aibioFoghorn Therapeutics cuts at-the-market program to $100 million from $200 million
Tickers FHTX
An amendment with TD Cowen cuts the program to $100 million, and the 8-K gives no reason for the cut. The new supplement shows immediate dilution of $3.78 per share at the $4.44 reference price.
Key facts
- Company
- Foghorn Therapeutics Inc. (NASDAQ: FHTX)
- News type
- Financings
- Primary source
- Foghorn Therapeutics Inc. 424B5 (2025-03-20)
The amendment
Foghorn Therapeutics Inc. signed Amendment No. 1 on March 20, 2025 to its Common Stock Sales Agreement with TD Securities (USA) LLC, which succeeded Cowen and Company, LLC as sales agent. The original agreement is dated April 15, 2022. The amendment cuts the at-the-market program to up to $100 million from up to $200 million, according to the 8-K filed the same day. The 8-K gives no reason for the reduction, and the prospectus supplement does not say how many shares, if any, were sold under the earlier program.
Costs and proceeds
The prospectus supplement dated March 20, 2025 covers up to $100,000,000 of common stock. TD Cowen may sell at prevailing prices but is not required to sell any specific amount. Foghorn will pay commissions of up to 3.0% of gross proceeds, and it will reimburse up to $90,000 of TD Cowen's outside legal costs. Total offering expenses, including commissions, are estimated at approximately $4,122,000.
As an illustration, selling 22,522,522 shares at $4.44, the March 18, 2025 closing price, would bring in approximately $99,999,998 gross, or $95,877,998 net. There is no minimum amount that must be sold, so actual proceeds could be substantially lower.
Banks, counsel and dilution
TD Securities is the only sales agent the supplement names, and it will be deemed an underwriter under the Securities Act. Sales may also run through an affiliate of TD Cowen. Latham & Watkins LLP of Boston represents the agent, and Ropes & Gray LLP of New York passes on the validity of the shares for Foghorn. The supplement says TD Cowen and its affiliates have provided investment banking services to Foghorn for customary fees.
Foghorn had 55,594,131 shares outstanding on December 31, 2024. A buyer at $4.44 would face immediate dilution of $3.78 per share, against an as-adjusted net tangible book value of $0.66 per share. Before the offering, net tangible book value was a deficit of $0.82 per share. Warrants for 7,239,239 shares, at an exercise price of $0.04, were also outstanding at year-end.
What the business section says
Foghorn calls itself a clinical-stage precision therapeutics company that targets the chromatin regulatory system, which it says is implicated in approximately 50 percent of all cancers. Its 10-K for 2024 says the company is working on more than eight programs, with one clinical-stage candidate in Phase 1.
That candidate is FHD-909 (LY4050784), an oral SMARCA2 inhibitor developed with Eli Lilly and Company under a collaboration signed in December 2021. Lilly started a Phase 1 dose escalation trial, with the first patient dosed in October 2024. The 10-K says FHD-909 has shown high selectivity over SMARCA4 in preclinical studies. The company also says its pipeline could help more than 500,000 cancer patients and that it could file four Investigational New Drug applications over two years. Those are the company's own estimates.
Cash and what comes next
The supplement gives no cash balance, so it does not show how long Foghorn can fund its programs. The supplement lists general corporate purposes as the use of proceeds, and it says management will have broad discretion over the money. Unused proceeds may be invested in a way that does not produce income or that loses value.
The supplement also warns that further equity or convertible sales could dilute stockholders. The shares are sold under a shelf registration on Form S-3 that covers up to $300,000,000 of securities. The stock closed at $4.41 on January 21, 2025 and at $4.44 on March 18, 2025.