Fulcrum Therapeutics, Inc. (NASDAQ:FULC) Q4 2023 Earnings Call Transcript

Fulcrum Therapeutics, Inc. (NASDAQ:FULC) Q4 2023 Earnings Call Transcript February 27, 2024

Fulcrum Therapeutics, Inc. beats earnings expectations. Reported EPS is $-0.4, expectations were $-0.44. FULC isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning and welcome to Fulcrum Therapeutics Fourth Quarter and Full Year 2023 Financial Results and Business Update Conference Call. Currently all participants are in listen-only mode. This call is being webcast live and can be accessed on the Investors section of Fulcrum’s website at www.fulcrumtx.com and is being recorded. Please be reminded that remarks made during this call may contain forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995. These may include statements about the company’s future expectations, plans, clinical development timelines and financial projections. While these forward-looking statements represent Fulcrum’s view of today, this should not be relied upon as presenting the company’s views in the future.

Fulcrum may update these statements in the future, but is not taking on an obligation to do so. Please refer to Fulcrum’s most recent filing 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 Alex Sapir, CEO and President of Fulcrum. Joining Alex on the call are Alan Musso, Chief Financial Officer, and Dr. Iain Fraser, Interim Chief Medical Officer. After providing updates on our key programs, there will be a brief Q&A in which Alex, Alan and Iain will be available to answer your questions. With that, it’s my pleasure to turn the call over to Alex.

Alex Sapir: That’s great. Thanks, Valerie, and thanks to all of you for joining us today. 2023 was a year in which we both completed enrollment in our Phase 3 REACH trial for losmapimod for facioscapulohumeral muscular dystrophy, or FSHD for short, and resolved the clinical hold for pociredir, which allowed us to resume clinical testing in patients with sickle cell disease. In the fourth quarter, we continued to drive forward our two key clinical programs and advance our pre-clinical pipeline and with our cash runway that extends into 2026, I do believe that we are well-positioned to execute our corporate objectives and deliver on key milestones in 2024 and beyond. So at this point, let me go a bit deeper and elaborate on the progress we’ve made toward our goal of delivering transformative therapies to improve the lives of patients with rare genetic diseases.

Let’s start with our most advanced program, losmapimod, which is an oral small molecule p38 alpha/beta MAP kinase inhibitor currently in Phase 3 development for the treatment of FSHD. Now, FSHD is a rare form of muscular dystrophy with an estimated US prevalent patient population of 30,000. FSHD is characterized by a slow but relentless loss of muscle function year after year, resulting in significant impairment of upper extremity muscle function and mobility. As a result, many patients are unable to perform daily life activities that you and I take for granted, such as reaching for a cup of coffee, reaching for a cup in the kitchen cabinet, brushing your teeth, feeding yourself, even practicing good hygiene. And about 20% of patients ultimately become wheelchair-bound.

Despite the high unmet need, there are currently no approved treatment options for these patients. So in our quest to bring hope for these patients, in September of last year, we completed enrollment in our global Phase 3 trial for losmapimod, with a total of 260 patients enrolled in the trial. The trial initiated in June 2022 and 15 months later we had surpassed our enrollment expectations, which we believe is a real testament to the high unmet need for this rare disease. We are on track to report top-line data in the fourth quarter of 2024, which will bring us one step closer to delivering the first-ever FDA-approved therapy for FSHD patients. So, just a quick reminder of some of the details around the Phase 3 study, which we call REACH. REACH is a 48-week trial intended to be registration-enabling both in the US and in ex-US geographies.

The primary endpoint for REACH is a change from baseline in the relative surface area, or RSA, which is a quantitative assessment of reachable workspace. RSA is an objective measure of upper extremity range of motion and muscle function that specifically evaluates shoulder and arm mobility using 3D motion sensor technology. In our Phase 2 study, losmapimod demonstrated a 10% change in the RSA score relative to placebo at 48 weeks. And based on interactions with FDA, we are currently assessing the extent to which a change in the RSA score is considered meaningful to patients. Additionally, key secondary endpoints include muscle fat infiltration or MFI, which is an important marker of disease pathology measured by whole-body MRI, shoulder dynamometry, as well as self-reported quality of life measures that will help inform our thinking on our payer strategy as we begin preparing for a commercial launch here in the US.

Now turning to pociredir, our oral HbF inducer for the potential treatment of patients with sickle cell disease, or SCD for short. Sickle cell is a lifelong inherited blood disorder that severely impacts quality of life for approximately 100,000 people in the US and approximately 4.4 million people worldwide. Historically, the standard of treatment for sickle cell disease has involved blood transfusions, pain medications and hydroxyurea, focusing primarily on symptom relief. And while exciting scientific progress has enabled the advancement and more recently of the approval of gene editing therapeutic approaches, we believe there remains a high unmet need for safe and accessible therapeutic options that are broadly protective of sickle cell symptomatology.

As a first-in-class oral small molecule HbF inducer, we believe pociredir has the potential to address a critical unmet need for patients. Now, just as a quick reminder, in August of 2023, the FDA lifted the clinical hold for pociredir. And I think it’s also really important to note that there were no changes either in the protocol-defined dose escalation scheme or the three-month treatment duration. Clinical trial sites have now been activated and others have been selected and are going through the necessary steps for site activation in order to be ready for patient recruitment for the Phase 1b study we call PIONEER. Based on the revised inclusion-exclusion criteria, we will be enrolling patients with high disease severity. Cohort three of the PIONEER study will evaluate pociredir at the 12 milligram once-daily dose followed by cohort four at the 20 milligram once-daily dose.

Both cohorts are expected to enroll approximately 10 patients each. And we look forward to providing specific guidance on readout of the 12 milligram and 20 milligram cohort as we have additional sites activated and a good basis to project enrollment trajectory. We are looking forward to building on the encouraging clinical data obtained prior to the clinical hold, which demonstrated that pociredir increased total HbF of a magnitude that could translate into a meaningful improvement in disease severity. More specifically, after only 42 days of treatment, we observed up to a 10 percentage point increase in HbF from baseline or total HbF of approximately 25%. We believe that pociredir, as an oral HbF inducer, has the potential to provide a differentiated therapeutic option for people living with sickle cell disease.

Addressing the significant unmet need in the sickle cell community remains a key priority for us, and we are excited to build on this momentum in the years ahead. So that’s the clinical update. For the financial update, let me turn it over to Alan Musso, our Chief Financial Officer, who will walk you through some of the numbers. Alan, over to you.

Alan Musso: Thanks, Alex. I’ll now go over our results for the fourth quarter and full year ended December 31, 2023, beginning with the results for the quarter. Collaboration revenue was $0.9 million for the fourth quarter of 2023 compared to $0.7 million for the same period in 2022. Our research and development expenses were $19 million for the fourth quarter of 2023, compared to $18.6 million for the same period in 2022. The increase of $0.4 million was primarily due to higher personnel cost. General and administrative expenses were $9.9 million for the fourth quarter of 2023 compared to $10.1 million for the same period in 2022. The decrease of $0.2 million was primarily due to lower professional service costs. And for the fourth quarter of 2023, Fulcrum reported a net loss of $24.8 million compared to $26.1 million for the same period in 2022.

I’ll now review the results for the year ended December 31, 2023. Collaboration revenue was $2.8 million for the year ended December 31, 2023, compared to $6.3 million for the same period in 2022. The lower collaboration revenue during 2023 was attributable to the completion of activities under our collaboration agreement with Acceleron, which terminated in October 2022, and due to a decrease in revenues under our collaboration agreement with MyoKardia as we completed our research services during the fourth quarter of 2023. Our research and development expenses were $71.8 million for the year ended December 31, 2023, compared to $76.8 million in 2022. The decrease in 2023 was primarily attributable to a $5 million milestone obligation incurred upon the initiation of the REACH clinical trial in the second quarter of 2022 under our license agreement with GlaxoSmithKline.

Our general and administrative expenses were $41.7 million for each of the years ended December 31, 2023 and 2022. The net loss was $97.3 million for the year ended December 31, 2023 compared to $109.9 million in 2022. And now turning to the balance sheet. We ended 2023 with cash, cash equivalents and marketable securities of $236.2 million, compared to $202.9 million as of December 31, 2022. This increase in our cash position is primarily due to net proceeds from our January 2023 equity offering of $117.3 million, partially offset by our net cash used in operating activities in 2023. And during the fourth quarter of 2023, our cash burn was $20.9 million. We continue to operate from a strong financial position with a cash runway into 2026. And with that, let me turn the call back over to Alex.

Alex Sapir: Great. Thanks so much, Alan. So, as all of you can see, we are well-positioned for a very exciting 2024 and are encouraged by the progress across our two clinical programs, losmapimod, which has the potential — which has first-in-market potential for patients with FSHD, and pociredir, which has best-in-class potential for patients living with sickle cell disease. So at this point, Valerie, let’s go ahead and open it up for questions.

Operator: [Operator Instructions] Our first question comes from the line of Matthew Biegler of Oppenheimer. Your line is open.

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Q&A Session

Matthew Biegler: Hey, good morning, guys. I just wanted to maybe tag on something you said about on the regulatory side of the coin here for losmapimod. Can you just walk us through your interactions with the FDA and where you are with discussions on the clinical benefit for reachable workspace? And I guess what you’ll need to show in REACH to make them happy? Thanks.

Alex Sapir: Yeah, thanks so much, Matt, for the question. Let me just say a couple of things and I’ll turn it over to Iain to go in a bit more detail. So, the REACH study is a very well-powered study with the 260 patients that we had enrolled. We’ve got a 96% powering on that study, and we believe that, that study has the potential to be registration-enabling based on our interactions to date with FDA. But I think more specifically, to answer your question around reachable workspace, let me turn that one over to Iain.

Iain Fraser: Yeah. Thanks, Alex. And thanks, Matt. So, obviously there are no drugs approved for FSHD, and so there’s no precedent in the regulatory sphere for an endpoint. However, we have had a number of productive and indeed ongoing discussions with FDA involving both the review division, which is in neurology, as well as the COA division. And we’re executing on a plan that we’ve agreed upon with them that we believe will establish the clinical meaningfulness of the reachable workspace. Specifically, there are a couple of components to that. The first is that we’re generating additional data from observational studies in FSHD. So this is not involving any treatment with losmapimod, but observing these patients, as requested by the agency to identify what is for them the most appropriate measures of change in upper extremity function.

And this is achieved through evaluating items on patient-reported outcomes. The next step will be to apply those back to the REACH data themselves in order to derive what is the clinically meaningful threshold for reachable workspace. And then secondly, we are conducting a number of exit interviews of patients that have gone through the REACH study. And this will help to enhance our understanding as well as FDA’s understanding of what a change in RWS means for them. And our expectation is that at the very latest, these data would all be available at the time of NDA submission. And of course, ultimately, FDA will ultimately make the final determination as to what is considered clinically meaningful, considering the totality of evidence.

Matthew Biegler: Okay. So effectively we can say that there needs to be a little bit more validation work done on the RWS assay. Is that a fair characterization?

Iain Fraser: Well, I think the validation work on the instrument itself, in terms of the test, retest capabilities, the training process that goes into it, the provision of the technical pieces of it, all of that has been done, and is really quite satisfactory. I think it’s the last remaining piece around the clinical meaningfulness, and what is considered minimally, clinically significant change.

Matthew Biegler: Understood. Thanks a lot.

Alex Sapir: Yeah, thanks, Matt.

Operator: Thank you. One moment, please. Our next question comes from the line of Corinne Johnson of Goldman Sachs. Your line is open.

Unidentified Analyst: Good morning. This is Craig on for Corinne. I guess one for us. How familiar are physicians with reachable workspace endpoint? And can you describe some of your physician education efforts that you’re planning once you have the data?

Alex Sapir: Yeah, great question, Craig. And thanks for asking that. I’ll start, and then I’ll certainly turn it over to Iain, if he has any others. So I would say that reachable workspace is not a standard instrument that neuromuscular specialists currently use when evaluating their patients with FSHD, it is somewhat of a novel instrument. And so in terms of the answer to your question about what we’re doing from an educational standpoint, to really train them on what reachable workspace is and what a change in reachable workspace actually means, we’re doing a number of programs throughout the year. We’ve got a program in two weeks at the MDA conference, the CME program, in which we’re actually spending a lot of time with the physicians that have signed up for that program, walking through what is reachable workspace, what is a normal baseline for patients, and what does a change in reachable workspace actually mean.

The clinical meaningfulness of that change, going back to the first question that Matt asked, will ultimately be sort of determined once we have the REACH data. But there’s a number of activities that we’re doing this year and in 2025 to really educate physicians on reachable workspace so that when the data does come out, they’ve got some context for those results. Iain, anything you would add?

Iain Fraser: No, the only thing I would add, perhaps, obviously all of the investigators in our clinical studies, both the ReDUX4 Phase 2 as well as REACH in Phase 3, are very well familiar with it now because of their participation in the study. And they obviously speak to their colleagues as well. So I think there’s some level of dissemination through the clinical trials themselves. And then additionally, as Alex said, we have some CME programs that are designed to inform and educate physicians around that.

Unidentified Analyst: Got it. Thank you very much.

Alex Sapir: All right. Thanks, Craig.

Operator: Thank you. One moment, please. Our next question comes from the line of Joseph Schwartz of Leerink Partners. Your line is open.

Joori Park: Hi. Good morning. I’m Joori Park dialing in for Joe. Thank you for taking our question. The first one is on losmapimod. Given reachable workspace isn’t a standard instrument, how can physicians measure benefit in the real world if they don’t have access to the tools? Are there other metrics that could track with reachable workspace or clinically meaningful benefits? And I have a follow-up. Thank you.

Alex Sapir: Okay, that’s great. Yeah, I think — thanks so much for the question. I think to answer that, let me turn that over to Iain, our Chief Medical Officer.