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

Fulcrum Therapeutics, Inc. (NASDAQ:FULC) Q1 2023 Earnings Conference Call May 15, 2023 8:00 AM ET

Company Participants

Chris Calabrese - LifeSci Advisors, LLC

Robert J. Gould - President and CEO

Iain Fraser - Interim Chief Medical Officer

Conference Call Participants

Edward Tenthoff - Piper Sandler

Joseph Schwartz - SVB Securities

Unidentified Analyst - Goldman Sachs

Matthew Biegler - Oppenheimer

Judah Frommer - Crédit Suisse

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.

Question-and-Answer Session

Operator

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

Edward Tenthoff

Great, thank you for taking my questions and Robert, thank you for the thorough update. I wanted to dig a touch deeper into 6058 then sort of what are the outstanding issues, what do you see as sort of the experiments you need to do or data you need to collect in order to provide the FDA with the information they need to list the whole take?

Robert J. Gould

Thanks, Ed. There's two outstanding issues with the FDA that we're currently in discussions with them. One is a question around reversibility, the effect that we see when we inhibit EED with 6058. That's primarily related to reversibility of gene expression changes, which of course are a consequence of inhibiting the AAD [ph] protein. Those studies are preclinical, non-toxicology studies along the lines of pharmacological reversibility. They are well underway and as we get those results we'll be discussing them with the FDA. The other set of outstanding issues relates to defining the patient populations that can most benefit from the elevation in HbF that we're seeing. The regulatory agency has asked us to define that population, a higher risk population than we were evaluating previously, and we're in active discussions with them to discuss that that population. As I'm sure you know, there has been a number of different definitions of at risk populations in sickle cell patients, whether you are looking at the gene and cell therapy studies or some of the other small molecules that are symptomatic treatments. And so we're integrating those prior studies along with our own thoughts and care to define that population that can most benefit.

Edward Tenthoff

That makes a lot of sense. One last quick question, if I may, and this may be a tough one to answer. Is there a dose relationship to the concerns that the FDA has, or since it is really a clinical finding, is there not some kind of dose relationship toxic concerns there?

Robert J. Gould

So we've not seen anything in the clinical studies that would give us any concern about the toxicologic findings that have been seen pre-clinically. As I mentioned, during the update was at the two 6 milligram and 12 milligram clinical doses, there have been no serious adverse events at all. And in terms of the preclinical studies, we see dose dependent increases in target engagement. And part of the FDA is concerned around the hematologic malignancies that we've seen is that those types of malignancies have been seen with other PRC2 inhibitors. And they want to be sure that we're defining that risk benefit ratio appropriately both pre-clinically as well as clinically.

Edward Tenthoff

Yes. That's helpful. And Robert, if I may just take some, congrats on finding a new CEO, a great job stepping in during this sort of transition time for the company.

Robert J. Gould

Thanks Ed.

Operator

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

Joseph Schwartz

Thanks so much. I was wondering if you have any data on hand, which can help distinguish the propensity of FTX-6058 hematologic malignancies relative to other PRC2 inhibitors, that you're able to show to the FDA in order to help them get comfortable with the risk benefit of 6058 in sickle cell disease? And as a follow up, how are you thinking about defining the patient population, who can benefit and is that high risk?

Robert J. Gould

Thanks Joe. Maybe I'll take the first part of that, the first question that you asked and then let Iain speak to the second defining the patient population. Among the data that we've been able to share with the FDA is, of course, not only the studies that we've done, the types of toxicology studies that we've done, but also the gene expression changes that we're seeing with EED inhibition in animal studies, particularly the most -- model to animal studies. What we've seen there is that there's a -- obviously, are a number of gene expression changes, we're seeing really, as you would expect robust effects on the HbF gene HPV, and that's what the FDA is really focused on in terms of the reversibility studies. And so those kinds of gene expression changes relative to other inhibitors of PRC2 what they're focusing on. Iain, maybe you want to speak to defining the patient population.

Iain Fraser

Yes. Thanks, Robert and thanks, Joseph for the question. So based on the clinical data that we've generated to date, we've been able to see that subjects treated with FTX-6058 experience a dose dependence and clinically relevant increase in their hemoglobin into the range where we think that this is going to be clinically relevant and potentially beneficial. We will discuss these aspects with the FDA as we explore our path forward and as we think about populations for the clinical trial, we've been informed greatly by the therapies in the field, including gene therapies and stem cell replacement therapies, gene editing and so on, where a higher risk population has been defined in those studies.

Operator

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

Unidentified Analyst

Hey, this is Rob on for Madhu. Thanks for taking our questions. And we were just wondering, are there any thoughts to new asset INDs given your cash runway?

Robert J. Gould

Thanks, Rob. Yes, we actually under the leadership of our Chief Scientific Officer, Jeff Jacobs or JJ as he goes by, we've got a number of options that are progressing through the preclinical programs. We're not quite ready to give updates on the status of those programs or the areas, but we continue to be focused on the non-malignant hematology space and the muscular dystrophy space and as Alex comes on board and has a chance to come up to speed on those programs, we're excited about providing further updates on what those programs are and their development status.

Unidentified Analyst

Okay. Is there a time line that we can expect for sort of communication of the new INDs?

Iain Fraser

Not yet. It's a little premature for us to speculate on that already provide guidance on those time lines.

Unidentified Analyst

Okay, thank you.

Operator

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

Matthew Biegler

Hey Rob and team. Thanks for the questions. We were just curious on time lines, do you still think that a six-month time line to a possible resolution is still on the table or is this likely a 2024 event?

Robert J. Gould

As we're continuing the ongoing dialogue with the FDA, it's a little early to provide a clear definition of when the time line will get resolved. Certainly, we're in active conversations, we've really been encouraged by the dialogue that we're having with them. And the interaction with them is cordial and very, very active. So our current guidance is assuming a rapid resolution of that timeline. Exactly when that will get resolved I don't want to guide to yet.

Matthew Biegler

Okay, that’s fair. I wanted to maybe dial into a little bit, a little bit more into what you just said about your interactions with the FDA. How would you describe them, are they ongoing and collaborative or are you kind of just working now behind the scenes to as you said, define the eligible patient population and then run some of the other non-toxicology studies, or is this like a very cordial relationship that you have? Thanks.

Robert J. Gould

Yeah, it's actually extremely cordial with the regulatory agency. As we discussed, various thoughts with them, it's been a true partnership with real open discussion around their perception of the populations, which coincides with our perception of the populations that are at risk, and it's not contentious in any way. It's actually a pleasure interacting with them as they provide guidance and thoughts on the population.

Matthew Biegler

Thanks Rob.

Operator

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

Judah Frommer

Yeah. Hi, good morning. Thanks for taking the questions. First, just curious from a clinical study perspective, does changing the risk profile of the potentially addressable patient population kind of devalue any of the data you have thus far or is there -- or is it more just about the commercial risk benefit profile here?

Robert J. Gould

Yeah, let me speak to the last part of that, like the commercial value and then I will let Iain speak to the first part of the question, which is has your price, it doesn't devalue the data we have enhanced. In these initial studies defining a higher risk population, as the FDA has requested, first of all we think based on data we have in hand, we'll continue to see the robust increases in HbF that we've seen up to date. But more importantly, that's the study that we're requesting us to do first, and that really doesn't speak to subsequent studies that we'd be doing. They would be looking at the overall commercial opportunity for an oral small molecule activator of HbF, which we think still has an important place in the pharmacopoeia. As you know, an overall commercial strategy often involves multiple kinds of trials and multiple kinds of patients. And this is just the first foray into a higher risk population. Maybe I'll let Iain speak to whether the applicability of the data we've generated today.

Iain Fraser

Yes. Thank you, Robert, and thanks Judah. So I think in no way at all does this devalue or alter our perceptions of the data that we've generated to date in the sickle cell patient population at doses of 2 milligrams, 6 milligrams, and 12 milligrams once daily. That population clearly is an affected sickle cell population. Some of them were also on concomitant hydroxyurea at the time, and we've seen robust increases in fetal hemoglobin in that population. So as we move forward into somewhat slightly different defined patient population I don't think that there's any impact or adverse effects related to the previous data.

Judah Frommer

Okay, is it fair to assume that if you're going up against gene editing, cell therapy type approaches that you'd potentially be dosing higher to arrive at higher levels of HbF induction in a higher risk population or is your sense that, again, which I know has been an area of contention, historically, this 10% absolute induction bar might still be relevant in this higher risk population?

Iain Fraser

Yes. I don't think we see ourselves as going up against gene therapy and gene editing. We're using the way that they've defined their patient populations as a guideline as we move forward to define our patient population, bearing in mind that those procedures are associated with significant risks in and of themselves. So just a clarification there on how we're thinking of those particular populations. I don't think there's any bar on how much HbF induction we're looking for. I think clearly, as you've mentioned, the 10% is a number that's been thrown out there. I think in terms of the absolute percent that are helpful getting into the range of 20% to 30% is clearly being associated with clinical benefit using either genetic or pharmacological or a combination of those two approaches in the past. And so I think getting into that range seems to be clearly beneficial and 30% and a little higher might be functionally curative in some extent -- to some extent. So we'll be evaluating the dose response as we move up potentially beyond 12 milligrams to evaluate the dose response on HbF.

Judah Frommer

That’s helpful. Thank you.

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.