Fulcrum Therapeutics, Inc. (NASDAQ:FULC) Q1 2023 Earnings Call Transcript

Fulcrum Therapeutics, Inc. (NASDAQ:FULC) Q1 2023 Earnings Call Transcript May 15, 2023

Fulcrum Therapeutics, Inc. beats earnings expectations. Reported EPS is $-0.41, expectations were $-0.46.

Operator: Good morning and welcome to the Fulcrum Therapeutics First Quarter 2023 Financial Results and Business Update Conference Call. Currently all participants are in a listen-only mode. This call is being webcast live on the Investor Section of Fulcrum’s website at www.fulcrumtx.com and is being recorded. For opening remarks I would like to introduce Chris Calabrese. Please go ahead.

Chris Calabrese: Thank you, and good morning. Welcome to the Fulcrum Therapeutics First Quarter 2023 Financial Results and Business Update Conference Call. Please be reminded that remarks made during this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These may include statements about the company’s future expectations and plans, including the clinical hold of FTX-6058, clinical development time lines, and financial projections. While these forward-looking statements represent Fulcrum’s views as of today, they should not be relied upon as representing the company’s views in the future. Fulcrum may update these statements in the future, but it’s not taking on an obligation to do so.

Please refer to Fulcrum’s most recent filings with the Securities and Exchange Commission for a discussion of certain risks and uncertainties associated with the company’s business. Leading the call today will be Dr. Robert Gould, Interim Chief Executive Officer of Fulcrum, who will provide a corporate overview, discuss key pipeline updates as well as the financials before we open the call for Q&A. And Dr. Iain Fraser, Interim Chief Medical Officer, will be able to answer questions during the Q&A portion of the call. With that, it’s my pleasure to turn the call over to Robert.

Robert J. Gould: Thank you, Chris. Good morning. I appreciate everyone taking the time to join us today. I’d like to begin by reiterating our deep commitment to advancing our organization and improving the lives of patients with genetically defined diseases in areas of high unmet medical need. In the first few months of 2023, we continued to make progress to address the FTX-6058 clinical hold and advance our Phase 3 REACH trial of Losmapimod in Facioscapulohumeral Muscular Dystrophy. We are also pleased to announce the appointment of the Alex Sapir to the position of President and Chief Executive Officer and Member of the Board of Directors effective July 1, 2023. As of last Friday, Alex joined as special advisor to me and we are thrilled to have a world class leader of his stature on Board to propel Fulcrum to the next level of achievement.

Alex brings deep industry knowledge from the public sector and has more than 25 years of experience building commercial stage pharmaceutical organizations. Most recently, Alex served as Chief Executive Officer and a Member of the Board of Directors of ReViral, prior to the company’s acquisition by Pfizer. Prior to ReViral served as President and Chief Executive Officer and Member of the Board of Directors of Dova Pharmaceuticals. Earlier in his career, Alex spent 10 years as Executive Vice President of Marketing and Sales for United Therapeutics and held roles of increasing responsibility within the commercial organization at GlaxoSmithKline. Alex’s impressive track record makes him an ideal fit for Fulcrum at this critical juncture. With this brief introduction, I’ll now dive into our programs and provide an update on recent activities.

Let me start by discussing our most recent updates to the FTX-6058 program, our oral HBF inducer for the potential treatment of patients with sickle cell disease. As previously announced, we received verbal notification from the FDA on February 23rd that they had placed a full clinical hold on the investigational new drug application for FTX-6058 and we received a formal clinical hold letter from the FDA on February 24th. We immediately suspended dosing and paused enrollment in the trial of FTX-6058. We have been in active and ongoing dialogue with the FDA, and we’ll provide an update once we have more clarity on the regulatory path forward. Overall, our interactions with the agency thus far have been productive and collaborative, and we look forward to continuing our dialogue as we work to resolve the clinical hold.

In the initial feedback provided in February 2023, the FDA stated that the hold related to preclinical data submitted in April, October, and December 2022 and nonclinical and clinical evidence of hematologic malignancies observed with other inhibitors of polycomb repressor complex 2 or PRC2. The agency is focused on balancing the safety and efficacy tradeoffs and has requested that Fulcrum further define the population or the potential benefit of continued treatment with FTX-6058 outweighs potential risk. The hold is not a result of any clinical findings in the Phase 1b trial that was ongoing at the time of the hold. For further context, we have a strong data set from the subjects who completed dosing prior to the clinical hold. Treatment with FTX-6058, the highest dose of 12-milligram showed a 10% absolute HbF increase from baseline, resulting in a total HbF level of 24.9% after 42 days of treatment.

Additionally, FTX-6058 has been generally well tolerated to date with no drug-related treatment emergent serious adverse events or discontinuations due to treatment-emergent adverse events. All adjourned subjects showed clinically relevant improvements in the 6 milligram and 12 milligram dose cohorts consistent across subjects both on and off background hydroxyurea, the current standard of care. We maintained that FTX-6058 has the potential to provide a differentiated therapeutic option for people living with sickle cell disease and that the clinical and preclinical data generated to date demonstrated favorable benefit risk profile. Now turning to our most advanced program, Losmapimod, a selective p38 alpha/beta mitogen activated protein kinase inhibitor.

Losmapimod is in Phase 3 development for the treatment of FSHD and other zonal dominant generic form of muscular dystrophy which has an estimated patient population of 16,000 to 38,000 in the United States alone. FSHD is characterized by relentless and accumulating muscle and functional loss and results in the inability to perform daily life activities due to a significant impairment of upper extremity function, loss of mobility, and chronic pain. Although it’s one of the most common forms of muscular dystrophy, there are currently no approved treatments. Given the high unmet need for innovation, we are extremely encouraged by Losmapimod’s therapeutic potential to preserve muscle function and believe it has the potential to address the urgent need for a safe and effective disease-modifying treatment that can slow or stop disease progression.

We initiated REACH our double-blind placebo-controlled Phase 3 trial of Losmapimod in June 2022 and are currently enrolling patients in the U.S., Canada, and Europe. At this time 31 sites are active out of 36 sites. This 48-week trial is expected to enroll approximately 230 adults and expected to complete enrollment in the second half of 2023. We are pleased with the rapid pace of enrollment in the Losmapimod Phase 3 REACH trial, which is both a testament to the high level of engagement by our clinical trial sites and our team’s strategic execution. The primary endpoint is the absolute change from baseline and reachable work space or RWS, a quantitative measure of upper extremity range of motion and function, that specifically evaluates shoulder and proximal arm mobility with 3D motion sensor technology.

Preserving this upper extremity function is critical for maintaining ability for self-care and other activities of daily living that directly influence quality of life and independence. In addition to safety and tolerability, secondary endpoints include muscle fat infiltration or MFI, an important marker of disease pathology and self-reported outcomes such as the Patient Global Impression of Change, or PGIC and quality of life measures. These will include health care utilization questionnaires that will inform our thinking about payer strategy as we prepare for a potential commercial launch. REACH was designed as a highly efficient 48-week trial and is intended to be registration enabling both in the U.S. and in ex-U.S. geographies. We are confident that we have selected reliable measures of disease progression, and we hope to demonstrate meaningful advantages for Losmapimod compared to placebo.

Encouragingly, our Phase 2b ReDUX4 trial demonstrated significant improvements in RWS relative to placebo at 48-weeks. Furthermore, top line results from the ongoing open label extension of ReDUX4 shows that participants in the initial treatment arm who continued to receive Losmapimod demonstrated durability of effect through a 96-week period. Additionally, patients who crossed over from placebo to Losmapimod after the initial 48-week showed improvement and slowing of disease progression as measured by RWS mean change from baseline. We believe these data support the disease modifying potential and long-term benefit of Losmapimod. To date, Losmapimod has been dosed in over 3,600 patients across multiple therapeutic areas and results from ReDUX4 and our open-label extension trial provides evidence of an encouraging safety and tolerability profile.

As we drive our clinical path forward for Losmapimod, we look forward to leveraging the large safety database and building on our learnings from ReDUX4 and ongoing open-label extension trial. Now turning to other corporate matters. As previously announced, Esther Rajavelu, our Chief Financial Officer, recently resigned from the company effective April 21, 2023. We appreciate her commitment to operational and financial excellence and are grateful for the positive contribution she has made to our company. We are continuing to work with Esther in her role as an Advisor, while the finance team continues to execute our financial strategy. As a reminder, Dr. Iain Fraser continues to serve as Interim CMO and Dr. Alan Ezekowitz, Member of the Fulcrum Board of Directors since February 2017 continues to serve as Senior Clinical Advisor to ensure program continuity.

As we continue to solidify our leadership team, we remain focused on realizing Fulcrum’s mission and the work at hand. With that I will provide an update on our financials. We ended March 31, 2023 with cash, cash equivalents, and marketable securities of $297.8 million compared to $202.9 million on December 31, 2022. In January 2023, we completed an underwritten public offering of our common stock, raising approximately $117.3 million in net proceeds. We continue to operate from a strong financial position, and we expect our cash, cash equivalents, and marketable securities to fund our operating expenses into mid-2025. This projection assumes the timely resolution of the FTX-6058 clinical hold. Collaboration revenue was $0.3 million for the first quarter of 2023 as compared to $2.6 million for the first quarter of 2022.

Research and development expense were $16.7 million for the first quarter of 2023 as compared to $17.8 million for the first quarter of 2022. The decrease of $1.1 million was primarily due to decreased research and development headcount partially offset by increased costs associated with the advancement of REACH. General and administrative expenses were $11.5 million for the first quarter of 2023, as compared to $10.8 million for the first quarter of 2022. The increase of $0.7 million was primarily due to increased stock-based compensation expense. Net loss was $24.8 million for the first quarter of 2023, as compared to $25.9 million for the first quarter of 2022. Overall, I am confident of the company’s strong cash position, and upcoming catalysts provide a solid foundation for execution and value creation.

We remain focused on driving our clinical programs forward, exploring opportunities to leverage the value of our research engine, and executing our corporate objectives. We remain on track to complete enrollment for our FSHD Phase 3 REACH in the second half of 2023 and are committed to working with the FDA to resolve the clinical hold on FTX-6058. I want to reiterate that we are optimistic there is a path forward to resolve the full clinical hold. Additionally, with today’s announcement of Alex as our next CEO and President, Fulcrum is ending the first quarter of 2023 in a position of strength and great promise for the future. Before we conclude today’s call, I want to extend my sincere appreciation and gratitude for the foundational work that has brought us closer to treating the root cause of genetically defined rare diseases and bringing transformative therapies to patients.

I’d like to thank the entire Fulcrum team, our investors, and the many people who have been supportive along the way, including our patients and their families. With that, we are happy to take questions.

Q&A Session

Operator: [Operator Instructions]. The first question comes from Edward Tenthoff with Piper Sandler. Your line is open.

Operator: Please standby for the next question. The next question comes from Joseph Schwartz with SVB Securities. Your line is open.

Operator: Please standby for our next question. The next question comes from Madhu Kumar with Goldman Sachs. Your line is open.

Operator: Please standby for the next question. The next question comes from Matthew Biegler with Oppenheimer. Your line is open.

Operator: [Operator Instructions]. The next question comes from Judah Frommer with Credit Suisse. Your line is open.

Operator: This concludes the question-and-answer portion of the call. I will now turn the call back over to Fulcrum’s CEO, Robert for closing remarks. Robert?

Robert J. Gould: Thank you, operator and thanks to everyone who joined us this morning. Please stay safe and healthy. And I’m sure we’ll all be talking to you all later. Thanks, Ken.

Operator: Thank you for participating. You may now disconnect. Goodbye.