C4 Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Unaudited results; dollar amounts below are in millions unless otherwise stated. C4 Therapeutics is a clinical-stage biopharmaceutical company developing targeted protein degraders using its TORPEDO platform. It has no approved products and has not generated product-sales revenue; reported revenue is from collaborations.
Financial results and position
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $13.8 | $9.8 | $21.5 | $17.2 |
| Research and development expense | $31.3 | $23.3 | $57.5 | $43.8 |
| General and administrative expense | $9.9 | $8.6 | $22.7 | $16.0 |
| Operating loss | $27.4 | $22.1 | $58.8 | $42.6 |
| Net loss | $27.4 | $22.6 | $59.0 | $43.6 |
| Basic and diluted net loss per share | $0.56 | $0.51 | $1.21 | $1.00 |
Collaboration revenue increased 41% in Q2 and 25% for the six-month period year over year. Higher Biogen revenue drove the increases, partly offset by lower Calico revenue; six-month Roche revenue also fell following termination of the BRAF target collaboration in November 2021. Operating expenses rose 29% in Q2 and 34% for the six months. Revenue is collaboration-based, so a conventional product gross margin is not reported.
- Cash and liquidity: At June 30, cash and cash equivalents were $57.3; current and non-current marketable securities totaled $340.5. Cash, cash equivalents and marketable securities were approximately $397.8, versus approximately $451.5 at December 31, 2021. Current assets were $318.4 and current liabilities $46.1.
- Cash flow: Six-month operating cash use was $48.8, compared with $42.9 in 2021. Investing activities provided $29.2, largely from net maturities of marketable securities; financing provided $0.7. Cash, cash equivalents and restricted cash declined $18.8. The 2021 financing inflow included $169.9 net proceeds from a follow-on offering.
- Debt and obligations: Related-party term debt had a carrying value of $11.1, including current and long-term portions; the $12.5 principal loan bears 11.25% interest at June 30, is secured by substantially all assets, and matures June 5, 2024. Principal payments begin after the interest-only period ends in December 2022. Operating lease liabilities totaled $75.2, following the addition of expanded Watertown premises.
- Other balance-sheet items: Deferred revenue was $40.2, down from $56.2 at year-end. Accumulated deficit was $326.7. Unrealized losses on available-for-sale securities reached $4.6, recorded in other comprehensive loss; the company reported no individual security in a significant unrealized loss position and no credit-loss allowance.
Business updates, outlook and risks
- Pipeline: CFT7455, for multiple myeloma and non-Hodgkin lymphomas, remained in Phase 1/2; enrollment continued in Cohorts B-1 and C. The filing reports toxicity in Cohort A and a resulting change to dosing for additional patients. CFT8634, for synovial sarcoma and SMARCB1-deleted solid tumors, began its Phase 1/2 trial with first-patient dosing in May 2022. Both candidates had FDA orphan drug designation for specified indications.
- Expected milestones: The company expected to submit an IND for CFT1946 and begin a Phase 1/2 trial in BRAF V600X-driven cancers in the second half of 2022. It expected to complete IND-enabling activities for CFT8919 by year-end 2022. These are forward-looking plans, not reported outcomes.
- Runway and funding: The financial-statement note says available cash, cash equivalents and marketable securities were expected to fund operations for at least 12 months from issuance of the statements. Separately, the risk discussion says the company believed available funds plus expected collaboration payments would support its existing operating plan through the end of 2024. Management cautions that these estimates depend on assumptions; substantial additional funding will be needed to take candidates through approval, and no committed external funding source was identified. The $200 million ATM program had no sales through June 30, 2022.
- Key risks and uncertainties: Clinical-stage development and the targeted-protein-degradation approach are unproven; clinical results may not establish safety or efficacy. The filing cites trial enrollment, manufacturing and supplier dependence, COVID-19-related disruption, competition, intellectual-property protection, collaboration-partner decisions, and the need for further financing. Marketable securities are exposed to interest-rate risk. The company reported no material legal proceedings and no material changes in internal control over financial reporting; disclosure controls were assessed as effective at a reasonable-assurance level.
Important facts for investors to verify
- Whether CFT7455’s revised dosing and observed Cohort A toxicity affect safety, enrollment, or development plans, and what subsequent clinical data show.
- Progress and timing for CFT8634 enrollment, the CFT1946 IND and trial plan, and CFT8919 IND-enabling work.
- Whether actual spending and future collaboration receipts support the stated runway estimates, particularly the end-of-2024 operating-plan estimate.
- How collaboration revenue and deferred revenue evolve as Roche, Biogen and Calico research obligations are performed or change.
- Debt service, lease costs, and any additional financing—including potential dilution or use of the ATM program.