C4 Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. C4 Therapeutics is a clinical-stage biopharmaceutical company developing targeted protein degraders using its TORPEDO platform. It has not generated product-sales revenue; reported revenue comes from research and license collaborations.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Collaboration revenue | $7.7 million | $7.4 million; up $0.2 million |
| Research and development expense | $26.2 million | $20.5 million |
| General and administrative expense | $12.8 million | $7.4 million |
| Operating loss | $31.4 million | $20.5 million |
| Net loss | $31.6 million; $0.65 per share | $21.0 million; $0.49 per share |
| Net cash used in operating activities | $26.6 million | $24.9 million |
At March 31, cash and cash equivalents were $46.0 million and marketable securities totaled $375.6 million, for combined cash, cash equivalents and marketable securities of approximately $421.7 million. Total assets were $515.5 million and stockholders’ equity was $364.5 million. Current liabilities were $47.0 million, including $31.3 million of current deferred revenue. The company reported $10.9 million of related-party debt, net of unamortized discount and issuance costs; the loan bears 11.25% interest and matures June 2024. Operating lease liabilities totaled $76.5 million, with the amended Watertown lease extending to March 2032.
Revenue mix shifted: Biogen revenue rose to $4.7 million from $1.9 million, while Roche revenue fell to $1.1 million from $2.2 million and Calico revenue fell to $1.8 million from $3.4 million. Higher personnel costs, including stock-based compensation, drove much of the increase in R&D and G&A expense. G&A also reflected commencement of the additional leased space. Marketable securities recorded a $2.9 million unrealized loss in other comprehensive loss.
Cash flow, liquidity and outlook
Cash, cash equivalents and restricted cash declined by $30.1 million during the quarter. Investing cash use was $4.0 million, primarily net purchases of marketable securities; financing provided $0.5 million. The company states that its $421.7 million of cash, cash equivalents and marketable securities at quarter-end is expected to fund operations for at least 12 months from issuance of the financial statements. Separately, its risk disclosure estimates that these funds, together with future collaboration payments, could fund the existing operating plan through the end of 2024; this depends on assumptions and is not a guarantee. Management expects substantial expenses and operating losses to continue and says additional financing will be needed to complete development and commercialization.
Programs, management commentary and key risks
- CFT7455: Phase 1/2 trial ongoing for multiple myeloma and non-Hodgkin lymphomas; the company presented Cohort A data in April 2022 and continues enrollment. It disclosed toxicity in Cohort A and changes to dosing in subsequent cohorts.
- CFT8634: FDA-cleared IND; the company expected to dose the first patient in the first half of 2022. FDA granted orphan drug designation for soft tissue sarcoma in March 2022.
- CFT1946: The company expected to submit an IND and begin a Phase 1/2 trial in BRAF V600X-driven cancers in the second half of 2022. CFT8919 IND-enabling work was expected to be completed by year-end 2022; the filing’s risk discussion refers to a planned trial in 2023.
- Key risks include early-stage clinical and scientific uncertainty, patient enrollment and safety, reliance on contract manufacturers and research organizations, collaboration-partner decisions, intellectual-property protection, competition, COVID-19-related operational disruption, and the need for additional capital. The $12.5 million Perceptive term loan is secured by substantially all company assets and imposes covenants and a minimum controlled-account cash balance.
- The expanded lease added $44.4 million of right-of-use assets and $44.1 million of lease liabilities. No tenant improvement allowance had been recorded by quarter-end; the company expected to receive up to $2.6 million in 2022.
- No material legal proceedings were reported. Management concluded disclosure controls were effective; no material change in internal control over financial reporting was reported.
Important facts for investors to verify
- Latest CFT7455 clinical safety, dosing, enrollment and efficacy updates, particularly following Cohort A toxicity and dose changes.
- Whether CFT8634 dosing and the CFT1946 IND/trial milestones occurred on the stated timelines, and progress on CFT8919.
- Cash burn and the assumptions behind the differing liquidity horizons: at least 12 months in the financial-statement note versus through year-end 2024 in the risk discussion, including expected collaboration receipts.
- Collaboration-program progress, potential milestone conditions, and any changes to Roche, Biogen or Calico arrangements; no royalties had been received to date.
- Interest expense, debt covenants and repayment schedule, as well as the long-term lease commitments and any tenant-improvement reimbursements.