C4 Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; filed May 4, 2023. C4 Therapeutics is a clinical-stage biopharmaceutical company developing targeted protein degraders using its TORPEDO platform. It has no approved products and has generated no product-sales revenue.
Financial performance and position
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Collaboration revenue | $3.8 million | $7.7 million |
| Research and development expense | $29.0 million | $26.2 million |
| General and administrative expense | $10.9 million | $12.8 million |
| Operating loss | $36.2 million | $31.4 million |
| Net loss | $34.8 million | $31.6 million |
| Net loss per share | $0.71 | $0.65 |
| Net cash used in operations | $33.1 million | $26.6 million |
- Collaboration revenue fell about 51%, principally due to lower Biogen revenue as research activity progressed toward the end of its research term. There is no product-sales revenue.
- R&D expense rose about 11%, reflecting higher clinical-trial costs for CFT7455, CFT8634 and CFT1946 and higher facilities costs, partly offset by lower preclinical spending. G&A fell about 15%, mainly due to lower professional fees and stock-based compensation.
- Interest and other income was $2.1 million, compared with $0.3 million, reflecting higher returns on investments; this partly offset the larger operating loss.
- At March 31, cash and cash equivalents were $49.5 million and marketable securities were $255.6 million, totaling approximately $305.0 million. Current assets were $278.5 million versus current liabilities of $39.4 million.
- Term-loan principal was $11.75 million, with a carrying value of about $10.9 million after discounts. The related-party loan bears variable interest; its rate was 14.17% at quarter-end. Principal payments began in 2023, and the balance is due at maturity in June 2024. The loan is secured by substantially all company assets and includes a $3.0 million minimum-cash requirement and covenants.
Material changes and business developments
- Three product candidates were in clinical trials: CFT7455, CFT8634 and CFT1946. The company continued dose-escalation enrollment in each program. CFT8634 had shown dose-proportional exposure, oral bioavailability and deep BRD9 degradation in initial data reported in January 2023.
- CFT8919 completed IND-enabling activities in December 2022; the filing described an IND submission planned for the first half of 2023.
- Calico’s research term expired March 13, 2023, with related research substantially complete. Biogen’s research term was scheduled to end in June 2023. Roche collaboration work continued on three targets.
- Accumulated deficit was $430.7 million at quarter-end, compared with $395.9 million at December 31, 2022. Stockholders’ equity declined to $262.5 million from $289.2 million.
Outlook, risks and contingencies
- The company expects continuing operating losses and increased expenses as it advances clinical and preclinical programs. It stated that cash, cash equivalents and marketable securities would fund operations for at least 12 months from issuance of the financial statements. Separately, management said those resources, together with expected collaboration payments, were expected to support the existing operating plan through the end of 2024; this estimate depends on assumptions and is not assured.
- Management expects to require substantial additional financing; no external funding source was committed as of March 31, 2023. The $200 million at-the-market equity program had no sales through quarter-end. Future equity financing could dilute shareholders; debt or collaboration financing could impose restrictions or require relinquishing rights.
- Clinical, regulatory and scientific risks remain substantial: the company has not completed a clinical trial or obtained product approval, early results may not predict later outcomes, and adverse effects or enrollment delays could slow or halt development. The filing notes that observed safety signals led to a dosing-schedule modification in the CFT7455 trial.
- Other key risks include dependence on third-party manufacturers and research organizations, limited manufacturing redundancy, competition, intellectual-property challenges, partner decisions and possible disruption from COVID-19 or supply constraints. The company reported no material legal proceedings and no off-balance-sheet arrangements.
- Management concluded disclosure controls and procedures were effective at the reasonable-assurance level; no material change in internal control over financial reporting was reported for the quarter.
Most important facts for investors to verify
- Whether clinical-trial enrollment, safety, dose selection and efficacy evidence support continued advancement of CFT7455, CFT8634 and CFT1946.
- Whether CFT8919’s planned IND submission occurred and what subsequent regulatory or development timing means for spending.
- Actual cash burn and collaboration receipts relative to the stated runway; note the different runway statements and the reliance on expected partner payments for the end-of-2024 estimate.
- Biogen’s post-research-term plans, Roche program progress, and any milestone, option or termination developments following Calico’s research-term expiry.
- Debt repayment and refinancing plans ahead of the June 2024 maturity, including the high variable interest rate and secured-loan covenants.
- Potential financing, dilution, and changes in the ATM program, as well as material developments in the May 2023 petition challenging a BRD9-related patent.