FULC - NASDAQ

Good morning and welcome to the Fulcrum Therapeutics Second 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. 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 on FTX-6058, clinical development time lines and financial projections. While these forward-looking statements represent Fulcrum's view as of today, this should not be relied upon as representing 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 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 Alex Sapir, CEO and President of Fulcrum. Joining Alex on the call today are Dr. Iain Fraser, Interim Chief Medical Officer; and Greg Tourangeau, Fulcrum's Principal Accounting Officer. After providing updates on our key programs, there will be a brief Q&A in which Alex, Iain and Greg will be available to answer your questions. With that, it is my pleasure to turn the call over to Alex. Please go ahead.

Thank you, operator, and thanks to all of you for taking time to join us today. It's truly an honor for me to have the opportunity to lead Fulcrum at this important time and to build on the company's strong foundation as we work towards advancing our pipeline and delivering on our commitment to improve the lives of patients with rare genetic diseases. So what I'd like to do this morning is to provide a brief update on our two key programs, losmapimod for Facioscapulohumeral Muscular Dystrophy or FSHD for short and FTX-6058 for sickle cell disease. After that, I'll provide a couple of corporate updates and then turn it over to Greg for financial highlights. And after Greg, we'll open it up for questions. So let's start with losmapimod, our most advanced program. As a quick reminder, losmapimod, a selective p38 alpha/beta MAP kinase inhibitor is currently in Phase 3 development for the treatment of FSHD, a form of muscular dystrophy with an estimated patient population of 30,000 in the U.S. Now FSHD is characterized by relentless and accumulating loss of muscle function over many years, resulting in the inability to perform daily life activities like putting away the dishes or listing a cup of coffee, activities that you and I take for granted. Now, even more sobering is the fact that these patients have no approved treatment options for their disease. These are the factors that drove us to embark on this journey to find options for these patients that had none. So, in June of 2022, we initiated our Phase 3 trial for losmapimod, which we call the REACH study. Let me give a bit of background on REACH. It's a 48-week trial intended to be registration enabling both in the U.S. and in ex-U.S. geographies. The primary endpoint for the study is the change from baseline in reachable workspace or RWS, a quantitative measure of upper extremity range of motion and function that specifically evaluate shoulder and arm mobility using 3D motion sensor technology. Now preserving this upper extremity function is critical for these patients to maintain their independence and their ability to perform some of these activities of daily living that I talked about earlier. As part of this study, we'll also be looking at some other important secondary endpoints like muscle fat infiltration or MFI, which is an important marker of disease pathology as well as self-supported quality of life measures and health care utilization questionnaires that will really help inform our thinking on our payer strategy as we prepare for a commercial launch. I'm really excited to share that screening in the REACH study has now closed, and we expect enrollment to complete later this quarter. And with this being a 48-week study, we plan to report top line data in the fourth quarter of 2024. For us and more importantly, for the patients, this brings us one step closer to delivering the first-ever FDA-approved therapy for patients with FSHD. Let me now move on to 6058. 6058 is our oral HbF inducer for the potential treatment of patients with sickle cell disease. As previously announced, we received a clinical hold letter from FDA on February 24th and at that point, immediately suspended dosing and paused enrollment in the Phase 1b trial for 6058. In the initial feedback provided by FDA, they stated that the hold was related to preclinical data that we submitted in April, October and December of 2022 as well as other nonclinical and clinical evidence of hematological malignancies observed with other PRC2 inhibitors. In order for us to restart the Phase 1b study, the agency has requested that Fulcrum further define the patient population where the potential benefit of continued treatment with 6058 outweighs potential risk. I do think it's important to mention that at this stage, the FDA has not requested any additional preclinical or clinical data as a prerequisite to restarting the Phase 1b study in patients. Based on preliminary clinical data that we obtained prior to the clinical hold, 6058 has demonstrated dose-dependent increases in total fetal hemoglobin or HbF of a magnitude that we believe has the potential to lead to a meaningful improvement in disease severity. We believe that 6058 as an oral HbF inducer has the potential to provide a differentiated therapeutic option for patients living with sickle cell disease and that the clinical and preclinical data generated to date demonstrate a favorable benefit risk profile. Overall, our interactions with FDA have been productive and collaborative, and we look forward to continuing our interactions as we work towards resolving the clinical hold as quickly as possible. I will provide an update once we have more clarity on the regulatory path forward, and I intend to provide specifics regarding this more narrowly-defined patient population once we have agreement with FDA. So that covers the updates on our two key clinical programs. Before turning it over to Greg, let me give a quick update on two other important topics. As we remain committed to delivering groundbreaking therapies for underserved communities, in July of this year, we obtained an exclusive global license from CAMP4 Therapeutics to acquire intellectual property arising from CAMP4's preclinical research program in Diamond-Blackfan Anemia or DBA for short. Under the terms of this agreement, Fulcrum will research investigational oral compounds for the potential treatment of DBA, a congenital rare blood disorder that affects an estimated 5,000 individuals worldwide. Our agreement with CAMP4 further strengthens our discovery pipeline, and we are excited to expand on CAMP4's foundational preclinical work, which we believe has potential broad applications and a unique opportunity for growth. Additionally, solidifying our leadership team is one of my key priorities, and I am pleased to announce the appointment of Alan Musso, to the position of Chief Financial Officer effective August 7. I have known Alan for some time now and thus have firsthand knowledge of his financial acumen, his keen strategic insights on a range of complex financial decisions that face a company of our size, and most importantly, his character. His leadership experience within the biopharma industry will be invaluable as the company enters its next stage of development. Welcome aboard, Alan. And so with that, let me turn it over to Greg to give an update on our financials. Greg?

Thanks, Alex. We ended June 30, 2023, with cash, cash equivalents and marketable securities of $278.2 million as compared to $202.9 million as of December 31, 2022. 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 a timely resolution of the FTX-6058 clinical hold. Collaboration revenue was $0.9 million for the second quarter of 2023 as compared to $1.9 million for the second quarter of 2022. Research and development expenses were $17.8 million for the second quarter of 2023 as compared to $25 million for the second quarter of 2022. The decrease of $7.2 million was primarily attributable to a $5 million milestone due to GSK that we achieved during the second quarter of 2022 upon the initiation of REACH as well as decreased costs as a result of the clinical hold for FTX-6058. General and administrative expenses were $10.3 million for the second quarter of 2023 as compared to $11.1 million for the second quarter of 2022. The decrease of $0.8 million was primarily due to decreased professional services costs. Net loss was $23.8 million for the second quarter of 2023 as compared to $34.1 million for the second quarter of 2022. And with that, let me turn it back over to Alex.

That's great. Thanks, Greg. And with that overview, operator, let's go ahead and open it up for questions.

[Operator Instructions] Please stand by while we compile our Q&A roster. Our first question comes from Dae Gon Ha with Stifel. Your line is open.

This is Benazir on for Dae Gon. Can you hear me okay?

We cannot hear you.

Hello?

Yes. Go ahead again.

Hello, this is Benazir on for Dae Gon. Can you hear me?

Yes. Operator, maybe let's move on to the next question, and then we can come back to Dae Gon and his colleagues there. It's just too difficult to hear them.

Okay, one moment for our next question please. The next question comes from Joseph Schwartz with Leerink Partners.

Can you hear me okay?

Yes, loud and clear. Thanks, Joe.

Okay, great. Thanks for taking my question. Congrats on the progress. I was hoping you could expand a bit on a comment that I heard regarding the FDA, the FDA has not asked for any more preclinical data in order to get off of hold, just given you are doing some more non-tox preclinical studies. Does that suggest that really the key to getting off of hold lies solely on the ability to define a patient population where there's an attractive risk benefit relationship. Can you help us -- can you just explain this concept a little bit more?

Yes, absolutely, Joe, and thanks for asking the question. I'll start off and then I'll turn it over to Iain to provide a bit more insight. So you're absolutely right. The FDA has not requested any additional preclinical or clinical data prior to restarting our Phase 1b study in patients. What they have requested is some additional, what I would define as, pharmacology data before moving into healthy volunteers. So with that sort of broader overview, let me just turn it over to Iain, and he can go into a little bit more detail.

Yes. Thanks, Alex. I think it's just important to make that differentiation between the two aspects of the hold and the two aspects of the clinical program. The one around the patients with sickle cell disease in the 1b study, and as Alex has said, the request there is around defining the appropriate patient population. The second piece is around getting back into healthy volunteers. Obviously, we've studied a number of them already, over 80, in our initial clinical evaluations, but there's still additional work that's traditionally done in healthy volunteers at this stage of the drug development program. And as part of that, there's a preclinical pharmacology study to evaluate the target engagement after a short number of doses in order to provide reassurance that giving a small number of doses to healthy volunteers is not associated with any long-term alterations. So that's the work that's ongoing, but it's specifically for the healthy volunteer population. And as we've said before, the healthy volunteer population is a nice to have as part of the drug development program, but it's not an absolute requirement and our priority is very much around getting back into the patient population for the 1b.

Next question operator?

Please stand by for the next question. The next question comes from Edward Tenthoff with Piper Sandler. Your line is open.

Great, thank you. And just two questions, if I may. Firstly, welcome aboard, Alan. So with respect to the question, so you'll go back into healthy volunteers first most likely, is that true? And can you define what would be a long-term follow-up there? And how quickly do you think you could get back into sickle cell patients? And then I just wanted to follow up. Is there anything specific that needs to be done with losmapimod and REACH other than just executing on the trial to report the data late next year? Thanks.

Yes, it's great. Let me turn it over to Iain for the first question, then I'm happy to take the second question there, Ed. Thanks for asking both.

Yes. Thanks, Alex. And to be clear, the healthy volunteers and those [indiscernible] are not linked in any way in terms of getting back into the clinic. The healthy volunteer studies that are typically done at this stage are things like a radiolabeled ADME study, which is a single dose study or a formulation switch study, again, typically a single-dose crossover type study that are supportive for the overall program, they're not required. And so again, our priority is to get back into the patients. There's not a requirement that there'd be any healthy volunteer studies initiated first. It's getting back into the patients and then the healthy volunteer studies will proceed in parallel as necessary and if there are any issues in getting back into healthy volunteers, those types of studies can be done in the patient population, if needed. So it's not a requirement.

Helpful clarification, thanks.

That's great. Ed and then, this is Alex. In terms of your second question, yes, as we had announced in our earlier comments. We're delighted that screening has closed. This is a study that has enrolled very quickly. We would expect enrollment to close sometime later this quarter. So if you add 48 weeks to that, which is the duration of the study. That would put us out until sometime in the fourth quarter of next year to release top line and what you would see during that top line release is basically -- would essentially be what you would expect to see will provide patient disposition, the balance between the two arms. We'll be providing the primary endpoint as well as the secondary endpoints, we'll report out on safety. And we are -- we would expect to see similar improvement that we saw in the ReDUX4 study across all of those key primary and secondary endpoints. So we're certainly looking forward to that day.

Great. Thank you so very much.

Thanks, Ed.

Please stand by for the next question. The next question comes from Dae Gon Ha with Stifel.

This is Benazir on for Dae Gon. Can you guys hear me now?

Yes, much better. Thank you so much.

Great. So one of our questions was, have there been any additional discussions with the FDA regarding DUX4 as a biomarker in FSHD and if DUX4 like data occurs in REACH with minimal effect on DUX4 composite score, but like a noteworthy benefit in a reachable workspace, how would they interpret that? And what about the EMA feedback as well?

Yes. Great question. I think to answer that, let me turn that over to Iain.

Yes. That has not been a topic of discussion with the regulators. The focus is on the endpoints as defined for the REACH study, which for the primary endpoint is obviously the reachable workspace and not the biomarker. The biomarker is not being evaluated in the REACH study at all. And that, as I said, has not been a topic of discussion.

The next question comes from Matthew Biegler with OPCO.

This is Matt Hagood on for Matt. I wanted to ask, just given the variability inherent in FSHD, could you talk about what gives you confidence that, that one-year time line in the FSHD study will be long enough to make a meaningful impact on outcomes.

Yes. Iain?

Yes. Thanks, Matt. So you're correct that there is heterogeneity in FSHD. I think that's pretty well described. We're very much encouraged by the data from the ReDUX4 Phase 2 study in 80 patients on the reachable workspace, which did show a nominally statistically significant difference between losmapimod and placebo in that study. So I think we're encouraged by that as we move into a larger number of patients 230 in the REACH study and the powering in that study is based on the observed effect seen in the ReDUX4 Phase 2 study. So that's with respect to the primary. And then one of the secondary endpoints in the REACH study is an MRI-based endpoint, which because it is a whole-body MRI assessment accounts for the heterogeneity at least across different muscles in any given patient and samples, the muscles broadly across each patient. So I think that's helpful in that it's a more integrated evaluation. It's not focused purely on the upper extremity, which the reachable workspace does.

Thanks guys.

Thank you.

[Operator Instructions] The next question is from Judah Frommer with Credit Suisse.

Congrats on the progress. Maybe just to put a finer point on the updates we can expect in sickle cell. I guess if all goes as planned, what would be the next update we would hear related to patients? And what would be the next update we would hear related to healthy volunteers? Just trying to figure out if those would come at the same time and which would come first?

Yes. Great question, Judah. Thanks for asking. Let me sort of set the stage a little bit in terms of our thoughts on when we would expect to come off clinical hold, and then I'll turn it over to Iain to get more specifically into the questions that you posed. So when the hold first came out at the end of February, I think it was around the beginning of March that we had guided to that it would take at least a minimum of six months in order to reach resolution with FDA. So that sort of puts us out until the September time frame. So I would expect that we would be able to share with everybody the resolution that has been reached in the path forward with the FDA sometime probably in the fourth quarter of this year or possibly even the first quarter of next year. As I mentioned, the conversations with FDA continue to go well. I would define them as productive and very collaborative. But as many of you know, it's just -- there's a process when engaging with the FDA, and that process simply takes time. And then once we get off hold, obviously, one of our key priorities as an organization is to reinitiate that Phase Ib study, begin dosing patients again with the 12-milligram, ideally 10 patients and then move to the 20. And our belief is that we'll continue to see these dose-dependent increases in HbF that we've been so happy with prior to the hold. I think it's probably a little bit premature at this stage to guide when we would be able to report out either data from healthy volunteers or data from the other two cohorts the 12-milligram and the 20-milligram cohort that I mentioned in the Phase Ib study. But I don't know, Iain, if you have anything else you'd want to share.

No. Just to reemphasize what I mentioned earlier in response to a question that the two populations, the healthy volunteer and the sickle cell patients are really quite distinct in terms of what is required to get back to those populations and that our primary focus is around getting back to the sickle cell patients until we'll announce when we've achieved agreements on that and we're moving forward with the study in the patient population for the healthy volunteers. It will likely be whatever the next healthy volunteer study happens to be, and that's likely what will be announced. But they're not linked, and they're not sequenced.

That's helpful. Thank you.

Thanks Judah.

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

That's great. Thanks, Michelle. So overall, I would say I'm very encouraged by the continued progress in the first half of 2023 and with our strong cash position out until mid-2025. We as a team, look forward to executing on many of the key priorities for our two clinical programs in the months ahead. And finally, let me just take this opportunity to express my sincere appreciation and gratitude to my fellow Fulcrum teammates, to the physicians we work with, to advance our clinical studies and finally, and most importantly, to the patients and their families. It's the efforts of this collective group of people that each day brings us one step closer to treating the root cause of genetically defined rare diseases and bringing transformative therapies to patients. So thanks again, everyone, for joining us on the call this morning. I look forward to seeing many of you at some of the upcoming fall investor conferences. Have a great rest of the day. Thanks.