10-Q 1 fmtx-20220331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

 

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

For the quarterly period ended March 31, 2022

OR

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: 001-39333

 

Forma Therapeutics Holdings, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

37-1657129

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

300 North Beacon Street, Suite 501

Watertown, Massachusetts

02472

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (617) 679-1970

 

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, par value $0.001 per share

 

FMTX

 

The Nasdaq Global 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.

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

As of April 28, 2022, the registrant had 47,804,697 shares of common stock, $0.001 par value per share, outstanding.

 

 


Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

6

Item 1.

Financial Statements (Unaudited)

6

 

Condensed Consolidated Balance Sheets

6

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

7

 

Condensed Consolidated Statements of Stockholders’ Equity

8

 

Condensed Consolidated Statements of Cash Flows

9

 

Notes to Condensed Consolidated Financial Statements

10

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

26

Item 4.

Controls and Procedures

27

PART II.

OTHER INFORMATION

28

Item 1.

Legal Proceedings

28

Item 1A.

Risk Factors

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

76

Item 3.

Defaults Upon Senior Securities

76

Item 4.

Mine Safety Disclosures

76

Item 5.

Other Information

76

Item 6.

Exhibits

77

Signatures

78

 

 

 

 

2


Summary of the Material and Other Risks Associated with Our Business

Our business is subject to numerous material and other risks and uncertainties that you should be aware of in evaluating our business. These risks include, but are not limited to, the following:

 

 

 

We are a clinical-stage biopharmaceutical company with a limited operating history and have not generated any revenue to date from drug sales and may never become profitable.

 

 

We have incurred significant operating losses in recent periods and anticipate that we will incur continued losses for the foreseeable future.

 

 

We will require additional capital to finance our operations, which 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 would be forced to delay, scale back or discontinue some of our product candidate development programs or pre-commercialization efforts.

 

 

We depend heavily on the success of our lead product candidates, etavopivat and FT-7051. We cannot be certain that we will be able to obtain regulatory approval for, or successfully commercialize, any of our current or future product candidates.

 

 

If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.

 

 

Rare hematologic diseases may have relatively low prevalence and it may be difficult to identify patients with the driver of the disease, which may lead to delays in enrollment for our trials.

 

 

Business interruptions resulting from the COVID-19 global pandemic or similar public health crises could cause a disruption to the development to our product candidates and adversely impact our business.

 

 

Our current or future product candidates may cause adverse or other undesirable side effects that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

 

 

If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals both for our current or future product candidates, we will not be able to commercialize, or will be delayed in commercializing, our current or future product candidates, and our ability to generate revenue will be materially impaired.

 

 

Even if we receive regulatory approval for any of our current or future product candidates, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense. Additionally, our current or future product candidates, if approved, could be subject to labeling and other restrictions and market withdrawal and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our drugs.

 

 

Manufacturing our current or future product candidates is complex and we may encounter difficulties in production. If we encounter such difficulties, our ability to provide supply of our current or future product candidates for preclinical studies and clinical trials or for commercial purposes could be delayed or stopped.

 

 

Even if we receive marketing approval for our current or future product candidates, our current or future product candidates may not achieve broad market acceptance, which would limit the revenue that we generate from their sales.

 

 

We rely, and expect to continue to rely, on third parties to conduct our ongoing and planned clinical trials for our current and future product candidates. If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain marketing approval for or commercialize our current and potential future product candidates and our business could be substantially harmed.

 

 

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

 

The material and other risks summarized above should be read together with the text of the full risk factors below and in the other information set forth in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the related notes, as well as in other documents that we file with the SEC. If any such material and other risks and uncertainties actually occur, our business, prospects, financial condition and results of operations could be materially and adversely affected. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial may also materially adversely affect our business, prospects, financial condition and results of operations.

3


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains express or implied forward-looking statements within the meaning of the Private Securities Litigation Reform Act, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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 contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

 

 

 

the timing and the success of preclinical studies and clinical trials of etavopivat and FT-7051 and any other product candidates, including the availability, timing and announcement of data and results of such studies and trials;

 

 

the initiation of any clinical trials of etavopivat and FT-7051 and any other product candidates;

 

 

 

our need to raise additional funding before we can expect to generate any revenues from product sales;

 

 

 

our ability to conduct successful clinical trials or obtain regulatory approval for etavopivat and FT-7051 or any other product candidates that we may identify or develop;

 

 

 

our heavy dependence upon the success of our research to generate and advance additional product candidates;

 

 

 

our ability to establish an adequate safety and efficacy profile for etavopivat, FT-7051 or any other product candidates that we may pursue;

 

 

 

the implementation of our strategic plans for our business, any product candidates we may develop and any companion diagnostics;

 

 

 

our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates any companion diagnostics;

 

 

 

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

 

 

 

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

 

 

 

our ability to maintain and establish partnerships and collaborations;

 

 

 

the notice of termination of certain and potential benefits from the remaining licenses to Boehringer Ingelheim International GmbH and Celgene Corporation, now Bristol-Myers Squibb Company;

 

 

 

our financial performance, including our ability to obtain additional funding to fund our operation and complete further development and commercialization of our product candidates, when needed and if approved;

 

 

 

our ability to effectively manage our anticipated growth;

 

 

 

developments relating to our competitors and our industry, including the impact of government regulation;

 

 

 

our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;

 

 

 

the effect of the COVID-19 pandemic, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations; and

 

 

 

other risks and uncertainties, including those listed under the section titled “Risk Factors.”

In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. 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 Quarterly Report on 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 implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the Securities and Exchange Commission thereto completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.

4


The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on 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 Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business and the markets for our product candidates. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from our own internal estimates and research as well as from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources. While we are not aware of any misstatements regarding any third-party information presented in this Quarterly Report on Form 10-Q, their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties and are subject to change based on various factors, including those discussed under the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

5


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

FORMA THERAPEUTICS HOLDINGS, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

74,415

 

 

$

77,421

 

Short-term marketable securities

 

 

346,943

 

 

 

386,805

 

Income tax receivable

 

 

12,050

 

 

 

11,988

 

Prepaid expenses and other current assets

 

 

13,117

 

 

 

10,187

 

Total current assets

 

 

446,525

 

 

 

486,401

 

Property and equipment, net

 

 

13,550

 

 

 

13,927

 

Long-term marketable securities

 

 

19,985

 

 

 

26,047

 

Operating lease right-of-use asset

 

 

21,620

 

 

 

22,074

 

Other assets

 

 

12,817

 

 

 

12,612

 

Total assets

 

$

514,497

 

 

$

561,061

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,044

 

 

$

4,145

 

Accrued expenses and other current liabilities

 

 

19,091

 

 

 

25,748

 

Operating lease liability

 

 

5,112

 

 

 

5,125

 

Income tax payable

 

 

90

 

 

 

70

 

Total current liabilities

 

 

26,337

 

 

 

35,088

 

Operating lease liability, noncurrent

 

 

26,967

 

 

 

27,617

 

Total liabilities

 

 

53,304

 

 

 

62,705

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.001 par value; 150,000,000 shares authorized at March 31, 2022 and
   December 31, 2021;
47,771,388 and 47,411,356 shares issued at March 31, 2022 and
   December 31, 2021, respectively;
47,762,683 and 47,398,238 shares outstanding at
   March 31, 2022 and December 31, 2021, respectively

 

 

47

 

 

 

47

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized and no issued or outstanding at
   March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Additional paid-in capital

 

 

735,678

 

 

 

728,683

 

Accumulated deficit

 

 

(274,532

)

 

 

(230,374

)

Total stockholders’ equity

 

 

461,193

 

 

 

498,356

 

Total liabilities and stockholders’ equity

 

$

514,497

 

 

$

561,061

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


FORMA THERAPEUTICS HOLDINGS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended
March 31,

 

 

 

2022

 

 

2021

 

Collaboration revenue

 

$

 

 

$

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

31,273

 

 

 

26,343

 

General and administrative

 

 

13,136

 

 

 

9,867

 

Total operating expenses

 

 

44,409

 

 

 

36,210

 

Loss from operations

 

 

(44,409

)

 

 

(36,210

)

Other income:

 

 

 

 

 

 

Interest income

 

 

289

 

 

 

262

 

Other expense, net

 

 

(35

)

 

 

(4

)

Total other income, net

 

 

254

 

 

 

258

 

Loss before taxes

 

 

(44,155

)

 

 

(35,952

)

Income tax expense

 

 

3

 

 

 

8

 

Net loss and comprehensive loss

 

$

(44,158

)

 

$

(35,960

)

Net loss allocable to shares of common stock, basic and diluted

 

$

(44,158

)

 

$

(35,960

)

Net loss per share of common stock, basic and diluted

 

$

(0.93

)

 

$

(0.76

)

Weighted-average shares of common stock outstanding, basic and diluted

 

 

47,561,631

 

 

 

47,295,013

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

7


FORMA THERAPEUTICS HOLDINGS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2020

 

 

47,248,685

 

 

$

47

 

 

$

705,607

 

 

$

(57,410

)

 

$

648,244

 

Exercise of options to purchase common stock

 

 

68,389

 

 

 

 

 

 

333

 

 

 

 

 

 

333

 

Vesting of restricted common stock

 

 

11,501

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation

 

 

 

 

 

 

 

 

3,848

 

 

 

 

 

 

3,848

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(35,960

)

 

 

(35,960

)

Balance at March 31, 2021

 

 

47,328,575

 

 

$

47

 

 

$

709,788

 

 

$

(93,370

)

 

$

616,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

47,398,238

 

 

$

47

 

 

$

728,683

 

 

$

(230,374

)

 

$

498,356

 

Exercise of options to purchase common stock

 

 

131,788

 

 

 

 

 

 

741

 

 

 

 

 

 

741

 

Vesting of restricted common stock

 

 

4,413

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

 

228,244

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation

 

 

 

 

 

 

 

 

6,254

 

 

 

 

 

 

6,254

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(44,158

)

 

 

(44,158

)

Balance at March 31, 2022

 

 

47,762,683

 

 

$

47

 

 

$

735,678

 

 

$

(274,532

)

 

$

461,193

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

8


 

FORMA THERAPEUTICS HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(44,158

)

 

$

(35,960

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

638

 

 

 

183

 

Non-cash operating lease expense

 

 

261

 

 

 

375

 

Equity-based compensation

 

 

6,254

 

 

 

3,848

 

(Accretion) amortization of marketable securities

 

 

(2

)

 

 

377

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

(Increase) decrease in income taxes receivable

 

 

(62

)

 

 

207

 

(Increase) in prepaid expenses and other current assets

 

 

(2,930

)

 

 

(1,954

)

(Increase) in other assets

 

 

 

 

 

(2,555

)

(Decrease) in accounts payable

 

 

(2,138

)

 

 

(1,368

)

(Decrease) in accrued expenses and other current liabilities

 

 

(6,708

)

 

 

(3,990

)

Increase in income taxes payable

 

 

20

 

 

 

73

 

(Decrease) in operating lease liability

 

 

(470

)

 

 

(473

)

Net cash used in operating activities

 

 

(49,295

)

 

 

(41,237

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of held-to-maturity marketable securities

 

 

(148,905

)

 

 

(257,868

)

Proceeds from maturity and redemption of marketable securities

 

 

194,831

 

 

 

114,500

 

Purchases of property and equipment

 

 

(261

)

 

 

(83

)

Net cash provided by (used in) investing activities

 

 

45,665

 

 

 

(143,451

)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from exercise of options to purchase common stock

 

 

741

 

 

 

333

 

Payment of public offering costs

 

 

(79

)

 

 

(500

)

Net cash provided by (used in) financing activities

 

 

662

 

 

 

(167

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(2,968

)

 

 

(184,855

)

Cash, cash equivalents and restricted cash, beginning of the period

 

 

79,538

 

 

 

285,159

 

Cash, cash equivalents and restricted cash, end of the period

 

$

76,570

 

 

$

100,304

 

Supplemental disclosure of non-cash activities:

 

 

 

 

 

 

Operating lease right-of-use asset recognized upon adoption of Topic 842

 

$

 

 

$

7,478

 

Public offering costs included in accounts payable and accrued expenses

 

$

111

 

 

$

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

9


 

FORMA THERAPEUTICS HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1—Organization and Nature of Business

Forma Therapeutics Holdings, Inc. and its wholly-owned subsidiaries, hereinafter collectively, “the Company”, is a clinical-stage biopharmaceutical company focused on the development and commercialization of novel therapeutics to transform the lives of patients with rare hematologic diseases and cancers.

On June 23, 2020, the Company completed an initial public offering (“IPO”) in which the Company issued and sold 15,964,704 shares of its common stock at a public offering price of $20.00 per share, resulting in net proceeds of $293.3 million after deducting underwriting discounts and commissions and offering expenses payable by the Company. Upon the closing of the IPO, all outstanding shares of preferred stock automatically converted into 20,349,223 shares of common stock; all issued shares of enterprise junior stock automatically converted into 2,124,845 and 103,007 shares of common stock and restricted common stock, respectively; and all outstanding warrants to purchase shares of preferred stock automatically converted into warrants to purchase an aggregate of 70,133 shares of common stock with an exercise price of $5.13 per share.

On December 15, 2020, the Company completed a follow-on public offering in which the Company issued and sold 6,095,000 shares of its common stock at a public offering price of $45.25 per share, resulting in net proceeds of $258.6 million after deducting underwriting discounts and commissions and offering expenses payable by the Company.

On July 26, 2021, the Company filed a Registration Statement on Form S-3 with the SEC, which was automatically declared effective on July 26, 2021 (File No. 333-258174), as amended by Post-Effective Amendment No. 1 and Post-Effective Amendment No. 2 on Form S-3 filed on March 1, 2022, in relation to the registration of up to $400.0 million of common stock, preferred stock, debt securities, warrants and units or any combination thereof (the “2021 Shelf”). The Company also simultaneously entered into a Sales Agreement ("Sales Agreement") with SVB Leerink LLC (the "Sales Agent") to provide for the offering, issuance and sale of up to an aggregate amount of $200.0 million of common stock from time to time in “at-the-market” offerings, with $150.0 million of common stock currently registered under the 2021 Shelf, and subject to the limitations thereof. The Company will pay to the Sales Agent cash commissions of up to 3.0% of the gross proceeds of sales of common stock under the Sales Agreement. As of the date of this Quarterly Report on Form 10-Q, the Company has not made any sales of its common stock under the Sales Agreement.

Liquidity
The Company is focused on the development and commercialization of novel therapeutics to transform the lives of patients with rare hematologic diseases and cancers. The Company is building a pipeline of therapeutics with a focus on these areas and has devoted substantially all of its resources to the research and development of its drug development efforts, comprised of research and development, manufacturing, conducting clinical trials, protecting its intellectual property and general and administrative functions relating to these operations. The future success of the Company is dependent on its ability to develop its product candidates and ultimately upon its ability to attain sustained profitable operations through commercialization of products.

The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, the need for additional capital, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval and reimbursement for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development of technological innovations by competitors, reliance on third-party manufacturers and the ability to transition from pilot-scale production to large-scale manufacturing of products.

10


 

The Company has determined that its cash, cash equivalents and marketable securities of $441.3 million as of March 31, 2022 will be sufficient to fund its operations for at least one year from the date these condensed consolidated financial statements are issued. To date, the Company has primarily financed its operations through license and collaboration agreements, the sale of preferred shares and preferred stock to outside investors and the completion of the IPO and follow-on public offering. The Company has experienced significant negative cash flows from operations during the three months ended March 31, 2022. The Company does not expect to experience any significant positive cash flows from its existing collaboration agreements and does not expect to have any product revenue in the near term. The Company expects to incur substantial operating losses and negative cash flows from operations for the foreseeable future as it continues to invest significantly in research and development of its programs. Management’s belief with respect to its ability to fund operations is based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, the Company may need to seek additional funding sooner than would otherwise be expected. There can be no assurance that the Company will be able to obtain additional funding on acceptable terms, if at all.

Note 2—Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The condensed consolidated financial statements include the accounts of Forma Therapeutics Holdings, Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The Company has prepared the accompanying condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures generally included in financial statements in conformity with GAAP have been condensed or omitted in accordance with such rules and regulations. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standard Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Significant Accounting Policies
These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Unaudited Interim Condensed Consolidated Financial Statements

The accompanying condensed consolidated balance sheet as of March 31, 2022, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2022 and 2021, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2022 and 2021 and the condensed consolidated statements of cash flows for the three months ended March 31, 2022 and 2021 are unaudited. The financial data and other information contained in the notes thereto as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 are also unaudited. The condensed consolidated balance sheet data as of December 31, 2021 was derived from the Company’s audited consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2021, and in the opinion of the Company’s management, reflect all adjustments which are necessary to present fairly the Company’s financial position as of March 31, 2022, the results of its operations for the three months ended March 31, 2022 and 2021 and cash flows for the three months ended March 31, 2022 and 2021. Such adjustments are of a normal and recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2021, and the notes thereto, included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Cash, Cash Equivalents and Restricted Cash

The Company considers all short-term, highly liquid investments with original maturities of 90 days or less at acquisition date to be cash equivalents. The carrying amounts of the Company’s cash equivalents approximate their fair value due to their short-term nature.

11


 

Amounts in restricted cash consist of letters of credit and a security deposit to secure the Company’s facilities. Restricted cash is included in other assets on the condensed consolidated balance sheets. The following table reconciles cash, cash equivalents and restricted cash as of March 31, 2022 and 2021 to the condensed consolidated statements of cash flows (in thousands):

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Cash and cash equivalents

 

$

74,415

 

 

$

97,834

 

Restricted cash

 

 

2,155

 

 

 

2,470

 

Total cash, cash equivalents and restricted cash as shown in the condensed
   consolidated statements of cash flows

 

$

76,570

 

 

$

100,304

 

 

Marketable Securities

Marketable securities generally consist of U.S. Treasury securities, debt securities of U.S. Government agencies and corporate entities and commercial paper. The objectives for holding investments are to invest the Company’s excess cash resources in investment vehicles that provide a better rate of return compared to an interest-bearing bank account with limited risk to the principal invested. Marketable securities with original maturities of greater than 90 days and remaining maturities of less than one year from the balance sheet date are classified as short-term marketable securities. Marketable securities with remaining maturities of greater than one year from the balance sheet date are classified as long-term marketable securities. All investments are classified as held-to-maturity marketable securities as the Company does not have intent to sell these securities and it is more likely than not the Company will not be required to sell such investments before recovery of their amortized cost basis. Held-to-maturity securities are stated at their amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included in interest income in the condensed consolidated statements of operations and comprehensive loss.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with the equity holders. There was no difference between net loss and comprehensive loss presented in the accompanying condensed consolidated financial statements for the three months ended March 31, 2022 and 2021.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments, which has been subsequently amended by ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-10, ASU No. 2019-11, ASU No. 2020-02 and ASU No. 2022-02 (“ASU 2016-13”). The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Although earlier adoption is permitted, the Company plans to adopt ASU 2016-13 on January 1, 2023. The Company is currently evaluating the potential impact that this standard may have on its condensed consolidated financial statements and related disclosures.

12


 

Note 3—Fair Value of Financial Assets

The following tables present information about the Company’s assets that are measured or disclosed at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

 

 

 

Fair Value Measurements at the Reporting Date Using

 

 

 

March 31,
2022

 

 

Quoted Prices
In Active
Markets
Using
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets—Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase agreement

 

$

25,000

 

 

$

 

 

$

25,000

 

 

$

 

Money market funds

 

 

45,736

 

 

 

45,736

 

 

 

 

 

 

 

Assets—Short-term marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency securities

 

 

39,927

 

 

 

 

 

 

39,927

 

 

 

 

U.S. Treasury securities

 

 

54,881

 

 

 

54,881

 

 

 

 

 

 

 

Commercial paper

 

 

217,008

 

 

 

 

 

 

217,008

 

 

 

 

Corporate debt securities

 

 

33,969

 

 

 

 

 

 

33,969

 

 

 

 

Assets—Long-term marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

 

19,665

 

 

 

19,665

 

 

 

 

 

 

 

Total

 

$

436,186

 

 

$

120,282

 

 

$

315,904

 

 

$

 

 

 

 

Fair Value Measurements at the Reporting Date Using

 

 

 

December 31,
2021

 

 

Quoted Prices
In Active
Markets
Using
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets—Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase agreement

 

$

25,000

 

 

$

 

 

$

25,000

 

 

$

 

Money market funds

 

 

49,957

 

 

 

49,957

 

 

 

 

 

 

 

Assets—Short-term marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency securities

 

 

40,022

 

 

 

 

 

 

40,022

 

 

 

 

U.S. Treasury securities

 

 

27,972

 

 

 

27,972

 

 

 

 

 

 

 

Commercial paper

 

 

268,472

 

 

 

 

 

 

268,472

 

 

 

 

Corporate debt securities

 

 

50,271

 

 

 

 

 

 

50,271

 

 

 

 

Assets—Long-term marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency securities

 

 

1,991

 

 

 

 

 

 

1,991

 

 

 

 

U.S. Treasury securities

 

 

23,958

 

 

 

23,958

 

 

 

 

 

 

 

Total

 

$

487,643

 

 

$

101,887

 

 

$

385,756

 

 

$

 

 

During the three months ended March 31, 2022 and twelve months ended December 31, 2021 there were no transfers into or out of Level 3.

The Company’s Level 2 investments classified as cash equivalents and marketable securities are valued using third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs.

13


 

Note 4—Marketable Securities

The following table presents the carrying amounts and estimated fair values of financial instruments not measured at fair value in the condensed consolidated balance sheets as they are considered held-to-maturity securities.

The Company’s investments by type consisted of the following (in thousands):

 

 

 

March 31, 2022

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair Value

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency securities

 

$

39,999

 

 

$

 

 

$

(72

)

 

$

39,927

 

U.S. Treasury securities

 

 

75,079

 

 

 

 

 

 

(533

)

 

 

74,546

 

Commercial paper

 

 

217,695

 

 

 

 

 

 

(687

)

 

 

217,008

 

Corporate debt securities

 

 

34,155

 

 

 

 

 

 

(186

)

 

 

33,969

 

Total

 

$

366,928

 

 

$

 

 

$

(1,478

)

 

$

365,450

 

 

 

 

 

December 31, 2021

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair Value

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency securities

 

$

42,032

 

 

$