C4 Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. The company is a clinical-stage biopharmaceutical developer of targeted protein degraders. It has no product sales; reported revenue is from collaboration and license agreements.
Financial results
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Collaboration revenue | $11.1 million | $6.8 million | $17.5 million | $28.2 million |
| Research and development expense | $28.3 million | $29.7 million | $87.3 million | $87.2 million |
| General and administrative expense | $10.5 million | $9.6 million | $31.8 million | $32.3 million |
| Net loss | $27.0 million | $32.0 million | $97.7 million | $91.0 million |
| Net loss per share | $0.55 | $0.65 | $1.99 | $1.86 |
- Q3 operating loss was $27.8 million, versus $32.5 million a year earlier. Nine-month operating loss was $101.6 million, versus $91.2 million.
- Q3 collaboration revenue rose primarily because Roche revenue increased after completion of research activities for a nominated target. Nine-month revenue declined mainly with lower Biogen and Calico revenue, partly offset by higher Roche revenue. Calico’s research term expired in March 2023; Biogen’s expired in June 2023, although specified work continues.
- At September 30, cash and cash equivalents were $61.0 million and marketable securities were $185.5 million, totaling approximately $246.4 million. Total current assets were $223.7 million and current liabilities were $30.3 million.
- Operating cash use for the first nine months was $82.8 million, compared with $76.8 million in 2022. Investing activities provided $126.4 million, largely reflecting net maturities of securities; financing activities used $12.2 million, including repayment of the $12.5 million related-party term loan.
- The term loan was repaid in July 2023, releasing liens on substantially all company assets. A $0.6 million extinguishment loss was recorded. No long-term debt remained at September 30. Operating lease liabilities totaled $72.2 million.
- The company reported no product-sales revenue and continued to incur losses. Gross margin is not presented as a meaningful measure in the filing for this collaboration-funded, pre-commercial business.
Business developments, outlook and risks
- Management stated that cash, cash equivalents and marketable securities of $246.4 million should fund operations into the second half of 2025. The company expects continued operating losses and says it will need substantial additional financing; it has no committed external funding source.
- Betta Pharma agreed to license and develop CFT8919 in Greater China, with a $10.0 million upfront payment and potential milestone payments of up to $357.0 million, plus royalties. No Betta revenue had been recognized by September 30 because revenue recognition had not commenced. A separate agreement for Betta Investment to buy approximately $25.0 million of shares had not closed as of the November 1 filing date.
- Roche collaboration revenue was $8.2 million for Q3 and $8.7 million for the nine months. The company may receive future milestones and royalties under collaborations, but such payments depend on partner and development outcomes.
- CFT7455 and CFT1946 were enrolling patients in Phase 1 dose-escalation studies. The FDA cleared the CFT8919 investigational new drug application in June 2023; the company expected to initiate clinical activity outside Greater China after Betta’s Phase 1 dose escalation.
- After quarter-end, on October 30, the board decided not to advance CFT8634 beyond Phase 1 dose escalation. The company said November 2023 clinical data showed substantial BRD9 degradation but insufficient efficacy in heavily pretreated patients; suspension-related costs were not expected to be material.
- Key risks include early-stage clinical and technical uncertainty, potential safety or efficacy failures, reliance on third-party manufacturers and CROs, competition, collaboration-partner decisions, intellectual-property disputes, and the need for additional capital. Management reported effective disclosure controls at the reasonable-assurance level and no material change in internal control over financial reporting during the quarter. No material legal proceedings were reported.
Important facts for investors to verify
- Whether Betta Investment’s approximately $25.0 million stock purchase closed after the filing date, and the timing and accounting for any proceeds.
- Updated cash runway and financing plans, given operating cash use of $82.8 million in the first nine months and management’s expectation of funding into the second half of 2025.
- Clinical enrollment, safety, dose selection and efficacy evidence for CFT7455 and CFT1946, and the timing and terms of CFT8919’s clinical development.
- The effect of discontinuing CFT8634 on pipeline priorities, planned spending and future clinical disclosures.
- Future collaboration revenue and any milestones, particularly as Biogen and Calico research terms have expired and recognized revenue depends on contract performance.