fhtx-20210930

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 September 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 October 29, 2021, the registrant had 37,091,588 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	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
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, particularly in light of recent geopolitical instability and other developments that may negatively impact the ability to utilize CDMOs or CROs that are located outside of the United States;

•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)


	September 30, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	57,841	$	92,795
Marketable securities	63,001		92,975
Prepaid expenses and other current assets	3,111		4,917
Total current assets	123,953		190,687
Property and equipment, net	18,346		19,528
Restricted cash	1,733		1,733
Other assets	2,431		842
Operating lease right-of-use assets	39,606		42,804
Total assets	$	186,069	$	255,594
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,821	$	3,680
Accrued expenses and other current liabilities	7,206		9,161
Operating lease liabilities	6,991		$	3,981
Deferred revenue	1,278		2,024
Total current liabilities	19,296		18,846
Notes payable, net of discount and current portion	19,914		19,654
Operating lease liabilities, net of current portion	53,020		58,361
Deferred revenue, net of current portion	12,686		12,546
Other liabilities	171		—
Total liabilities	105,087		109,407
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 25,000,000 shares authorized at September 30, 2021 and December 31, 2020; no shares issued or outstanding	—		—
Common stock, $0.0001 par value; 175,000,000 shares authorized at September 30, 2021 and December 31, 2020; 37,044,763 shares issued and outstanding at September 30, 2021; 36,790,946 shares issued and outstanding at December 31, 2020	4		4
Additional paid-in capital	316,104		309,126
Accumulated other comprehensive loss	(13)		(7)
Accumulated deficit	(235,113)		(162,936)
Total stockholders’ equity	$	80,982	$	146,187
Total liabilities and stockholders’ equity	$	186,069	$	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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Collaboration revenue	$	41	$	179	$	606	$	179
Operating expenses:
Research and development	20,494		16,113		57,862		41,244
General and administrative	5,808		2,555		15,396		6,687
Total operating expenses	26,302		18,668		73,258		47,931
Loss from operations	(26,261)		(18,489)		(72,652)		(47,752)
Other income (expense):
Interest expense	(499)		(202)		(1,480)		(658)
Interest income and other income (expense), net	680		394		1,955		437
Change in fair value of preferred stock warrant liability	—		(70)		—		(69)
Total other income (expense), net	181		122		475		(290)
Net loss	$	(26,080)	$	(18,367)	$	(72,177)	$	(48,042)
Net loss per share attributable to common stockholders—basic and diluted	$	(0.71)	$	(3.12)	$	(1.96)	$	(8.76)
Weighted average common shares outstanding—basic and diluted	36,971,767		5,884,027		36,879,392		5,487,154
Comprehensive loss:
Net loss	$	(26,080)	$	(18,367)	$	(72,177)	$	(48,042)
Other comprehensive loss:
Unrealized losses on marketable securities	(3)		—		(6)		—
Total other comprehensive loss	(3)		—		(6)		—
Total comprehensive loss	$	(26,083)	$	(18,367)	$	(72,183)	$	(48,042)

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 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
Issuance of common stock upon exercise of stock options	—	—		183,413	—		505		—		—		505
Stock-based compensation expense related to issuance of options and employee stock purchase plan	—	—		—	—		2,370		—		—		2,370
Unrealized losses on marketable securities	—	—		—	—		—		(3)		—		(3)
Net loss	—	—		—	—		—		—		(26,080)		(26,080)
Balances at September 30, 2021	—	$	—	37,044,763	$	4	$	316,104	$	(13)	$	(235,113)	$	80,982

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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

Amount

Balances at December 31, 2019

28,615,546

86,544

4,870,851

—

SEC Form 10-Q filed by Foghorn Therapeutics Inc.