TLDR
- Foghorn Therapeutics stock crashed 49% to $1.84 after Eli Lilly walked away from their cancer drug partnership.
- The two companies decided not to advance FHD-909 into expanded trials following disappointing Phase 1 results.
- A second collaborative cancer program, the SMARCA2 degrader effort, is also being scrapped.
- Foghorn is cutting about 40% of its workforce to preserve cash.
- The company now expects its cash runway to stretch into the second half of 2029.
Foghorn Therapeutics stock collapsed on Thursday after the biotech announced its partnership with Eli Lilly had come to an end. The stock fell 49% to $1.84 once trading resumed, marking its worst single-day drop on record.
Foghorn Therapeutics Inc., FHTX
Trading in Foghorn was halted ahead of the news. When it reopened, investors sold fast.
The company is now worth roughly $212 million. That is a steep fall for a biotech that once partnered with one of pharma’s biggest names.
Foghorn and Lilly decided not to push FHD-909 into the next phase of testing. The drug had just finished a Phase 1 dose escalation trial.
FHD-909 targeted a protein called SMARCA2 using an oral small molecule. It was designed to work through a mechanism known as synthetic lethality, pairing with tumors that carry a specific genetic flaw.
Why The Drug Program Failed
CEO Adrian Gottschalk said the drug actually hit its target well. Safety looked fine too, even at doses above what preclinical work had suggested was needed.
The problem was effectiveness. Gottschalk said the biology behind the SMARCA2/4 relationship simply didn’t translate into results strong enough to keep developing the drug.
That is a tough outcome after years of work. It also means Lilly is walking away from more than just one program.
The two companies confirmed a second cancer collaboration, the Selective SMARCA2 degrader program, is being dropped as well. Foghorn said it does not expect any further joint projects with Lilly going forward.
The partnership dates back to December 2021. Lilly’s Loxo Oncology unit signed the deal with $300 million in upfront cash plus an $80 million equity stake at $20 a share.
Those terms looked promising for Foghorn at the time. Today’s stock price is a long way from that $20 entry point.
What Happens Next For Foghorn
With the partnership gone, Foghorn is moving into cost-cutting mode. The company is cutting close to 40% of its staff and restructuring operations.
Management says these moves should extend its cash runway into the second half of 2029. That buys time to keep its remaining pipeline alive.
Foghorn says it will now focus on its own proprietary programs. That list includes a Selective EP300 degrader, a Selective CBP degrader, and an oral immunology and inflammation program.
The company is also keeping its induced proximity platform as a core focus. These areas don’t rely on Lilly funding going forward.
For Lilly, the stock barely moved on the news. Shares dipped about 2%, a small blip for a company of its size.
For Foghorn, the stakes are much higher. The biotech is now largely on its own, leaning on internal cash and a leaner team to carry its pipeline forward into the next few years.
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