C4 Therapeutics, Inc. [CCCC] Filings

10-Q 1 cccc-20230630.htm 10-Q cccc-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

________________________________________________

FORM 10-Q

________________________________________________

(Mark One)


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

For the quarterly period ended June 30, 2023


o			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 120 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.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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. o

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

As of July 31, 2023, the registrant had 49,190,855 shares of common stock, $0.0001 par value per share, outstanding.

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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, expansion and completion of studies or trials, the period during which the results of the trials will become available, and our research and development programs;

•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, including the possibility for reduced pricing of our products, once approved, if they are later subject to mandatory price negotiation with the Centers for Medicare and Medicaid Services under the Inflation Reduction Act of 2022 or other applicable laws;

•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® (Target ORiented ProtEin Degrader Optimizer) 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, Calico Life Sciences, LLC, or Calico, and Betta Pharmaceuticals Co., Ltd, or Betta Pharma, or enter 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;

•the ultimate impact, and risks related to the direct or indirect impact of, any health epidemic on our business, manufacturing, clinical trials, research programs, supply chain, regulatory review, healthcare systems or the global economy as a whole;

•future agreements with third parties in connection with the manufacturing, development, 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 U.S. 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;

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•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.

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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 $70.7 million and $59.0 million for the six months ended June 30, 2023 and 2022, 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 and likelihood of successfully developing any products.

•While we are a clinical-stage company and have commenced clinical trials of three of our product candidates, all of our other product candidates are still in preclinical development. Further, 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, or if we experience significant delays in doing any of these things.

•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 and efficacy of any of our product candidates, which would prevent, delay, or require additional research or analysis to proceed with development, regulatory approval, and commercialization of our current and future product candidates.

•We have ongoing collaboration agreements with Roche and Betta Pharma, as well as collaboration agreements with Biogen and Calico, whose research terms expired on June 30, 2023 and March 13, 2023, respectively. We may also seek to enter into additional collaborations in the future with third parties for the development and/or commercialization of certain of our product candidates. However, we may never realize the full potential benefits under these existing or potential collaboration arrangements.

•We face substantial competition, which may result in others discovering, developing or commercializing products for the same indication and/or patient population 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 or enforceable, our competitors could develop and commercialize technology, product candidates, and products similar or identical to ours, and our ability to successfully commercialize our technology, product candidates, and products may be impaired.

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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.

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		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	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	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 3.	Defaults Upon Senior Securities	70
Item 4.	Mine Safety Disclosures	70
Item 5.	Other Information	70
Item 6.	Exhibits	71
	SIGNATURES	73

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

C4 Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(Unaudited)


	June 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	44,881	$	29,754
Marketable securities, current	222,404		246,399
Accounts receivable	1,028		1,473
Prepaid expenses and other current assets	6,074		9,931
Total current assets	274,387		287,557
Marketable securities, non-current	19,415		60,962
Property and equipment, net	7,572		7,400
Right-of-use asset	67,067		70,116
Restricted cash	3,279		3,279
Other assets	3,288		1,526
Total assets	$	375,008	$	430,840
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,247	$	1,172
Accrued expenses and other current liabilities	16,729		19,769
Deferred revenue, current	13,971		16,618
Operating lease liability, current	4,956		4,700
Long-term debt − related party, current and net of discount	10,335		2,287
Total current liabilities	48,238		44,546
Deferred revenue, net of current	24,647		16,895
Operating lease liability, net of current	68,416		70,970
Long-term debt − related party, net of current and discount	—		9,195
Total liabilities	141,301		141,606
Commitments and contingencies (see Note 11)
Stockholders’ equity:
Preferred stock, par value of $0.0001 per share; 10,000,000 shares authorized, and no shares issued or outstanding as of June 30, 2023 and December 31, 2022, respectively	—		—
Common stock, par value of $0.0001 per share; 150,000,000 shares authorized, and 49,065,098 and 48,966,216 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	5		5
Additional paid-in capital	702,068		689,256
Accumulated other comprehensive loss	(1,774)		(4,137)
Accumulated deficit	(466,592)		(395,890)
Total stockholders’ equity	233,707		289,234
Total liabilities and stockholders’ equity	$	375,008	$	430,840

See accompanying notes to unaudited condensed consolidated financial statements.

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C4 Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue from collaboration agreements	$	2,664	$	13,834	$	6,423	$	21,488
Operating expenses:
Research and development	29,926		31,323		58,968		57,526
General and administrative	10,306		9,895		21,251		22,715
Total operating expenses	40,232		41,218		80,219		80,241
Loss from operations	(37,568)		(27,384)		(73,796)		(58,753)
Other income (expense), net:
Interest expense and amortization of long-term debt − related party	(600)		(534)		(1,206)		(1,061)
Interest and other income, net	2,246		506		4,300		782
Total other income (expense), net	1,646		(28)		3,094		(279)


Net loss	$	(35,922)	$	(27,412)	$	(70,702)	$	(59,032)
Net loss per share − basic and diluted	$	(0.73)	$	(0.56)	(1.44)		(1.21)
Weighted-average number of shares used in computed net loss per share − basic and diluted	49,063,631		48,823,698		49,048,062		48,779,508

Other comprehensive loss:
Unrealized gain (loss) on marketable securities	696		(931)		2,363		(3,806)
Comprehensive loss	$	(35,226)	$	(28,343)	$	(68,339)	$	(62,838)

See accompanying notes to unaudited condensed consolidated financial statements.

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C4 Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance as of December 31, 2022	48,966,216	$	5	$	689,256	(4,137)		$	(395,890)	$	289,234
Issuance of common stock upon exercise of stock options	11,759	—		56		—		—		56
Issuance of common stock upon vesting of restricted stock units, net of shares repurchased for tax withholding	48,730	—		(94)		—		—		(94)
Issuance of common stock under 2020 ESPP	20,748	—		104		—		—		104
Stock-based compensation	—	—		6,251		—		—		6,251
Change in unrealized loss, net on marketable securities	—	—		—		1,667		—		1,667
Net loss	—	—		—		—		(34,780)		(34,780)
Other	5,056	—		32		—		—		32
Balance as of March 31, 2023	49,052,509	5		695,605		(2,470)		(430,670)		262,470
Exercise of stock options and release of stock units	1,337	—		2		—		—		2
Stock-based compensation	—	—		6,425		—		—		6,425
Change in unrealized loss, net on marketable securities	—	—		—		696		—		696
Net loss	—	—		—		—		(35,922)		(35,922)
Other	11,252	—		36		—		—		36
Balance as of June 30, 2023	49,065,098	$	5	$	702,068	$	(1,774)	$	(466,592)	$	233,707

See accompanying notes to unaudited condensed consolidated financial statements.

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C4 Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity - Continued

(in thousands, except share amounts)

(Unaudited)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance as of December 31, 2021	48,688,875	$	5	$	658,091	$	(775)	$	(267,715)	$	389,606
Issuance of common stock upon exercise of stock options	52,707	—		260		—		—		260
Issuance of common stock under 2020 ESPP	8,028	—		220		—		—		220
Stock-based compensation	—	—		8,879		—		—		8,879
Change in unrealized loss on marketable securities	—	—		—		(2,875)		—		(2,875)
Net loss	—	—		—		—		(31,620)		(31,620)
Other	1,880	—		59		—		—		59
Balance as of March 31, 2022	48,751,490	5		667,509		(3,650)		(299,335)		364,529
Exercise of stock options and release of stock units	124,677	—		259		—		—		259
Stock-based compensation	—	—		8,109		—		—		8,109
Change in unrealized loss on marketable securities	—	—		—		(931)		—		(931)
Net loss	—	—		—		—		(27,412)		(27,412)
Other	1,485	—		39		—		—		39
Balance as of June 30, 2022	48,877,652	$	5	$	675,916	$	(4,581)	$	(326,747)	$	344,593

See accompanying notes to unaudited condensed consolidated financial statements.

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C4 Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	Six Months Ended June 30,
	2023		2022
Cash flows used in operating activities:
Net loss	$	(70,702)	$	(59,032)
Adjustments to reconcile net loss to cash used in operating activities:
Stock-based compensation expense	12,676		17,086
Depreciation and amortization expense	1,003		740
Reduction in carrying amount of right-of-use asset	3,048		2,890
Net amortization (accretion) of premiums (discounts) on marketable securities	(1,724)		1,082
Amortization of debt discount − related party	354		354
Other	68		—
Changes in operating assets and liabilities:
Accounts receivable	445		4,007
Prepaid expenses and other current and long-term assets	2,096		1,722
Accounts payable	941		(564)
Accrued expenses and other current liabilities	(3,133)		(87)
Operating lease liability	(2,299)		(983)
Deferred revenue	5,105		(16,006)
Net cash used in operating activities	(52,122)		(48,791)
Cash flows provided by (used in) investing activities:
Proceeds from maturities of marketable securities	129,708		138,057
Purchases of marketable securities	(60,078)		(108,132)
Purchases of property and equipment, net	(951)		(701)
Net cash provided by investing activities	68,679		29,224
Cash flows (used in) provided by financing activities:
Payment of long-term debt − related party	(1,500)		—
Payments for repurchase of common stock for tax withholding	(94)		—
Proceeds from exercise of stock options	58		519
Other	106		220
Net cash (used in) provided by financing activities	(1,430)		739

Net change in cash, cash equivalents and restricted cash	15,127		(18,828)
Cash, cash equivalents and restricted cash at beginning of period	33,033		79,403
Cash, cash equivalents and restricted cash at end of period	$	48,160	$	60,575

Reconciliation of cash, cash equivalents and restricted cash:
Cash, cash equivalents and restricted cash at end of period	$	48,160	$	60,575
Less: restricted cash	(3,279)		(3,279)
Cash and cash equivalents at end of the period	$	44,881	$	57,296

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C4 Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows - Continued

(in thousands)

(Unaudited)


	Six Months Ended June 30,
	2023		2022
Supplemental disclosures of cash flow information:
Cash paid for interest − related party	$	852	$	828
Cash paid for leases	$	4,271	$	2,996

Supplemental disclosures of non-cash investing and financing activities:
Capital expenditures in accounts payable and accrued expenses	$	223	$	3,270
Operating lease liabilities arising from obtaining right-of-use assets	$	—	$	44,067

See accompanying notes to unaudited condensed consolidated financial statements.

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C4 THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Nature of the business and basis of presentation

C4 Therapeutics, Inc., or, together with its subsidiary, the Company, is a clinical-stage biopharmaceutical company dedicated to the advancement of targeted protein degradation science to develop a new generation of small-molecule medicines to transform how disease is treated. The Company leverages its proprietary technology platform, TORPEDO (Target ORiented ProtEin Degrader Optimizer), to efficiently design and optimize small-molecule medicines that harness the body’s natural protein recycling system to rapidly degrade disease-causing protein, offering the potential to overcome drug resistance, drug undruggable targets, and improve patient outcomes. The Company uses its TORPEDO platform to advance multiple targeted oncology programs to the clinic while expanding its research platform to deliver the next wave of medicines for difficult-to-treat diseases. The Company was incorporated in Delaware on October 7, 2015 and has its principal office in Watertown, Massachusetts.

Liquidity and capital resources

Since its inception, the Company’s primary activities have been focused on research and development activities, building the Company’s intellectual property, recruiting and retaining personnel, and raising capital to support these activities. To date, the Company has funded its operations primarily with proceeds received from the sales of redeemable convertible preferred stock, public offerings of the Company’s common stock, through its collaboration agreements, and debt financing.

The Company has incurred recurring losses since its inception, including net losses of $70.7 million and $59.0 million for the six months ended June 30, 2023 and 2022, respectively. In addition, as of June 30, 2023, the Company had an accumulated deficit of $466.6 million. To date, the Company has not generated any revenue from product sales as none of its product candidates have been approved for commercialization. The Company expects to continue to generate operating losses for the foreseeable future.

The Company expects that its cash, cash equivalents, and marketable securities of $286.7 million as of June 30, 2023 will be sufficient to fund its operations for at least the next twelve months from the date of issuance of these condensed consolidated financial statements. Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Risks and uncertainties

The Company is subject to risks common to other life science companies in the early development stage including, but not limited to, uncertainty of ability to raise additional financing, product development and commercialization, development by its competitors of new technological innovations, dependence on key personnel, market acceptance of products, lack of marketing and sales history, product liability, protection of proprietary technology and intellectual property, and compliance with the Food and Drug Administration, or the FDA, and other government regulations. If the Company does not successfully advance its programs into and through human clinical trials and commercialize any of its product candidates either directly or through collaborations with other companies, the Company may be unable to produce product revenue or achieve profitability. There can be no assurance that the Company’s research and development efforts will be successful, adequate protection for the Company’s intellectual property will be obtained, any products developed will obtain necessary government regulatory approval, or any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies.

Note 2. Summary of significant accounting policies

Basis of presentation and consolidation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or the SEC, regarding interim financial reporting, and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements include the accounts of C4 Therapeutics, Inc. and its subsidiary, C4T Securities Corporation. All intercompany balances and transactions have been eliminated in consolidation.

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Unaudited interim financial information

The accompanying condensed consolidated balance sheet as of June 30, 2023, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2023 and 2022, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2023 and 2022, and the condensed consolidated statements of cash flows for the six months ended June 30, 2023 and 2022, and the related interim disclosures are unaudited. These unaudited condensed consolidated financial statements include all adjustments necessary, consisting of only normal recurring adjustments, to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of and for year ended December 31, 2022, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the SEC on February 23, 2023.

Use of estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. This process may result in actual results differing materially from those estimated amounts used in the preparation of the condensed consolidated financial statements if these results differ from historical experience or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, amounts and timing of revenues recognized under the Company’s research and development collaboration arrangements, prepaid and accrued research and development expense, incremental borrowing rate used in the measurement of lease liabilities, and estimated volatility used in fair valuation of stock options. The Company assesses estimates on an ongoing basis; however, actual results could materially differ from those estimates.

Significant accounting policies

The Company’s significant accounting policies are disclosed in the audited condensed consolidated financial statements for the year ended December 31, 2022, which are included in the Company’s Annual Report on Form 10-K that was filed with the SEC on February 23, 2023. Since the date of those condensed consolidated financial statements, there have been no material changes to the Company’s significant accounting policies.

Note 3. Fair value measurements

The following table presents information about the Company’s financial assets measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values as of June 30, 2023 (in thousands):


	Fair Value		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	39,009	$	39,009	$	—	$	—
Corporate debt securities	5,622		—		5,622		—

Marketable securities:
Corporate debt securities	175,855		—		175,855		—
U.S. government debt securities	55,083		—		55,083		—
U.S. Treasury securities	10,881		—		10,881		—
Total cash equivalents and marketable securities	$	286,450	$	39,009	$	247,441	$	—

There have been no transfers between fair value levels during the six months ended June 30, 2023.

The following table sets forth the fair value of the Company’s financial assets by level within the fair value hierarchy at

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December 31, 2022 (in thousands):


	Fair Value		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	28,705	$	28,705	$	—	$	—

U.S. Treasury securities	799		—		799		—
Marketable securities:
Corporate debt securities	234,327		—		234,327		—
U.S. government debt securities	47,641		—		47,641		—
U.S. Treasury securities	25,393		—		25,393		—
Total cash equivalents and marketable securities	$	336,865	$	28,705	$	308,160	$	—

The Company classifies its money market funds, which are valued based on quoted market prices in active markets, with no valuation adjustment, as Level 1 assets within the fair value hierarchy.

Marketable securities consist of U.S. Treasury securities, U.S. government debt securities, and corporate debt securities, all of which are classified as available-for-sale pursuant to ASC 320, Investments – Debt and Equity Securities. Marketable securities are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined using models or other valuation methodologies on a recurring basis.

Note 4. Marketable securities

Marketable securities as of June 30, 2023 consisted of the following (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Marketable securities, current:
Corporate debt securities	$	164,192	$	20	$	(963)	$	163,249
U.S. government debt securities	48,856		—		(582)		48,274
U.S. Treasury securities	10,914		—		(33)		10,881
Marketable securities, non-current:
Corporate debt securities	12,722		—		(116)		12,606
U.S. government debt securities	6,909		—		(100)		6,809

Total marketable securities, current and non-current	$	243,593	$	20	$	(1,794)	$	241,819

Marketable securities as of December 31, 2022 consisted of the following (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Marketable securities, current:
Corporate debt securities	$	183,270	$	2	$	(2,068)	$	181,204
U.S. government debt securities	40,986		—		(1,184)		39,802
U.S. Treasury securities	25,650		—		(257)		25,393
Marketable securities, non-current:
Corporate debt securities	53,592		2		(471)		53,123
U.S. government debt securities	8,000		—		(161)		7,839

Total marketable securities, current and non-current	$	311,498	$	4	$	(4,141)	$	307,361

Marketable securities classified as current have maturities of less than one year and are classified as available-for-sale. Marketable securities classified as non-current are those that: (i) have a maturity of greater than one year, and (ii) are not intended to be liquidated within the next twelve months, although these funds are available for use and, therefore, are

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classified as available-for-sale. No available-for-sale debt securities held as of June 30, 2023 or December 31, 2022 had remaining maturities greater than five years.

Based on factors such as historical experience, market data, issuer-specific factors, and current economic conditions, the Company did not record an allowance for credit losses at June 30, 2023 and December 31, 2022, related to these securities.

Note 5. Property and equipment

Property and equipment consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Property and equipment:
Laboratory equipment	$	8,490	$	8,757
Leasehold improvements	4,766		4,682
Furniture and fixtures	1,181		1,181
Office equipment	621		529
Construction in progress	208		183
Computer equipment	98		191
Total property and equipment	15,364		15,523
Less: accumulated depreciation	(7,792)		(8,123)
Total property and equipment, net	$	7,572	$	7,400

Depreciation expense related to property and equipment is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Depreciation expense	$	458	$	435	$	1,003	$	740

Note 6. Leases

The Company leases office and laboratory space under a non-cancelable operating lease. In addition, the Company subleases a portion of its office and laboratory space. There have been no material changes to the Company’s lease or sublease during the six months ended June 30, 2023. For additional information, please read Note 6, Leases, to the audited condensed consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

Note 7. Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Accrued expenses and other current liabilities:
Accrued research and development	$	10,168	$	9,824
Accrued compensation and benefits	4,235		6,831
Accrued professional fees	870		1,062
Other	1,456		2,052
Total accrued expenses and other current liabilities	$	16,729	$	19,769

Note 8. Collaboration and license agreements

Roche Collaboration and License Agreement

In March 2016, the Company entered into a license agreement with Roche, which was amended in June 2016 and amended further in March 2017. The Company and Roche amended and restated that agreement (as so amended) in December 2018. This amended and restated agreement is referred to as the Roche Agreement. Under the Roche Agreement, the Company and Roche agreed to collaborate in the research, development, manufacture and commercialization of target-binding degrader medicines using the Company’s proprietary TORPEDO platform for the treatment of cancers and other

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indications. Under the Roche Agreement, the Company may elect to opt into certain co-development rights, in which case the Company will receive an increased royalty rate on future product sales from products directed to that target. In addition, if the Company opts into certain co-detailing rights, it is also entitled to reimbursement of certain commercialization costs. Upon entry into the Roche Agreement, the Company received additional upfront consideration of $40.0 million from Roche.

In November 2020, the Company signed a further amendment, the effect of which was to provide that the parties would develop up to five potential targets, with Roche maintaining its option rights to license and commercialize products directed to those targets. The November 2020 amendment also provides a mechanism through which the Company and Roche can mutually agree to terminate the Roche Agreement on a target-by-target basis by the entry into a Mutual Target Termination Agreement. Upon the entry into a Mutual Target Termination Agreement, the Roche Agreement provides that all rights and responsibilities for know-how and other intellectual property in support of products that use inhibition as their mode of action revert to Roche and all rights and responsibilities for know-how and other intellectual property in support of products that use degradation as their mode of action revert to the Company. In support of this allocation of rights, Roche provides the Company, and the Company provides Roche, with a perpetual irrevocable, fully paid up, exclusive (even as to party granting the license), sublicensable (including in multiple tiers) license to the patents and know-how that are allocated to a party under a Mutual Target Termination Agreement. As the research activities with Roche have progressed and evolved over time, there are now three targets on which the parties continue to collaborate, with Roche maintaining its option rights to license and commercialize products directed to those three targets.

Under the Roche Agreement, the Company receives annual research plan payments of $1.0 million for up to three years for each active research plan. For certain targets, Roche is required to pay the Company fees of $2.0 million and $3.0 million upon the progression of targets to the lead series identification achievement and good laboratory practice toxicology study phase, respectively. Finally, adjustments were made to the option exercise fees, whereby targets that have progressed through standard good laboratory practice, or GLP, toxicology studies at the time of exercise now have option exercise fees of $7.0 million to $12.0 million and those progressed through Phase 1 trials have option exercise fees of $20.0 million. For each target option exercised by Roche, the Company is eligible to receive milestone payments ranging from $260.0 million to $275.0 million upon the achievement of certain development and commercial milestones with respect to corresponding products, subject to certain reductions and exclusions based on intellectual property coverage. Roche is also required to pay the Company up to $150.0 million per target in one-time sales-based milestone payments upon the achievement of specified levels of net sales of a product directed to such target. Finally, Roche is required to pay the Company tiered royalties ranging from the mid-single digits to mid-teen percentages on net sales of products sold by Roche pursuant to its exercise of its option rights, subject to certain reductions. For sales of products for which the Company exercises its co-development right, the applicable royalty rates will be increased by a low-single digit percentage.

The collaboration is managed by a joint research committee. The Company has control over the joint research committee prior to Roche’s exercise of its option rights as to a particular target, with Roche assuming control of the joint research committee thereafter. Roche may terminate the Roche Agreement on a target-by-target or product-by-product basis under several scenarios upon at least 90 days’ prior written notice.

Roche Agreement accounting

At commencement, the Company identified twelve performance obligations within the Roche Agreement, represented by the six potential research and development targets then included in the collaboration and the option rights held by Roche for each of those six targets. A non-exclusive royalty-free license to use the Company’s intellectual property to conduct research and development activities and participation on joint research committee were identified as promised services. However, the Company determined that the research and development license and research and development services were not distinct from one another, and participation on the joint research committee was determined to be quantitatively and qualitatively immaterial.

The total transaction price of the Roche Agreement is allocated to the performance obligations based on their relative standalone selling price. The allocated transaction price is recognized as revenue from collaboration agreements in one of two ways:

•Research and development targets: The Company recognizes the portion of the transaction price allocated to each of the research and development performance obligations as the research and development services are provided, using an input method, in proportion to costs incurred to date for each research development target as compared to total costs incurred and expected to be incurred in the future to satisfy the underlying obligation related to said research and development target. The transfer of control occurs over this period and, in management’s judgment, is the best measure of progress towards satisfying the performance obligation.

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•Option rights: The transaction price allocated to the options rights, which are considered material rights, is recognized in the period that Roche elects to exercise or elects to not exercise its option right to license and commercialize the underlying research and development target.

The following table summarizes the allocation of the total transaction price to the identified performance obligations under the arrangement, and the amount of the transaction price unsatisfied as of June 30, 2023 (in thousands):


	Transaction Price Allocated		Transaction Price Unsatisfied
Performance obligations:
Research and development targets	$	61,074	$	25,029
Option rights	6,748		2,502
Total	$	67,822	$	27,531

Amounts due to the Company that have not yet been received are recorded as accounts receivable and amounts received that have not yet been recognized as revenue are recorded as deferred revenue on the Company’s condensed consolidated balance sheet.

Betta Pharma Collaboration Research and License Agreement

On May 29, 2023, the Company entered into a collaboration and license agreement, or the Betta License Agreement, with Betta Pharma to collaborate on the development and commercialization of CFT8919 in mainland China, Hong Kong SAR, Macau SAR and Taiwan, or the Licensee Territory, with the Company retaining rights to CFT8919 in the rest of the world other than the Licensee Territory, or the C4T Territory.

Under the terms of the Betta License Agreement, the Company grants Betta Pharma an exclusive license under certain of the Company's intellectual property rights to develop, manufacture and commercialize CFT8919 for all uses in humans in the Licensee Territory. Betta Pharma is responsible for all development, regulatory approval, manufacturing and commercialization costs in the Licensee Territory except where Betta Pharma acts as the Company's agent in the Licensee Territory in connection with a global trial sponsored by the Company. As part of the collaboration, Betta Pharma made an upfront cash payment of $10.0 million and has agreed to make up to $357.0 million in aggregate milestone payments, plus tiered royalties on net sales of CFT8919 in the Licensee Territory. Royalties payable from Betta Pharma to the Company range from low to mid double-digit percent, subject to certain reductions under certain circumstances as described in the Betta License Agreement. In addition, as part of the collaboration, the Company has agreed to make milestone payments to Betta Pharma of up to $40.0 million following the Company's receipt of approval of a New Drug Application for CFT8919 from the FDA, with the milestone amount based on the percentage of patients in contemplated clinical trials that were enrolled by Betta Pharma and the line of therapy of the approval. In addition, the Company has agreed to pay Betta Pharma tiered royalties on net sales of CFT8919 in the C4T Territory in the low single digit percent range, subject to reductions under certain circumstances as described in the Betta License Agreement.

In connection with the execution of the Betta License Agreement, the Company, Betta Pharma, and an affiliate of Betta Pharma, (Betta Investment (Hong Kong) Limited, or Betta Investment), entered into a Stock Purchase Agreement dated May 29, 2023, or the Betta Stock Purchase Agreement, and together with the Betta License Agreement, or the Betta Agreements, pursuant to which Betta Investment agreed to purchase 5,567,928 shares of the Company's common stock, or the Shares, for an aggregate purchase price of approximately $25.0 million, or $4.49 per share, which represented a 25% premium over the 60-trading-day volume weighted average closing price as of two trading days prior to the effective date of the Betta Stock Purchase Agreement. Closing under the Betta Stock Purchase Agreement is subject to customary closing conditions, as well as continued effectiveness of the Betta License Agreement and Betta Investment’s receipt of a certificate of outbound investment by enterprises by the Ministry of Commerce of the People’s Republic of China, the National Development and Reform Commission of the People’s Republic of China and State Administration of Foreign Exchange of the People’s Republic of China or their local counterparts. The closing under the Betta Stock Purchase Agreement had not occurred as of June 30, 2023.

The collaboration is managed by a joint steering committee, which is composed of representatives from both Betta Pharma and the Company. Following the completion of the dose escalation phase of the Phase 1 trial of CFT8919, Betta Pharma may terminate the Betta Agreement for convenience upon at least 90 days’ prior written notice. Each party also has various termination rights under certain circumstances, including but not limited to regulatory safety stoppages, patent challenges, or a material breach by the other party, subject to certain conditions.

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Betta Agreements accounting

The Company expects to recognize revenue under the Betta Agreements from one type of arrangement, the licensing agreement. The Betta Agreements will consist of the following activities: (1) license of intellectual property, (2) clinical manufacturing supply agreement, and (3) manufacturing technology transfer, and (4) commercial manufacturing supply agreement. As of June 30, 2023, the total transaction price is currently $10.0 million, consisting of the $10.0 million upfront cash consideration. Revenue recognition associated with the Betta Agreements is expected to commence upon the delivery of clinical supply under the clinical manufacturing supply agreement, which has not been executed as of June 30, 2023. As of June 30, 2023, the Company had collected the full $10.0 million upfront payment from Betta.

During the three and six months ended June 30, 2023, no revenue has been recognized under the Betta Agreements. Amounts received or due to the Company that have not yet been recognized as revenue are recorded in deferred revenue on the Company’s condensed consolidated balance sheet.

Biogen Collaboration Research and License Agreement

In December 2018, the Company entered into a collaboration research and license agreement, or the Biogen Agreement, with Biogen. In February 2020, the Company and Biogen amended the Biogen Agreement to provide further clarity around Biogen’s ownership of target binding moieties (which are portions of molecules), and any related intellectual property that are directed at or bind to collaboration targets. This amendment further provided that Biogen licenses to the Company rights to use these Biogen target binding moieties and any related intellectual property as needed in order to conduct the research and development activities contemplated under the Biogen Agreement. Pursuant to the terms of the Biogen Agreement, the Company and Biogen agreed to collaborate on research activities to develop novel treatments for neurological conditions such as Alzheimer's disease and Parkinson's disease through medicines that rely on target protein degradation, or TPD, as their mode of action, all of which are created using the Company’s degrader technology. Under the terms of the Biogen Agreement, the Company was engaged to develop TPD therapeutics that utilize degrader technology for up to five target proteins over a period of 54 months, ending in June 2023. On a target-by-target basis, after successful completion of a defined target evaluation period, Biogen assumes full rights and responsibility for continued development of each target. As of June 30, 2023, the research term of the Biogen Agreement has expired, though certain research activities on the nominated targets will continue for an additional time period, as contemplated by the Biogen Agreement.

In exchange for the non-exclusive research license from Biogen, as well as a $45.0 million nonrefundable upfront payment, the Company has granted a license to develop, commercialize, and manufacture products related to each of the targets (which is contingent on not cancelling the agreement), performs initial research services for drug discovery, has provided a non-exclusive research and commercial license to its intellectual property, and participates on the joint steering committee, or the Biogen JSC. The Company was also obligated to participate in early research activities for other potential targets or sandbox activities, at Biogen’s election up to a maximum amount; any work performed for these services is reimbursed by Biogen, and Biogen reimburses the Company for certain full-time equivalent, or FTE, costs. The Company’s obligations under the sandbox activities were completed as of August 31, 2021. For any target, following the achievement of development candidate criteria and prior to any IND-enabling study, Biogen will bear all costs and expenses of and will have sole discretion and decision-making authority with respect to the performance of further activities with respect to any degrader under development under the Biogen Agreement and all products that incorporate that degrader. Biogen is also required to pay the Company up to $35.0 million per target in development milestones and $26.0 million per target in one-time sales-based payments for the first product to achieve certain levels of net sales. In addition, Biogen is required to pay the Company royalties on a licensed product-by-licensed product basis, on worldwide net product sales. All milestone and sales-based payments are made after the Company has met the defined criteria in the joint research plan for that target, at which time Biogen will have control of the products related to the targets for commercialization; the receipt of these payments is contingent on the further development of products directed to the targets to commercialization by Biogen, without any additional research and development efforts from the Company.

The collaboration is managed by the Biogen JSC, which Biogen has control over, and Biogen may terminate the Biogen Agreement on a target-by-target or product-by-product basis under several scenarios, upon at least 90 days’ prior written notice.

Biogen Agreement accounting

The Company recognizes revenue under the Biogen Agreement from two types of services: (i) research and development services, and (ii) sandbox activities, which are discovery-type research services.

•Research and development services: The Company identified one performance obligation at the outset of the Biogen Agreement, representing a combined performance obligation consisting of (1) the licenses, (2) the research activities for the target evaluation phase for all five targets, and (3) the joint research plan phase for each target. The Company determined that the licenses and research activities were not distinct from one

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another, as the licenses have limited value without the performance of the research activities by the Company. Participation on the Biogen JSC to oversee the research activities and the technology transfer associated with the Biogen License Agreement were determined to be quantitatively and qualitatively immaterial and therefore are excluded from performance obligations. The Company recognizes the transaction price allocated to this performance obligation as the research and development services are provided, using an input method, in proportion to costs incurred to date for each research development target as compared to total costs incurred and expected to be incurred in the future to satisfy the underlying obligation related to said research and development target. The transfer of control occurs over this period and, in management’s judgment, is the best measure of progress towards satisfying the performance obligation.

•Sandbox activities: Biogen had the option to fund sandbox activities in exchange for consideration at market rates, whereby the Company would perform discovery-type research at Biogen’s election to develop other potential targets that may be used as replacement targets for the initially nominated targets or two additional targets under the Biogen Agreement. Revenues earned under this option were recognized as services were performed and were not included in the transaction price allocated to the performance obligation described above. The Company recognized FTE reimbursement received for sandbox activities as revenue as incurred each quarter. As noted above, sandbox activities fully concluded on August 31, 2021.

As of June 30, 2023, the total transaction price of the Biogen Agreement of $55.0 million is allocated to the research and development services performance obligation and $6.6 million of the allocated transaction price remains unsatisfied. As contemplated by the Biogen Agreement, certain research activities on the nominated targets will continue for a period of time beyond the June 2023 end of the research term.

Amounts due to the Company that have not yet been received are recorded as accounts receivable and amounts received that have not yet been recognized as revenue are recorded in deferred revenue on the Company’s condensed consolidated balance sheet.

Calico Collaboration and License Agreement

In March 2017, the Company entered into a collaboration and license agreement, or the Calico Agreement, with Calico whereby the Company and Calico agreed to collaborate to develop and commercialize small molecule protein degraders for diseases of aging, including cancer, for a five-year period ending in March 2022. In August 2021, the Company provided an extension option to Calico, which Calico exercised in September 2021, resulting in a $1.0 million extension payment to extend the research term with respect to a certain program for up to a one-year period that ended in March 2023. In addition, Calico reimbursed the Company for a number of FTEs, depending on the stage of the research, at specified market rates. As of March 13, 2023, the research term of the Calico Agreement has expired, and the Company's research activities associated with the agreement are substantially complete.

Under the Calico Agreement, Calico paid an upfront amount of $5.0 million and certain annual payments totaling $5.0 million through June 30, 2020 and paid target initiation fees and reimbursed the Company for a number of FTEs, depending on the stage of the research, at specified market rates. For each target, the Company is eligible to receive up to $132.0 million in potential development and commercial milestone payments, on sales of all products resulting from the collaboration efforts. Calico is also required to pay the Company up to $65.0 million in one-time sales-based payments for the first product to achieve certain levels of net sales. In addition, Calico is required to pay the Company royalties, at percentages in the mid-single digits, on a licensed product-by-licensed product basis, on worldwide net product sales. All milestone and sales-based payments are made after the Company has met the defined criteria in the joint research plan for that target, at which time Calico will have control of the products related to targets for commercialization; the receipt of these payments by the Company is contingent on the further development of the targets to commercialized products by Calico, without any additional research and development efforts required by the Company.

As of June 30, 2023, the total transaction price of the Calico Agreement of $13.0 million was allocated to the research and development services performance obligation and the transaction price has been fully allocated and satisfied.

Amounts due to the Company that have not yet been received are recorded as accounts receivable on the Company’s condensed consolidated balance sheet.

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Summary of revenue recognized from collaboration agreements

Revenue from collaboration agreements for the three and six months ended June 30, 2023 and 2022 in the condensed consolidated statements of operations and comprehensive loss was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue from collaboration agreements:
Roche Agreement	$	160	$	2,550	$	513	$	3,673
Biogen Agreement	2,504		9,534		4,840		14,250
Calico Agreement	—		1,750		1,070		3,565
Total revenue from collaboration agreements	$	2,664	$	13,834	$	6,423	$	21,488

Financial information related to the collaboration and license agreements consisted of the following in the Company’s condensed consolidated balance sheet as of June 30, 2023 (in thousands):


	Accounts Receivable		Deferred Revenue, Current		Deferred Revenue, Net of Current		Deferred Revenue, Total
Supplemental information:
Roche Agreement	$	500	$	5,718	$	16,314	$	22,032
Biogen Agreement	—		6,586		—		6,586
Calico Agreement	528		—		—		—
Betta Agreements	—		1,667		8,333		10,000
Total	$	1,028	$	13,971	$	24,647	$	38,618

Financial information related to the collaboration and license agreements consisted of the following in the Company’s condensed consolidated balance sheet as of December 31, 2022 (in thousands):


	Accounts Receivable		Deferred Revenue, Current		Deferred Revenue, Net of Current		Deferred Revenue, Total
Supplemental information:
Roche Agreement	$	417	$	4,649	$	16,895	$	21,544
Biogen Agreement	—		11,427		—		11,427
Calico Agreement	1,056		542		—		542
Total	$	1,473	$	16,618	$	16,895	$	33,513

Supplemental financial information related to the collaboration and license agreements for the three and six months ended June 30, 2023 and 2022 are (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue recognized that was included in the contract liability at the beginning of the period	$	2,664	$	12,122	$	5,895	$	18,488
Revenue recognized from performance obligations fully or partially satisfied in previous periods	$	—	$	503	$	—	$	518

As of June 30, 2023, the aggregate amount of the transaction price allocated to performance obligations under the Roche Agreement, the Biogen Agreement, and the Betta Agreements that were partially unsatisfied was $44.1 million.

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Note 9. Long-term debt – related party

Long-term debt – related party consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Term Loan — related party, net of unamortized debt issuance costs and debt discount of $665 and $1,018 at June 30, 2023 and December 31, 2022, respectively	$	10,335	$	11,482
Less: current portion	10,335		2,287
Total long-term debt — related party, net of current and discount	—		9,195

On June 5, 2020, contemporaneously with the completion of its Series B Financing, the Company entered into a Credit Agreement, or the Credit Agreement, with Perceptive Credit Holdings III, LP, an affiliate of Perceptive Advisors LLC, or Perceptive, that provided for an aggregate principal borrowing amount of up to $20.0 million, available in two tranches of $12.5 million and $7.5 million. Perceptive was considered a related party to the Company based on its ownership of the Company’s common stock at inception of the Credit Agreement.

In June 2020, the Company drew down on the first tranche of $12.5 million, or the Term Loan, which was outstanding as of June 30, 2023. The Company elected not to draw down the second tranche, which expired on June 30, 2021. The Term Loan bore interest at a variable rate using the greater of LIBOR or 1.75%, plus 9.50%. The interest rate was 14.68% as of June 30, 2023, and the Term Loan is secured by a lien on substantially all of the Company’s assets.

On May 17, 2023, the Company entered into an amendment to the Credit Agreement pursuant to which the Company and its lender agreed to replace the LIBOR benchmark with SOFR, which is regulated by the Federal Reserve Bank of New York. The Company amended its Credit Agreement due to the Financial Conduct Authority's planned phase-out of LIBOR on June 30, 2023. The use of the SOFR rate will be effective as of July 1, 2023, at which point the amended Credit Agreement will bear interest at a variable rate using SOFR plus 9.50%.

The Credit Agreement requires the Company to maintain a minimum aggregate cash balance of $3.0 million in one or more controlled accounts and contains various affirmative and negative covenants that limit its ability to engage in specified types of transactions.

The Company was required to make interest-only payments on the Term Loan through December 5, 2022. In 2023, the Company began making monthly principal payments equal to 2.0% of the Term Loan, plus interest. These payments will continue until June 5, 2024, or the Maturity Date, at which time the outstanding principal and unpaid interest balance is due. If the Company pays off the Term Loan prior to the Maturity Date, it will be required to pay a prepayment fee, which was $0.1 million as of June 30, 2023.

The following table contains the anticipated future minimum payments on long-term debt as of June 30, 2023 for each of the years ending December 31, 2023 and 2024 (in thousands):


Undiscounted, minimum long-term debt payments:
2023 (six months ending December 31)	$	1,500
2024	9,500
Total undiscounted, minimum long-term debt payments	$	11,000

In July 2023, the Company's obligation to pay a prepayment fee was extinguished based on the terms of the Credit Agreement and, as a result, the Company elected to repay the remaining outstanding principal balance on the Term Loan on July 26, 2023.

In connection with the repayment of the outstanding balance on the Term Loan, the liens on substantially all of our and our subsidiaries’ assets will be released.

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Note 10. Stock-based compensation

Stock-based compensation expense for the three and six months ended June 30, 2023 and 2022 was classified in the Company’s condensed consolidated statement of operations and comprehensive loss as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Stock-based compensation expense:
Research and development	$	2,644	$	3,776	$	5,227	$	7,388
General and administrative	3,781		4,372		7,449		9,698
Total stock-based compensation expense	$	6,425	$	8,148	$	12,676	$	17,086

Stock options

During the six months ended June 30, 2023, the Company granted stock options for the purchase of 2,127,180 shares of common stock with a weighted average exercise price of $5.51 per share and a weighted average grant-date fair value of $4.07 per shares. As of June 30, 2023, the unrecognized compensation cost related to outstanding stock options was $48.5 million, which is expected to be recognized over a weighted-average period of 2.6 years.

Performance-based restricted stock units

During the three and six months ended June 30, 2023, the Company did not grant any performance-based restricted stock units, or PSUs. 60,776 PSUs vested during the six months ended June 30, 2023 upon their respective achievement of performance-based vesting criteria. Upon vesting, each PSU automatically converted into one share of the Company’s common stock. The Company indirectly repurchased 12,046 shares of its common stock through net-share settlement as consideration for employee tax withholding obligations arising upon vesting of the PSUs, which tax amounts were remitted to the applicable revenue authorities in cash. As of June 30, 2023, the unrecognized compensation cost related to outstanding PSUs with performance-based vesting criteria that are considered not probable of achievement was $8.8 million.

Time-based restricted stock units

During the three and six months ended June 30, 2023, the Company issued restricted stock units, or RSUs, that were subject to time-based vesting conditions to its employees . These RSUs are valued on the grant date using the grant date market price of the underlying shares. Upon vesting, each RSU automatically converts into one share of the Company’s common stock.

The following table summarizes the Company’s RSU activity for the six months ended June 30, 2023:


	Shares	Weighted-Average Grant Date Fair Value
Outstanding as of December 31, 2022	—	$	—
Issued	724,500	5.68
Vested	—	—
Forfeited	(37,360)	$	5.67
Outstanding as of June 30, 2023	687,140	$	5.68

As of June 30, 2023, the unrecognized compensation cost related to outstanding RSUs was $3.5 million, which is expected to be recognized over a weighted-average period of 3.6 years.

Note 11. Commitments and contingencies

Legal proceedings

The Company is not currently party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred the costs related to such legal proceedings.

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Note 12. Loss per share

For periods in which the Company reports a net loss attributable to common stockholders, potentially dilutive securities have been excluded from the computation of diluted net loss per share as their effects would be anti-dilutive. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same. For purposes of the dilutive net loss per share calculation, stock options, and restricted stock units for which the performance or market vesting conditions have been met are considered to be common stock equivalents, while restricted stock units with performance or market vesting conditions that were not met as of June 30, 2023 are not considered to be common stock equivalents. The Company excluded the following potential common shares presented based on amounts outstanding at period end from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:


	As of June 30,
	2023	2022
Anti-dilutive common stock equivalents:
Options to purchase common stock	7,929,853	7,055,913

Total anti-dilutive common stock equivalents	7,929,853	7,055,913

Basic and diluted loss per share is computed by dividing net loss by the weighted-average common shares outstanding for the three and six months ended June 30, 2023 and 2022 (in thousands, except share and per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net loss	$	(35,922)	$	(27,412)	$	(70,702)	$	(59,032)
Denominator:
Weighted-average number of shares used in computed net loss per share − basic and diluted	49,063,631		48,823,698		49,048,062		48,779,508
Net loss per share − basic and diluted	$	(0.73)	$	(0.56)	$	(1.44)	$	(1.21)

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited condensed consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023. As discussed in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2022.

Business overview

We are a clinical-stage biopharmaceutical company dedicated to advancing targeted protein degradation science to develop a new generation of small molecule medicines to transform how disease is treated. We leverage our proprietary technology platform, TORPEDO (Target ORiented ProtEin Degrader Optimizer), to efficiently design and optimize small-molecule medicines that harness the body’s natural protein recycling system to rapidly degrade disease-causing protein, offering the potential to overcome drug resistance, drug undruggable targets and improve patient outcomes. We are using our TORPEDO platform to advance multiple targeted oncology programs to the clinic while expanding the platform to deliver the next wave of medicines for difficult-to-treat diseases and ultimately improve treatment options for patients.

Our most advanced product candidate, CFT7455, is an orally bioavailable MonoDAC degrader of protein targets called IKZF1 and IKZF3, currently in clinical development for multiple myeloma, or MM, and non-Hodgkin lymphomas, or NHLs. The United States Food and Drug Administration, or FDA, granted orphan drug designation to CFT7455 for the treatment of MM. We presented initial clinical data from Arm A of this clinical trial in April 2022. We continue to enroll patients in the Phase 1 escalation portion of the ongoing Phase 1/2 clinical trial.

Our next most advanced product candidate, CFT8634, is an orally bioavailable BiDAC degrader of a protein target called BRD9, currently in clinical development for synovial sarcoma and SMARCB1-null solid tumors. In March 2022, the FDA granted orphan drug designation to CFT8634 for the treatment of soft tissue sarcoma. In May 2022, we initiated the first-in-human Phase 1/2 clinical trial of this product candidate. In January 2023, we shared initial PK and PD data from the initial dose escalation cohorts of the Phase 1/2 trial that demonstrate dose proportional exposure, strong oral bioavailability and deep BRD9 degradation. We continue to enroll patients in the Phase 1 dose escalation portion of the ongoing Phase 1/2 clinical trial.

We are also developing CFT1946, an orally bioavailable BiDAC degrader specifically to be potent and selective against BRAF V600 mutant targets to treat melanoma, non-small cell lung cancer, or NSCLC, colorectal cancer, or CRC, and other malignancies that harbor this mutation. In January 2023, we initiated a first-in-human Phase 1/2 clinical trial of CFT1946 for the treatment of BRAF V600 mutant solid tumors including NSCLC, colorectal cancer and melanoma, and continue to enroll patients in the Phase 1 dose escalation portion of the trial.

Additionally, we are developing CFT8919, an orally bioavailable, allosteric, mutant-selective BiDAC degrader of epidermal growth factor receptor, or EGFR, with an L858R mutation in NSCLC. In May 2023, we entered into an exclusive licensing agreement for the development and commercialization of CFT8919 in Greater China, including Hong Kong SAR, Macau SAR and Taiwan, with Betta Pharmaceuticals, Co., Ltd, or Betta Pharma. Additionally in June 2023, the FDA cleared the investigational new drug, or IND, application for CFT8919. C4T expects to initiate clinical trial activities outside Greater China following the completion of Betta Pharma's Phase 1 dose escalation trial in Greater China.

Beyond these initial product candidates, we are further diversifying our pipeline by developing new degraders against both clinically validated and currently undruggable targets for our own proprietary pipeline and for the pipeline we are developing in collaboration with Roche.

Financial operations overview

Revenues

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products for the foreseeable future. Our revenues to date have been generated through research collaboration and license agreements. We recognize revenue over the expected performance period under each agreement. We expect that our revenue for the next several years will be derived primarily from our current collaboration agreements and any additional

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collaborations that we may enter into in the future. To date, we have not received any royalties under any of our existing collaboration agreements.

For a description of our collaboration agreements with F. Hoffman-La Roche Ltd and Hoffman-La Roche Inc., or Roche, Biogen MA, Inc., or Biogen, Calico Life Sciences LLC, or Calico, and Betta Pharma, please see Note 8, Collaboration and license agreements, to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Research and development expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our product candidates, and include:

•salaries, benefits, and other related costs, including stock-based compensation expense, for personnel engaged in research and development functions;

•expenses incurred under agreements with third parties, including contract research organizations and other third parties that conduct research, preclinical, and clinical activities on our behalf as well as third parties that manufacture our product candidates for use in our preclinical and clinical trials;

•cost of outside consultants, including their fees and related travel expenses;

•costs of laboratory supplies and acquiring materials for preclinical studies and clinical trials;

•facility-related expenses, which include direct depreciation costs of equipment and allocated expenses for rent and maintenance of facilities and other operating costs; and

•third-party licensing fees.

We expense research and development costs as incurred. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our condensed consolidated financial statements as prepaid or accrued research and development expenses. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses and expensed as the related goods are delivered or the services are performed.

We expect that our research and development expenses will continue to increase substantially in connection with our planned preclinical and clinical development activities.

General and administrative expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, legal, business development, and administrative functions. General and administrative expenses also include legal fees relating to corporate matters; professional fees for accounting, auditing, tax, and consulting services; insurance costs; travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.

We expect that our general and administrative expenses will potentially increase in the future to support increased research and development activities. These increases will likely include higher costs related to the hiring of additional personnel; fees to outside consultants, lawyers and accountants; and investor and public relations costs.

Other income (expense), net

Other income (expense), net primarily consists of the following:

•interest expense and amortization of our long-term debt, which is discussed in greater detail in Note 9, Long-term debt – related party, to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q; and

•interest income earned on our cash, cash equivalents, and marketable securities and accretion of discount on marketable securities.

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Results of operations

Comparison of the three and six months ended June 30, 2023 and 2022

Revenue

Revenue from our collaboration and license agreements consisted of the following for the three and six months ended June 30, 2023 and 2022 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue from collaboration agreements:
Roche Agreement	$	160	$	2,550	$	513	$	3,673
Biogen Agreement	2,504		9,534		4,840		14,250
Calico Agreement	—		1,750		1,070		3,565
Total revenue from collaboration agreements	$	2,664	$	13,834	$	6,423	$	21,488

The $11.2 million decrease in revenue in the three months ended June 30, 2023, as compared to the three months ended June 30, 2022 is primarily driven by:

•a $7.0 million decrease in revenue recognized under the Biogen Agreement, resulting from the additional research activities we will perform on the nominated targets for a period of time period following the June 2023 end of the research term, all as contemplated by the Biogen Agreement;

•a $2.4 million decrease in revenue recognized under the Roche Agreement, resulting from our June 2022 completion of research activities for a nominated target; and

•a $1.8 million decrease in revenue recognized under the Calico Agreement, as a result of the performance obligation and transaction price becoming fully satisfied as of March 31, 2023.

The $15.1 million decrease in revenue in the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 is primarily driven by a $9.4 million decrease in revenue recognized under the Biogen Agreement, resulting from the additional research activities we will perform on the nominated targets for a period of time period following the June 2023 end of the research term, all as contemplated by the Biogen Agreement.

Research and development expense

The following table summarizes our research and development expense for the three and six months June 30, 2023 and 2022 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development expenses:
Personnel expenses	10,531		$	10,642	$	20,911	$	21,553
Preclinical development and discovery expenses	$	7,729	10,513		16,341		20,708

Clinical expenses	4,558		2,766		7,587		3,575
Professional fees	2,200		1,577		4,610		3,232
Intellectual property and other expenses	4,908		5,825		9,519		8,458

Total research and development expenses	$	29,926	$	31,323	$	58,968	$	57,526

The $1.4 million decrease in research and development expense in the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 is primarily driven by a $2.8 million decrease in preclinical expenses as a result of additional programs progressing to clinical stages, offset primarily by a $1.8 million increase in clinical expenses as a result of the ongoing Phase 1/2 clinical trials of CFT7455, CFT8634, and CFT1946.

The $1.4 million increase in research and development expense in the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 is primarily driven by

•a $4.0 million increase in clinical expenses as a result of the ongoing Phase 1/2 clinical trials of CFT7455, CFT8634, and CFT1946;

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•a $1.4 million increase in professional fees; and

•a $1.1 million increase in intellectual property and other expenses.

This was offset by a $4.4 million decrease in costs resulting from less IND-enabling activities as programs transition to the clinic.

General and administrative expense

The following table summarizes our general and administrative expense for the three and six months ended June 30, 2023 and 2022 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
General and administrative expenses:
Personnel expenses	$	7,381	$	7,877	$	15,065	$	16,426
Professional fees and other expenses	2,925		2,018		6,186		6,289
Total general and administrative expenses	$	10,306	$	9,895	$	21,251	$	22,715

The $0.4 million increase in general and administrative expense in the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 is primarily driven by a $0.9 million increase in professional fees and other expenses offset by a $0.5 million decrease in personnel expenses as a result of a lower valuation for stock options granted in 2023 due to the reduction in the market price of our common stock compared to 2022, and the vesting of PSUs in 2022

The $1.5 million decrease in general and administrative expense in the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 is primarily driven by a $1.4 million decrease in personnel expenses as a result of a lower valuation for stock options granted in 2023 due to the reduction in the market price of our common stock compared to 2022, and the vesting of PSUs in 2022.

Other income (expense), net

The following table summarizes our other income (expense), net for the three and six months ended June 30, 2023 and 2022 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Other income (expense), net:
Interest and other income, net	2,246		506		$	4,300	$	782
Interest expense and amortization of long-term debt − related party	(600)		(534)		(1,206)		(1,061)
Total other income (expense), net	$	1,646	$	(28)	$	3,094	$	(279)

The $1.6 million increase in other income (expense), net in the three months ended June 30, 2024 as compared to the three months ended June 30, 2022 is primarily driven by a $1.7 million increase in interest and other income resulting from higher interest earned on our investments during the three months ended June 30, 2023.

The $3.4 million increase in other income (expense), net in the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 is primarily driven by a $3.5 million increase in interest and other income resulting from higher interest earned on our investments during the six months ended June 30, 2023.

Liquidity and capital resources

Sources of liquidity

Since inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the preclinical programs and our product candidates through clinical development. We do not currently have any approved products and have never generated any revenue from product sales. To date, we have financed our operations primarily through the sale of preferred stock, public offerings of our common stock, and through payments from collaboration partners. As of June 30, 2023, we had cash, cash equivalents and marketable securities of approximately $286.7 million.

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Cash flows

The following table summarizes our sources and uses of cash for the periods presented (in thousands):


	Six Months Ended June 30,
	2023		2022
Net change in cash, cash equivalents and restricted cash:
Net cash used in operating activities	$	(52,122)	$	(48,791)
Net cash provided by investing activities	68,679		29,224
Net cash (used in) provided by financing activities	(1,430)		739
Total net change in cash, cash equivalents and restricted cash	$	15,127	$	(18,828)

Operating activities

Net cash used in operating activities for the six months ended June 30, 2023 was driven primarily by the following uses of cash:

•net loss of $70.7 million;

•$3.1 million change in accrued expenses and other current liabilities; and

•$2.3 million change in our operating lease liability.

These were offset by:

•non-cash expenses of $15.4 million, which primarily consisted of stock-based compensation expense of $12.7 million;

•$5.1 million change in deferred revenue due from the allocated transaction price that remains unsatisfied related to the Betta Agreements, offset by the recognition of revenue under our collaboration agreements; and

•$2.1 million change in prepaid expenses and other current and long-term assets.

Net cash used in operating activities for the six months ended June 30, 2022 was driven primarily by the following uses of cash:

•net loss of $59.0 million;

•$16.0 million change in deferred revenue due to the recognition of revenue under our collaboration agreements; and

•$1.0 million change in operating lease liability.

These were offset by:

•non-cash expenses of $22.2 million, which primarily consisted of stock-based compensation expense of $17.1 million;

•$4.0 million change in accounts receivable; and

•$1.7 million change in prepaid expenses and other current and long-term assets.

Investing activities

Net cash provided by investing activities for the six months ended June 30, 2023 was driven primarily by $69.6 million of maturities of marketable securities, net of purchases.

Net cash provided by investing activities for the six months ended June 30, 2022 was driven primarily by $29.9 million of maturities of marketable securities, net of purchases.

Financing activities

Net cash used in financing activities for the six months ended June 30, 2023 was driven primarily by $1.5 million from principal payments made on the Term Loan.

Net cash provided by financing activities for the six months ended June 30, 2022 was primarily attributable to $0.5 million from exercises of stock options.

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Funding requirements

Since our inception, we have incurred significant operating losses and we expect to continue to incur significant expenses and increasing operating losses for the foreseeable future as we advance the preclinical programs and our product candidates through clinical development. In addition, we expect to continue to incur costs associated with operating as a public company.

Specifically, we anticipate that our expenses will increase substantially in the future, if and as we:

•continue our ongoing first-in-human Phase 1/2 trials and initiate and conduct planned first-in-human Phase 1/2 trials for our other product candidates;

•advance additional product candidates into preclinical and clinical development;

•continue to invest in our proprietary TORPEDO platform;

•advance, expand, maintain, and protect our intellectual property portfolio;

•hire additional clinical, regulatory, quality, and scientific personnel;

•add operational, financial and management information systems, and personnel to support our ongoing research, product development, potential future commercialization efforts, operations as a public company and general and administrative roles;

•seek marketing approvals for any product candidates that successfully complete clinical trials; and

•ultimately establish a sales, marketing, and distribution infrastructure and scale up external manufacturing capabilities to commercialize any products for which we may obtain marketing approval.

Because of the numerous risks and uncertainties associated with development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital and operating costs associated with our current and anticipated preclinical and clinical development. Our future capital requirements will depend on many factors, including:

•the progress, costs, and results of ongoing and planned first-in-human Phase 1/2 trials for our lead product candidates and any future clinical development of those lead product candidates;

•the scope, progress, costs, and results of preclinical and clinical development for our other product candidates and development programs;

•the number and development requirements of other product candidates that we pursue;

•the progress and success of our existing and any future collaborations with third party partners, including whether or not we receive additional research support or milestone payments from our existing collaboration partners upon the achievement of milestones;

•the costs, timing, and outcome of regulatory review of our product candidates;

•the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;

•our willingness and ability to establish additional collaboration arrangements with other biotechnology or pharmaceutical companies on favorable terms, if at all, for the development or commercialization of current or additional future product candidates;

•the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; and

•the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval.

As a result of the anticipated expenditures described above, we will need to obtain substantial additional financing to support our continuing operations and pursue our long-term business plan. Until such time, if ever, that we can generate substantial revenue from product sales, we expect to finance our cash needs through a combination of equity offerings, debt offerings, collaborations, strategic alliances, and marketing, distribution or licensing arrangements. Although we may receive potential future milestone and royalty payments under our collaborations with Roche, Calico, Biogen, and Betta Pharma, we do not have any committed external sources of funds as of June 30, 2023. In connection with the execution of the Betta License Agreement, we, Betta Pharma, and an affiliate of Betta Pharma, (Betta Investment (Hong Kong) Limited, or Betta Investment), entered into a Stock Purchase Agreement, or the Betta Stock Purchase Agreement, and together with the Betta License Agreement, or the Betta Agreements, pursuant to which Betta Investment agreed to purchase 5,567,928

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shares of our common stock, or the Shares, for an aggregate purchase price of approximately $25.0 million, or $4.49 per share, which represents a 25% premium over the 60-trading-day volume weighted average closing price as of two trading days prior to the effective date of the Betta Stock Purchase Agreement. Closing under the Betta Stock Purchase Agreement is subject to customary closing conditions, as well as continued effectiveness of the Betta License Agreement and Betta Investment’s receipt of a certificate of outbound investment by enterprises by the Ministry of Commerce of the People’s Republic of China, the National Development and Reform Commission of the People’s Republic of China and State Administration of Foreign Exchange of the People’s Republic of China or their local counterparts. The closing under the Betta Stock Purchase Agreement had not occurred as of June 30, 2023. Adequate additional funds may not be available to us on acceptable terms, or at all. If we are unable to raise capital when needed or on attractive terms, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

If we raise additional capital through the sale of equity securities, including through the issuance of the Shares to Betta Investment, each investor’s ownership interest will be diluted, and the terms of any securities we may issue could include liquidation or other preferences that adversely affect the rights of holders of our common stock. Preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as making acquisitions or capital expenditures or declaring dividends.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.

At-the-market equity program

In November 2021, we filed an automatically effective registration statement on Form S-3, or the Registration Statement, with the SEC that registers the offering, issuance and sale of an unspecified amount of common stock, preferred stock, debt securities, warrants, and/or units of any combination thereof. Simultaneously, we entered into an equity distribution agreement with Cowen and Company, LLC, as sales agent, to provide for the issuance and sale by of up to $200.0 million of common stock from time to time in “at-the-market” offerings under the Registration Statement and related prospectus and any prospectus supplement filed with the Registration Statement, or the ATM Program. As of June 30, 2023, no sales have been made under the ATM Program.

Contractual obligations

We enter into contracts in the normal course of business with contract manufacturing organizations, contract research organizations, and other vendors to assist in the performance of our research and development activities and other services and products for operating purposes. These contracts generally provide for termination on notice, and therefore are cancellable contracts and not included in the table of contractual obligations and commitments.

During the six months ended June 30, 2023, except for the minimum rental commitments disclosed in Note 6, Leases, and Note 9, Long-term debt – related party, to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there were no significant changes to our contractual obligations and commitments described under "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022.

Critical accounting policies and use of estimates

Our critical accounting policies are those policies that require the most significant judgments and estimates in the preparation of our unaudited condensed consolidated financial statements. We have determined that our most critical accounting policies are those relating to revenue recognition from collaborations, research and development expense recognition, lease liability measurement, and stock-based compensation. There have been no significant changes to our existing critical accounting policies discussed in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 23, 2023.

Off-balance sheet arrangements

We have not entered into any off-balance sheet arrangements, as defined under the applicable regulations of the SEC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk related to changes in interest rates. Our marketable securities are subject to interest rate risk and may decrease in value if market interest rates increase. As of June 30, 2023, we had marketable securities of $241.8 million, which consisted of corporate debt securities, U.S. government debt securities, and U.S. Treasury securities. Our marketable securities are short term in nature with a weighted-average maturity date of 0.5 years. As such, while these

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interest-earning instruments carry a degree of interest rate risk, historical fluctuations in interest income have not been significant for the Company.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

Our management, with the participation of our principal executive officer and our principal financial officer have evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of June 30, 2023. The term “disclosure controls and procedures,” as defined in the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of June 30, 2023, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the reasonable assurance level.

Changes in internal control over financial reporting

We continuously seek to improve the efficiency and effectiveness of our internal controls. This results in refinements to processes throughout the company. There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent limitation on the effectiveness over financial reporting

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but there can be no assurance that such improvements will be sufficient to provide us with effective internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. As of the date of this Quarterly Report on Form 10-Q, we were not a party to any material legal matters or claims.

Item 1A. Risk Factors.

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all the other information in this Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our condensed consolidated financial statements and related notes, as well as in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023, before you make an investment decision with respect to our securities. The risks and uncertainties described below and in our other filings with the SEC, including our Annual Report on Form 10-K, may not be the only ones that we face. The occurrence of any of the events or developments described below, if they actually occur, could harm our business, financial condition, results of operations, and growth prospects. As a result, the market price of our common stock could decline, and you may lose all or part of your investment in our common stock.

Risks related to our financial position and need for additional capital

We are a clinical-stage biopharmaceutical company and have incurred significant losses since our inception. We expect to incur losses over at least the next several years and may never achieve or maintain profitability.

We are a clinical-stage biopharmaceutical company with limited operating history. Our net loss was $70.7 million and $59.0 for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023 we had an accumulated deficit of $466.6 million. To date, we have not generated any revenue from product sales and have financed our operations primarily through sales of our equity interests, including public offerings of our common stock, proceeds from our collaborations and debt financing. We are still in the early stages of development of our product candidates. As a result, we expect that it will be several years, if ever, before we have a product candidate ready for regulatory approval and commercialization. We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability. To become and remain profitable, we must succeed in developing, obtaining marketing approval for, and commercializing products that generate significant revenue. This will require us to be successful in a range of challenging activities, including, without limitation, successfully completing preclinical studies and clinical trials of our product candidates, discovering additional product candidates, establishing arrangements with third parties for the conduct of our clinical trials, procuring clinical- and commercial-scale manufacturing, obtaining marketing approval for our product candidates, manufacturing, marketing and selling any products for which we may obtain marketing approval, identifying collaborators to develop product candidates we identify or additional uses of existing product candidates, and successfully completing development of product candidates for our collaboration partners.

We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. We anticipate that our expenses will increase substantially if and as we:

•initiate, conduct, and successfully complete first-in-human and later-stage clinical trials of our product candidates and as we expand the scope of our proprietary research and development portfolios;

•leverage our TORPEDO platform to identify and then advance additional product candidates into preclinical and clinical development;

•expand the capabilities of our TORPEDO platform;

•seek marketing approvals for any product candidates that successfully complete clinical trials;

•ultimately establish a sales, marketing, and distribution infrastructure and scale up external manufacturing capabilities to commercialize any products for which we expect to obtain marketing approval;

•advance, expand, maintain, and protect our intellectual property portfolio;

•hire additional personnel, including in areas such as clinical development, regulatory, quality, scientific, and general and administrative positions; and

•add operational, financial, and management information systems and personnel, including personnel to support our ongoing research and development and potential future commercialization efforts.

Further, we expect to continue to incur additional costs associated with operating as a public company, including significant legal, accounting, insurance, investor relations, and other expenses.

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Our expenses could increase beyond our expectations if we are required by the FDA, the European Medicines Agency, or other regulatory authorities to perform trials in addition to those that we currently expect, or if we experience any delays in either establishing appropriate manufacturing arrangements for or completing our clinical trials or the clinical development of any of our product candidates.

Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses we will incur or when, if ever, we will be able to achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue operations. A decline in the value of our company, or in the value of our common stock, could also cause you to lose all or part of your investment.

If one or more of the product candidates that we develop is approved for commercial sale, we anticipate incurring significant costs associated with commercializing those approved product candidates. Even if we are able to generate revenues from the sale of any approved products, we may not become profitable and may need to obtain additional funding to continue operations.

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.

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we prepare for and initiate, conduct, and complete our ongoing and planned first-in-human Phase 1/2 clinical trials of our product candidates, advance our TORPEDO platform and continue research and development activities, expand our proprietary research and development portfolios and initiate and continue clinical trials of, and potentially seek marketing approval for, our current and future preclinical programs. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales, and distribution. Further, we expect to continue to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we may be required to delay, limit, reduce or terminate our research, product development programs or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

We had cash, cash equivalents, and marketable securities of approximately $286.7 million as of June 30, 2023. We believe that these funds, together with the funds expected to be invested by Betta Investment to purchase shares of our common stock under the Betta Stock Purchase Agreement and future payments expected to be received under existing collaboration agreements excluding certain milestone payments, will be sufficient to fund our existing operating plan into the second half of 2025. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our current capital resources sooner than we currently expect. Our future capital requirements will depend on many factors, including:

•the timing, progress, costs, and results of our ongoing and planned first-in-human Phase 1/2 clinical trials for our product candidates and any future clinical development of those product candidates;

•the scope, progress, costs, and results of preclinical and clinical development stage programs and our other product candidates and development programs;

•the number and development requirements of other product candidates that we pursue;

•the success of our ongoing collaborations with Roche and Betta Pharma, including the successful closing of Betta Investment's purchase of shares of our common stock under the Betta Stock Purchase Agreement;

•the costs, timing, and outcomes of regulatory review of our product candidates;

•the costs and timing of future commercialization activities, including product manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive or expect to receive marketing approval;

•the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval and the timing of the receipt of any such revenue;

•any delays or interruptions, including delays due to any global health epidemics such as the recent COVID-19 pandemic, that we experience in our preclinical studies, clinical trials, and/or supply chain;

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•the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights, and defending any intellectual property-related claims; and

•our ability to establish collaboration arrangements with other biotechnology or pharmaceutical companies on favorable terms, if at all, for the development or commercialization of our product candidates or access to our TORPEDO platform.

Our current cash, cash equivalents, and marketable securities will not be sufficient for us to fund any of our product candidates through regulatory approval. As a result, we will need to raise substantial additional capital to complete the development and commercialization of our product candidates. Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete. We may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for several years, if at all. Adequate additional funds may not be available to us on acceptable terms, or at all. In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans.

We remain early in the development lifecycle, which may make it difficult for you to evaluate the success of our business to date and assess our future viability.

We commenced operations in late 2015 and our activities to date have been limited to organizing and staffing our company, business planning, raising capital, conducting discovery and research activities, filing patent applications, identifying potential product candidates, developing and advancing our TORPEDO platform, undertaking preclinical studies, establishing arrangements with third parties for the manufacture of initial quantities of our product candidates, and preparing for and conducting early-stage clinical trials. While we have several ongoing clinical trials, all of our other product candidates are still in preclinical development or in the discovery stage. We have not yet demonstrated our ability to successfully complete any clinical trials, obtain marketing approvals, manufacture a commercial-scale product directly or through a third party or conduct sales, marketing and distribution activities necessary for successful product commercialization. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history or if we had already successfully completed some or all of these types of activities in the past.

In addition, as a biopharmaceutical company, we may encounter unforeseen expenses, difficulties, complications, delays, and other known and unknown challenges. We will need to transition at some point from a company with a research and development focus to a company capable of supporting commercial activities and we may not be successful in making that transition.

We expect our financial condition and operating results to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely upon the results of any quarterly or annual periods as indications of future operating performance.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

Until the time, if ever, when we can generate substantial revenue from product sales, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. Although we may receive potential future payments under our collaborations with Biogen, Roche and Calico, we do not currently have any committed external source of funds. If we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted and the terms of any securities we may issue in the future may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions, or capital expenditures or declaring dividends.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us.

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Risks related to the discovery and development of our product candidates

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

Treating diseases using targeted protein degradation is a new treatment modality. Our future success depends on the successful development of this novel therapeutic approach. Very few small molecule product candidates using targeted protein degradation, such as those developed through our TORPEDO platform, have been tested in humans and none of the product candidates developed through our TORPEDO platform have been approved in the United States or Europe. The data underlying the feasibility of developing these types of therapeutic products is both preliminary and limited. If any adverse learnings are made by other developers of targeted protein degraders, there is a risk that development of our product candidates could be materially impacted. Discovery and development of small molecules that harness the ubiquitin proteasome pathway to degrade protein targets have been impeded largely by the complexities and limited understanding of the functions, biochemistry and structural biology of the specific components of the ubiquitin-proteasome system, including E3 ligases and their required accessory proteins involved in target protein ubiquitination, as well as by challenges of engineering compounds that promote protein-to-protein interactions.

The scientific research that forms the basis of our efforts to develop our degrader product candidates under our TORPEDO platform is ongoing and the scientific evidence to support the feasibility of developing TORPEDO platform-derived therapeutic treatments is both preliminary and limited. Further, certain cancer patients have shown inherent primary resistance to approved drugs that inhibit disease-causing proteins and other patients have developed acquired secondary resistance to these inhibitors. Although we believe our product candidates may have the ability to degrade the specific mutations that confer resistance to currently marketed inhibitors of disease-causing enzymes, any inherent primary or acquired secondary resistance to our product candidates in patients, or if the scientific research that forms the basis of our efforts proves to be contradicted, would prevent or diminish their clinical benefit.

While we have several ongoing clinical trials, at this time, we have not yet completed a clinical trial of any product candidate. As a result, we are only starting to assess the safety of our lead product candidates in patients and we have not yet assessed the safety of any of our other earlier-stage product candidates in humans. Although some of our earlier-stage product candidates have produced observable results in animal studies, there is a limited safety data set for their effects in animals. In addition, these product candidates may not demonstrate the same chemical and pharmacological properties in humans and may interact with human biological systems in unforeseen, ineffective or harmful ways. As a result, there could be adverse effects from treatment with any of our current or future product candidates that we cannot predict at this time.

Additionally, the regulatory approval process for novel product candidates such as ours can be more expensive and take longer than for other, better-known or extensively studied product candidates. Although other companies are also developing therapeutics based on targeted protein degradation, no regulatory authority has granted approval for any therapeutic of this nature at this time. As a result, it is more difficult for us to predict the time and cost of developing our product candidates and we cannot predict whether the application of our TORPEDO platform, or any similar or competitive protein degradation platforms, will result in the development of product candidates that make it through to marketing approval. Any development problems we experience in the future related to our TORPEDO platform or any of our research programs may cause significant delays or unanticipated costs or may prevent the development of a commercially viable product. Any of these factors may prevent us from completing our preclinical studies or any clinical trials that we may initiate, as well as from commercializing any product candidates we may develop on a timely or profitable basis, if at all.

We are a clinical stage biotechnology company and, while we have commenced clinical trials of certain of our product candidates, all of our other product candidates are still in preclinical development or in the discovery stage. If we are unable to advance to clinical development, develop, obtain regulatory approval for and commercialize our product candidates or experience significant delays in doing so, our business may be materially harmed.

We are a clinical-stage biotechnology company and, while we have commenced clinical trials of three of our product candidates, all of our other product candidates are currently in preclinical development or in the discovery stage. As a result, their risk of failure is high. We have invested substantially all of our efforts and financial resources into building our TORPEDO platform and identifying and conducting preclinical development of our current product candidates, including our lead programs. Our ability to generate revenue from product sales, which we do not expect will occur for several years, if ever, will depend heavily on the successful development and eventual commercialization of one or more of our product candidates. The success of our product candidates will depend on several factors, including the following:

•sufficiency of our financial and other resources;

•successful initiations and completion of preclinical studies;

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•successful submission and clearance of INDs and initiation of clinical trials;

•successful patient enrollment in, and conduct and completion of, clinical trials;

•receipt and related terms of marketing approvals from applicable regulatory authorities;

•obtaining and maintaining patent or trade secret protection and regulatory exclusivity for our product candidates;

•making suitable arrangements with third-party manufacturers for both clinical and commercial supplies of our product candidates;

•developing product candidates that achieve the therapeutic properties desired and appropriate for their intended indications;

•establishing sales, marketing and distribution capabilities, and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others;

•acceptance of our products, if and when approved, by patients, the medical community, and third-party payors;

•obtaining and maintaining third-party coverage and adequate reimbursement;

•establishing a continued acceptable safety profile of our products and maintaining that profile following approval;

•effectively competing with other therapies; and

•the skill and success of our third-party collaboration partners in accomplishing any of the aforementioned in the markets in which they are developing our product candidate(s) in a timely manner.

If we do not successfully achieve one or more of these factors in a timely manner, or at all, we could experience significant delays or an inability to successfully commercialize our product candidates, which could materially harm our business. Moreover, if we do not receive regulatory approvals, we may not be able to continue our operations.

We have relatively limited experience as a company in completing preclinical studies to enable the filing of INDs, submitting INDs or commencing, enrolling and conducting clinical trials.

Our experience as a company in completing IND-enabling preclinical studies comes from our work in commencing clinical development of three product candidates. While this work represents a substantial amount of progress, to date, we still have relatively limited experience as a company in commencing, enrolling and conducting clinical trials. In part because of this, while we continue to make strides in this area, we cannot be certain that our preclinical studies will be completed on time, that we will submit INDs in a timely manner, that any INDs we submit will be cleared by the FDA in a timely manner, if at all, or our planned clinical trials will begin, enroll or be completed on time, if at all. In addition, while these are our current expectations, we may experience manufacturing delays or other delays with IND-enabling studies or we may determine that additional IND-enabling studies are warranted. Moreover, we cannot be sure that submission of an IND will result in the FDA allowing us to commence clinical trials or that, once begun, issues will not arise that lead to the suspension or termination of our clinical trials. Additionally, even if the applicable regulatory authorities agree with the design and implementation of the clinical trials set forth in our INDs, we cannot guarantee that those regulatory authorities will not change their requirements in the future. These considerations apply to the INDs described above and also to new clinical trials we may submit as amendments to existing INDs or as part of new INDs in the future. Any failure to file INDs on the timelines we expect or to obtain regulatory approvals for our clinical trials may prevent us from completing our clinical trials or commercializing our products on a timely basis, if at all.

Further, large-scale clinical trials would require significant additional financial and management resources and reliance on third-party clinical investigators, CROs and consultants. Relying on third-party clinical investigators, CROs and consultants may cause us to encounter delays that are outside of our control and, for each of the product candidates that is currently in clinical development, we have engaged a CRO to lead our first-in-human Phase 1/2 clinical trial. Relying on third parties in the conduct of our preclinical studies or clinical trials exposes us to a risk that they may not adequately adhere to study or trial protocols or comply with good laboratory practice or good clinical practice, or GCP, as required for any studies or trials we plan to submit to a regulatory authority. We may also be unable to identify and contract with sufficient investigators, CROs, and consultants on a timely basis or at all, and we may also determine and have in the past determined after a clinical trial has commenced that a change in CRO is warranted. There can be no assurance that we will be able to negotiate and enter into appropriate contractual arrangements without current or potential future CROs, if and when necessary for our other product candidates, on terms that are acceptable to us on a timely basis or at all.

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Our preclinical studies and clinical trials may fail to demonstrate adequately the safety and efficacy of any of our product candidates, which would prevent or delay development, regulatory approval, and commercialization. Further, the results of preclinical studies may not be predictive of future results in later studies or trials and initial success in clinical trials may not be indicative of results obtained when these trials are completed or in later stage clinical trials.

Before obtaining regulatory approval for the commercial sale of any of our product candidates, we must demonstrate through lengthy, complex, and expensive preclinical studies and clinical trials that our product candidates are both safe and effective for use in each target indication. Preclinical and clinical testing is expensive and can take many years to complete. Further, the outcome of these activities is inherently uncertain. Failure can occur at any time during the preclinical study and clinical trial processes and, because many of our product candidates are in an early stage of development and have never been tested in humans, there is a high risk of failure. In addition, because targeted protein degraders are a relatively new class of product candidates, any failures or adverse outcomes in preclinical or clinical testing seen by other developers in this class could materially impact the success of our programs. We may never succeed in developing marketable products.

It is also possible that the results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials. Preclinical and clinical data are often susceptible to varying interpretations and analyses and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products. Although product candidates may demonstrate promising results in preclinical studies and early clinical trials, they may not prove to be effective or safe in subsequent clinical trials. The results of the dose escalation portion of our ongoing and planned first-in-human Phase 1/2 clinical trials of our product candidates may not be predictive of the results of further clinical trials of these product candidates or any other product candidates and may not be sufficient to enable us to progress to the Phase 2 portion of a Phase 1/2 clinical trial. Testing on animals occurs under different conditions than testing in humans and, therefore, the results of animal studies may not accurately predict human experience.

There is typically an extremely high rate of attrition from the failure of product candidates proceeding through preclinical studies and clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy profile despite having progressed successfully through preclinical studies and/or initial clinical trials. Likewise, early, smaller-scale clinical trials may not be predictive of eventual safety or effectiveness in large-scale pivotal clinical trials. In particular, the small number of patients in our planned early clinical trials of the designs of these trials may make the results of these trials less predictive of the outcome of later clinical trials. Many companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy, insufficient durability of efficacy or unacceptable safety issues, notwithstanding promising results in earlier trials. Most product candidates that commence preclinical studies and clinical trials are never approved as marketable products. Any setbacks of this nature in our clinical development could materially harm our business, financial condition, results of operations and prospects.

Additionally, we expect that the first clinical trials for our product candidates will be open-label studies, where both the patient and investigator know whether the patient is receiving the investigational product candidate or either an existing approved drug or placebo. This is the case with our ongoing first-in-human clinical trials and will be the case in the first-in-human clinical trials of the additional product candidates we presently expect to advance into clinical development. Most typically, open-label clinical trials test only the investigational product candidate and sometimes do so at different dose levels. Open-label clinical trials are subject to various limitations that may exaggerate any therapeutic effect as patients in open-label clinical trials are aware when they are receiving treatment. In addition, open-label clinical trials may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical trials are aware of which patients have received treatment and may interpret the information of the treated group more favorably given this knowledge.

Any preclinical studies or clinical trials that we may conduct may not demonstrate the safety and efficacy necessary to obtain regulatory approval to market our product candidates. If the results of our ongoing or future preclinical studies or clinical trials are inconclusive with respect to the safety and efficacy of our product candidates, if we do not meet the clinical endpoints with statistical and clinically meaningful significance or if there are safety concerns associated with our product candidates, we may be prevented or delayed in obtaining marketing approval for those product candidates. In some instances, there can be significant variability in safety or efficacy results between different preclinical studies and clinical trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, changes in and adherence to the clinical trial protocols and the rate of dropout among clinical trial participants.

While we have commenced a clinical trial of each of our three most advanced product candidates, we have not yet initiated clinical trials for any of our other product candidates. As is the case with all drugs, it is likely that there may be side effects associated with the use of our product candidates related to on-target toxicity, off-target toxicity, or other mechanisms of

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drug toxicity including chemical-based toxicity. Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects of this nature. If unacceptable levels of toxicity are observed or if our product candidates have other characteristics that are unexpected, we may need to abandon their development, modify our development plans as to dose level and/or dose schedule or otherwise, or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. For example, due to observed safety signals, we previously modified the dosing schedule in our ongoing Phase 1/2 clinical trial of CFT7455 as we continue to advance this clinical trial. Further, if we were to observe unacceptable levels of side effects, or if other developers of similar targeted protein degraders were to find an unacceptable severity or prevalence of side effects with their drug candidates, our trials could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications. Drug-related side effects could also affect patient recruitment or the ability of enrolled patients to complete an ongoing trial or result in potential product liability claims. Many compounds that initially showed promise in early-stage testing for treating cancer have later been found to cause side effects that prevented further development of the compound. Any of these occurrences may significantly harm our business, financial condition, and prospects.

The conclusions and analysis drawn from announced or published interim top-line and preliminary data from our clinical trials from time to time may change as more patient data become available. Further, all interim data that we provide remains subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publish interim or top-line preliminary data from our clinical trials. Interim data from clinical trials that we may conduct are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. In addition, preliminary or top-line data also remains subject to audit and verification procedures that may result in the final data being different, potentially in material ways, from the preliminary data we previously announced or published. As a result, interim and preliminary data should be viewed with caution until final data are available. Adverse differences between preliminary or interim data and final data could significantly harm our reputation, business, financial condition, results of operations and prospects.

Drug development is a lengthy and expensive process with an uncertain outcome. We may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

While we have commenced clinical trials of our three most advanced product candidates, all of our other product candidates are still in preclinical development or in the discovery stage at this time and the risk of failure for all of our product candidates remains high. We are unable to predict when or if any of our product candidates will prove effective or safe in humans or will receive marketing approval. Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Before we can commence clinical trials for a product candidate, we must complete extensive preclinical studies that support our planned INDs in the United States or similar applications in other jurisdictions. We cannot be certain of the timely initiation, completion or outcome of our preclinical studies and, other than in the cases of our three most advanced product candidates where the FDA has cleared the IND for our first-in-human studies of the drug candidate, we cannot predict if the FDA or similar regulatory authorities outside the United States will allow us to commence our proposed clinical trials or if the outcome of our preclinical studies ultimately will support the further development of any of our product candidates.

Clinical testing is expensive, difficult to design and implement, can take many years to enroll and complete and is uncertain as to the timing and outcome. A failure of one or more clinical trials can occur at any stage of the process. We may experience numerous unforeseen events during or as a result of clinical trials, which could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including:

•delays in reaching, or the failure to reach, a consensus with regulators on clinical trial design or the inability to produce acceptable preclinical results to enable entry into human clinical trials;

•the supply or quality of our product candidates or other materials necessary to conduct clinical trials may be insufficient or inadequate, including as a result of delays in the testing, validation, manufacturing and delivery of product candidates to the clinical sites by us or by third parties with whom we have contracted to perform certain of those functions;

•delays in reaching, or the failure to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites or CROs;

•the failure of regulators or IRBs to authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

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•difficulty in designing clinical trials and in selecting endpoints for diseases that have not been well studied and for which the natural history and course of the disease is poorly understood;

•the selection of certain clinical endpoints that may require prolonged periods of clinical observation or analysis of the resulting data;

•the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate or fail to return for post-treatment follow-up or we may be unable to recruit suitable patients to participate in our clinical trials;

•our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs to suspend or terminate our clinical trials;

•we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks;

•the third parties with whom we contract may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

•the requirement from regulators or IRBs that we or our investigators suspend or terminate clinical trials for various reasons, including noncompliance with regulatory requirements or unacceptable safety risks;

•clinical trials of our product candidates may produce negative or inconclusive results and we may decide, or regulators may require us, to conduct additional clinical trials, modify our development plans as to dose level and/or dose schedule or otherwise, or abandon product development programs;

•the cost of clinical trials of our product candidates may be greater than we anticipate;

•staffing shortages, including but not limited to the lack of appropriately trained or experienced clinical research associates or medical staff at the institutions where we conduct our clinical trials or the lack of sufficient support personnel at these institutions involved in site contracting and activation, may cause delays or create other challenges to the timely and efficient conduct of our clinical trials;

•imposition of a clinical hold by regulatory authorities as a result of a serious adverse event, concerns with a class of product candidates or after an inspection of our clinical trial operations, trial sites or manufacturing facilities; and

•occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; and

•disruptions caused by any global health epidemics, such as the recent COVID-19 pandemic, which may increase the likelihood that we encounter these types of difficulties or cause other delays in initiating, enrolling, conducting, or completing our planned clinical trials.

We also may encounter challenges in our clinical development programs due to evolving regulatory policy in the United States or other jurisdictions. For example, in 2021, the FDA's Oncology Center of Excellence launched Project Optimus, an initiative to reform dose selection in oncology drug development, and this initiative is still being implemented. If the FDA believes we have not sufficiently established that the selected dose or doses for our product candidates maximize efficacy as well as safety and tolerability, the FDA may require us to conduct additional clinical trials or generate additional dosing-related information, which could significantly delay and/or increase the expense of our clinical development programs.

If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully enroll or complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns related to our product candidates, we may:

•be delayed in obtaining marketing approval for our product candidates, if at all;

•obtain approval for indications or patient populations that are not as broad as intended or desired;

•obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;

•be required to perform additional clinical trials to support marketing approval;

•have regulatory authorities withdraw or suspend their approval, or impose restrictions on distribution of a product candidate in the form of a risk evaluation and mitigation strategy, or REMS;

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•be subject to additional post-marketing testing requirements or changes in the way the product is administered; or

•have our product removed from the market after obtaining marketing approval.

Our product development costs also will increase if we experience delays in preclinical studies or clinical trials or in obtaining marketing approvals. While we have commenced clinical trials of our three most advanced product candidates, we do not know whether any of our other preclinical studies or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Significant preclinical study or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or could allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates, which may harm our business, results of operations, financial condition and prospects.

Further, cancer therapies sometimes are characterized as first-line, second-line or third-line. The FDA often approves new oncology therapies initially only for third-line or later use, meaning for use after two or more other treatments have failed. When cancer is detected early enough, first-line therapy, usually systemic anti-cancer therapy (e.g., chemotherapy), surgery, radiation therapy or a combination of these, is sometimes adequate to cure the cancer or prolong life without a cure. Second-line and third-line therapies are administered to patients when prior therapy has been shown to not be effective. Our ongoing and planned early-stage clinical trials will be with patients who have received one or more prior treatments and we expect that we would initially seek regulatory approval of our lead product candidates as second-line or third-line therapy. Subsequently, for those products that prove to be sufficiently beneficial, if any, we would expect to seek approval potentially as a first-line therapy, but any product candidates we develop, even if approved for second-line or third-line therapy, may not be approved for first-line therapy and, prior to seeking and/or receiving any approvals for first-line therapy, we may have to conduct additional clinical trials.

C4 Therapeutics, Inc. [CCCC] Filings
10-Q	[2023-08-08]
10-Q	[2023-05-04]
10-K	[2023-02-23]
10-Q	[2022-11-03]
10-Q	[2022-08-04]
10-Q	[2022-05-05]
10-K	[2022-02-24]
10-Q	[2021-11-10]
10-Q	[2021-08-11]
S-1	[2021-06-14]
10-Q	[2021-05-13]
10-K	[2021-03-11]
10-Q	[2020-11-12]
S-1	[2020-09-10]