Foghorn Therapeutics Inc.

11/05/2025 | Press release | Distributed by Public on 11/05/2025 06:04

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Some of the numbers included herein have been rounded for the convenience of presentation. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and in this Quarterly Report on Form 10-Q.
Overview
Foghorn is a clinical stage, precision therapeutics biotechnology company pioneering a new class of medicines that treat serious diseases by correcting abnormal gene expression through selectively targeting the chromatin regulatory system, an untapped opportunity for therapeutic intervention in oncology and with potential in a wide spectrum of other diseases including immunology and inflammation.
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. To our knowledge, we are the only company with the ability to study and target the chromatin regulatory system at scale, in context, and in an integrated way.
Our proprietary Gene Traffic Control platform provides an integrated and mechanistic understanding of how the various components of the chromatin regulatory system interact, allowing us to identify, validate and potentially drug targets within this system. We have developed unique capabilities that have yielded new insights and scalability in drugging this new, previously untapped and promising area.
At present, we are working on more than seven programs with one clinical-stage drug candidate currently in Phase 1 development. We have discovered highly selective chemical matter for some of the most challenging targets in oncology including SMARCA2 (BRM), CBP, EP300, and ARID1B as well as other undisclosed targets. We believe our current pipeline has the potential to help more than 500,000 cancer patients. We take a small molecule, modality agnostic approach to drugging targets which includes protein degraders, allosteric enzymatic inhibitors, and transcription factor disruptors. 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.
Since our inception, we have focused substantially all of our resources on building our Gene Traffic Control platform, organizing and staffing our company, business planning, conducting discovery and research activities, raising capital, protecting our trade secrets, filing patent applications, identifying potential product candidates, undertaking preclinical studies and clinical trial activities, establishing arrangements with third parties for the manufacture of initial quantities of our product candidates and component materials and initiating two strategic collaborations. We do not have any products approved for sale and have not generated any revenue from product sales.
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 unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q). Concurrent with the Lilly Collaboration Agreement, we also entered into a stock purchase agreement (the "Lilly SPA") with Lilly whereby we issued and sold Lilly 4,000,000 shares of our common stock at a price of $20.00 per share, resulting in net proceeds of $80.0 million, of which $42.2 million was allocated to equity upon the issuance of our common stock.

The collaboration with Lilly includes a U.S. 50/50 U.S. co-development and co-commercialization agreement for its selective SMARCA2 oncology program that includes both a selective inhibitor (FHD-909) and a selective degrader, as well as an additional undisclosed oncology target. The collaboration also includes three discovery programs from Foghorn's proprietary Gene Traffic Control platform.
FHD-909 was transitioned to Lilly during the third quarter of 2023, which triggered the 50/50 cost share for the SMARCA2 programs. Costs related to the cost-share are included in research and development expenses on the condensed consolidated statements of operations and comprehensive loss.
In October 2024, the Phase 1 dose escalation study of FHD-909, a selective allosteric ATPase inhibitor of SMARCA2, developed in collaboration with Lilly, dosed its first patient.
In December 2024, we announced our decision to discontinue the independent development of FHD-286 in combination with decitabine in patients with relapsed and/or refractory acute myeloid leukemia.
In May 2024, the Company entered into an underwriting agreement with Jefferies LLC, TD Securities (USA) LLC and Evercore Group LLC relating to the issuance and sale of an aggregate of 12,743,039 shares of its common stock at a public offering price of $5.51 per share to certain investors. In addition, the Company issued and sold to certain investors in lieu of common stock pre-funded warrants to purchase 7,220,794 shares of its common stock (the "Pre-funded Warrants") at a public offering price of $5.5099 per pre-funded warrant, which represents the public offering price per share of the common stock less the $0.0001 exercise price per share of each pre-funded warrant. The offering (the "May 2024 Offering") closed on May 22, 2024, resulting in net proceeds of $102.8 million, after deducting underwriting discounts, commissions and other offering expenses.
We have incurred significant operating losses since our inception. For the nine months ended September 30, 2025 and the year ended December 31, 2024, we reported net losses of $52.6 million and $86.6 million, respectively. As of September 30, 2025, we had an accumulated deficit of $610.8 million. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. Our ability to generate any product revenue or product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more product candidates we are developing or may develop.
We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:
• advance FHD-909 and other product candidates partnered with Lilly, and continue preclinical and clinical development of product candidates from our current portfolio;
• identify and advance additional research programs and additional product candidates;
• initiate preclinical testing for any new product candidates we identify and develop;
• obtain, maintain, expand, enforce, defend and protect our trade secrets and intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio;
• hire additional research and development personnel;
• add operational, legal, compliance, financial and management information systems and personnel to support our research, product development and operations;
• expand the capabilities of our platform;
• acquire or in-license product candidates, intellectual property and technologies;
•experience significant operating cost increases as a result of increased inflation or increased tariffs;
• 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.
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. 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. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings and collaborations or licensing arrangements and the Lilly Collaboration Agreement. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back our development or commercialization plans for one or more of our product candidates.
Because of the numerous risks and uncertainties associated with pharmaceutical product development and the current geopolitical and economic and trade environment, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
Components of Our Results of Operations
Collaboration Revenue
To date, we have not generated any revenue from product sales and do not expect to do so in the near future. If our development efforts for our product candidates are successful and result in regulatory approval or licenses with third parties, we may generate revenue in the future from product sales, milestone payments under our existing collaboration agreement or payments from other license agreements that we may enter into with third parties.
In December of 2021, we entered into a strategic collaboration with Lilly to create novel oncology medicines by applying Foghorn's proprietary Gene Traffic Control platform. The collaboration includes a co-development and co-commercialization agreement for the aforementioned selective SMARCA2 oncology program and an additional undisclosed oncology target. In addition, the collaboration includes three additional discovery programs using Foghorn's proprietary Gene Traffic Control platform. Under the terms of the collaboration, Foghorn received upfront consideration of $300.0 million in cash pursuant to the Lilly Collaboration Agreement, together with an equity investment by Lilly of $80.0 million in shares of Foghorn common stock pursuant to the Lilly SPA.
For the SMARCA2 selective program and the additional undisclosed target program, Foghorn will lead discovery and early research activities, while Lilly will lead development and commercialization activities with participation from Foghorn in operational activities and cost sharing. Foghorn and Lilly will share 50/50 in the U.S. economics, and Foghorn is eligible to receive royalties on ex-U.S. sales starting in the low double-digit range and escalating into the twenties based on revenue levels.
For the additional discovery programs, Foghorn will lead discovery and early research activities. Foghorn may receive up to a total of $1.3 billion in potential development and commercialization milestones. Additionally, Foghorn will have an option to participate in a percentage of the U.S. economics and is eligible to receive tiered royalties from the mid-single digit to low-double digit range on sales outside the U.S. that may be exercised after the successful completion of the dose-finding toxicity studies.
We cannot provide assurances as to the timing of future milestones, royalty payments and economics associated with the strategic collaboration with Lilly, if any.
In the third quarter of 2023, we transitioned the SMARCA2 Selective inhibitor, FHD-909, to Lilly, for which Lilly will lead and we will participate and share in 50% of the costs until at least registrational trials. Costs incurred will continue to be included in research and development expenses on the condensed consolidated statements of operations and comprehensive loss.
We recognized total deferred revenue of $337.8 million related to the Lilly Collaboration Agreement and the Lilly SPA, which included the $300.0 million upfront payment under the Lilly Collaboration Agreement as well as $37.8 million allocated to deferred revenue from the gross proceeds of the Lilly SPA to be recognized over the performance period. For the three months ended September 30, 2025 and 2024, we recognized $8.2 million and $7.8 million, respectively, of revenue under the Lilly Collaboration Agreement. For the nine months ended September 30, 2025 and 2024, we recognized $21.7 million and $19.7 million, respectively, of revenue under the Lilly Collaboration Agreement. As of September 30, 2025, we had $258.4 million of deferred revenue related to the above mentioned upfront payment and revenue allocation remaining on our condensed consolidated balance sheets.
Operating Expenses
Our operating expenses are comprised of research and development expenses and general and administrative expenses.
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 contract research organizations ("CROs"), and our collaboration partner;
•the cost of manufacturing drug substance and drug product for use in our research and preclinical studies and clinical trials under agreements with third parties, such as consultants and contractors and contract development and manufacturing organizations ("CDMOs");
•laboratory supplies and research materials;
•facilities, depreciation and amortization and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance; and
•payments made under third-party licensing agreements.
We track our direct external research and development expenses on a program-by-program basis. These consist of costs that include fees, reimbursed materials, and other costs paid to consultants, contractors, CDMOs, and CROs in connection with our preclinical, clinical and manufacturing activities. We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities expenses, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple programs and our platform and, as such, are not separately classified.
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. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any product candidates we may develop. A change in the outcome of any number of variables with respect to product candidates we may develop could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any product candidates we may develop. In addition, given the uncertainties associated with the current geopolitical and economic and trade environment, our research and development expenses may increase in an unpredictable manner.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation, for employees engaged in executive, finance and accounting, legal, and other administrative functions. 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. We also anticipate that we will continue to incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance costs and investor and public relations expenses associated with operating as a public company.
Other Income, Net
Interest Income
Interest income consists of interest earned on our invested cash balances.
Other Income, Net
Other income, net consists of sublease income and miscellaneous expense unrelated to our core operations.
Income Taxes
As of December 31, 2024, we had federal net operating loss carryforwards of $52.3 million, which may be available to offset future taxable income. The federal net operating loss can be carried forward indefinitely but are limited to offset 80% of annual taxable income. As of December 31, 2024, we also had federal and state research and development tax credit carryforwards of $7.2 million and $3.7 million, respectively, which may be available to reduce future tax liabilities and expire at various dates beginning in 2043 and 2037, respectively. Due to our history of cumulative net losses since inception and uncertainties surrounding our ability to generate future taxable income, we have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date. We do not expect to have taxable income in the current year.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company has evaluated the impact of the OBBBA and determined that it does not have a material impact on the Company's condensed consolidated financial statements.
Critical Accounting Estimates
Our unaudited condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). The preparation of our unaudited condensed consolidated financial statements and
related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses and the disclosure of contingent assets and liabilities in our unaudited condensed consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 as well as elsewhere in this Quarterly Report on Form 10-Q, we believe that revenue recognition and accrued research and development expenses are those most critical to the judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements. There have been no material changes to our critical accounting policies and estimates detailed in the Critical Accounting Estimatessection of Item 7. Management's Discussion and Analysis of financial Condition and Results of Operationsin our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Results of Operations
Comparison of the Three and Nine Months Ended September 30, 2025 and 2024
The following table summarizes our results of operations for three and nine months ended September 30, 2025 and 2024:
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 Change 2025 2024 Change
(in thousands) (in thousands)
Collaboration revenue $ 8,153 $ 7,808 $ 345 $ 21,662 $ 19,746 $ 1,916
Operating expenses:
Research and development 20,002 24,689 (4,687) 63,420 74,020 (10,600)
General and administrative 6,652 6,971 (319) 20,753 22,006 (1,253)
Impairment of long-lived assets - - - - 2,398 (2,398)
Total operating expenses 26,654 31,660 (5,006) 84,173 98,424 (14,251)
Loss from operations (18,501) (23,852) 5,351 (62,511) (78,678) 16,167
Other income, net:
Interest income 2,032 3,495 (1,463) 7,033 8,804 (1,771)
Other income, net 620 1,235 (615) 2,859 2,757 102
Total other income, net 2,652 4,730 (2,078) 9,892 11,561 (1,669)
Net loss $ (15,849) $ (19,122) $ 3,273 $ (52,619) $ (67,117) $ 14,498
Collaboration Revenue
Under our collaboration agreement, revenue is recognized based on the work performed during the period. Collaboration revenue was $8.2 million for the three months ended September 30, 2025, compared to $7.8 million for the three months ended September 30, 2024. The increase in collaboration revenue is attributed to continued advancement of programs under the Lilly Collaboration Agreement.
Collaboration revenue was $21.7 million for the nine months ended September 30, 2025, compared to $19.7 million for the nine months ended September 30, 2024. The increase in collaboration revenue is attributed to continued advancement of programs under the Lilly Collaboration Agreement.
Research and Development Expenses
The following table summarizes our research and development expenses for the three and nine months ended September 30, 2025 and 2024:
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 Change 2025 2024 Change
(in thousands) (in thousands)
Research and development program expenses:
FHD-286 $ (958) $ 2,395 $ (3,353) $ 790 $ 9,182 $ (8,392)
Lilly partnered programs 6,731 6,342 389 16,914 13,940 2,974
Platform, research and discovery, and unallocated expenses:
Early development and other research external costs 3,818 4,321 (503) 11,075 14,535 (3,460)
Personnel related (including stock-based compensation) 6,366 6,834 (468) 20,736 21,430 (694)
Facilities and IT related expenses and other 4,045 4,797 (752) 13,905 14,933 (1,028)
Total research and development expenses $ 20,002 $ 24,689 $ (4,687) $ 63,420 $ 74,020 $ (10,600)
Research and development expenses were $20.0 million for the three months ended September 30, 2025, compared to $24.7 million for the three months ended September 30, 2024. The decrease is attributed to the following:
•a decrease in FHD-286 costs of $3.4 million due to the decision to discontinue both the independent development of FHD-286 in combination with decitabine in patients with relapsed and/or refractory AML, resulting in the shutdown of the Phase 1 clinical trial, and independent development of FHD-286 in patients with uveal melanoma; and
•a decrease in facilities and IT related expenses and other costs of $0.8 million primarily due to the June 2025 lease modification (see Note 9); and
•a decrease in early development and other research external costs of $0.5 million, which was primarily driven by a decrease in preclinical research costs due to program progression; and
•a decrease in personnel related costs of $0.5 million, including a $0.2 million decrease in stock-based compensation expense, due to decreased headcount in our research and development function compared to the prior period; and
•an increase in Lilly partnered programs of $0.4 million, primarily driven by initiation of the Phase 1 dose escalation study of FHD-909. We expect these costs to continue to increase with increasing enrollment of FHD-909.
Research and development expenses were $63.4 million for the nine months ended September 30, 2025, compared to $74.0 million for the nine months ended September 30, 2024. The decrease is attributed to the following:
•a decrease in FHD-286 costs of $8.4 million due to the decision to discontinue both the independent development of FHD-286 in combination with decitabine in patients with relapsed and/or refractory AML, resulting in the shutdown of the Phase 1 clinical trial, and independent development of FHD-286 in patients with uveal melanoma; and
•a decrease in early development and other research external costs of $3.5 million, which was primarily driven by a decrease of $2.1 million in preclinical research costs due to program progression and a decrease in FHD-609 spend of $1.4 million due to the shutdown of the Phase 1 clinical trial in synovial sarcoma and SMARCAB1-loss tumors; and
•a decrease in facilities and IT related expenses and other costs of $1.0 million primarily due to the June 2025 lease modification; and
•a decrease in personnel related costs of $0.7 million, including a $0.6 million decrease in stock-based compensation expense, due to decreased headcount in our research and development function compared to prior period; and
•an increase in Lilly partnered programs of $3.0 million, primarily driven by initiation of the Phase 1 dose escalation study of FHD-909. We expect these costs to continue to increase with increasing enrollment of FHD-909.
General and Administrative Expenses
The following table summarizes our general and administrative expenses for the three and nine months ended September 30, 2025 and 2024:
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 Change 2025 2024 Change
(in thousands) (in thousands)
Personnel related (including stock-based compensation) $ 4,450 $ 4,326 $ 124 $ 13,394 $ 13,204 $ 190
Professional and consulting 1,386 1,409 (23) 4,298 5,026 (728)
Facilities and IT related expenses and other 816 1,236 (420) 3,061 3,776 (715)
Total general and administrative expenses
$ 6,652 $ 6,971 $ (319) $ 20,753 $ 22,006 $ (1,253)
General and administrative expenses were $6.7 millionfor the threemonths ended September 30, 2025, compared to $7.0 millionfor the threemonths ended September 30, 2024. The decrease is primarily attributed to a decrease in facilities and IT related expenses and other costs of $0.4 million due to the June 2025 lease modification (see Note 9).
General and administrative expenses were $20.8 millionfor the ninemonths ended September 30, 2025, compared to $22.0 millionfor the ninemonths ended September 30, 2024. The decrease is primarily attributed to a decrease in professional and consulting costs of $0.7 million and a decrease in facilities and IT related expenses and other costs of $0.7 million due to the June 2025 lease modification.
Impairment of Long-Lived Assets
For the nine months ended September 30, 2024, the Company recorded a non-cash impairment of long-lived assets charge of $2.4 million related to the sublease of office space at the Company's main office in Cambridge, MA (see Note 9 to our notes to unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q). There were no impairment charges for the three and nine months ended September 30, 2025.
Other Income, Net
Other income, net was $2.7 million for the three months ended September 30, 2025, compared to $4.7 million for the three months ended September 30, 2024. The decrease was due to decreased interest income due to a lower average balance of marketable securities during the period and decreased sublease income due to the conclusion of one sublease on April 28, 2025 (see Note 9).
Other income, net was $9.9 million for the nine months ended September 30, 2025, compared to $11.6 million for the nine months ended September 30, 2024. The decrease was due to decreased interest income due to a lower average balance of marketable securities during the period.
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. Through September 30, 2025, 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 Research Collaboration and Exclusive License Agreement (the "Merck Collaboration Agreement") with Merck Sharp & Dohme Corp. ("Merck"), proceeds we received in December 2021 under the Lilly SPA of $80.0 million; an upfront payment of $300.0 million received in January 2022 under the Lilly Collaboration Agreement; a payment of $5.0 million received from Merck under the Merck Collaboration Agreement in the third quarter of 2022 for the achievement of a research milestone; and net proceeds of $102.8 million, after deducting underwriting discounts, commissions and other offering expenses, from the May 2024 Offering. As of September 30, 2025, we had cash, cash equivalents and marketable securities of $180.3 million.
Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented:
Nine Months Ended September 30,
2025 2024
(in thousands)
Net cash used in operating activities $ (63,828) $ (75,887)
Net cash provided by (used in) investing activities 98,808 (52,195)
Net cash provided by financing activities 442 105,424
Net increase (decrease) in cash, cash equivalents and restricted cash $ 35,422 $ (22,658)
Operating Activities
During the nine months ended September 30, 2025, operating activities used $63.8 million of cash, resulting from our net loss of $52.6 million to fund our operations and by changes in our operating assets and liabilities of $23.9 million partially offset by net non-cash charges of $12.7 million. Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2025 consisted primarily of a decrease of $21.7 million in deferred revenue resulting from the recognition of revenue on the upfront payments received in connection with the Lilly Collaboration Agreement, a $5.8 million decrease in operating lease liabilities partially offset by a $3.5 million net increase in working capital.
During the nine months ended September 30, 2024, operating activities used $75.9 million of cash, resulting from the net cash used to fund our net loss of $67.1 million and changes in our operating assets and liabilities of $24.1 million partially offset by net non-cash charges of $15.4 million. Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2024 was primarily driven by a $19.7 million decrease in deferred revenue resulting from the recognition of revenue on the upfront payments received in connection with the Lilly Collaboration Agreement and a $6.0 million decrease in operating lease liabilities partially offset by a $1.6 million net increase in working capital.
Investing Activities
During the nine months ended September 30, 2025, net cash provided by investing activities was $98.8 million consisting of $196.1 million of marketable securities maturing partially offset by $97.3 million of purchases of marketable securities.
During the nine months ended September 30, 2024, net cash used in investing activities was $52.2 million consisting of $221.8 million of purchases of marketable securities and $0.4 million in purchases of property and equipment, partially offset by $170.1 million of maturities of marketable securities.
Financing Activities
During the nine months ended September 30, 2025, net cash provided by financing activities was $0.4 million consisting of net proceeds from the exercise of common stock options and the 2020 Employee Stock Purchase Plan ("ESPP").
During the nine months ended September 30, 2024, net cash provided by financing activities was $105.4 million consisting of net proceeds from the offering of our common stock and prefunded warrants of $102.8 million, after deducting underwriting discounts, commissions and other offering expenses that had been paid during the nine months ended September 30, 2024, and net proceeds from the exercise of common stock options and the ESPP of $2.6 million.
Funding Requirements
We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we continue to fund on-going and potential future clinical activities, including the Phase 1 clinical trial of FHD-909 partnered with Lilly, advance preclinical programs, and initiate clinical trials for our product candidates in development, including those partnered with Lilly. As of the issuance date of the interim unaudited condensed consolidated financial statements included in this Quarterly Report, 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 could use our available capital resources sooner than we currently expect, in which case we would be required to obtain additional financing sooner than planned, which may not be available to us on acceptable terms, or at all, especially in light of recent stock market volatility, particularly impacting the biotech industry. 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.
If we are unable to raise sufficient capital as and when needed, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidate we may develop, or be unable to expand our operations or otherwise capitalize on our business opportunities. If we raise additional funds through collaborations or licensing arrangements with third parties, we may have to relinquish valuable rights to future revenue streams or product candidates or grant licenses on terms that may not be favorable to us.
See "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for additional risks associated with our substantial capital requirements.
Off-balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission.
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Foghorn Therapeutics Inc. published this content on November 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 12:05 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]