SEC Filing – C4 Therapeutics

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cccc-10q_20210930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission File Number: 001-39567

C4 Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	47-5617627
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

490 Arsenal Way, Suite 200 Watertown, MA	02472
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 231-0700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

CCCC

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 1, 2021, the registrant had 48,625,608 shares of common stock, $0.0001 par value per share, outstanding.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Form 10-Q, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains express or implied forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Forward-looking statements in this Form 10-Q may include, but are not limited to, statements about:

•

the initiation, timing, progress, results, safety and efficacy, and cost of our research and development programs and our current and future preclinical studies and clinical trials, including statements regarding the timing of initiation and completion of studies or trials, the period during which the results of the trials will become available, and our research and development programs;

•

the ultimate impact of the ongoing coronavirus, or COVID-19, pandemic, or any other health epidemic, on our business, manufacturing, clinical trials, research programs, supply chain, regulatory review, healthcare systems or the global economy as a whole;

•

risks related to the direct or indirect impact of the ongoing COVID-19 pandemic or any future large-scale adverse health event, such as the scope and duration of the outbreak, government actions and restrictive measures implemented in response, material delays in diagnoses, initiation or continuation of treatment for diseases that may be addressed by our development candidates and investigational medicines, or in patient enrollment in clinical trials, potential clinical trials, regulatory review or supply chain disruptions, and other potential impacts to our business, the effectiveness or timeliness of steps taken by us to mitigate the impact of the pandemic, and our ability to execute business continuity plans to address disruptions caused by the ongoing COVID-19 pandemic or future large-scale adverse health event;

•

our ability to obtain funding for our operations necessary to complete further development, manufacturing and commercialization of our product candidates;

•

our ability to obtain and maintain regulatory approval for any of our current or future product candidates;

•

the period of time over which we anticipate our existing cash and cash equivalents, and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements;

•

our ability to identify and develop product candidates for treatment of additional disease indications;

•

the potential attributes and benefits of our product candidates;

•

the rate and degree of market acceptance and clinical utility for any product candidates we may develop;

•

the pricing and reimbursement of our product candidates, if approved;

•

the effects of competition with respect to any of our current or future product candidates, as well as innovations by current and future competitors in our industry;

•

the implementation of our strategic plans for our business, any product candidates we may develop and our TORPEDO^® platform;

•

the ability and willingness of our third-party strategic collaborators to continue research, development and manufacturing activities relating to our product candidates, including our ability to advance programs under our existing collaboration agreements with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc., or Roche, Biogen MA, Inc., or Biogen, and Calico Life Sciences LLC, or Calico, or other new collaboration agreements;

•

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates;

•

estimates of our future expenses, revenues, capital requirements, and our needs for additional financing;

•

future agreements with third parties in connection with the manufacturing and commercialization of our product candidates, if approved;

•

the size and growth potential of the markets for our product candidates and our ability to serve those markets;

•

our financial performance;

•

regulatory developments in the United States and foreign countries;

•

our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

•

the success of competing therapies that are or may become available;

•

our ability to attract and retain key scientific or management personnel;

•

developments relating to our competitors and our industry; and

•

other risks and uncertainties, including those discussed in Part II, Item 1A - Risk Factors in this Form 10-Q.

In some cases, forward-looking statements can be identified by terminology such as “will,” “may,” “should,” “could,” “expects,” “intends,” “plans,” “aims,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section titled “Risk Factors” and elsewhere in this Form 10-Q. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those expressed or implied by the forward-looking statements. No forward-looking statement is a promise or a guarantee of future performance.

The forward-looking statements in this Form 10-Q represent our views as of the date of this Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Form 10-Q.

This Form 10-Q may include statistical and other industry and market data that we obtained from industry publications and research, surveys, and studies conducted by third parties. Industry publications and third-party research, surveys, and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. We have not independently verified the information contained in such sources.

SUMMARY OF RISK FACTORS

Our ability to implement our business strategy is subject to numerous risks that you should be aware of before making an investment decision. These risks are described more fully in Part II, Item 1A - Risk Factors in this Form 10-Q. These risks include, among others:

•

We are a clinical-stage biopharmaceutical company with a limited operating history and have incurred significant losses since our inception. To date, we have not generated any revenue from product sales. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years and may never achieve or maintain profitability. Our net loss was $68.2 million and $44.5 million for the nine months ended September 30, 2021 and 2020, respectively.

•

We will need substantial additional funding to pursue our business objectives and continue our operations. If we are unable to raise capital when needed, we may be required to delay, limit, reduce or terminate our research or product development programs or future commercialization efforts.

•

Our approach to the discovery and development of product candidates based on our TORPEDO platform is unproven, which makes it difficult to predict the time, cost of development and likelihood of successfully developing any products.

•

Most of our product candidates are still in preclinical development and we have never completed a clinical trial of any of our product candidates. Our business could be harmed if we are unable to advance to clinical development, develop, obtain regulatory approval for and/or commercialize our product candidates; if we experience significant delays in doing any of these things; or if we experience significant cost increases.

•

We cannot be certain of the timely completion or outcome of our preclinical testing and clinical trials. In addition, the results of preclinical studies may not be predictive of the results of clinical trials and the results of any early-stage clinical trials we commence may not be predictive of the results of later-stage clinical trials.

•

Our preclinical studies and clinical trials may fail to demonstrate adequately the safety, potency, purity and efficacy of any of our product candidates, which would prevent or delay development, regulatory approval and commercialization of our current and future product candidates.

•

We have entered into collaboration agreements with Roche, Biogen and Calico and may in the future seek to enter into collaborations with third parties for the development and/or commercialization of certain of our product candidates. If we fail to enter into these types of new collaborations, or if our existing collaborations are not successful, we may be unable to continue development of our product candidates, we will not receive any contemplated or potential future milestone payments or royalties, and we could fail to capitalize on the market potential of our product candidates.

•

The continuing effects of the ongoing COVID-19 pandemic, including the spread of new strains of the virus, could adversely impact our business, including our preclinical studies and clinical trials.

•

We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

•

We rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for preclinical and clinical testing, as well as for commercial manufacture if any of our product candidates receive marketing approval. This reliance on third parties may increase the risk that we will not have sufficient quantities of our product candidates in a timely manner, or at an acceptable cost or quality.

•

If we are unable to obtain required marketing approvals for, commercialize, manufacture, obtain and maintain patent protection for or gain market acceptance of our product candidates, or if we experience significant delays in doing so, our business will be materially harmed and our ability to generate revenue from product sales will be materially impaired.

•

If we are unable to obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and products may be impaired.

NOTE REGARDING COMPANY REFERENCES

Unless the context otherwise requires, the terms “C4 Therapeutics,” “the Company,” “we,” “us,” and “our” in this Form 10-Q refer to C4 Therapeutics, Inc. and its consolidated subsidiary.

NOTE REGARDING TRADEMARKS

We own or have rights to various trademarks, service marks and trade names that are used in connection with the operation of our business, including our company name, C4 Therapeutics, our logo, the name of our TORPEDO technology platform and the names of our BIDAC and MONODAC protein degrader product candidates. This Form 10-Q may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not intended to and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the ®, ^TM or ^SM symbols, but the omission of such references is not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable owner of these trademarks, service marks and trade names.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statement of Operations and Comprehensive Loss	2
	Condensed Consolidated Statement of Stockholder’s Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	69
Item 3.	Defaults Upon Senior Securities	69
Item 4.	Mine Safety Disclosures	69
Item 5.	Other Information	69
Item 6.	Exhibits	70
	SIGNATURES	71

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

C4 Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(Unaudited)

	September 30, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	162,745		$	181,727
Marketable securities, current		239,326			189,962
Accounts receivable		4,845			4,484
Prepaid expenses and other current assets		5,378			4,836
Total current assets		412,294			381,009
Marketable securities, non-current		78,191			—
Property and equipment, net		3,323			3,323
Right-of-use asset		12,249			13,229
Restricted cash		1,276			2,577
Other assets		578			—
Total assets	$	507,911		$	400,138
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,745		$	5,683
Accrued expenses and other current liabilities		11,471			9,524
Deferred revenue, current		32,294			27,603
Operating lease liability, current		1,177			1,042
Total current liabilities		48,687			43,852
Deferred revenue, net of current		38,936			53,617
Operating lease liability, net of current		10,920			11,826
Long-term debt − related party		10,588			10,052
Total liabilities		109,131			119,347
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value of $0.0001 per share; 10,000,000 shares authorized, and no shares issued or outstanding as of September 30, 2021 and December 31, 2020, respectively		—			—
Common stock, par value of $0.0001 per share; 150,000,000 shares authorized, and 48,593,398 and 43,059,632 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		5			4
Additional paid-in capital		650,987			464,597
Accumulated other comprehensive (loss) income		(155	)		13
Accumulated deficit		(252,057	)		(183,823	)
Total stockholders’ equity		398,780			280,791
Total liabilities and stockholders’ equity	$	507,911		$	400,138

See accompanying notes to condensed consolidated financial statements.

C4 Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenue from collaboration agreements	$	8,500		$	8,447		$	25,707		$	24,933
Operating expenses:
Research and development		24,302			23,935			68,114			58,007
General and administrative		8,452			2,861			24,472			8,472
Total operating expenses		32,754			26,796			92,586			66,479
Loss from operations		(24,254	)		(18,349	)		(66,879	)		(41,546	)
Other (expense) income, net:
Interest expense and amortization of long-term debt − related party		(539	)		(562	)		(1,606	)		(689	)
Interest and other income, net		110			50			251			334
Change in fair value of warrant liability		—			(3,141	)		—			(3,141	)
Total other (expense) income, net		(429	)		(3,653	)		(1,355	)		(3,496	)
Loss before income taxes		(24,683	)		(22,002	)		(68,234	)		(45,042	)
Income tax benefit		—			167			—			502
Net loss	$	(24,683	)	$	(21,835	)	$	(68,234	)	$	(44,540	)
Unrealized gain (loss) on marketable securities		(86	)		10			(168	)		8
Comprehensive loss	$	(24,769	)	$	(21,825	)	$	(68,402	)	$	(44,532	)

Reconciliation of net loss to net loss attributable to common stockholders:
Net loss	$	(24,683	)	$	(21,835	)	$	(68,234	)	$	(44,540	)
Accrual of preferred stock dividends		—			(5,212	)		—			(10,363	)
Net loss attributable to common stockholders	$	(24,683	)	$	(27,047	)	$	(68,234	)	$	(54,903	)
Net loss per share attributable to common stockholders − basic and diluted	$	(0.51	)	$	(17.55	)	$	(1.51	)	$	(36.76	)
Weighted-average number of shares used in computed net loss per share − basic and diluted		48,490,533			1,540,902			45,163,444			1,493,521

See accompanying notes to condensed consolidated financial statements.

C4 Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

(Unaudited)

	Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital			Income (Loss)			Deficit			Equity
Balance as of December 31, 2020		43,059,632	$	4	$	464,597			13		$	(183,823	)	$	280,791
Exercise of stock options		49,328		—		166			—			—			166
Stock-based compensation		—		—		3,845			—			—			3,845
Unrealized loss on marketable securities		—		—		—			(107	)		—			(107	)
Net loss		—		—		—			—			(20,971	)		(20,971	)
Other		—		—		(19	)		—			—			(19	)
Balance as of March 31, 2021		43,108,960	$	4	$	468,589		$	(94	)	$	(204,794	)	$	263,705
Issuance of common stock, net of estimated issuance costs of $11.3 million (Note 10)		4,887,500		1		169,482			—			—			169,483
Shares issued upon warrant exercise − related party (Note 10)		256,038		—		—			—			—			—
Exercise of stock options		126,150		—		539			—			—			539
Stock-based compensation		—		—		5,175			—			—			5,175
Unrealized gain on marketable securities		—		—		—			25			—			25
Net loss		—		—		—			—			(22,580	)		(22,580	)
Other		1,411		—		80			—			—			80
Balance as of June 30, 2021		48,380,059	$	5	$	643,865		$	(69	)	$	(227,374	)	$	416,427
Exercise of stock options		205,210		—		873			—			—			873
Stock-based compensation		—		—		6,027			—			—			6,027
Unrealized loss on marketable securities		—		—		—			(86	)		—			(86	)
Net loss		—		—		—			—			(24,683	)		(24,683	)
Other		8,129		—		222			—			—			222
Balance as of September 30, 2021		48,593,398	$	5	$	650,987		$	(155	)	$	(252,057	)	$	398,780

See accompanying notes to condensed consolidated financial statements.

C4 Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) - Continued

(in thousands, except share amounts)

(Unaudited)

	Redeemable Convertible Preferred Stock				Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Shares			Amount		Capital			Income (Loss)			Deficit			Deficit
Balance as of December 31, 2019		113,145,900	$	110,995		1,426,641		$	1	$	5,525		$	—		$	(117,488	)	$	(111,962	)
Exercise of stock options		—		—		49,031			—		156			—			—			156
Stock-based compensation		—		—		—			—		116			—			—			116
Repurchase of common stock		—		—		—			—		(202	)		—			—			(202	)
Vested stock option settlement		—		—		—			—		(728	)		—			—			(728	)
Net loss		—		—		—			—		—			—			(11,912	)		(11,912	)
Balance as of March 31, 2020		113,145,900	$	110,995		1,475,672		$	1	$	4,867		$	—		$	(129,400	)	$	(124,532	)
Issuance of Series B redeemable convertible preferred stock, net of issuance costs of $4.5 million		138,571,428		141,026		—			—		—			—			—			—
Exercise of stock options		—		—		38,378			—		109			—			—			109
Stock-based compensation		—		—		—			—		161			—			—			161
Repurchase of common stock		—		—		(23,714	)		—		78			—			—			78
Vested stock option settlement		—		—		—			—		(85	)		—			—			(85	)
Unrealized loss on marketable securities		—		—		—			—		—			(2	)		—			(2	)
Net loss