ITEM 7. 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 consolidated financial statements and the related notes to those statements included elsewhere in this Annual Report on Form 10-K. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Some of the numbers included herein have been rounded for the convenience of presentation. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

Overview

Foghorn is a clinical stage, precision therapeutics biotechnology company pioneering a new class of medicines that treat serious diseases by correcting abnormal gene expression through selectively targeting the chromatin regulatory system, an untapped opportunity for therapeutic intervention in oncology and with potential in a wide spectrum of other diseases including immunology and inflammation.

The chromatin regulatory system orchestrates gene expression—the turning on and off of genes—which is fundamental to how all our cells function. The chromatin regulatory system is implicated in approximately 50 percent of all cancers, and understanding how this system works could lead to an entirely new class of precision medicines. To our knowledge, we are the only company with the ability to study and target the chromatin regulatory system at scale, in context, and in an integrated way.

Our proprietary Gene Traffic Control platform provides an integrated and mechanistic understanding of how the various components of the chromatin regulatory system interact, allowing us to identify, validate and potentially drug targets within this system. We have developed unique capabilities that have yielded new insights and scalability in drugging this new, previously untapped and promising area.

At present, we are working on more than seven programs with one clinical-stage drug candidate currently in Phase 1 development. We have discovered highly selective chemical matter for some of the most challenging targets in oncology including SMARCA2 (BRM), CBP, EP300, and ARID1B as well as other undisclosed targets. We believe our current pipeline has the potential to help more than 500,000 cancer patients. We take a small molecule modality agnostic approach to drugging

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targets which includes protein degraders, allosteric enzymatic inhibitors, and transcription factor disruptors. We are a biology first company, which means we focus first on the underlying genetics and biology of a disease relevant target and then leverage the most appropriate drugging approach to impact the disease biology.

Since our inception, we have focused substantially all of our resources on building our Gene Traffic Control platform, organizing and staffing our company, business planning, conducting discovery and research activities, raising capital, protecting our trade secrets, filing patent applications, identifying potential product candidates, undertaking preclinical studies and clinical trial activities, establishing arrangements with third parties for the manufacture of initial quantities of our product candidates and component materials and initiating two strategic collaborations. We do not have any products approved for sale and have not generated any revenue from product sales.

On December 10, 2021, we entered into a collaboration agreement (the “Lilly Collaboration Agreement”) with Eli Lilly and Company (“Lilly”), for which we received an upfront payment of $300.0 million in January 2022 (see Note 8 to our notes to consolidated financial statements included elsewhere in this Annual Report on Form 10-K). Concurrent with the Lilly Collaboration Agreement, we also entered into a stock purchase agreement (the “Lilly SPA”) with Lilly whereby we issued and sold Lilly 4,000,000 shares of our common stock, par value $0.0001 per share (“Common Stock”), at a price of $20.00 per share, resulting in net proceeds of $80.0 million, of which $42.2 million was allocated to equity upon the issuance of our common stock.

The Lilly Collaboration Agreement generally provides that Lilly and Foghorn will co-develop and co-commercialize certain “joint” programs for the U.S., and these joint programs will be subject to a U.S. profit and expense share. Outside the U.S., the joint programs are subject to a world-wide research and development expense share and ex-U.S. royalties. The joint programs include the selective SMARCA2 oncology program that includes both a selective inhibitor (FHD-909) and a selective degrader, as well as an additional undisclosed oncology target. The collaboration also includes three discovery programs that will leverage Foghorn’s proprietary Gene Traffic Control platform which are subject to customary royalties and milestones and are not subject to co-development, co-commercialization rights.

FHD-909 was transitioned to Lilly during the third quarter of 2023, which triggered the 50/50 cost share for the SMARCA2 programs. Costs related to the cost-share are included in research and development expenses on the consolidated statements of operations and comprehensive loss.

In October 2024, the first patient was dosed in a Phase 1 dose escalation study of FHD-909, a selective allosteric ATPase inhibitor of SMARCA2, developed in collaboration with Lilly.

In December 2024, we announced our decision to discontinue the independent development of FHD-286 in combination with decitabine in patients with relapsed and/or refractory acute myeloid leukemia.

In May 2024, the Company entered into an underwriting agreement with Jefferies LLC, TD Securities (USA) LLC and Evercore Group LLC relating to the issuance and sale of an aggregate of 12,743,039 shares of its Common Stock at a public offering price of $5.51 per share to certain investors. In addition, the Company issued and sold to certain investors in lieu of Common Stock pre-funded warrants to purchase 7,220,794 shares of its Common Stock (the “Pre-funded Warrants”) at a public offering price of $5.5099 per pre-funded warrant, which represents the public offering price per share of the Common Stock less the $0.0001 exercise price per share of each pre-funded warrant. The offering (the “May 2024 Offering”) closed on May 22, 2024, resulting in net proceeds of $102.8 million, after deducting underwriting discounts, commissions and other offering expenses.

In the fourth quarter of 2025, the Company utilized its at-the-market facility (the “ATM Facility”) to sell 101,174 shares of its Common Stock for proceeds of $0.5 million.

On January 9, 2026, the Company entered into securities purchase agreements (the “Purchase Agreements”) with certain leading life sciences investors (the “Investors”), relating to the issuance and sale of 2,030,314 shares of its Common Stock and, in lieu of Common Stock, pre-funded warrants to purchase 5,421,250 shares of Common Stock (the “Pre-Funded Warrants”). The Company sold the shares of Common Stock and Pre-Funded Warrants together with two series of warrants, Series 1 Warrants and Series 2 Warrants, to purchase an aggregate of 7,451,564 shares of the Common Stock (the “Series Warrants”). The Pre-Funded Warrants were exercisable immediately upon issuance at an initial exercise price of $0.0001 per share and have a term of 20 years. The shares of Common Stock, or Pre-Funded Warrants, as applicable, and the accompanying Series Warrants were immediately separable and were issued separately, but they were purchased together in the offering.

The Series Warrants were immediately exercisable. Each Series 1 Warrant has an initial exercise price of $13.42 per share of Common Stock, subject to certain adjustments, and expires on June 30, 2027. Each Series 2 Warrant has an initial exercise price of $20.13 per share of Common Stock, subject to certain adjustments, and expires on December 31, 2030. For the Series Warrants, the Investor may elect to receive, in lieu of shares of Common Stock, pre-funded warrants to purchase an equivalent number of shares of Common Stock. The offering (the “January 2026 Offering”) closed on January 13, 2026, resulting in gross

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proceeds of approximately $50 million before offering expenses, and excluding any proceeds the Company may receive upon exercise of the Pre-Funded Warrants and Series Warrants.

We have incurred significant operating losses since our inception. For the years ended December 31, 2025 and 2024, we reported net losses of $74.3 million and $86.6 million, respectively. As of December 31, 2025, we had an accumulated deficit of $632.5 million. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. Our ability to generate any product revenue or product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more product candidates we are developing or may develop.

We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

•advance FHD-909 and other product candidates partnered with Lilly, and continue preclinical and clinical development of product candidates from our current portfolio;

•identify and advance additional research programs and additional product candidates;

•initiate preclinical testing for any new product candidates we identify and develop;

•obtain, maintain, expand, enforce, defend and protect our trade secrets and intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio;

•hire additional research and development personnel;

•add operational, legal, compliance, financial and management information systems and personnel to support our research, product development and operations;

•expand the capabilities of our platform;

•acquire or in-license product candidates, intellectual property and technologies;

•experience significant operating cost increases as a result of increased inflation or increased tariffs;

•operate as a public company;

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

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

We will not generate revenue from product sales unless and until we successfully commercialize one of our product candidates, after completing clinical development and obtaining regulatory approval. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing and distribution. Further, we expect to incur additional costs associated with operating as a public company.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings and collaborations or licensing arrangements and the Lilly Collaboration Agreement. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back our development or commercialization plans for one or more of our product candidates.

Because of the numerous risks and uncertainties associated with pharmaceutical product development and the current geopolitical and economic and trade environment, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

Components of Our Results of Operations

Collaboration Revenue

To date, we have not generated any revenue from product sales and do not expect to do so in the near future. If our development efforts for our product candidates are successful and result in regulatory approval or licenses with third parties, we may generate revenue in the future from product sales, milestone payments under our existing collaboration agreement or payments from other license agreements that we may enter into with third parties.

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In December of 2021, we entered into a strategic collaboration with Lilly to create novel oncology medicines by applying Foghorn’s proprietary Gene Traffic Control platform. The collaboration includes a U.S. co-development and co-commercialization agreement for the aforementioned selective SMARCA2 (BRM) oncology program and an additional undisclosed oncology target. In addition, the collaboration includes three additional discovery programs using Foghorn’s proprietary Gene Traffic Control platform. Under the terms of the collaboration, Foghorn received upfront consideration of $300.0 million in cash pursuant to the Lilly Collaboration Agreement, together with an equity investment by Lilly of $80.0 million in shares of Foghorn Common Stock pursuant to the Lilly SPA.

For the SMARCA2 selective program and the additional undisclosed target program, Foghorn will lead discovery and early research activities, while Lilly will lead development and commercialization activities with participation from Foghorn in operational activities and cost sharing. Foghorn and Lilly will share 50/50 in the U.S. economics, and Foghorn is eligible to receive royalties on ex-U.S. sales starting in the low double-digit range and escalating into the twenties based on revenue levels.

For the additional discovery programs, Foghorn will lead discovery and early research activities. Foghorn may receive up to a total of $1.3 billion in potential development and commercialization milestones. Additionally, Foghorn will have an option to participate in a percentage of the U.S. economics and is eligible to receive tiered royalties from the mid-single digit to low-double digit range on sales outside the U.S. that may be exercised after the successful completion of the dose-finding toxicity studies.

We cannot provide assurances as to the timing of future milestones, royalty payments and economics associated with the strategic collaboration with Lilly, if any.

In the third quarter of 2023, we transitioned the Selective SMARCA2 inhibitor, FHD-909, to Lilly, for which Lilly will lead and we will participate and share in 50% of the costs until at least registrational trials. Costs incurred will continue to be included in research and development expenses on the consolidated statements of operations and comprehensive loss.

We recognized total deferred revenue of $337.8 million related to the Lilly Collaboration Agreement and the Lilly SPA, which included the $300.0 million upfront payment under the Lilly Collaboration Agreement as well as $37.8 million allocated to deferred revenue from the gross proceeds of the Lilly SPA to be recognized over the performance period. For the years ended December 31, 2025 and 2024, we recognized $30.9 million and $22.6 million, respectively, of revenue under the Lilly Collaboration Agreement and, as of December 31, 2025, we had $249.2 million of deferred revenue related to the above mentioned upfront payment and revenue allocation remaining on our consolidated balance sheets.

Operating Expenses

Our operating expenses are comprised of research and development expenses and general and administrative expenses.

Research and Development Expenses

Research and development expenses consist primarily of costs incurred to progress our proprietary and partnered pipeline, including our discovery efforts, which include:

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

•expenses incurred in connection with our research programs and preclinical and clinical development of our product candidates, including under agreements with third parties, such as consultants and contractors and contract research organizations (“CROs”), and our collaboration partner;

•the cost of manufacturing drug substance and drug product for use in our research and preclinical studies and clinical trials under agreements with third parties, such as consultants and contractors and contract development and manufacturing organizations (“CDMOs”);

•laboratory supplies and research materials;

•facilities, depreciation and amortization and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance; and

•payments made under third-party licensing agreements.

We track our direct external research and development expenses on a program-by-program basis. These consist of costs that include fees, reimbursed materials, and other costs paid to consultants, contractors, CDMOs, and CROs in connection with our preclinical, clinical and manufacturing activities. We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities expenses, including depreciation or other indirect costs, to specific product

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development programs because these costs are deployed across multiple programs and our platform and, as such, are not separately classified.

We expect that our research and development expenses may increase in the future as we advance our programs into clinical development and continue our discovery, research and preclinical activities in the near term and in the future. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any product candidates we may develop. A change in the outcome of any number of variables with respect to product candidates we may develop could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any product candidates we may develop. In addition, given the uncertainties associated with the current geopolitical and economic and trade environment, our research and development expenses may increase in an unpredictable manner.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits, and stock-based compensation, for employees engaged in executive, finance and accounting, legal, and other administrative functions. General and administrative expenses also include professional fees for legal, patent, consulting, investor and public relations, human resources, and accounting and audit services as well as direct and allocated facility-related costs.

We anticipate that our general and administrative expenses may increase in the future as we continue to support our continued research activities and development of our programs and platform. We also anticipate that we will continue to incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance costs and investor and public relations expenses associated with operating as a public company.

Other Income, Net

Interest Income

Interest income consists of interest earned on our invested cash balances.

Other Income, Net

Other income, net consists of sublease income and miscellaneous expense unrelated to our core operations.

Provision for Income Taxes

Since our inception, we have not recorded any federal or state income tax benefits for the net losses we have incurred in any year or for our federal or state earned research and development tax credits, due to our uncertainty of realizing a benefit from those items. During the years ended December 31, 2025 and 2024, we recorded no provision for income taxes. As of December 31, 2025, we had federal net operating loss carryforwards of $198.5 million, which may be available to offset future taxable income. The federal net operating loss can be carried forward indefinitely but are limited to offset 80% of annual taxable income. As of December 31, 2025, we also had U.S. federal and state research and development tax credit carryforwards of $9.4 million and $3.7 million, respectively, which may be available to reduce future tax liabilities and expire at various dates beginning in 2043 and 2037, respectively. Due to our history of cumulative net losses since inception and uncertainties surrounding our ability to generate future taxable income, we have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date. We do not expect to have taxable income in the current year.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA provides for, among other things, the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company has evaluated the impact of the OBBBA and determined that it does not have a material impact on the Company’s consolidated financial statements. The most significant impact is the provision allowing for immediate expensing of certain research and development expenses. The Company has implemented the two-year accelerated expensing under the OBBBA causing the previously capitalized US R&D expenses, amortized over 5 years, to be accelerated over two years. Note that the Company will continue to assess its overall business up until the filing of the 2025 federal tax return and may change its election under IRC Section 174A if it determines there is a more beneficial position.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, (“GAAP”). The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses and the disclosure of

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contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

We received significant non-refundable upfront payments under our collaboration agreements with Lilly, from which we recognize revenue over time using the cost-to-cost method. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the identified single performance obligation. In estimating the total costs to satisfy our performance obligation, we are required to make significant estimates including an estimate of the expected time and expected internal and external costs to fulfill the performance obligation. In developing these estimates we consider historical experience, relevant entity-specific factors, known market trends and conditions, and a variety of other factors we believe are relevant to estimating the total cost to fulfill the performance obligation. We periodically evaluate estimates against the actual time and costs incurred as well as any anticipated changes to the timing or estimated costs. Any cumulative effect of revisions to the total estimated costs to complete our performance obligation will be recorded in the period in which the changes are identified, and amounts can be reasonably estimated. A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods and the classification of deferred revenue between short-term and long-term.

Accrued Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate certain accrued research and development expenses. This process involves estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of the estimates with the service providers and make adjustments if necessary. Examples of estimated accrued research and development expenses include those related to fees paid to:

•vendors in connection with discovery, preclinical and clinical development activities;

•CROs in connection with preclinical studies and testing and clinical trials; and

•CDMOs in connection with the process development and scale up activities and the production and manufacturing of materials.

We base the expense recorded related to contract research and manufacturing on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CROs and CDMOs that conduct services and produce and supply materials. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. While the majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met, some require advance payments. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. We record these as prepaid expenses on our consolidated balance sheets.

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Results of Operations

Comparison of the Years Ended December 31, 2025 and 2024

The following table summarizes our results of operations for the years ended December 31, 2025 and 2024:

Year Ended December 31, Change

(in thousands)

Operating expenses:

Gain on lease modification (1,632) — (1,632)

Other income, net:

Collaboration Revenue

Under the Lilly Collaboration Agreement, revenue is recognized based on the work performed during the period. Collaboration revenue was $30.9 million for the year ended December 31, 2025, compared to $22.6 million for the year ended December 31, 2024. The increase in collaboration revenue is attributed to continued advancement of programs under the Lilly Collaboration Agreement.

Research and Development Expenses

The following table summarizes our research and development expenses for the years ended December 31, 2025 and 2024:

Year Ended December 31, Change

(in thousands)

Research and development program expenses:

Platform, research and discovery, and unallocated expenses:

Early development and other research external costs 16,658 18,407 (1,749)

Personnel related (including stock-based compensation) 27,266 27,718 (452)

Research and development expenses were $85.5 million for the year ended December 31, 2025, compared to $94.5 million for the year ended December 31, 2024. The decrease is attributed to the following:

•a decrease in FHD-286 costs of $10.2 million due to the discontinuation of both the independent development of FHD-286 in combination with decitabine in patients with relapsed and/or refractory AML, resulting in the shutdown of the Phase 1 clinical trial, and termination of the independent development of FHD-286 in patients with uveal melanoma; and

•a decrease in facilities and IT related expenses and other costs of $1.8 million primarily due to the June 2025 lease modification (see Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K) and decreased headcount in our research and development function compared to prior year; and

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•a decrease in early development and other research external costs of $1.7 million which was driven by decreased FHD-609 spend due to the shutdown of the Phase 1 clinical trial in synovial sarcoma and SMARCAB1-loss tumors and a decrease in preclinical research costs due to program progression; and

•a decrease in personnel-related costs of $0.5 million, primarily driven by a $0.6 million decrease in stock-based compensation expense due to a lower weighted average expense per award compared to prior year, partially offset by increased payroll taxes period over period; and

•an increase in Lilly partnered programs of $5.2 million primarily driven by initiation of the Phase 1 dose escalation study of FHD-909. We expect these costs to continue to increase with increasing enrollment of FHD-909.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the years ended December 31, 2025 and 2024:

Year Ended December 31,

(in thousands)

Personnel related (including stock-based compensation) $ 17,415 $ 17,125 $ 290

Facilities and IT related expenses and other 4,041 4,984 (943)

Total general and administrative expenses $ 27,550 $ 28,359 $ (809)

General and administrative expenses were $27.6 million for the year ended December 31, 2025, compared to $28.4 million for the year ended December 31, 2024. The decrease is attributed to the following:

•a decrease in facilities and IT related expenses and other costs of $0.9 million primarily due to the June 2025 lease modification (see Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

Gain on Lease Modification

For the year ended December 31, 2025, we recorded a gain on lease modification of $1.6 million resulting from the remeasurement of the right-of-use asset and lease liabilities in connection with the Company’s main office lease and relocation to Watertown, MA, in December 2025 (See Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K). For the year ended December 31, 2024, the Company recorded no gain on lease modification.

Impairment of Long-Lived Assets

For the year ended December 31, 2025, we recorded a non-cash impairment of long-lived assets charge of $5.9 million for the abandonment of leasehold improvements in connection with the Company’s main office lease and relocation to Watertown, MA, in December 2025 (See Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K). For the year ended December 31, 2024, we recorded a non-cash impairment of long-lived assets charge of $2.4 million related to the sublease of office space at the Company’s prior headquarters in Cambridge, MA.

Other Income, Net

Total other income, net was $12.1 million for the year ended December 31, 2025, compared to $16.1 million for the year ended December 31, 2024. The decrease was due to decreased interest income due to a lower average balance of marketable securities during the period and decreased sublease income due to the conclusion of both subleases during 2025 (see Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

Liquidity and Capital Resources

Since our inception in October 2015, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we support our continued research activities and development of our programs and platform. Through December 31, 2025, we have funded our operations with proceeds from our initial public offering (“IPO”) in October 2020, sales of preferred stock, term loans, an upfront payment of $15.0 million we received in July 2020 under the Research Collaboration and Exclusive License Agreement (the “Merck Collaboration Agreement”) with Merck Sharp & Dohme Corp. (“Merck”), proceeds we received in December 2021 under the Lilly SPA of $80.0 million; an upfront payment of $300.0 million received in January 2022 under the Lilly Collaboration Agreement; a payment of $5.0 million received from Merck under the Merck Collaboration Agreement in the third quarter of 2022 for the achievement of a research milestone; net

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proceeds of $102.8 million, after deducting underwriting discounts, commissions and other offering expenses, from the May 2024 Offering; and net proceeds from our ATM Facility of $0.5 million. As of December 31, 2025, we had cash, cash equivalents and marketable securities of $158.9 million.

January 2026 Offering

On January 9, 2026, the Company entered into the Purchase Agreements with the Investors, relating to the issuance and sale of 2,030,314 shares of its Common Stock and, in lieu of Common Stock, Pre-Funded Warrants to purchase 5,421,250 shares of Common Stock. The Company sold the shares of Common Stock and Pre-Funded Warrants together with Series Warrants, consisting of Series 1 Warrants and Series 2 Warrants to purchase an aggregate of 7,451,564 shares of the Common Stock. The Pre-Funded Warrants were exercisable immediately upon issuance at an initial exercise price of $0.0001 per share and have a term of 20 years. The shares of Common Stock, or Pre-Funded Warrants, as applicable, and the accompanying Series Warrants were immediately separable and were issued separately, but they were purchased together in the offering.

The offering price for the shares of Common Stock is $6.71 per share (or $6.7099 for each Pre-Funded Warrant, which equals the price per share of the Common Stock less the exercise price of the Pre-Funded Warrants). The aggregate gross proceeds to the Company from this offering were approximately $50.0 million before any offering expenses, and excluding any proceeds the Company may receive upon exercise of the Pre-Funded Warrants and Series Warrants. No underwriter or placement agent participated in the offering.

Cash Flows

The following table summarizes our sources and uses of cash for each of the periods presented:

Year Ended December 31,

(in thousands)

Net cash used in operating activities $ (86,099) $ (100,406)

Net cash provided by (used in) investing activities 112,040 (29,904)

Net cash provided by financing activities 1,023 105,428

Operating Activities

For the year ended December 31, 2025, operating activities used $86.1 million of cash, resulting from our net loss of $74.3 million to fund our operations and by changes in our operating assets and liabilities of $32.1 million partially offset by net non-cash charges of $20.3 million. Net cash used in changes in our operating assets and liabilities for the year ended December 31, 2025 consisted primarily of a decrease of $30.9 million in deferred revenue resulting from the recognition of revenue on the upfront payments received in connection with our collaboration agreements and a $6.7 million decrease in operating lease liabilities, partially offset by a $5.5 million net increase in working capital.

For the year ended December 31, 2024, operating activities used $100.4 million of cash, resulting from our net loss of $86.6 million to fund our operations and by changes in our operating assets and liabilities of $32.3 million partially offset by net non-cash charges of $18.5 million. Net cash provided by changes in our operating assets and liabilities for the year ended December 31, 2024 consisted primarily of a decrease of $22.6 million in deferred revenue resulting from the recognition of revenue on the upfront payments received in connection with our collaboration agreements, a $7.9 million decrease in operating lease liabilities and a $1.7 million net decrease in working capital.

Investing Activities

For the year ended December 31, 2025, net cash provided by investing activities was $112.0 million consisting of $243.3 million of marketable securities maturing partially offset by $131.2 million of purchases of marketable securities and $0.1 million in purchases of property and equipment.

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For the year ended December 31, 2024, net cash used in investing activities was $29.9 million primarily due to $261.5 million of purchases of marketable securities and $0.9 million in purchases of property and equipment offset by $232.5 million of marketable securities maturing.

Financing Activities

For the year ended December 31, 2025, net cash provided by financing activities was $1.0 million, consisting of $0.5 million net proceeds from the sale of common stock under our ATM Facility and $0.5 million net proceeds from the exercise of common stock options and the employee stock purchase plan.

For the year ended December 31, 2024, net cash provided by financing activities was $105.4 million, consisting of net proceeds from the offering of our common stock and pre-funded warrants of $102.8 million, after deducting underwriting discounts, commissions and other offering expenses that had been paid in during the twelve months ended December 31, 2024 and $2.6 million net proceeds from the exercise of common stock options and the employee stock purchase plan.

Funding Requirements

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we continue to fund on-going and potential future clinical activities, including the Phase 1 clinical trial of FHD-909 partnered with Lilly, advance preclinical activities, and initiate clinical trials for our product candidates in development, including those partnered with Lilly. As of the issuance date of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we expect that our cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements for at least twelve months. We have based this estimate on assumptions that may prove to be inaccurate. We could use our available capital resources sooner than we currently expect, in which case we would be required to obtain additional financing sooner than planned, which may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our long-term business strategy. We will be required to obtain further funding through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources.

If we are unable to raise sufficient capital as and when needed, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidate we may develop, or be unable to expand our operations or otherwise capitalize on our business opportunities. If we raise additional funds through collaborations or licensing arrangements with third parties, we may have to relinquish valuable rights to future revenue streams or product candidates or grant licenses on terms that may not be favorable to us.

Off-balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, for this reporting period and are not required to provide the information required under this item.

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ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FOGHORN THERAPEUTICS INC.

Index to Consolidated Financial Statements

Page

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) 74

Consolidated Balance Sheets 76

Consolidated Statements of Operations and Comprehensive Loss 77

Consolidated Statements of Stockholders’ Deficit 78

Consolidated Statements of Cash Flows 79

Notes to Consolidated Financial Statements 80

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Foghorn Therapeutics Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Foghorn Therapeutics, Inc. and its subsidiary (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, shareholders' deficit, and cash flows, for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Collaboration Revenue - Refer to Notes 2 and 8 to the financial statements

Critical Audit Matter Description

During the year ended December 31, 2025, the Company recognized revenue of $30.9 million. As discussed in Note 2 to the consolidated financial statements, at inception, the Company determines whether contracts are within the scope of ASC 606, Revenue from Contracts with Customers, or ASC 606, or other topics. Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. For performance obligations where revenue is recognized over time, the Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company recognizes revenue using the cost-to-cost method, where the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the identified performance obligation. The impacts on revenue from changes in total estimated costs are recognized on a cumulative basis in the period when the changes occur. If estimates of the total cost change, or if contract amendments change the scope of the performance obligation, the required adjustments to revenue could be material.

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We identified revenue recognition as a critical audit matter because of the judgments necessary for management to estimate total costs to satisfy the applicable performance obligation under the contract. This required a high degree of auditor judgment when performing audit procedures to audit management’s estimates of total costs and evaluating the results of those procedures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to collaboration revenue included the following, among others:

•We obtained and read the relevant contracts and other documents related to the collaboration agreement.

•We evaluated the Company’s accounting analysis for the applicable contract, including the application to the relevant authoritative guidance.

•We tested the amount of revenue recognized, including the measurement of progress for revenue that is recognized over time.

•We tested management’s estimate of the total cost of fulfilling the performance obligation, including retrospective reviews of the changes in such estimates over time.

•We also discussed the basis for key assumptions with the Company's research and development personnel, who oversee the completion of the collaboration arrangement.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

March 11, 2026

We have served as the Company’s auditor since 2018.

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Foghorn Therapeutics Inc.

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

December 31,

Assets

Current assets:

Restricted cash 1,250 —

Prepaid expenses and other current assets 3,091 5,854

Other assets 4 68

Liabilities and Stockholders’ Deficit

Current liabilities:

Accrued expenses and other current liabilities 11,357 8,531

Operating lease liabilities 923 9,067

Operating lease liabilities, net of current portion 40,347 28,064

Other liabilities 556 —

Commitments and contingencies (Note 11)

Stockholders’ deficit:

Accumulated other comprehensive gain 24 135

Total liabilities and stockholders’ deficit $ 198,103 $ 283,982

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

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Foghorn Therapeutics Inc.

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

Year Ended December 31,

Operating expenses:

Gain on lease modification (1,632) —

Impairment of long-lived assets 5,914 2,398

Other income, net:

Comprehensive loss:

Other comprehensive gain (loss):

Unrealized gains (losses) on marketable securities (111) 961

Total other comprehensive gain (loss) (111) 961

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

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Foghorn Therapeutics Inc.

Consolidated Statements of Stockholders’ Deficit

(In thousands, except share amounts)

Shares Amount

Stock-based compensation expense — — 11,893 — — 11,893

Unrealized gains on marketable securities — — — 961 — 961

Issuance of common stock upon exercise of pre-funded warrants 725,949 — — — — —

Stock-based compensation expense — — 10,399 — — 10,399

Unrealized losses on marketable securities — — — (111) — (111)

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

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Foghorn Therapeutics Inc.

Consolidated Statements of Cash Flows

(In thousands)

Year ended December 31,

Cash flows from operating activities:

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

Depreciation and amortization expense 3,332 3,120

Loss on disposal of property and equipment 31 —

Gain on lease modification (1,632) —

Impairment of long-lived assets 5,914 2,398

Accretion of discount on marketable securities (1,926) (4,613)

Changes in operating assets and liabilities:

Prepaid expenses and other current assets 2,827 1,317

Accrued expenses and other liabilities 2,204 (564)

Operating lease liabilities (6,743) (7,942)

Net cash used in operating activities (86,099) (100,406)

Cash flows from investing activities:

Purchases of property and equipment (50) (906)

Proceeds from maturities of marketable securities 243,337 232,472

Net cash provided by (used in) investing activities 112,040 (29,904)

Cash flows from financing activities:

Payments of public offering costs — (585)

Net cash provided by financing activities 1,023 105,428

Cash, cash equivalents and restricted cash at beginning of period 57,162 82,044

Cash, cash equivalents and restricted cash at end of period $ 84,126 $ 57,162

Supplemental cash flow information:

Cash paid for taxes $ 9 $ 860

Supplemental disclosure and noncash investing and financing information:

Reconciliation of cash, cash equivalents and restricted cash:

Restricted cash (current and non-current) 3,250 1,708

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

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Foghorn Therapeutics Inc.

Notes to Consolidated Financial Statements

1. Nature of Business, Going Concern and Basis of Presentation

Nature of Business

Foghorn Therapeutics Inc. (the “Company”) is a clinical-stage biopharmaceutical company discovering and developing a new class of medicines targeting genetically determined dependencies within the chromatin regulatory system. The Company uses its proprietary Gene Traffic Control platform to identify, validate and potentially drug targets within the system. The Company was founded in October 2015 as a Delaware corporation. The Company is headquartered in Watertown, Massachusetts.

The Company is subject to risks similar to those of other clinical-stage companies in the biopharmaceutical industry, including dependence on key individuals, the need to develop commercially viable products, competition from other companies, many of whom are larger and better capitalized, and the need to obtain adequate additional financing to fund the development of its products. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be maintained, that any products developed will obtain required regulatory approval or that any approved products will be commercially viable. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from the sale of its products.

Going concern

The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. Since inception, the Company has funded its operations primarily with proceeds from sales of preferred stock, upfront and milestone payments from a collaboration agreements, public offerings and a stock purchase agreement. The Company has incurred recurring losses, including net losses of $74.3 million and $86.6 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, the Company had an accumulated deficit of $632.5 million. The Company expects to continue to generate operating losses in the foreseeable future. As of the issuance date of these consolidated financial statements the Company expects that its cash, cash equivalents and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months.

The Company will need to obtain additional funding through public or private equity offerings, debt financings, collaborations, strategic alliances and/or licensing arrangements to continue to fund its operations. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into collaborative or strategic alliances or licensing arrangements. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. Arrangements with collaborators or others may require the Company to relinquish rights to certain of its technologies or programs. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs, pipeline expansion or commercialization efforts, which could adversely affect its business prospects. Although management will continue to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding in the future on terms acceptable to the Company to fund continuing operations when needed or at all.

Basis of presentation

The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. 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 Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

2. Summary of Significant Accounting Policies

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, revenue recognition and the accrual of research and development expenses. The Company bases its estimates on historical experience, known trends and

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other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Actual results may differ from those estimates or assumptions.

Concentrations of credit risk and of significant suppliers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

The Company relies, and expects to continue to rely, on a small number of vendors to provide services, supplies and materials for certain activities related to its programs. These programs could be adversely affected by a significant interruption in these services or the availability of materials.

Cash equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

Marketable Securities

The Company’s marketable securities are classified as available-for-sale and are carried at fair value with the unrealized gains and losses reported as a component of accumulated other comprehensive loss in stockholders’ equity. The Company classifies its marketable securities with maturities beyond one year as short-term, based on their highly liquid nature and because such marketable securities are available for current operations.

The Company reviews marketable securities whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying value is not recoverable. For available-for-sale debt securities, the credit allowance is limited to the amount that fair value is less than amortized cost. Unrealized gains (losses) are evaluated for impairment under ASC 326, Financial Instruments - Credit Losses, to determine if the impairment is credit-related or noncredit-related. Credit-related impairment is recognized as an allowance on the consolidated balance sheets with a corresponding adjustment to earnings, and noncredit-related impairment is recognized in other comprehensive loss. Evidence considered in this assessment includes reasons for the impairment, compliance with our investment policy, the severity of the impairment, collectability of the security, and any adverse conditions specifically related to the security, an industry, or geographic area.

Unrealized gains and losses are included as a component of accumulated other comprehensive loss in the consolidated balance sheets and consolidated statements of stockholders’ deficit and a component of total comprehensive loss. Realized gains and losses are included as a component of other income, net based on the specific identification method.

Restricted cash

Amounts included in restricted cash represent amounts pledged as collateral for letters of credit required for security deposits on the Company’s leased facilities. These amounts are classified as restricted cash in the Company’s consolidated balance sheets.

Property and equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of each asset as follows:

Estimated Useful Life

Laboratory equipment 5 years

Furniture and fixtures 5 years

Computer equipment and software 3 years

Leasehold improvements Shorter of useful life or remaining term of lease

Costs for capital assets not yet placed into service are depreciated once placed into service. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is included in loss from operations. Expenditures for repairs and maintenance are charged to expense as incurred.

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Impairment of long-lived assets

The Company evaluates its long-lived assets, which consist primarily of property and equipment and operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. For the years ended December 31, 2025 and 2024, the Company recorded a non-cash impairment charge of $5.9 million and $2.4 million, respectively, on the consolidated statements of operations and comprehensive loss. See Note 10 Leases and Note 4 Property and Equipment, Net, for additional information.

Fair value measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

•Level 1—Quoted prices in active markets for identical assets or liabilities.

•Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

•Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company’s cash equivalents and marketable securities are carried at fair value, determined according to the fair value hierarchy described above (see Note 3). The carrying values of the Company’s accounts payable and accrued expenses approximate their fair values due to the short-term nature of these liabilities.

Collaboration Agreements

The Company analyzes its collaboration arrangements to assess whether they are within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. When the Company has concluded that it has a customer relationship with one of its collaborators, the Company follows the guidance in ASC Topic 606, Revenue From Contracts With Customers (“ASC 606”).

Revenue recognition

The Company accounts for its collaboration arrangement under ASC 606, as the Company concluded that it has a customer relationship with its collaborator. For additional information on the Company’s collaboration agreements, see Note 8, Collaboration Agreement, to these consolidated financial statements. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer.

The Company assesses the goods or services promised within each contract and determines those that are performance obligations. The promised goods or services in the Company’s arrangements would likely consist of licenses, rights to the Company’s intellectual property, research and development services and related supporting activities. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. The Company assesses if these options provide a material right to the customer and if so, they are considered performance obligations.

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The Company assesses whether each promised good or service is distinct for the purpose of identifying the performance obligations in the contract. This assessment involves subjective determinations and requires management to make judgments about the individual promised goods or services and whether such are separable from the other aspects of the contractual relationship. Promised goods and services are considered distinct provided that: (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (that is, the good or service is capable of being distinct) and (ii) the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (that is, the promise to transfer the good or service is distinct within the context of the contract). In assessing whether a promised good or service is distinct, the Company considers factors such as the research, development, manufacturing and commercialization capabilities of the customer and the availability of the associated expertise in the general marketplace. The Company also considers the intended benefit of the contract in assessing whether a promised good or service is separately identifiable from other promises in the contract. If a promised good or service is not distinct, an entity is required to combine that good or service with other promised goods or services until it identifies a bundle of goods or services that is distinct.

The transaction price is then determined and allocated to the identified performance obligations in proportion to their standalone selling prices (“SSP”) on a relative SSP basis. SSP is determined at contract inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied. Determining the SSP for performance obligations requires significant judgment. In developing the SSP for a performance obligation, the Company considers applicable market conditions and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated costs. The Company validates the SSP for performance obligations by evaluating whether changes in the key assumptions used to determine the SSP will have a significant effect on the allocation of arrangement consideration between multiple performance obligations.

If the consideration promised in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the promised goods or services to a customer. The Company determines the amount of variable consideration by using the expected value method or the most likely amount method. The Company includes the unconstrained amount of estimated variable consideration in the transaction price. The amount included in the transaction price is constrained to the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each subsequent reporting period, the Company re-evaluates the estimated variable consideration included in the transaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment.

If an arrangement includes development and regulatory milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s control such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company generally recognizes revenue using the cost incurred to date as compared to the total estimated cost. The impact on revenue of changes in total estimated costs are recognized on a cumulative basis in the period that the change occurs. If estimates of the total cost change, or if contract amendments change the scope of the performance obligation, the required adjustments to revenue could be material.

For arrangements with licenses of intellectual property that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes royalty revenue and sales-based milestones at the later of (i) when the related sales occur, or (ii) when the performance obligation to which the royalty has been allocated has been satisfied.

The Company records amounts as accounts receivable when the right to consideration is deemed unconditional. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded for deferred revenue.

In determining the transaction price, the Company adjusts consideration for the effects of the time value of money if the timing of payments provides the Company with a significant benefit of financing. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between the transfer of the promised goods or services to the customer and the payment by the customer will be one year or less. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied, either at a point in time or over time, and if over time, recognition is based on the use of an output or input method.

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Research and development costs

Research and development expenses consist of costs incurred in performing research and development activities, including salaries and bonuses, stock-based compensation, employee benefits, facilities costs, laboratory supplies, depreciation, and external costs of vendors engaged to conduct research, preclinical and clinical development activities as well as the cost of licensing technology.

Upfront payments and milestone payments made for the licensing of technology are expensed as research and development over the period to which they relate. Costs for research and development activities are expensed in the period in which they are incurred. Payments for such activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated financial statements as prepaid expense or accrued research and development expense. Determining the prepaid and accrued balances at the end of any reporting period incorporate certain judgments and estimates by management that are based on information available to the Company including information provided by vendors regarding the progress to completion of specific tasks or costs incurred.

Patent costs

All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses.

Leases

The Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines if an arrangement is a lease or contains an embedded lease at inception. For arrangements that meet the definition of a lease, the Company determines the initial classification and measurement of its right-of-use asset and lease liability at the lease commencement date and thereafter if modified. The lease term includes any renewal options that the Company is reasonably assured to exercise. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its estimated secured incremental borrowing rate for that lease term. The Company’s policy is to not record leases with an original term of twelve months or less on its consolidated balance sheets and recognizes those lease payments in the consolidated statements of operations and comprehensive loss as incurred over the lease term. The Company’s existing leases are for office and laboratory space and an equipment lease.

In addition to rent, the leases may require the Company to pay additional costs, such as utilities, maintenance and other operating costs, which are generally referred to as non-lease components. The Company has elected to not separate lease and non-lease components. Only the fixed costs for lease components and their associated non-lease components are accounted for as a single lease component and recognized as part of a right-of-use asset and liability. Rent expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in operating expense in the consolidated statements of operations and comprehensive loss.

The Company received payments and income from a sublease on a portion of the Company’s Cambridge, Massachusetts office lease prior to the sublease’s termination (see Note 10). The Company recognized sublease income on a straight-line basis over the lease term in other income, net, net on the consolidated statements of operations and comprehensive loss, net of any revenue share due to the Company’s lessor.

Stock-based compensation

The Company measures stock options with service-based vesting or performance-based vesting granted to employees, non-employees and directors based on the fair value on the date of grant using the Black-Scholes option-pricing model. Compensation expense for the awards is recognized over the requisite service period for employees and directors and as services are delivered for non-employees, both of which are generally the vesting period of the respective award. The Company uses the straight-line method to record the expense of awards with only service-based vesting conditions. The Company uses the graded-vesting method to record the expense of awards with both service-based and performance-based vesting conditions, commencing once achievement of the performance condition becomes probable. The Company accounts for forfeitures of share-based awards as they occur.

The Company classifies stock-based compensation expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

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Net loss per share

Basic net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period, adjusted for potential dilutive common shares.

In periods in which the Company reported a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

The Company reported a net loss attributable to common stockholders for the years ended December 31, 2025 and 2024.

The following pre-funded warrants outstanding at each period end were included in the basic and diluted net loss per share calculation:

December 31,

For the year ended December 31, 2025, 725,965 pre-funded warrants were exercised. For the year ended December 31, 2024, no pre-funded warrants were exercised.

The following common stock equivalents presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share because including them would have had an anti-dilutive impact:

December 31,

Segments

Operating segments are defined as components of an entity for which separate discrete financial information is made available and that is regularly evaluated by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company’s CODM is its chief executive officer and the Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The Company is focused on pioneering the discovery and development of a new class of medicines targeting genetically determined dependencies within the chromatin regulatory system. See Note 14 for additional disclosures related to segment reporting.

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 stockholders. For the years ended December 31, 2025 and 2024, the Company’s only element of other comprehensive loss was unrealized gains and losses on available for sale debt securities.

Income taxes

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to the provision for income taxes. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.

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The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. Any resulting unrecognized tax benefits are recorded within the provision for income taxes.

Recently issued accounting pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." The standard enhances the existing income tax disclosures to provide information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. The standard is effective for annual periods beginning after December 15, 2024. The Company adopted ASU 2023-09 during the year ended December 31, 2025 on a prospective basis. The expanded disclosures are included in the consolidated financial statements (Note 9).

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures , which is intended to improve disclosures about a public company’s expenses including the disclosure of certain expenses included and aggregated in captions such as cost of sales, selling general & administrative and research and development expenses on the consolidated financial statements on an interim and annual basis. The standard is effective for annual periods beginning after December 15, 2026 and interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the standard on the presentation of its consolidated financial statements and footnotes.

3. Marketable Securities and Fair Value Measurements

As of December 31, 2025, available for sale marketable securities by security type consisted of (in thousands):

AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses EstimatedFairValue

U.S. government agencies (due within one year) 1,500 — — 1,500

Corporate notes and bonds (due within one year) 41,208 23 — 41,231

As of December 31, 2024, available for sale marketable securities by security type consisted of (in thousands):

AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses EstimatedFairValue

U.S. treasury notes (due within one year) $ 35,366 $ 28 $ — $ 35,394

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The following tables present the Company’s fair value hierarchy for its assets and liabilities, which are measured at fair value on a recurring basis (in thousands):

Fair Value Measurements atDecember 31, 2025 Using:

Level 1 Level 2 Level 3 Total

Assets:

Cash equivalents:

Marketable securities:

Fair Value Measurements atDecember 31, 2024 Using:

Level 1 Level 2 Level 3 Total

Assets:

Cash equivalents:

Marketable securities:

For the years ended December 31, 2025 and 2024, there were no transfers between Level 1, Level 2 and Level 3.

4. Property and Equipment, Net

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

December 31,

Computer equipment and software 46 67

Leasehold improvements — 17,023

Less: Accumulated depreciation and amortization (7,005) (15,084)

Depreciation and amortization expense was $3.3 million and $3.1 million for the years ended December 31, 2025 and 2024, respectively. The Company recognized a non-cash impairment of leasehold improvements of $5.9 million and $0.8 million for the years ended December 31, 2025 and 2024, respectively, see Note 10, Leases, for additional information.

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5. Accrued Expenses and Other Current Liabilities

Accrued expenses consisted of the following (in thousands):

December 31,

Accrued employee compensation and benefits $ 5,921 $ 4,742

Accrued external research and development expenses 4,194 3,076

Accrued professional fees 842 712

6. Common Stock

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company's stockholders. Common stockholders are not entitled to receive dividends, unless declared by the board of directors.

In May 2024, the Company entered into an underwriting agreement with Jefferies LLC, TD Securities (USA) LLC and Evercore Group LLC relating to the issuance and sale of an aggregate of 12,743,039 shares of its common stock at a public offering price of $5.51 per share to certain investors. In addition, the Company issued and sold to certain investors in lieu of common stock the Pre-funded Warrants to purchase 7,220,794 shares of its common stock at a public offering price of $5.5099 per pre-funded warrant, which represents the public offering price per share of the common stock less the $0.0001 exercise price per share of each pre-funded warrant. The offering closed on May 22, 2024, resulting in net proceeds of $102.8 million after deducting underwriting discounts and commissions and other offering expenses.

As the Pre-funded Warrants are indexed to the Company’s common stock (and otherwise meet the requirements to be classified in equity), the Company recorded the consideration received from the issuance of the pre-funded warrants as additional paid-in capital on the Company’s consolidated balance sheets and statements of stockholders’ deficit.

The Pre-funded Warrants are exercisable at any time.

On April 15, 2022, the Company entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”) with respect to an at-the-market offering (the “ATM Offering”) pursuant to which the Company, at its discretion, may offer and sell shares of its common stock having an aggregate offering price of up to $200.0 million from time to time through Cowen as its sales agent. Sales of common stock through Cowen, if any, will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. The Company will pay Cowen a commission of up to 3.0% of the gross sales price of any common stock sold through Cowen under the Sales Agreement.

On March 20, 2025, the Company and TD Securities (USA) LLC, as successor to Cowen (“TD Cowen”) entered into amended the sales agreement (the “Amended Sales Agreement”), which, among other things, reduced the amount of shares of common stock that may be sold under the ATM Offering to up to $100 million of shares of common stock.

In the fourth quarter of 2025, the Company issued and sold 101,174 shares of its common stock under the ATM Facility for net proceeds of $0.5 million.

7. Stock-Based Compensation

2020 Equity Incentive Plan

The Company’s 2020 Equity Incentive Plan (the “2020 Plan”) provides for the grant of incentive stock options, non-qualified options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. The number of shares initially reserved for issuance under the 2020 Plan was (i) 2,200,000 shares (the “share pool”), plus (ii) the number of shares of common stock available for issuance under the Company’s 2016 Stock Incentive Plan (the “2016 Plan”) as of the effective date of the 2020 Plan, plus the number of shares of common stock underlying awards under the 2016 Plan that on or after the date of adoption expire or become unexercisable without delivery of shares, are forfeited to, or repurchased for cash, are settled in cash, or otherwise become available again for grant under the 2016 Plan, in each case, in accordance with its terms (up to an aggregate of 5,078,295 shares). As of December 31, 2025, 3,486,615 shares remained available for future grant under the 2020 Plan.

The share pool will automatically increase on January 1 of each year from 2021 to 2030 by the lesser of (i) four percent of the number of shares of our common stock outstanding as of the close of business on the immediately preceding December 31 and

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(ii) the number of shares determined by the board of directors on or prior to such date for such year. The number of shares reserved for issuance under the 2020 Plan was increased by 2,266,293 shares effective January 1, 2026.

The 2020 Plan is administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, or its committee if so delegated. Stock options granted with service-based vesting conditions generally vest over four years and expire after ten years. The exercise price for stock options granted is not less than the fair value of common stock on the date of grant. The Company bases fair value of common stock on the quoted market price.

2020 Employee Stock Purchase Plan

On October 21, 2020, the Company’s board of directors adopted and its stockholders approved the 2020 Employee Stock Purchase Plan (the “ESPP”), which became effective on October 21, 2020. The aggregate number of shares of common stock available for purchase pursuant to the exercise of options under the ESPP is 360,000 shares, plus an automatic annual increase, as of January 1 of each year from 2021 to 2030, equal to the lesser of one percent of the number of shares of common stock outstanding as of the close of business on the immediately preceding December 31 and (ii) the number of shares determined by the board of directors on or prior to such date for such year (up to a maximum of 3,220,520 shares). As of December 31, 2025, 2,077,652 shares remained available for future grant under the ESPP. The number of shares reserved for issuance under the ESPP was increased by 566,573 shares effective January 1, 2026.

Eligible employees may authorize payroll deductions of up to 15% of their eligible compensation during an offering period. The purchase of shares is done at a 15% discount on the lesser of (i) the Fair Market Value of a share of Stock on the first day of the offering period and (ii) the Fair Market Value of a share of Stock on the last day of the offering period. The Company currently holds two offering periods, September 1 and March 1, respectively. For the years ended December 31, 2025 and 2024, the Company recognized a de minimis amount and $0.1 million, respectively, of expense related to the ESPP.

Stock option valuation

The fair value of stock option grants is estimated using the Black-Scholes option-pricing model. The Company currently lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted for the years ended December 31, 2025 and 2024 which was as follows:

Year Ended December 31,

Risk-free interest rate 4.3 % 4.1 %

Expected volatility 93.5 % 89.3 %

Expected dividend yield — —

Expected term (in years) 5.8 6.1

The following table summarizes the Company’s option activity for the year ended December 31, 2025 which was as follows:

(in years) (in thousands)

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The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. The aggregate intrinsic value of stock options exercised for the years ended December 31, 2025 and 2024 was $0.5 million and $1.8 million, respectively

The weighted average grant-date fair value of stock options granted for the years ended December 31, 2025 and 2024 was $3.32 per share and $3.14 per share, respectively.

Stock-based compensation

The Company recorded stock-based compensation expense related to common stock options in the following expense categories of its consolidated statements of operations and comprehensive loss for the years ended December 31, 2025 and 2024 which was as follows (in thousands):

Year Ended December 31,

Research and development expenses $ 4,336 $ 4,955

General and administrative expenses 6,063 6,938

As of December 31, 2025, total unrecognized compensation cost related to unvested options was $11.7 million, which is expected to be recognized over a weighted average period of 2.1 years.

8. Collaboration Agreement

Lilly Collaboration Agreement and Stock Purchase Agreement

In December 2021, the Company entered into the Lilly Collaboration Agreement with Lilly to create novel oncology medicines by applying Foghorn’s proprietary Gene Traffic Control platform. The collaboration includes a co-development and co-commercialization agreement for the Company’s selective SMARCA2 (BRM) oncology target, consisting of two programs, and one additional undisclosed oncology target (collectively, the “Joint Programs”). The collaboration also includes three additional discovery targets or programs (collectively, the “Discovery Programs”) for a total of six programs directed at five targets.

With respect to the Joint Programs, the Company will lead discovery and early research activities through the successful completion of dose finding toxicity studies for the identified compound, while Lilly will lead development and commercialization activities of the identified compound with participation from the Company in development activities and 50% cost sharing until registrational clinical trials. The Company and Lilly may jointly develop and commercialize the Joint Program compound though the Company may, in its sole discretion, opt-out on a program-by-program basis of further participation in the development and commercialization efforts prior to the first registrational clinical trial. If the Company does not opt-out, Lilly and the Company will continue to share in the costs to further develop and commercialize the Joint Program compound on a worldwide basis, equally share in the U.S. profits on product sales, subject to certain adjustments and receive royalties on sales outside of the United States (“Ex-U.S.”) at royalty rates ranging from low double digits to high twenties. If the Company opts-out of further development and commercialization efforts, it will have no further obligations to share in the development and commercialization costs, will receive royalties rather than profit share on U.S. sales and will receive royalties at a lower rate on Ex-U.S. sales.

With respect to the Discovery Programs, the Company will lead discovery and early research activities through the successful completion of dose finding toxicity studies for the identified compounds. The Company may, in its sole discretion, opt-in on a program-by-program basis after the successful completion of dose finding toxicity to participate in the further development and commercialization efforts of the Discovery Program compounds. If the Company opts-in to the development and commercialization of the Discovery Program compounds, it will be eligible to receive milestone payments of up to $10.0 million per program upon specified research and development milestones and up to $180.0 million per program upon achievement of specified regulatory and commercial milestones and will also be eligible to share in the U.S. profits at pre-determined percentages on product sales. The Company would also be eligible to receive tiered Ex-U.S. royalty rates, calculated on a product-by-product and country-by-country basis, on net sales outside of the United States, if any, ranging from low single digits to low double digits, but less then teens. If the Company does not opt-in to further development and commercialization efforts for the Discovery Programs, it will be eligible to receive milestone payments of up to $70.0 million per program upon specified research and development milestones and up to $360.0 million per program upon achievement of specified regulatory and commercial milestones per approved product, if any. The Company would also be eligible to receive tiered royalties on net sales of products worldwide at royalty rates ranging from low single digits to low double digits, but less than teens.

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Lilly has the right to make substitutions for each of the five targets during the research term of each program, subject to certain limitations. Pursuant to the Lilly Collaboration Agreement, the Company will also participate in joint decision-making through the joint steering committee and subcommittees. Unless terminated earlier, the Lilly Collaboration Agreement will continue on a product-by-product basis until the expiration of all royalty obligations under the Lilly Collaboration Agreement and when neither the Company nor Lilly is developing, commercializing or manufacturing any product under the Lilly Collaboration Agreement. The Company or Lilly may terminate the Lilly Collaboration Agreement upon an uncured material breach by the other party. Lilly may also terminate the Lilly Collaboration Agreement in its entirety or on a target-by-target, program-by-program or product-by-product basis for any reason upon certain notice to the Company.

Under the terms of the Lilly Collaboration Agreement, Lilly agreed to make a nonrefundable upfront payment of $300.0 million to the Company within thirty (30) business days following the effective date of the agreement. Simultaneously with the execution of the Lilly Collaboration Agreement, the Company and Lilly entered into a stock purchase agreement with Lilly (the “Lilly SPA”), pursuant to which Lilly purchased 4,000,000 shares of the Company’s common stock at $20.00 per share, for an aggregate purchase price of $80.0 million.

The Company determined that the Lilly Collaboration Agreement and the Lilly SPA should be evaluated as a combined contract in accordance with ASC 606. The Company determined the fair value of the shares sold under the Lilly SPA to be $37.8 million less than the contractual purchase price stipulated in the Lilly SPA. In accordance with the applicable accounting guidance in ASC 815-40, Contracts in Entity’s Own Equity, the Company determined that the sale of stock should be recorded at fair value and therefore allocated the excess consideration received under the Lilly SPA to the Lilly Collaboration Agreement, which along with the non-refundable payment of $300.0 million will be recognized as revenue over the total estimated period of performance.

The Company accounted for the arrangement under ASC 606 as the Company concluded it has a customer relationship with Lilly. The Company determined that: (1) the research activities performed by the Company for both the Joint Programs and the Discovery Programs, (2) the development activities and cost sharing for the Joint Program development efforts after dose finding toxicity until registrational clinical trials, (3) the research, development, manufacture and commercialization licenses, and (4) service on the joint steering committee and subcommittees represent a single performance obligation under the Lilly Collaboration Agreement. The Company determined that Lilly cannot benefit from the licenses separately from the research activities, the development activities until registrational clinical trials and participation on the joint steering committee and subcommittees because these services are specialized and rely on the Company’s expertise such that these activities are highly interrelated and therefore not distinct. Accordingly, the promised goods and services represent one combined performance obligation, and the entire transaction price was allocated to that single combined performance obligation. The performance obligation will be satisfied over time as the Company performs the research activities, participates and shares in the cost of the development activities for the Joint Programs and participates in a joint steering committee and subcommittees to oversee these activities.

The Company’s options to share in further development and commercialization efforts via its opt-in/opt-out rights will be assessed and accounted for as separate units of accounting under the relevant guidance if, and when, such options are exercised by the Company.

During the third quarter of 2023, the Company transitioned the SMARCA2 (BRM) Selective inhibitor, FHD-909, into development activities for which Lilly leads and the Company participates and shares in 50% of the costs until at least registrational trials. Costs incurred will continue to be included in research and development expenses on the consolidated statements of operations and comprehensive loss.

The transaction price of $337.8 million was initially recorded as deferred revenue and is being recognized as revenue as the performance obligation is satisfied. The Company recognizes revenue using the cost-to-cost method, which it believes best depicts the transfer of control to the customer over time. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the identified performance obligation. Under this method, revenue is recorded as a percentage of the estimated transaction price based on the extent of progress towards completion. As of December 31, 2025, the potential research, development and regulatory milestone payments that the Company is eligible to receive were excluded from the transaction price as they were fully constrained by uncertain events. The Company will reevaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, and if necessary, the Company will adjust its estimate of the transaction price. Any additions to the transaction price would be reflected in the period as a cumulative revenue catch-up based on the ratio of costs incurred to the total estimated costs expected applied to the revised transaction price. Sales-based royalties and milestone payments, which predominantly relate to the license, will be recognized if and when the related sales occur.

As of December 31, 2025, the aggregate amount of the transaction price related to the unsatisfied portion of the performance obligation was $249.2 million, which is expected to be recognized as revenue through 2029 or beyond depending on the timing

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of certain clinical development activities. The Company does not expect collaboration revenue to be recognized evenly over this period as it will be recognized on a percentage of completion basis (using cost-to-cost method) as the Company performs the research and development activities and participates on the joint steering committee and subcommittees, which will likely vary from period to period. In estimating the total costs to satisfy its single performance obligation pursuant to the Lilly Collaboration Agreement, the Company is required to make significant estimates including the expected time and expected costs to fulfill the performance obligation. If estimates of the total estimated cost change, or if contract amendments change the scope of the performance obligations, the impacts could be material. The cumulative effect of revisions to the total estimated costs to complete the Company’s single performance obligation will be recorded in the period in which the changes are identified, and amounts can be reasonably estimated. A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods and the classification of deferred revenue between short-term and long-term.

For the years ended December 31, 2025 and 2024, the Company recorded $30.9 million and $22.6 million, respectively, of revenue under the Lilly Collaboration Agreement, which was included in deferred revenue at the beginning of the respective periods. As of December 31, 2025 and 2024, the Company had a payable to Lilly of $1.0 million and $0.6 million, respectively, recorded in accrued expenses and other current liabilities on the Company’s consolidated balance sheets.

9. Income Taxes

For the years ended December 31, 2025 and 2024 the Company recorded no income tax benefits for the net deferred tax assets comprised primarily of net operating losses incurred and research and development tax credits generated in each year, due to its uncertainty of realizing a benefit from these items.

All of the Company’s operating losses since inception have been generated in the United States.

A reconciliation of the U.S. federal statutory income tax rate of 21% to the Company’s effective income tax rate, post the adoption of ASU 2023-09, is as follows (in thousands, except percentages):

Amount Percent

Income taxes at U.S. federal statutory rate $ (15,600) 21.0 %

State income taxes, net of federal benefit 6 —

Nontaxable or nondeductible items

Stock-based compensation expense 1,142 (1.5)

Limitation on executive compensation 811 (1.1)

Tax Credits

Federal research and development tax credits (2,242) 3.0

Change in valuation allowance 15,803 (21.3)

Other adjustments (8) —

Income tax expense and effective income tax rate $ — 0.0 %

For the year ended December 31, 2025, state income taxes in Massachusetts make up the majority (greater than 50%) of the state income taxes, net of federal benefit category.

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A reconciliation of the U.S. federal statutory income tax rate of 21% to the Company’s effective income tax rate, prior to the adoption of ASU 2023-09, is as follows:

Income taxes at U.S. federal statutory rate 21.0 %

State income taxes, net of federal benefit 4.8

Federal and state research and development tax credits 4.9

Stock-based compensation expense (0.9)

Nondeductible/nontaxable permanent items (0.1)

Other (2.6)

Change in valuation allowance (27.1)

Effective income tax rate 0.0 %

Net deferred tax assets consisted of the following (in thousands):

December 31,

Deferred tax assets:

Research and development tax credit carryforwards 13,086 10,044

Capitalized start-up costs 92 108

Accrued expenses 6 3

Deferred tax liabilities:

Operating lease right-of-use assets (8,691) (6,172)

Total deferred tax liabilities (8,925) (7,957)

Net deferred tax assets $ — $ —

As of December 31, 2025, the Company had U.S. federal and state net operating loss carryforwards of $198.5 million and $213.5 million, respectively. The U.S. federal net operating loss carryforwards can be carried forward indefinitely but limited to offset 80% of annual taxable income. The state net operating loss carryforwards will begin to expire in 2039. As of December 31, 2025, the Company also had U.S. federal and state research and development tax credit carryforwards of $9.4 million and $3.7 million, respectively, which may be available to offset future tax liabilities and expire at various dates beginning in 2043 and 2037, respectively.

The Tax Cuts and Jobs Act (“TCJA”) requires taxpayers to capitalize and amortize, rather than deduct, research and development (“R&D”) expenditures under section 174 of the Internal Revenue Code of 1986, as amended (the “Code”) for tax years beginning after December 31, 2021. The Company will amortize these costs for tax purposes over 5 years if the R&D was performed in the U.S. and over 15 years if the R&D was performed outside the U.S. These rules became effective for the Company during the year ended December 31, 2022. The Company has capitalized foreign R&D costs of $25.2 million and $25.0 million for the tax years ended December 31, 2025 and December 31, 2024, respectively.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, providing taxpayers the option to fully deduct or continue capitalizing and amortizing domestic R&D expenditures under new Code Section 174A, effective for tax years beginning after December 31, 2024. The OBBBA also provides certain eligible taxpayers with the option to accelerate and deduct the remaining unamortized domestic R&D costs incurred during taxable years ending after December 31, 2021 and before January 1, 2025. The Company has implemented the two-year accelerated expensing for all domestic R&D costs

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incurred during taxable years ending after December 31, 2021 and before January 1, 2025. As of December 31, 2025, $75.2 million remains unamortized related to domestic R&D costs. Final elections will be made with the 2025 tax return filing.

The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s history of cumulative net losses incurred since inception and its lack of commercialization of any products that would generate revenue from product sales and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the net deferred tax assets as of December 31, 2025 and 2024. Management reevaluates the positive and negative evidence at each reporting period.

The valuation allowance increased by $21.2 million and $23.5 million for the years ended December 31, 2025 and 2024, respectively, primarily as a result of the increase in total deferred tax assets.

Ownership changes may limit the amount of net operating loss carryforwards or research and development tax credit carryforwards that can be utilized to offset future taxable income or tax liability. In general, an ownership change, as defined by Sections 382 and 383 of the Code, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50% (by value) over a three-year period. If the Company has experienced a change of control, utilization of the net operating loss carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under Sections 382 and 383 of the Code. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. To the extent there was a change in control, the Company's tax attributes could be subject to limitation. However, a full valuation allowance has been provided against the deferred tax assets related to the Company’s net operating loss and tax credit carryforwards and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance.

As of December 31, 2025 and 2024, the Company had not recorded any amounts for unrecognized tax benefits. The Company files income tax returns in the U.S. federal tax jurisdiction and Massachusetts and various other state tax jurisdictions as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. Since the Company is in a loss carryforward position, it is generally subject to examination by the U.S. federal, state, and local income tax authorities for all tax years in which a loss carryforward is available.

The Company made the following income tax payments (net of refunds received) during the year ended December 31, 2025 (in thousands):

US state and local

Massachusetts $ 9

Total income tax payments (net of refunds received) $ (96)

10. Leases

Lease agreements

Through December 2025, the Company occupied space in 500 Tech Square, Cambridge, Massachusetts under a lease agreement for 81,441 square feet of office and laboratory space that was set to expire in September 2028 (the “Office Lease”). In June 2025, the Company entered into a new lease agreement with its existing landlord of the Office Lease for new premises consisting of 72,846 square feet of laboratory and office space in Watertown, Massachusetts (the “New Lease”). The term of the New Lease commenced in December 2025 once the landlord completed its building improvements as defined in the New Lease (the “New Premises Delivery Date”) and extends through September 2035. The lease is subject to fixed-rate rent escalations and the option to extend the lease for two terms of five years each, which were not reasonably certain of exercise as of December 31, 2025. The estimated minimum lease payments under the New Lease total $60.8 million over the term, inclusive of free and reduced rent periods in the first three years of the term. Additionally, the Company is obligated to pay real estate taxes and other costs related to the premises, including operating costs and management of the leased premises, which are

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variable in nature. The variable costs are expensed as incurred and are disclosed as variable lease costs. The lease contains a tenant improvement allowance of $3.6 million and the landlord holds rights to the tenant improvements. The construction of the building improvements made prior to the New Premises Delivery Date were conducted by the landlord. The Company moved operations from its existing premises to the new premises in December 2025.

The Company is required to maintain a cash balance of $2.0 million to secure a letter of credit associated with the New Lease. This amount was classified as restricted cash (non-current) on the consolidated balance sheet as of December 31, 2025.

In conjunction and concurrent with the New Lease, in June 2025, the Company amended the Office Lease, which originally had a term through September 2028, to reduce the fixed lease payments and shorten the remaining term for a portion of the leased space from September 2028 to December 31, 2026, to provide for the termination of space the Company was subleasing contingent upon the New Premises Delivery Date and the landlord entering into a direct lease with the Company’s subtenant, to provide for the reduction of payments contingent upon the New Premises Delivery Date, and to provide for the early termination of the Office Lease contingent upon the New Premises Delivery Date.

In December 2025, upon the New Premises Delivery Date, contingencies related to the New Premises Delivery Date were resolved. The lease related to the portion of space being sublet was terminated immediately upon the New Premises Delivery Date. Additionally, under the amended Office Lease, the term of the remaining portions of the lease was shortened from September 2028 to the date the landlord provides a 15-day notice of termination, which the landlord can provide starting February 1, 2026, with an outside termination date of December 31, 2026. As of the New Premises Delivery Date in December 2025 the Company is not obligated to make any further payments with respect to the Office Lease and the Company vacated the Office Lease space in December 2025.

Lease accounting

The Company accounted for the amendment to the Office Lease and the New Lease as one combined contract under ASC 842, Leases (Topic 842) because the agreements were entered into at the same time, with the same counterparty and were negotiated as a package with the same commercial objective.

In June 2025, in connection with the shortened term to December 31, 2026 for a portion of the leased space and the reduction of fixed payments, the Company remeasured the right-of-use asset and lease liability related to the Office Lease for the non-contingent modification at the modification date, which resulted in a reduction to the right-of-use asset and lease liabilities of $8.8 million. With respect to the contingent modifications of other portions of the lease, as the New Premises Delivery Date and the related Office Lease termination dates were not in the control of the Company, the Company did not remeasure the term for these portions of the Office Lease for financial accounting purposes until the contingencies were resolved in December 2025.

In December 2025, upon resolution of contingencies related to the New Premises Delivery Date, the Company remeasured the right-of-use asset and lease liabilities related to the shortened lease term and elimination of remaining payments for the Office Lease, which resulted in a reduction to lease liabilities of $21.3 million related to the elimination of future payments under the Office Lease and a reduction to the remaining right-of-use asset of $9.6 million to reduce the right-of-use asset balance to zero. The reduction to the lease liability that would have reduced the right-of-use asset to below zero, or negative amount, was first recorded as a gain on lease modification of $1.6 million in the consolidated statement of operations and comprehensive loss, representing a previous impairment amount recorded on the Office Lease. Because the portion related to the previously recognized impairment is not an element of the arrangement with the lessor, and therefore, it is not akin to a lease incentive. The remaining negative amount $10.1 million was recorded as a lease incentive to reduce the right-of-use asset related to the New Lease, as the amendment to the Office Lease and the New Lease were combined and accounted for as a single transaction with the same counterparty.

In December 2025, upon commencement of the New Lease, which was the date the landlord made the premises available to the Company for its use, the Company recorded a right-of-use asset of $31.0 million, net of the $10.1 million remaining negative amount from the Office Lease, and lease liabilities of $41.1 million. As of December 31, 2025, the balances of the lease liability and right-of-use asset for the Office Lease were zero.

The components of lease expense were as follows for the years ended December 31, 2025 and 2024 (in thousands):

Year Ended December 31,

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Supplemental disclosure of cash flow information and non-cash investing and financing activities related to leases was as follows (in thousands):

Year Ended December 31,

Supplemental cash flow information:

Non-cash investing and financing activities:

Financing lease liabilities arising from obtaining right-of-use assets 1,200 —

Operating lease liabilities arising from obtaining right-of-use assets 41,143 —

The weighted average remaining lease term and discount rate was as follows:

Weighted-average remaining lease term—operating leases (in years) 9.7 3.7

Weighted-average discount rate—operating leases 7.24 % 5.30 %

As the Company’s leases do not provide an implicit rate, the Company’s estimated incremental borrowing rate was used to calculate the present value of the leases. In determining its incremental borrowing rate, the Company considered its credit quality and assessed interest rates available in the market for similar borrowings, adjusted for the impact of collateral over the term of the leases.

Future payments for the Company’s operating lease liabilities as of December 31, 2025 are as follows (in thousands):

Total future minimum lease payments 60,811

Less: estimated tenant improvement allowance (364)

Less: imputed interest (19,177)

Total operating lease liabilities $ 41,270

Year Ended December 31,

Included in the consolidated balance sheets (in thousands): 2025 2024

Current operating lease liabilities $ 923 $ 9,067

Operating lease liabilities, net of current portion 40,347 28,064

Total operating lease liabilities $ 41,270 $ 37,131

Impairments and sublease agreement

In connection with the New Premises Delivery and relocating operations from premises under the Office Lease to premises under the New Lease, the Company recognized an impairment charge during the year ended December 31, 2025 of $5.9 million in the consolidated statements of operations and comprehensive loss for the abandoned leasehold improvements related to the Office Lease.

In connection with a sublease for a portion of the Office Lease entered into in May 2024, which qualified as a triggering event for an asset impairment assessment, the Company recognized a non-cash impairment charge during the year ended December 31, 2024 of $2.4 million in the consolidated statements of operations and comprehensive loss of which $1.6 million was allocated to its right-of-use asset and $0.8 million was allocated to leasehold improvements.

Through December 2025, the Company had subleased portions of premises under the Office Lease. For the years ended December 31, 2025 and 2024, the Company recorded other income of $3.4 million and $4.2 million, respectively, related to its subleases. As of December 31, 2025, the Company has no subleases.

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11. Commitments and Contingencies

Leases

The Company’s commitments under its leases are described in Note 10.

License agreements

The Company has entered into various exclusive and non-exclusive license agreements for certain technologies. Under the terms of these license agreements, the Company could be required to reimburse the licensors for patent expenses and remit amounts in the low single-digit as sales-based royalties upon the occurrence of specific events as outlined in the corresponding license agreements. The Company is also required to make annual license maintenance fees of less than $0.1 million and pay up to $1.1 million in regulatory milestones on each licensed product upon the occurrence of specific events as outlined in one of the license agreements. None of our current product candidates utilizes technologies covered by these licenses.

Indemnification agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, contract research organizations, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and its executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. The Company has not incurred any material costs as a result of such indemnifications and is not currently aware of any indemnification claims.

Legal Proceedings

From time to time, the Company may become involved in litigation or other legal proceedings. The Company is not currently a party to any material litigation or legal proceedings.

12. Defined Contribution Plan

The Company has a 401(k) defined contribution plan (the “401(k) Plan”) for its employees. Eligible employees may make pretax contributions to the 401(k) Plan up to statutory limits. For the years ended December 31, 2025 and 2024, the Company recorded $0.3 million of expense related to 401(k) discretionary match.

13. Related Parties

In October 2015, the Company entered into a five-year consulting agreement with a scientific founder of the Company who is also a shareholder. In October 2020, this agreement was amended and extended to January 1, 2022, subject to automatic one-year renewal terms thereafter until terminated if notice is provided more than 30 days before the current end of term date. On January 1, 2026, the agreement was automatically renewed and extended to January 1, 2027. For the years ended December 31, 2025 and 2024, the Company paid the scientific founder $0.2 million. As of December 31, 2025 and 2024, the Company had no accounts payable due to the scientific founder.

On December 10, 2021, we entered into the Lilly Collaboration Agreement with Lilly. Concurrent with the Lilly Collaboration Agreement the Company also entered into the Lilly SPA where the Company issued and sold Lilly 4,000,000 shares of our common stock at a price of $20.00 per share, making them a 5% or greater shareholder in the Company for the years ended December 31, 2025 and 2024. We are obligated to make certain payments to Lilly pursuant to the Lilly Collaboration Agreement. For the years ended December 31, 2025 and 2024, the Company paid Lilly $8.2 million and $8.4 million, respectively. As of December 31, 2025 and 2024, the Company had a payable of $1.0 million and $0.6 million, respectively, due to Lilly.

14. Segment Reporting

Operating segments are defined as components of an entity for which separate discrete financial information is made available and that is regularly evaluated by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company manages its operations as a single segment (the “Segment”) for the purposes of assessing performance and making operating decisions. The CODM of the Segment is the Company’s chief executive officer. The Segment is focused on pioneering the discovery and development of a new class of medicines targeting genetically determined dependencies within the chromatin regulatory system. The Segment’s revenue is derived entirely from the recognition of deferred revenue related to our collaboration agreement with Lilly and funds received under the Lilly SPA

FHTX US Equity

FHTX · 10-K · period ended 2025-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FHTX US Equity☆

FHTX · 10-K · period ended 2025-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FHTX US Equity