fhtx-20210630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

______________________

FORM 10-Q

_____________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021


¨			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission File Number: 001-39634

______________________

Foghorn Therapeutics Inc.

(Exact Name of Registrant as Specified in its Charter)

______________________


Delaware (State or other jurisdiction of incorporation or organization)			47-5271393 (I.R.S. Employer Identification No.)

500 Technology Square, Ste 700 Cambridge MA (Address of principal executive offices)			02139 (Zip Code)

Registrant’s telephone number, including area code: 617-586-3100

______________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

FHTX

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	x	Smaller reporting company	x

		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of July 30, 2021, the registrant had 36,936,886 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss	3
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION	27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 6.	Exhibits	28
Signatures		29

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that are based on management’s beliefs and assumptions and on information currently available to management. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements include, but are not limited to, statements concerning:

•the initiation, timing, progress and results of our research and development programs, preclinical and clinical studies;

•our ability to advance any product candidates that we may develop and successfully complete preclinical and clinical studies;

•our ability to leverage our initial programs to develop additional product candidates using our Gene Traffic Control platform;

•the impact of the COVID-19 pandemic on our and our collaborators’ business operations, including our research and development programs and preclinical and clinical studies;

•developments related to our competitors and our industry;

•our ability to expand the target populations of our programs and the availability of patients for clinical testing;

•our ability to obtain regulatory approval for FHD-286, FHD-609, and any future product candidates from the U.S. Food and Drug Administration, or FDA, and other regulatory authorities;

•our ability to identify and enter into future license agreements and collaborations;

•our ability to continue to rely on our contract development and manufacturing organizations, or CDMOs, and contract research organizations, or CROs, for our manufacturing and research needs;

•regulatory developments in the United States and foreign countries;

•our ability to attract and retain key scientific and management personnel; and

•the scope of protection we are able to establish, maintain and enforce for intellectual property rights covering FHD-286, FHD-609, our future products and our Gene Traffic Control platform.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of known and unknown risks, uncertainties and assumptions, including those described under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. Moreover, we operate in an evolving environment. New risks and uncertainties may emerge from time to time, and it is not possible for management to predict all risks and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Foghorn Therapeutics Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)


	June 30, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	125,166	$	92,795
Marketable securities	16,107		92,975
Prepaid expenses and other current assets	3,399		4,917
Total current assets	144,672		190,687
Property and equipment, net	19,002		19,528
Restricted cash	1,733		1,733
Other assets	2,445		842
Operating lease right-of-use assets	40,674		42,804
Total assets	$	208,526	$	255,594
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,406	$	3,680
Accrued expenses	5,152		9,161
Operating lease liabilities	6,840		$	3,981
Financing lease liability	106		—
Deferred revenue	910		2,024
Total current liabilities	16,414		18,846
Notes payable, net of discount and current portion	19,826		19,654
Operating lease liabilities, net of current portion	54,803		58,361
Financing lease liability, net of current portion	198		—
Deferred revenue, net of current portion	13,095		12,546
Total liabilities	104,336		109,407
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 25,000,000 shares authorized at June 30, 2021 and December 31, 2020; no shares issued or outstanding	—		—
Common stock, $0.0001 par value; 175,000,000 shares authorized at June 30, 2021 and December 31, 2020; 36,861,350 shares issued and outstanding at June 30, 2021; 36,790,946 shares issued and outstanding at December 31, 2020	4		4
Additional paid-in capital	313,229		309,126
Accumulated other comprehensive loss	(10)		(7)
Accumulated deficit	(209,033)		(162,936)
Total stockholders’ equity	$	104,190	$	146,187
Total liabilities and stockholders’ equity	$	208,526	$	255,594

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Foghorn Therapeutics Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Collaboration revenue	$	279	$	—	$	565	$	—
Operating expenses:
Research and development	18,642		13,628		37,368		25,131
General and administrative	4,898		1,911		9,588		4,132
Total operating expenses	23,540		15,539		46,956		29,263
Loss from operations	(23,261)		(15,539)		(46,391)		(29,263)
Other income (expense):
Interest expense	(495)		(198)		(981)		(456)
Interest income and other income (expense), net	645		14		1,275		43
Change in fair value of preferred stock warrant liability	—		—		—		1
Total other income (expense), net	150		(184)		294		(412)
Net loss	$	(23,111)	$	(15,723)	$	(46,097)	$	(29,675)
Net loss per share attributable to common stockholders—basic and diluted	$	(0.63)	$	(2.90)	$	(1.25)	$	(5.61)
Weighted average common shares outstanding—basic and diluted	36,847,435		5,418,845		36,832,439		5,286,537
Comprehensive loss:
Net loss	$	(23,111)	$	(15,723)	$	(46,097)	$	(29,675)
Other comprehensive loss:
Unrealized losses on marketable securities	(16)		—		(3)		—
Total other comprehensive loss	(16)		—		(3)		—
Total comprehensive loss	$	(23,127)	$	(15,723)	$	(46,100)	$	(29,675)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Foghorn Therapeutics Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)


	Series A-1, A-2 and B Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balances at December 31, 2020	—	$	—	36,790,946	$	4	$	309,126	$	(7)	$	(162,936)	$	146,187
Issuance of common stock upon exercise of stock options	—	—		35,829	—		62		—		—		62
Stock-based compensation expense	—	—		—	—		1,888		—		—		1,888
Unrealized gains on marketable securities	—	—		—	—		—		13		—		13
Net loss	—	—		—	—		—		—		(22,986)		(22,986)
Balances at Balances at March 31, 2021	—	$	—	36,826,775	$	4	$	311,076	$	6	$	(185,922)	$	125,164
Issuance of common stock upon exercise of stock options	—	—		34,575	—		111		—		—		111
Stock-based compensation expense	—	—		—	—		2,042		—		—		2,042
Unrealized losses on marketable securities	—	—		—	—		—		(16)		—		(16)
Net loss	—	—		—	—		—		—		(23,111)		(23,111)
Balances at June 30, 2021	—	$	—	36,861,350	$	4	$	313,229	$	(10)	$	(209,033)	$	104,190


Balances at December 31, 2019	28,615,546	$	86,544	4,870,851	$	—	$	6,120	$	—	$	(94,136)	$	(88,016)
Issuance of common stock upon exercise of stock options	—	—		97,034	—		247		—		—		247
Vesting of restricted stock	—	—		222,973	—		—		—		—		—
Stock-based compensation expense	—	—		—	—		517		—		—		517
Net loss	—	—		—	—		—		—		(13,952)		(13,952)
Balances at Balances at March 31, 2020	28,615,546	$	86,544	5,190,858	$	—	$	6,884	$	—	$	(108,088)	$	(101,204)
Issuance of Series B convertible preferred stock, net of issuance costs of $123	6,407,867	47,936		—	—		—		—		—		—
Issuance of common stock upon exercise of stock options	—	—		20,819	—		27		—		—		27
Vesting of restricted stock	—	—		222,972	1		(1)		—		—		—
Stock-based compensation expense	—	—		—	—		489		—		—		489
Net loss	—	—		—	—		—		—		(15,723)		(15,723)
Balances at June 30, 2020	35,023,413	$	134,480	5,434,649	$	1	$	7,399	$	—	$	(123,811)	$	(116,411)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Foghorn Therapeutics Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(46,097)	$	(29,675)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	3,930		1,006
Depreciation and amortization expense	1,556		509

Change in fair value of preferred stock warrant liability	—		(1)
Noncash lease expense	2,162		1,659
Noncash interest expense	172		126
Accretion of discount on marketable securities	(18)		—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(87)		(774)
Accounts payable	(259)		(285)
Accrued expenses and other current liabilities	(1,699)		819
Operating lease liabilities	(725)		3,259
Deferred revenue	(565)		—
Net cash used in operating activities	(41,630)		(23,357)
Cash flows from investing activities:
Purchases of property and equipment	(3,003)		(3,269)

Purchases of marketable securities	(42,639)		—
Proceeds from the sale of marketable securities	119,470		—
Net cash provided by (used in) investing activities	73,828		(3,269)
Cash flows from financing activities:
Proceeds from issuance of convertible preferred stock, net of issuance costs	—		47,936
Proceeds from issuance of common stock upon exercise of stock options	173		274



Net cash provided by financing activities	173		48,210
Net increase in cash, cash equivalents and restricted cash	32,371		21,584
Cash, cash equivalents and restricted cash at beginning of period	94,528		17,255
Cash, cash equivalents and restricted cash at end of period	$	126,899	$	38,839


Supplemental cash flow information:
Cash paid for interest	$	810	$	341
Supplemental disclosure of noncash investing and financing information:

SEC Form 10-Q filed by Foghorn Therapeutics Inc.