and is a powerful complement to our inhibitor programs.
Protein degraders recruit target proteins to specific E3 ligase complexes and by doing so, promote the removal of the target protein by harnessing the cell’s ubiquitin and proteasome-based degradation system. This approach results in rapid loss and clearance from the cell of disease driving proteins and is a powerful complement to our inhibitor capabilities.
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. 68 of our employees have M.D. or Ph.D. degrees.
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.
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.
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 35 Table of Contents regulatory approvals.
Failure to comply with statutory and regulatory requirements may subject a manufacturer to legal or regulatory action, such as warning 37 Table of Contents letters, suspension of manufacturing, product seizures, injunctions, civil penalties or criminal prosecution. There is also a continuing, annual prescription drug product program user fee.
Failure to comply with statutory and regulatory requirements may subject a manufacturer to legal or regulatory action, such as warning letters, suspension of manufacturing, product seizures, injunctions, civil penalties or criminal prosecution. There is also a continuing, annual prescription drug product program user fee.
In the United States, these laws include, without limitation, state and federal anti-kickback, false claims, physician transparency, 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, 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; • 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; • The Physician Payments Sunshine Act, 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, and require companies to report information related to payments to healthcare providers, marketing expenditures or pricing.
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 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.
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.
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.
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.
If we fail to comply with applicable FDA or other requirements at any time with respect to product development, clinical testing, approval 32 Table of Contents or any other legal requirements relating to product manufacture, processing, handling, storage, quality control, safety, marketing, advertising, promotion, packaging, labeling, export, import, distribution, or sale, we may become subject to administrative or judicial sanctions or other legal consequences.
If we fail to comply with applicable FDA or other requirements at any time with respect to product development, clinical testing, approval or any other legal requirements relating to product manufacture, processing, handling, storage, quality control, safety, marketing, advertising, promotion, packaging, labeling, export, import, distribution, or sale, we may become subject to administrative or judicial sanctions or other legal consequences.
Our business operations and any current or future arrangements with third- 39 Table of Contents party payors, healthcare providers and physicians may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we develop, market, sell and distribute any drugs for which we obtain marketing approval.
Our business operations and any current or future arrangements with third-party payors, healthcare providers and physicians may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we develop, market, sell and distribute any drugs for which we obtain marketing approval.
Current first-line treatments for patients with AML typically involve aggressive combination chemotherapy regimens with or without hematopoietic stem cell transplantation (“HSCT”). Older patients or patients who cannot tolerate HSCT, typically those with comorbidities, are often treated with cytarabine and daunorubicin induction followed by high-dose cytarabine 12 Table of Contents consolidation.
Current first-line treatments for patients with AML typically involve aggressive combination chemotherapy regimens with or without hematopoietic stem cell transplantation (“HSCT”). Older patients or patients who cannot tolerate HSCT, typically those with comorbidities, are often treated with cytarabine and daunorubicin induction followed by high-dose cytarabine consolidation.
Additionally, the collection, use, storage, disclosure, transfer, or other processing of personal data 42 Table of Contents regarding individuals in the EU and the UK, including personal health data, is subject to the EU General Data Protection Regulation (“GDPR”) including as it forms part of the law of England and Wales, Scotland and Northern Ireland by virtue of section 3 of the European Union (Withdrawal) Act 2018 and as amended by the Data Protection, Privacy and Electronic Communications (Amendments etc.) (EU Exit) Regulations 2019 (SI 2019/419), known as UK GDPR.
For example, the collection, use, storage, disclosure, transfer, or other processing of personal data regarding individuals in the EU and the UK, including personal health data, is subject to the EU General Data Protection Regulation (“GDPR”) including as it forms part of the law of England and Wales, Scotland and Northern Ireland by virtue of section 3 of the European Union (Withdrawal) Act 2018 and as amended by the Data Protection, Privacy and Electronic Communications (Amendments etc.) (EU Exit) Regulations 2019 (SI 2019/419), known as UK GDPR.
In addition, we intend to post on our website all disclosures that are required by law or listing rules concerning any amendments to, or waivers from, any provision of the code. 43 Table of Contents
In addition, we intend to post on our website all disclosures that are required by law or listing rules concerning any amendments to, or waivers from, any provision of the code.
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.
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.
Within our workforce, 123 employees are engaged in research and development and 38 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, 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.
Furthermore, each clinical trial must be reviewed and approved by an IRB for each 33 Table of Contents institution at which the clinical trial will be conducted to ensure that the risks to individuals participating in the clinical trials are minimized and are reasonable compared to the anticipated benefits.
Furthermore, each clinical trial must be reviewed and approved by an IRB for each institution at which the clinical trial will be conducted to ensure that the risks to individuals participating in the clinical trials are minimized and are reasonable compared to the anticipated benefits.
As the orchestrator of gene expression, the chromatin regulatory system has implications in a large array of diseases. Based on academic literature and our research efforts, we believe our platform has significant potential across multiple therapeutic areas. We are committed to applying our Gene Traffic Control platform to additional therapeutic areas including virology and neurology.
As the orchestrator of gene expression, the chromatin regulatory system has implications in a large array of diseases. Based on academic literature and our research efforts, we believe our platform has significant potential across multiple therapeutic areas. We are committed to applying our Gene Traffic Control platform to additional therapeutic areas over time.
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.
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.
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 NSCLC tumors.
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.
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.
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.
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 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 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.
Despite these advances, patients who do achieve remission, five-year disease-free survival is only 30-40 percent because the majority of patients relapse. Patients in the elderly population have a relapse rate of 80-90 percent. Younger patients have a relapse rate of between 60-80 percent. There remains a significant need for safe, durable and broadly effective AML treatments.
Despite these advances, the five-year disease-free survival rate among patients who do achieve remission is only 30-40 percent because the majority of patients experience relapse. Elderly patients with AML have a relapse rate of 80-90 percent. Younger patients have a relapse rate of 60-80 percent. There remains a significant need for safe, durable and broadly effective AML treatments.
Despite the availability of both targeted and conventional therapies, the prognosis in NSCLC remains poor, with an overall five-year survival for all patients diagnosed with NSCLC of 19 percent. An analysis of genomic data in NSCLC cancer patients, collected as part of MSK-IMPACT, revealed that gene alterations in BRG1 were found in ten percent of NSCLC samples.
Despite the availability of both targeted and conventional therapies, the prognosis in NSCLC remains poor, with an overall relative five-year survival for all patients diagnosed with NSCLC of 28 percent. 16 Table of Contents An analysis of genomic data in NSCLC cancer patients, collected as part of MSK-IMPACT, revealed that gene alterations in BRG1 were found in ten percent of NSCLC samples.
Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life. 34 Table of Contents U.S.
Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life. U.S.
The process for determining whether a third-party payor will provide 40 Table of Contents coverage for a product may be separate from the process for setting the price or reimbursement rate that the payor will pay for the product once coverage is approved.
The process for determining whether a third-party payor will provide coverage for a product may be separate from the process for setting the price or reimbursement rate that the payor will pay for the product once coverage is approved.
Sales of an approved drug product will depend, in part, on the extent to which third-party payors, including government health programs in the United States such as Medicare and Medicaid, commercial health insurers and managed care organizations, provide coverage, and establish adequate reimbursement levels for the product.
Sales of an approved drug product will depend, in part, on the extent to which third-party payors, including government health programs in the United States such as Medicare and Medicaid, and private health insurance such as managed care plans, provide coverage, and establish adequate reimbursement levels for the product.
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.
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.
Our epi-genome sequencing tools allow us to understand the mechanisms of how our drugs are modifying the chromatin structure.
Our epi-genome sequencing tools allow us to understand 6 Table of Contents the mechanisms of how our drugs are modifying the chromatin structure.
We currently have efforts underway in autoimmune diseases. 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. • Continue to enhance our platform to extend our leading position in developing novel therapeutics targeting the chromatin regulatory system.
However, our pending provisional and PCT patent applications, and any patent applications that we may in the future file or license from third parties, may not result in the issuance of patents and any issued 29 Table of Contents patents we may obtain do not guarantee us the right to practice our technology or commercialize our product candidates.
However, our pending provisional and Patent Cooperation Treaty (“PCT”) patent applications, and any patent applications that we may in the future file or license from third parties, may not result in the issuance of patents and any issued patents we may obtain do not guarantee us the right to practice our technology or commercialize our product candidates.
General legislative cost control measures may also affect reimbursement for our product candidates. The Budget Control Act, as amended, resulted in the imposition of reductions in Medicare (but not Medicaid) payments to providers in 2013 and will remain in effect through 2031 (except May 1, 2020 to March 31, 2022) unless additional Congressional action is taken.
General legislative cost control measures may also affect reimbursement for our product candidates. The Budget Control Act, as amended, resulted in the imposition of reductions in Medicare (but not Medicaid) payments to providers in 2013 and will remain in effect through 2032 unless additional Congressional action is taken.
We have tested a selective degrader of EP300 in a number of cell lines which has demonstrated degradation and EP300-dependent cell killing in the cell proliferation assays as shown in the figure below: Figure 22. A selective degrader of EP300 tested in a number of cell lines has demonstrated degradation and EP300-dependent cell killing in cell proliferation assays.
We have tested in vitro a selective degrader of EP300 in a number of cell lines which has demonstrated degradation and significant responses in cell proliferation assays as shown in the figure below: Figure 15. A selective degrader of EP300 tested in a number of cell lines has demonstrated degradation and EP300-dependent cell killing in cell proliferation assays.
Patients who cannot tolerate combination chemotherapy receive low dose cytarabine, azacitidine, Venclexta ® , and/or enroll in clinical trials. There is a single biologic, gemtuzumab ozogamicin or Mylotarg, approved by the FDA for newly diagnosed and relapsed-refractory AML.
Patients who cannot tolerate combination chemotherapy receive low dose cytarabine, azacitidine, decitabine, venetoclax, some combination of these therapies, and/or enroll in clinical trials. There is a single biologic, gemtuzumab ozogamicin (Mylotarg®), approved by the FDA for newly diagnosed and relapsed-refractory AML.
The Food and Drug Omnibus Reform Act of 36 Table of Contents 2022 (“FDORA”) signed by President Biden on December 29, 2022 as part of the Consolidated Appropriations Act, 2023 (H.R. 2617) includes numerous reforms to the Accelerated Approval process for drugs and biologics and enables the FDA to require, as appropriate, that a post-approval study be underway prior to granting accelerated approval.
FDORA signed by President Biden on December 29, 2022 as part of the Consolidated Appropriations Act, 2023 (H.R. 2617) includes numerous reforms to the Accelerated Approval process for drugs and biologics and enables the FDA to require, as appropriate, that a post-approval study be underway prior to granting accelerated approval.
We anticipate initial clinical data in mid-2023. We believe Foghorn has the potential to be a major biopharmaceutical company with our current pipeline addressing more than 20 tumor types impacting more than 500,000 new patients annually.
We believe Foghorn has the potential to be a major biopharmaceutical company with our current pipeline addressing more than 20 tumor types impacting more than 500,000 new patients annually.
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. 12 Tumor Types with Highest Prevalence of BRG-1 Mutations Figure 14.
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.
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. Every program we have pursued to date is based on a genetic dependency on the chromatin regulatory system.
The Selective EP300 program has potential in various cancers which include bladder, NSCLC, various lymphomas and leukemias and could provide a new therapeutic option for more than 100,000 patients a year. 26 Table of Contents Figure 21.
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.
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 24 .
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.
We have tested a selective degrader of CBP across multiple cancers including gastric, colorectal, and bladder, which has demonstrated CBP-dependent cell killing in cell proliferation assays as shown in the figure below. 25 Table of Contents Figure 20. A selective degrader of CBP tested across multiple cancers has demonstrated CBP-dependent cell killing in cell proliferation assays.
We have tested in vitro a selective degrader of CBP across multiple cancers including gastric, colorectal, and bladder, which has demonstrated significant responses in cell proliferation assays as shown in the figure below.
Proof of mechanism will be based on indicators of target engagement in association with FHD-286 treatment. As we further understand the therapeutic potential of FHD-286 in the course of these initial clinical studies, we may pursue additional clinical studies in these and other indications as a single agent and/or in combination with novel or standard of care agents.
Proof of mechanism will be based on indicators of target engagement in association with FHD-286 combination treatment. As we further understand the therapeutic potential of FHD-286 in the course of this study, we may pursue additional clinical studies in these and other indications .
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; and • Global proteomics and mass spectrometry to measure selectivity in an unbiased fashion.
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.
For example, using our proprietary platform, we have disclosed four distinct targets: BRM, ARID1B, CBP and EP300, that have genetically determined dependencies within the chromatin regulatory each of which has the potential to impact over one hundred thousand patients per year.
For example, using our proprietary platform, we have disclosed four distinct targets: BRM, ARID1B, CBP and EP300, that have genetically determined dependencies within the chromatin regulatory system with the combined potential to treat over five hundred thousand patients per year.
FHD-286 As of March 1, 2023, we owned two U.S. patents, four pending U.S. provisional patent applications, five pending U.S. non-provisional patent applications, two pending PCT, patent applications, and 45 pending ex-U.S. patent applications that relate to FHD-286, including its composition and various methods of use.
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.
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 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.
Under the terms of the 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. • Merck Sharp & Dohme Corp.: In July 2020, we entered into a Research Collaboration and Exclusive License Agreement (the “Merck Collaboration Agreement”) with Merck Sharp & Dohme Corp.
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.
Recently, there has been considerable public and government scrutiny of pharmaceutical pricing and proposals to address the perceived high cost of pharmaceuticals. 41 Table of Contents Individual states in the United States have also increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Individual states in the United States have also increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
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.
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.
Once granted, PMA approval may be withdrawn by the FDA if compliance with post-approval requirements, conditions of approval or other regulatory standards is not maintained or problems are identified following initial marketing. 38 Table of Contents On July 31, 2014, the FDA issued a final guidance document addressing the development and approval process for “ In Vitro Companion Diagnostic Devices.” According to the guidance document, for novel therapeutic products that depend on the use of a diagnostic test and where the diagnostic device could be essential for the safe and effective use of the corresponding therapeutic product, the companion diagnostic device should be developed and approved or cleared contemporaneously with the therapeutic, although the FDA recognizes that there may be cases when contemporaneous development may not be possible.
On July 31, 2014, the FDA issued a final guidance document addressing the development and approval process for “ In Vitro Companion Diagnostic Devices.” According to the guidance document, for novel therapeutic products that depend on the use of a diagnostic test and where the diagnostic device could be essential for the safe and effective use of the corresponding therapeutic product, the companion diagnostic device should be developed and approved or cleared contemporaneously with the therapeutic, although the FDA recognizes that there may be cases when contemporaneous development may not be possible.
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.
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.
All of our drug candidates are small molecules and are manufactured in synthetic processes from available starting materials. The chemistry appears amenable to scale up and does not currently require unusual equipment in the manufacturing process. We expect to continue to develop product candidates that can be produced cost-effectively at contract manufacturing facilities.
The chemistry appears amenable to scale up and does not currently require unusual equipment in the manufacturing process. We expect to continue to develop product candidates that can be produced cost-effectively at contract manufacturing facilities.
The sponsor must also notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction as soon as possible but in no case later than seven calendar days after the sponsor’s initial receipt of the information. During the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points.
The sponsor must also notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction as soon as possible but in no case later than seven calendar days after the sponsor’s initial receipt of the information.
Although the impact of the IRA remains uncertain pending implementation, the IRA is likely to have a significant effect on the healthcare industry and prescription drug pricing overall. Healthcare reform efforts have been and may continue to be subject to scrutiny and legal challenge.
Although the impact of the IRA remains uncertain pending ongoing implementation, the IRA is likely to have a significant effect on the healthcare industry and prescription drug pricing overall.
FHD-286 is a highly potent, selective, allosteric and orally available, small-molecule, enzymatic inhibitor of BRG1 and BRM, for the potential treatment of uveal melanoma, AML and MDS. BRG1 and BRM are two highly similar proteins that serve as the ATPases, or the catalytic engines, across all forms of BAF.
FHD-286 is a highly potent, selective, allosteric and orally available, small-molecule, enzymatic inhibitor of BRG1 and BRM, two highly similar proteins that serve as the ATPases, or the catalytic engines, across all forms of BAF. Our preclinical data in AML demonstrated encouraging anti-tumor activity.
Patent term may be inadequate to protect our competitive position on our products for an adequate amount of time. As of March 1, 2023, we owned 14 pending U.S. provisional patent applications, 27 pending U.S. non-provisional patent applications, 9 pending Patent Cooperation Treaty (“PCT”) applications, and 133 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, 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.
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.
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.
After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes, and additional labeling claims, are subject to further testing requirements and FDA review and approval. 35 Table of Contents Orphan Drug Designation and Exclusivity Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the United States, or that affects more than 200,000 individuals in the United States where there is no reasonable expectation that the cost of developing and making the product available in the United States for the disease or condition will be recovered from sales of the product.
Orphan Drug Designation and Exclusivity Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the United States, or that affects more than 200,000 individuals in the United States where there is no reasonable expectation that the cost of developing and making the product available in the United States for the disease or condition will be recovered from sales of the product.
Illustrative locations of the binding sites of multiple transcription factors to the BAF complex. 28 Table of Contents Using the insights of where and how tightly transcription factors bind, we have developed as part of our Gene Traffic Control platform the ability to conduct high throughput screens on chromatin remodeling complex–transcription factor interactions.
Using the insights of where and how tightly transcription factors bind, we have developed as part of our Gene Traffic Control platform the ability to conduct high throughput screens on chromatin remodeling complex–transcription factor interactions. We have already validated numerous BAF-transcription factor interactions for targets of interest in various cancers.
We currently do not own or in-license any issued patents with respect to any of our product candidates, including FHD-286 and FHD-609, or our platform technology, and our intellectual property portfolio is in its very early stages.
We currently do not in-license any issued patents with respect to any of our product candidates, including FHD-286, or our platform technology.
For components of the system that are not amenable to enzymatic inhibition or where selectivity through inhibition may not be possible, we may leverage targeted protein degradation. 9 Table of Contents For transcription factor targets, we are leveraging where appropriate protein degradation and/or small molecule disruptors that can bind either to the transcription factor or its relevant binding partner (e.g., the BAF chromatin remodeling complex).
For transcription factor targets, we are leveraging where appropriate protein degradation and/or small molecule disruptors that can bind either to the transcription factor or its relevant binding partner (e.g., the BAF chromatin remodeling complex).
While initially focused in oncology, we believe our platform is broadly applicable across other disease areas with efforts underway in autoimmune diseases. 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.
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.
In addition to patent applications, we rely on unpatented trade secrets, know-how and continuing technological innovation to develop and maintain our competitive position. However, trade secrets and confidential know-how are difficult to protect. In particular, we consider various aspects of our Gene Traffic Control platform to constitute our trade secrets and know-how.
However, trade secrets and confidential know-how are difficult to protect. In particular, we consider various aspects of our Gene Traffic Control platform to constitute our trade secrets and know-how.
These points may be prior to submission of an IND, at the end of Phase 2, and before an NDA is submitted. Meetings at other times may be requested.
During the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points. These points may be prior to submission of an IND, at the end of Phase 2, and before an NDA is submitted. Meetings at other times may be requested.
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 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.
Biomarkers include assessment of various tumor mutations, as well as expression levels of BRG1 and BRM. These biomarkers may be used for future patient selection, measurements of target engagement and biochemical and cellular measures associated with efficacy.
We intend to explore the potential value of multiple biomarkers to further understand and accelerate drug development. Biomarkers include assessment of various tumor mutations, as well as expression levels of various proteins. These biomarkers may be used for future patient selection, measurements of target engagement and biochemical and cellular measures associated with efficacy.
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.
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.
Specifically, we use mouse xenograft models with inducible CRISPR / shRNA to validate that knockdown of our target of interest results in tumor growth inhibition.
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.
Functional genomics screens have shown that CBP and EP300 share a bi-directional synthetic lethal relationship. As a result, loss of function of one of these proteins leads to dependency on the other.
Functional genomics screens have shown that CBP and EP300 share a bi-directional synthetic lethal relationship. As a result, loss of function of one of these proteins leads to dependency on the other. Data suggest that there are potentially over 100,000 patients with EP300 mutations that could benefit from a therapy selectively targeting CBP.
To achieve our mission, we are executing a strategy with the following key elements: • Advance our lead precision oncology product candidates, FHD-286 and FHD-609, through clinical development in patients with select solid tumors and hematological cancers.
To achieve our mission, we are executing a strategy with the following key elements: • Advance our lead precision oncology product candidates, FHD-286 and FHD-909, through clinical development in patients with select solid tumors and hematological cancers. FHD-286 is a highly selective and potent enzymatic inhibitor that targets both the BRM and BRG1 enzymes of the BAF chromatin remodeling complex.
Additionally, we will retrospectively analyze our clinical studies for any other biomarkers that will further enhance patient stratification and response. 11 Table of Contents Our Product Candidates We are developing a broad pipeline of product candidates that target genetically determined dependencies within the chromatin regulatory system. Our programs consist of enzyme inhibitors, protein degraders and transcription factor disruptors.
We intend to use these biomarkers in our clinical studies to understand tumor response to our drug candidates. Additionally, we will retrospectively analyze our clinical studies for any other biomarkers that will further enhance patient stratification and response. Our Product Candidates We are developing a pipeline of product candidates that target genetically determined dependencies within the chromatin regulatory system.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf 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 FHD-286, FHD-609 or any other product candidates is critical to our success.
Biggest changeThis 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.
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; 59 Table of Contents • 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.
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.
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; 46 Table of Contents • 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; • 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 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.
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, FHD-609 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 FHD-286 or any other product candidates may be delayed.
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, FHD-609 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 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.
We may in the future seek orphan drug status for FHD-286 and FHD-609 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 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 have relied upon and plan to continue to rely upon third parties, including independent clinical investigators and third-party CROs and CDMOs, as well as potential collaboration partners to conduct certain aspects of our discovery, preclinical studies and development and clinical trials and to monitor and manage data for our ongoing preclinical and clinical programs.
We have relied upon and plan to continue to rely upon third parties, including independent clinical investigators and third-party CROs and CDMOs, as well as potential collaboration partners to conduct certain aspects of our discovery, pre-clinical studies and development and clinical trials and to monitor and manage data for our ongoing preclinical and clinical programs.
Although our research and development efforts to date have resulted in our discovery and preclinical development of FHD-286 and FHD-609 for the treatment of cancer, FHD-286 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-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 the impact of the IRA remains uncertain pending 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. See “ Business Section—Government Regulation—Current and Future Healthcare Reform Legislation ”.
Enrollment delays in our clinical trials may result in increased development costs for FHD-286, FHD-609 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 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.
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 FHD-609 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 or our other current or future product candidates.
We may not be able to file INDs or IND amendments to commence clinical trials of our product candidates on the timelines we expect, and even if we are able to, the FDA may not permit us to proceed.
We may not be able to file INDs or IND amendments to commence clinical trials of our product candidates on the timelines we or our partners expect, and even if we are able to, the FDA may not permit us to proceed.
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. 61 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.
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.
These exemptions include not being required to comply with the auditor attestation 66 Table of Contents requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”), not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”), not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
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 62 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 56 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 37% 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 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.
We may seek Breakthrough Therapy designation from the FDA for FHD-286 and FHD-609, and for some or all of our future product candidates.
We may seek Breakthrough Therapy designation from the FDA for FHD-286, and for some or all of our future product candidates.
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.
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.
We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability. Unfavorable global macroeconomic conditions and geopolitical trends could adversely affect our business, financial condition or results of operations.
We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability. Unfavorable global macroeconomic conditions, geopolitical trends, and armed conflict could adversely affect our business, financial condition or results of operations.
To obtain the requisite regulatory approvals to market and sell any of our product candidates, including FHD-286 and FHD-609, 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-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.
Patient enrollment is also affected by other factors, including: • severity of the disease under investigation; 50 Table of Contents • 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 (for example, outbreak of COVID-19).
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.
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.
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.
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 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.
Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns 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 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.
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; • 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; 65 Table of Contents • 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; • effects of public health crises, pandemics and epidemics, such as COVID-19; • 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; 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.
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, 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 Physician Payments Sunshine Act, which requires pharmaceutical and medical device companies to report information related to certain payments and transfers of value to certain healthcare providers to the Center for 63 Table of Contents 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 and require companies to report information related to payments to health care providers, marketing expenditures or pricing.
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.
A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions. 45 Table of Contents U.S. federal income tax reform could adversely affect our business and financial condition.
A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions. U.S. federal income tax reform could adversely affect our business and financial condition.
Our amended and restated certificate of incorporation, amended and restated by-laws and Delaware law contain provisions that may have the effect of discouraging, delaying or preventing a change in control of us or changes in our management that 67 Table of Contents stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares.
Our amended and restated certificate of incorporation, amended and restated by-laws and Delaware law contain provisions that may have the effect of discouraging, delaying or preventing a change in control of us or changes in our management that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares.
These products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 58 Table of Contents Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and resources from other aspects of our business.
These products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and resources from other aspects of our business.
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. 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. 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.
Risks Related to Our Reliance on Third Parties We rely, and expect to continue to rely, on third parties, including independent clinical investigators, CROs and CDMOs to conduct certain aspects of our discovery and preclinical studies and development, and our clinical trials.
Risks Related to Our Reliance on Third Parties We rely, and expect to continue to rely, on third parties, including independent clinical investigators, CROs and CDMOs to conduct certain aspects of our discovery and pre-clinical studies and development, and our clinical trials.
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.
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.
An inability to incorporate such technologies or features would have a material adverse effect on our business and may prevent us from successfully commercializing our product candidates. In addition, we may lose valuable 57 Table of Contents intellectual property rights or personnel as a result of such claims.
An inability to incorporate such technologies or features would have a material adverse effect on our business and may prevent us from successfully commercializing our product candidates. In addition, we may lose valuable intellectual property rights or personnel as a result of such claims.
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. Further, we may experience manufacturing delays or other delays with IND-enabling studies.
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.
For further information about our collaborations and Lilly's equity investment, see “Business—License Agreement with Merck” and “Business—Strategic Collaboration.” We have devoted all of our efforts to research and development. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter.
For further information about our collaborations and Lilly's equity investment, see “Business—Strategic Collaboration with Lilly.” We have devoted all of our efforts to research and development. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter.
We anticipate that our expenses will increase substantially if and as we: • advance our FHD-286 and FHD-609 product candidates and continue our preclinical development of product candidates from our current research programs; • 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; 44 Table of Contents • 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: • 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.
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, including due to our targeted disease having small patient populations; • 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; 49 Table of Contents • 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; • disruptions caused by the COVID-19 pandemic may increase the likelihood that we encounter such difficulties or delays in initiating, enrolling, conducting, or completing our planned and ongoing clinical trials; 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; • 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.
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 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 58 Table of Contents candidates.
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, 2022, we had 161 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, 2023, we had 116 full-time employees.
No uniform policy for coverage and reimbursement for products exists among third-party 64 Table of Contents payors in the United States. Therefore, coverage and reimbursement for products can differ significantly from payor to payor.
No uniform policy for coverage and reimbursement for products exists among third-party payors in the United States. Therefore, coverage and reimbursement for products can differ significantly from payor to payor.
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, 2022, we had an accumulated deficit of $373.1 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, 2023, we had an accumulated deficit of $471.6 million.
Since our IPO in October 2020, the closing price of our common stock as reported on the Nasdaq Global Market has ranged from a low of $5.44 on December 27, 2022 to a high of $25.88 on December 18, 2020.
Since our IPO in October 2020, the closing price of our common stock as reported on the Nasdaq Global Market has ranged from a low of $2.82 on February 5, 2024 to a high of $25.88 on December 18, 2020.
While we have not experienced any such material system failure or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations.
While to our knowledge, we have not experienced a material system failure or security breach to date, like other companies we are subject to attacks and if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations.
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.
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.
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, including the COVID-19 pandemic, political instability, armed conflicts and wars, including the Russia-Ukraine war.
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.
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 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.
For additional information regarding our competition, see “Business—Competition.” 48 Table of Contents Our product candidates utilize novel mechanisms of action, which may result in greater research and development expenses, regulatory issues that could delay or prevent approval, or discovery of unknown or unanticipated adverse effects.
For additional information regarding our competition, see “Business—Competition.” Our lead product candidate utilizes a novel mechanism of action, which may result in greater research and development expenses, regulatory issues that could delay or prevent approval, or discovery of unknown or unanticipated adverse effects.
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.
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.
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.
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.
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.
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.
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.
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.
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. 53 Table of Contents Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
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.
There may be significant intellectual property related litigation and proceedings relating to our owned and in-licensed, and other third party, intellectual property and proprietary rights in the future. 56 Table of Contents 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.
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.
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.
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.
If we or any of these third parties, our CROs or our CDMOs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. 60 Table of Contents 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.
If we or any of these third parties, our CROs or our CDMOs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.
We rely on multiple CROs to mitigate potential impacts that may affect any one of our CROs. However, CDMOs and other contractors and consultants could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, pandemics and other natural or man-made disasters or business interruptions, for which we are predominantly self-insured.
However, CDMOs and other contractors and consultants could be subject to adverse legislation or administrative restrictions, earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, pandemics and other natural or man-made disasters or business interruptions, for which we are predominantly self-insured.
Moreover, if our product candidates are associated with undesirable side effects in preclinical studies or clinical trials or have characteristics that are unexpected, we may elect to abandon their development or limit their development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial expectations for the product candidate if approved. 47 Table of Contents Additionally, adverse developments in clinical trials of pharmaceutical and biopharmaceutical products conducted by others may cause the FDA or other regulatory oversight bodies to suspend or terminate our clinical trials or to change the requirements for approval of any of our product candidates.
Moreover, if our product candidates are associated with undesirable side effects in preclinical studies or clinical trials or have characteristics that are unexpected, we may elect to abandon their development or limit their development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial expectations for the product candidate if approved.
In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates. 55 Table of Contents 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.
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.
Our ability to obtain clinical supplies of our product candidates could be disrupted if the operations of these suppliers are affected by a man-made or natural disaster or other business interruption. The continuing outbreak of COVID-19 in the United States and other countries may adversely affect our business and the market price of our common stock.
Our ability to obtain clinical supplies of our product candidates could be disrupted if the operations of these suppliers are affected by a man-made or natural disaster or other business interruption.
If we do not successfully develop and commercialize product candidates, we will not be able to generate product revenue in the future, which likely would result in significant harm to our financial position and adversely affect our stock price. 51 Table of Contents We rely on third parties to manufacture our preclinical and clinical product supplies, to produce and process clinical quantities of our product candidates and to assist with clinical trials.
If we do not successfully develop and commercialize product candidates, we will not be able to generate product revenue in the future, which likely would result in significant harm to our financial position and adversely affect our stock price.
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.
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.
We have not yet caused any product candidates to be manufactured on a commercial scale and may not be able to do so for any of our product candidates.
We need to negotiate and maintain contractual arrangements with these outside vendors for the supply of our product candidates and we may not be able to do so on favorable terms. We have not yet caused any product candidates to be manufactured on a commercial scale and may not be able to do so for any of our product candidates.
In order to commence a clinical trial in the United States, we are required to seek FDA acceptance of an IND for each of our product candidates. We cannot be sure any IND we submit to the FDA, or any similar clinical trial application we submit in other countries, will be accepted.
In order to commence a clinical trial in the United States, we and our partner are required to seek FDA acceptance of an IND for each of our product candidates.
We may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates. We have two product candidates in Phase 1 clinical development; all of our other product candidates are in preclinical development, and their risk of failure is high.
We may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
Despite the implementation of security measures, our internal computer systems and those of our current and future CROs and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, and telecommunication and electrical failures.
Despite the implementation of security measures, our internal computer systems and those of our current and future service providers, including our CROs and other contractors and consultants are vulnerable to damage from computer viruses, ransomware, unauthorized access, denial of service attacks, internal or external hacking, among other cyber attacks.
Our lead product candidates utilize novel mechanisms of action, which may result in greater research and development expenses, regulatory issues that could delay or prevent approval, or discovery of unknown or unanticipated adverse effects. For example, FHD-609 is a protein degrader. Currently there are no approved medicines using this mechanism of action.
Our lead product candidate, FHD-286, utilizes a novel mechanism of action, which may result in greater research and development expenses, regulatory issues that could delay or prevent approval, or discovery of unknown or unanticipated adverse effects.
We conduct our operations at our facilities in Cambridge, Massachusetts. The Massachusetts region is headquarters to many other biopharmaceutical companies and many academic and research institutions. Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms or at all.
Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms or at all.
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.
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.
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.
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.
To become and remain profitable, we must succeed in developing, obtaining marketing approval for and commercializing products that generate significant revenue.
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 have financed our operations primarily through private placements of our preferred stock and our IPO, as well as through a loan with Oxford Finance LLC, or Oxford Finance, which was repaid in full during fiscal year 2021; our collaboration agreement with Merck; and our strategic collaboration with Loxo Oncology at 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; and our strategic collaboration with Lilly and Lilly's concurrent investment in our equity.
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.
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.
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.
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.
We are currently in Phase 1 clinical trials for FHD-286 and FHD-609, and all of our other product candidates are in preclinical development.
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.
We intend to hire new employees to assume activities and responsibilities within the company, including conducting our research and performing development activities in the future. Our ability to compete in the highly competitive biotechnology and pharmaceutical industries depends upon our ability to attract and retain highly qualified managerial, scientific and medical personnel.
In the future, we may hire new employees to assume activities and responsibilities within the company, including conducting our research and performing development activities.
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 54 Table of Contents 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.
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.
We have two product candidates in Phase 1 clinical development and have not initiated clinical development of any other product candidate and expect that it will be many years, if ever, before we have a product candidate ready for commercialization.
We have not initiated clinical development of our other product candidates and 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 develop and, either directly or through collaborators, eventually commercialize a medicine or medicines with significant market potential.
Currently, our patent portfolio, including our portfolio related to our product candidates FHD-286 and FHD-609, is in its earliest stages, primarily consisting of provisional patent applications, which do not themselves issue as patents, and patent applications filed pursuant to the Patent Cooperation Treaty (the “PCT”). We have no issued patents related to FHD-286 or FHD-609.
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.
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.
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.
We are currently in the Phase 1 clinical development stage for our two most advanced product candidates, FHD-286 and FHD-609, and 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.
We are currently in the Phase 1 clinical development stage for our most advanced product candidate, FHD-286 and anticipate an IND filing by Lilly for FHD-909 in the second quarter of 2024. We are in the preclinical development stage for our other lead research programs.

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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. 69 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. 63 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 28, 2023, there were approximately 34 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 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.

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 our FHD-286 program costs of $8.6 million is associated with continued advancement of our Phase 1 clinical trial in uveal melanoma and activities to address FDA's full clinical hold on the Phase 1 study in AML/MDS; • an increase in personnel-related costs of $7.2 million, including a $2.1 million increase in stock-based compensation expense, due primarily to increased headcount in our research and development function; • an increase in platform and other early stage research costs of $3.3 million, which was due to continued investment and development of our platform and early research pipeline; • an increase in facility-related and other expenses of $3.1 million was due to the increased costs of supporting a growing research and development organization and their research efforts; and • an increase in our FHD-609 program cost of $3.1 million is associated with continued advancement of our Phase 1 clinical trial in synovial sarcoma.
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.
Through December 31, 2022, 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 and 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, 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.
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 the Company’s common stock.
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.
In the third quarter of 2022, the Company 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 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.
The chromatin regulatory system orchestrates gene expression — the turning on and off of genes — which is fundamental to how all our cells function. The chromatin regulatory system is implicated in approximately 50% of all cancers, and understanding how this system works could lead to an entirely new class of precision medicines.
The chromatin regulatory system orchestrates gene expression — the turning on and off of genes — which is fundamental to how all our cells function. The chromatin regulatory system is implicated in approximately 50 percent of all cancers, and understanding how this system works could lead to an entirely new class of precision medicines.
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 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 virology, autoimmune diseases and neurology.
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 primarily associated with 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.
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.
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. 73 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. 67 Table of Contents Other Income (Expense) Interest Income Interest income consists of interest earned on our invested cash balances.
Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We will be required to obtain further funding through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources.
Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our long-term business strategy. We will be required to obtain further funding through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources.
We believe our current pipeline has the potential to help more than 500,000 cancer patients. We take a small molecule 70 Table of Contents 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 64 Table of Contents small molecule modality agnostic approach to drugging targets which includes protein degraders, allosteric enzymatic inhibitors, and transcription factor disruptors.
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.
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.
On December 10, 2021, we entered into a collaboration agreement (the “Lilly Collaboration Agreement”) with Eli Lilly and Company (“Lilly”), for which we received an upfront payment of $300.0 million in January 2022 (see Note 8 to our notes to consolidated financial statements included elsewhere in this Annual Report on Form 10-K).
On December 10, 2021, we entered into a collaboration agreement (the “Lilly Collaboration Agreement”) with Lilly, for which we received an upfront payment of $300.0 million in January 2022 (see Note 8 to our notes to consolidated financial statements included elsewhere in this Annual Report on Form 10-K).
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 and continue to fund on-going clinical trials.
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.
As of the issuance date of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we expect that our cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements for at least twelve months.
As of the issuance date of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we expect that our cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements for at least twelve months. We have based this estimate on assumptions that may prove to be inaccurate.
We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we: • advance our FHD-286 and FHD-609 product candidates and continue our preclinical development of product candidates from our current research programs; • 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 71 Table of Contents • ultimately establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing 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-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.
Research and Development Expenses Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and progressing our programs, 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 contract research organizations (“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 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.
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.
We expect that our research and development expenses will increase substantially as we advance our programs into clinical development and expand our discovery, research and preclinical activities in the near term and in the future.
We expect that our research and development expenses may increase in the future as we advance our programs into clinical development and continue our discovery, research and preclinical activities in the near term and in the future.
For the years ended December 31, 2022 and 2021, we reported net losses of $108.9 million and $101.3 million, respectively. As of December 31, 2022, we had an accumulated deficit of $373.1 million. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years.
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.
For the year ended December 31, 2022 and 2021, we recognized $17.4 million and $0.6 million, respectively, of revenue under the Lilly Collaboration Agreement and, as of December 31, 2022, we had $319.8 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, 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.
As of December 31, 2022, we had cash, cash equivalents and marketable securities of $345.8 million.
As of December 31, 2023, we had cash, cash equivalents and marketable securities of $234.1 million.
Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: Year Ended December 31, 2022 2021 (in thousands) Net cash provided by (used in) operating activities $ 193,612 $ (50,250) Net cash provided by (used in) investing activities (244,322) 36,173 Net cash provided by financing activities 1,763 22,418 Net increase in cash, cash equivalents and restricted cash $ (48,947) $ 8,341 Operating Activities 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 our net loss of $108.9 million.
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.
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 our collaboration agreements with Merck and Lilly.
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.
As of December 31, 2022, we also had federal and state research and development tax credit carryforwards of $9.6 million and $5.7 million, respectively, which may be available to reduce future tax liabilities and expire at various dates beginning in 2036 and 2031, respectively.
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.
Property and equipment purchases for the year ended December 31, 2021 were primarily related to leasehold improvements for our facility in Cambridge, Massachusetts. Financing Activities For the year ended December 31, 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.
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.
While such revisions will have no impact on our cash flows, a significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods and the classification of deferred revenue between short-term and long-term . 74 Table of Contents Accrued Research and Development Expenses As part of the process of preparing our consolidated financial statements, we are required to estimate certain accrued research and development expenses.
While such revisions will have no impact on our cash flows, a significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods and the classification of deferred revenue between short-term and long-term .
The increase in interest income was primarily due to larger average cash balances and an increase in the average interest rate throughout the year ended December 31, 2022 compared to the year ended December 31, 2021.
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.
We are a biology first company which means we focus first on the underlying genetics and biology of a disease relevant target and then leverage the most appropriate drugging approach to impact the disease biology. Our two clinical-stage candidates are being studied across multiple indications and are supported by compelling science and preclinical data.
We are a biology first company which means we focus first on the underlying genetics and biology of a disease relevant target and then leverage the most appropriate drugging approach to impact the disease biology.
General and Administrative Expenses The following table summarizes our general and administrative expenses for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 Change (in thousands) Personnel related (including stock-based compensation) $ 18,243 $ 12,062 $ 6,181 Professional and consultant 6,921 4,852 2,069 Facility related and other 5,583 4,814 769 Total general and administrative expenses $ 30,747 $ 21,728 $ 9,019 General and administrative expenses were $30.7 million for the year ended December 31, 2022, compared to $21.7 million for the year ended December 31, 2021.
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.
For the year ended December 31, 2021, operating activities used $50.3 million of cash, resulting from our net loss of $101.3 million partially offset by net cash provided by changes in our operating assets and liabilities of $33.4 million and by net non-cash charges of $17.6 million.
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.
In the third quarter of 2022, the Company achieved a research milestone related to the Merck Collaboration Agreement and received a $5.0 million milestone payment from Merck. As of December 31, 2022, we had $17.0 million of deferred revenue related to the upfront payment and milestone achievement remaining on our consolidated balance sheets.
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.
General and administrative expenses also include professional fees for legal, patent, consulting, investor and public relations, human resources, and accounting and audit services as well as direct and allocated facility-related costs.
General and administrative expenses also include professional fees for legal, patent, consulting, investor and public relations, human resources, and accounting and audit services as well as direct and allocated facility-related costs. We anticipate that our general and administrative expenses may increase in the future as we continue to support our continued research activities and development of our programs and platform.
This process involves estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time.
Accrued Research and Development Expenses As part of the process of preparing our consolidated financial statements, we are required to estimate certain accrued research and development expenses. This process involves estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs.
Since our inception in 2015, our platform has generated a broad pipeline of more than 15 programs with two clinical-stage drug candidates currently in phase 1 development across multiple indications. 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 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.
Net cash provided by changes in our operating assets and liabilities for the year ended December 31, 2021 consisted primarily of $37.8 million of proceeds from the Lilly SPA partially offset by a $4.0 million decrease in operating lease liabilities and a $0.3 million net increase in working capital. 77 Table of Contents Investing Activities 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.
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.
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.
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.
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.
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.
The increase is attributed to the following: • an increase in personnel-related costs of $6.2 million, including a $3.8 million increase in stock-based compensation expense, which was a result of an increase in headcount in our general and administrative function to support our business; • an increase in professional and consulting costs of $2.1 million, which was due to additional external costs required to support growing operations; and 76 Table of Contents • an increase in facility related and other expense of $0.8 million was primarily due to increased corporate expenses to support our business.
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.
In July 2020, we entered into the Merck Collaboration Agreement, pursuant to which we will apply our proprietary Gene Traffic Control platform to discover and develop novel therapeutics. Under the Merck Collaboration Agreement, we granted Merck exclusive global rights to develop and commercialize drugs that target dysregulation of a single transcription factor.
Under the Merck Collaboration Agreement, we granted Merck exclusive global rights to develop and commercialize drugs that target dysregulation of a single transcription factor. Under the terms of the Merck Collaboration Agreement, we received a nonrefundable upfront payment of $15.0 million from Merck.
Other Income (Expense), Net Other income (expense) ,net consists of sublease income and miscellaneous expense unrelated to our core operations. Interest Expense Interest expense consists of interest expense associated with previously outstanding borrowings under our prior loan agreements as well as the amortization of debt discount associated with such agreements.
Other Income, Net Other income (expense), net consists of sublease income and miscellaneous expense unrelated to our core operations.
We cannot provide assurances as to the timing of future milestones, royalty payments and economics associated with the strategic collaboration with Loxo Oncology at Lilly.
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.
Research and Development Expenses The following table summarizes our research and development expenses for the years ended December 31, 2022 and 2021: Year Ended December 31, Change 2022 2021 (in thousands) Research and development program expenses: FHD-286 $ 18,906 $ 10,289 $ 8,617 FHD-609 10,674 7,604 3,070 Platform, research and discovery, and unallocated expenses: Platform and other early stage research external costs 22,214 18,865 3,349 Personnel related (including stock-based compensation) 32,612 25,405 7,207 Facility related and other 21,212 18,162 3,050 Total research and development expenses $ 105,618 $ 80,325 $ 25,293 Research and development expenses were $105.6 million for the year ended December 31, 2022, compared to $80.3 million for the year ended December 31, 2021.
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.
Results of Operations Comparison of the Years Ended December 31, 2022 and 2021 The following table summarizes our results of operations for the years ended December 31, 2022 and 2021: Year Ended December 31, Change 2022 2021 (in thousands) Collaboration revenue $ 19,228 $ 1,319 $ 17,909 Operating expenses: Research and development 105,618 80,325 25,293 General and administrative 30,747 21,728 9,019 Total operating expenses 136,365 102,053 34,312 Loss from operations (117,137) (100,734) (16,403) Other income (expense): Interest income 5,675 59 5,616 Other income (expense), net 2,580 2,494 86 Interest expense — (1,906) 1,906 Loss on debt extinguishment — (1,233) 1,233 Total other expense, net 8,255 (586) 8,841 Net loss $ (108,882) $ (101,320) $ (7,562) Collaboration Revenue Collaboration revenue was $19.2 million for the year ended December 31, 2022, compared to $1.3 million for the year ended December 31, 2021.
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.
Other Income (Expense) Interest income was $5.7 million for the year ended December 31, 2022, compared to $0.1 million for the year ended December 31, 2021.
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.
As of December 31, 2022, we had federal and state net operating loss carryforwards of $221.7 million and $203.3 million, respectively, which may be available to offset future taxable income.
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.
Income Taxes Since our inception, we have not recorded any income tax benefits for the net losses we have incurred or for the research and development tax credits earned in each period, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credit carryforwards will not be realized.
Provision for Income Taxes Since our inception, we have not recorded any federal or state income tax benefits for the net losses we have incurred in any year or for our federal or state earned research and development tax credits, due to our uncertainty of realizing a benefit from those items.
We periodically confirm the accuracy of the estimates with the service providers and make adjustments if necessary.
We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of the estimates with the service providers and make adjustments if necessary.
We are developing FHD-286, a selective, allosteric ATPase inhibitor with two separate Phase 1 studies in (i) metastatic uveal melanoma and (ii) relapsed and/or refractory acute myeloid leukemia (“AML”), and myelodysplastic syndrome (“MDS”). We expect initial clinical data for metastatic uveal melanoma in the first half of 2023.
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.
Removed
The relapsed and/or refractory AML and MDS study has been placed on full clinical hold by the FDA due to potential differentiation syndrome and potential linkages to grade 5 safety events. We are developing FHD-609, a targeted protein degrader, and are currently enrolling a Phase 1 study in synovial sarcoma and SMARCB1-loss tumors. We anticipate initial clinical data in mid-2023.
Added
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.
Removed
We believe Foghorn has the potential to be a major biopharmaceutical company with our current pipeline addressing more than 20 tumor types impacting more than 500,000 new patients annually. We believe we have the potential to file at least six new INDs over the next four years.
Added
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.
Removed
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
Costs incurred will continue to be included in research and development expenses on the consolidated statements of operations and comprehensive loss.
Removed
Under the terms of the Merck Collaboration Agreement, we received a nonrefundable upfront payment of $15.0 million from 72 Table of Contents Merck, and are eligible to receive up to $245.0 million upon achievement of specified research, development and regulatory milestones by any product candidate generated by the collaboration, and up to $165.0 million upon achievement of specified sales-based milestones per approved product from the collaboration, if any, as well as royalties on sales of any approved product from the collaboration.
Added
In September 2023 we re-evaluated our estimates related to the Lilly Collaboration Agreement.
Removed
We cannot provide assurance as to the timing of future milestone or royalty payments or that we will receive any of these payments at all. For the years ended December 31, 2022 and 2021, we recognized $1.8 million and $0.7 million, respectively, of revenue under the Merck Collaboration Agreement.
Added
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.
Removed
We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our programs and platform.
Added
In the third quarter of 2022, we achieved a research milestone related to the Merck Collaboration Agreement and received a $5.0 million milestone payment from Merck. On August 9, 2023 we received notice from Merck that it was terminating the Merck Collaboration Agreement effective November 7, 2023.
Removed
The federal net operating loss carryforwards include $5.3 million which expire in 2037 and $216.4 million which carryforward indefinitely but in some circumstances may be limited to offset 80% of annual taxable income. The state net operating loss carryforwards expire at various dates beginning in 2036.
Added
At the time of notice, no material obligations remained under the Merck Collaboration Agreement. As such, we recognized the remaining $16.1 million of deferred revenue, related to the original $15.0 million upfront payment and $5.0 million milestone payment received from Merck, as revenue, for year ended December 31, 2023.
Removed
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. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP.
Added
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.
Removed
The increase in collaboration revenue is attributed to the following: • an increase in Lilly collaboration revenue recognition of $16.8 million due to work performed pursuant to the Lilly Collaboration Agreement entered into in December 2021; and 75 Table of Contents • an increase in Merck collaboration revenue recognition of $1.1 million was primarily driven by the $0.7 million revenue catch-up adjustment related to the $5.0 million research milestone achievement in 2022, which is no longer considered constrained (see Note 8), and increased work completed under the Merck agreement in the year ended December 31, 2022 compared to the year ended December 31, 2021.
Added
Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, (“GAAP”).
Removed
Other income (expense), net was $2.6 million for the year ended December 31, 2022 compared to $2.5 million for the year ended December 31, 2021. The increase in interest and other income (expense), net for the year ended December 31, 2022 was primarily due to an increase of $0.1 million sublease income compared to the year ended December 31, 2021.
Added
Provision for income taxes For the year ended December 31, 2023, we recorded an income tax provision of $4.2 million .
Removed
The Company did not record any interest expense for the year ended December 31, 2022, compared to $1.9 million for the year ended December 31, 2021.
Added
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.
Removed
The decrease in interest expense for the year ended December 31, 2022 was due to the payoff of the Company's debt with Oxford Finance LLC in December 2021, resulting in no interest expense compared to the year ended December 31, 2021. We recorded a loss on debt extinguishment of $1.2 million for the year ended December 31, 2021.
Added
Net cash provided by changes in our operating assets and liabilities for the year ended December 31, 2023 consisted primarily of a decrease of $34.2 million in deferred revenue resulting from the recognition of revenue on the upfront payments received in connection with our collaboration agreements, a $7.5 million decrease in operating lease liabilities and a $0.2 million net decrease in working capital.
Removed
We used cash on hand to repay early the balance of our loan outstanding at the time, including a final payment fee and a prepayment fee. Liquidity and Capital Resources Since our inception in October 2015, we have incurred significant operating losses.
Removed
For the year ended December 31, 2021, net cash provided by investing activities was $36.2 million primarily due to the maturity of marketable securities of $139.5 million partially offset by the purchases of marketable securities of $100.0 million and the acquisition of property and equipment of $3.3 million.
Removed
For the year ended December 31, 2021, net cash provided by financing activities was $22.4 million, consisting primarily of proceeds from the Lilly SPA of $42.2 million and proceeds from the exercise of common stock options of $1.4 million partially offset by the repayment of notes payable of $21.2 million.
Removed
We have based these estimates as to how long we expect we will be able to fund our operations on assumptions that may prove to be inaccurate.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+9 added−0 removed0 unchanged
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. 78 Table of Contents
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.
Added
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”).
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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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