FULC - NASDAQ

Good morning and welcome to Fulcrum's Therapeutics Second Quarter 2024 Financial Results and Business Update Conference Call. [Operator Instructions]. 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 Securities Litigation Reform Act of 1995. These may include statements about the company's future expectations and plans, clinical development timelines 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 are Alan Musso, Chief Financial Officer; Dr. Pat Horn, Chief Medical Officer; and Dr. Iain Fraser, Senior Vice President of Development. After providing updates, on our key programs. There will be a brief Q&A in which Alex, Alan, Pat and Iain will be available to answer your questions. With that, it's my pleasure to turn the call over to Alex.

That's great. Thank you, Lisa, and good morning, everyone, and thanks to all of you for joining us for our second quarter conference call. We've organized today's call to provide you with updates on recent progress and upcoming milestones for our two clinical-stage assets, losmapimod and pociredir. And after a brief introduction, we'll segue into our pipeline, I'll then ask Alan to review the financials. And finally, we'll end by taking your questions. I am happy to report that we are on track to report top-line data for the Phase 3 REACH trial of losmapimod by the end of October compared to our previous guidance of the fourth quarter. As we advance toward this important inflection point, we continue to build out the team and add talent as we prepare for the potential NDA filing and the U.S. commercial launch of losmapimod. In parallel, we are working with Sanofi in preparation for regulatory filings and the launch of losmapimod outside of the United States. As a reminder, in May of this year, we announced our collaboration and license agreement with Sanofi for the development and commercialization of losmapimod for facioscapulohumeral muscular dystrophy, or FSHD for short, for all territories outside of the U.S. We believe we selected the best possible partner for losmapimod as this collaboration combines Fulcrum's expertise in FSHD with Sanofi's deep regulatory development and commercial capabilities in neuromuscular markets around the world. Together, we look forward to delivering on our shared commitment to address the high unmet need of patients in the FSHD community. Let me spend a bit more time on losmapimod, which as many of, is an oral small molecule selective T-38 alpha-beta MAP kinase inhibitor that inhibits DUX4 expression and many of its downstream transcripts and thus prevents muscle cell death in patients with FSHD. An estimated 30,000 patients in the U.S. have FSHD, which 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. And while there is a degree of heterogeneity in the onset and disease progression of FSHD, this relentless loss of muscle function means that approximately 20% of patients become wheelchair-bound. I think it's important to remind everyone that there are currently no approved therapies for FSHD and no drugs used off-label to help these patients. Now let's turn our attention to our Phase 3 registrational trial called REACH, which I spoke about earlier. As a reminder, Reach is a 48-week Phase 3 trial intended to be registration enabling both here in the U.S. and in ex-U.S. geographies. In September of last year, we completed enrollment in REACH with a total of 260 patients. As presented at the 31st Annual FSHD Society International Research Congress in June of this year, baseline characteristics of the REACH study population are similar to those of our Phase 2 ReDUX4 study population. Building on the encouraging clinical benefit and favorable tolerability observed in our ReDUX4 trial, the primary endpoint for the REACH study is the change from baseline in the relative surface area or RSA, which is a quantitative assessment of reachable workspace and has been shown to correlate with disease severity and progression. RSA is a measure of upper extremity range of motion and muscle function that specifically evaluate shoulder and arm mobility using 3D motion sensor technology and is indicative of the ability to perform activities of daily living. Based on collaborative interactions with the clinical outcome’s assessment, or COA Group at FDA, we are further assessing the extent to which a specific change in the RSA score is meaningful to patients. I'm pleased to report that we are on track to complete the activities agreed upon with the FDA at the time of reporting the REACH top-line data. Additional key secondary endpoints in REACH include muscle fat infiltration or MFI, which is a marker of disease pathology measured by whole body MRI, shoulder dynamometry and Patient Global Impression of Change or PGIC, for short. We believe that the implementation of self-reported quality-of-life measures and health care utilization questionnaires will help inform our payer strategy as we begin preparing for a commercial launch to deliver the first FSHD treatment for patients. We are now progressing towards the completion of the 48-week treatment phase of the trial for all enrolled patients. As of June 30, 2024, of the 234 out of the 260 who completed the 48-week treatment phase, 232 of those -- or 232 of those patients or 98% chose to enroll in Part B, the open-label extension of the study in which all patients receive drug. This very high percentage of patients opting to move into the open-label phase is similar to what was observed in our Phase 2 clinical trial, and we believe is indicative of the high unmet need for patients with FSHD. Again, we are on track to report top-line data by the end of October, which will bring us one step closer to delivering the first-ever FDA-approved therapy for FSHD patients. Now let's talk a little bit about pociredir, which is our oral HBF inducer for the potential treatment of patients with sickle cell disease. The elevation of HbF or fetal hemoglobin is a clinically validated therapeutic rationale for sickle cell disease, a lifelong inherited blood disorder that severely impairs quality of life for approximately 100,000 people in the U.S. and approximately 4.4 million people worldwide, making sickle cell disease one of the most prevalent nonmalignant hematologic diseases. Historically, the standard treatment for sickle cell disease has included blood transfusion, pain medications and hydroxyurea that focus only on symptom relief. While exciting scientific progress has enabled the advancement and more recently, the approval of gene editing therapeutic approaches, we believe there remains a high unmet need for an oral therapeutic option that is broadly protective of sickle cell disease symptomatology. As a first-in-class oral small molecule HbF inducer we believe pociredir has the potential to address this unmet need. Turning now to our Phase 1b clinical trial, the PIONEER trial, we continue to make progress. Given that many of the sites we are newly activating are academic sites here in the U.S. as well as outside the U.S., both of which have long site activation lead times, together with our narrower inclusion-exclusion criteria, it is taking longer than initially expected. We expect to have study data to share with everyone in 2025. As a reminder, Cohort 3 of the Phase 1b trial will evaluate pociredir at the 12-milligram once daily dose, with a dosing duration of three months followed by Cohort 4 at the 20-milligram once-daily dose also for three months. Both cohorts are expected to enroll approximately 10 patients each. We look forward to building on the encouraging clinical data obtained prior to the clinical hold which demonstrated that pociredir increased total fetal hemoglobin of a magnitude that could translate into a meaningful improvement in disease severity. These interim results of the Phase 1b trial involving 16 patients were recently reported in June at the EHA conference in Madrid and were very well received by the medical community. 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, and addressing the significant unmet need in the sickle cell disease community remains a key priority for us. So, with that update on the business, let me now turn it over to our Chief Financial Officer, Alan Musso, to run through the financials. Alan, over to you.

Thanks, Alex. I'll now go over our results for the second quarter ended June 30, 2024. Let me start with our cash position. As of June 30, 2024, cash, cash equivalents and marketable securities were $273.8 million as compared to $236.2 million as of December 31, 2023. The increase in our cash position is due to the $80 million upfront payment received from Sanofi in the second quarter of 2024, partially offset by cash used to fund our operating activities in the first half of the year. Collaboration revenue was $80 million for the second quarter of 2024 compared to $0.9 million for the second quarter of 2023. The increase of $79.1 million was primarily due to recognition of the $80 million upfront license payment received from Sanofi during the second quarter of 2024. Our research and development expenses were $17.3 million for the second quarter of 2024 compared to $17.8 million for the second quarter of 2023. The decrease of $0.5 million was primarily due to the losmapimod global development cost-sharing reimbursement from Sanofi, partially offset by increased costs related to the advancement of the REACH trial. The general and administrative expenses were $10.2 million for the second quarter of 2024 compared to $10.3 million for the second quarter of 2023 and the $0.1 million decrease was primarily due to lower equity compensation costs. For the second quarter of 2024, we had net income of $55.4 million compared to a net loss of $23.8 million for the second quarter of 2023. For the foreseeable future, excluding the potential for future milestone payments under our Sanofi collaboration, we expect to be in a loss position, including for the year ended December 31, 2024. And finally, turning to our cash runway guidance. Based on our current operating plans, we continue to expect that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating requirements into 2027. And with that, let me turn the call back over to Alex.

Great. Thanks so much, Alan. So, with that overview of the business and the financials, Lisa, let's go ahead and open it up for questions.

[Operator Instructions]. And our first question will come from Corinne Jenkins of Goldman Sachs. Your line is open.

Maybe first for the work that you're doing to validate reachable workspace for the agency, has the agency specified like specific metrics that are most important or the magnitude of changes like the change or the benefit they'd like to see? Or are they just asking for like general proof that the reachable workspace is beneficial? And then are there multiple analyses that they requested them? Do they all sort of have to go in the same direction? And then my other question in terms of the cash runway guidance you just provided into '27, what specific like clinical milestones and then commercial activity?

Yes. It's great. Thanks, Corinne, and thanks for the question. And if there are any more follow-up questions, maybe just speak up a little bit. You were a little bit difficult to hear. I think in terms of your questions around regional workspace and some of the work we're doing to prove out the clinical meaningfulness of that work I'll turn that one over to Iain, and then I'll ask Alan to provide an update on your question around the financials. So, Iain?

Yes, sure. Thanks, Corinne. So, since the regional workspace has not previously been used for any approvals, there are no preestablished criteria. And so there has not been a numerical criterion put forward by the agencies for this. And the work we are doing is in order to evaluate that across a range of different approaches leading towards an understanding of the meaningful score difference, which is the FDA term for a change within a given patient that is considered meaningful. So, as I say, there is no prespecified numerical value for that and the work coming out of -- the results coming out of the work that we are doing will inform that.

And then, Alan, maybe toward the second question that Corinne had.

Yes, sure, Corinne. The cash runway guidance that we're giving that does anticipate a full sort of success scenario. So, it funds the sort of further development of filing and commercialization of losmapimod. It also funds the completion of the ongoing pociredir trial as well as the follow-up trial that we anticipate, and funds the preclinical work that we have ongoing for which we expect that we'll have new products entering into the clinic from that work. So, it's sort of all in what we anticipate with the current portfolio of continued advancement.

And our next question will be coming from the line of Kristen Kluska of Cantor Fitzgerald. Your line is open.

Good morning everybody. Thanks for all the transparency and extra guidance today. So, on reachable workspace, we've been getting a lot of questions just because another company also had data on this. And -- to your point, given it really is a new endpoint hasn't been previously used for approval. Wondering now that we have two data sets supporting the endpoint if this helps, in your opinion, derisk this endpoint for this disease?

Yes. That's great. Kristen, thanks for the question. I think to answer that, I'll turn it over again to Iain.

Yes. Thanks, Kristen. I think it is encouraging for us to see that others are using this particular endpoint in FSHD, we certainly had hints from the agency that, that's the case that they're hearing about this as we engage with them around our discussions around reachable workspace. And I think it also reinforces the point that we've made previously that we haven't been suggested an alternative primary endpoint in FSHD. So, I think we're overall encouraged by those reports that have been coming out.

Yes. And the thing I would add, Kristen, this is Alex, is -- and you had mentioned some other data that had recently been published or reported out. I assume you're referring to the AVIDITY data. I think what the AVIDITY data does is it certainly validates not only the DUX4 pathway, but more specifically to your question, reachable workspace as the clinical endpoint, we believe that many of the registrational trials that will come after us will be required as part of their primary endpoint.

Okay. Appreciate that. And then assuming that the trial is successful, when you plan to meet with the FDA, can you just remind us, first, what the safety data set is including from the previous company that had studies in other indications. And then second, how much open-label extension data you're going to have from Phase 2 at that point to add on to the pool of evidence? Thanks so much, again.

Thanks, Kristen. Maybe I'll take the first question, and I'll turn the second question over to Iain. Yes, I think that is really one of the truly unique things about losmapimod. I don't know if this is unprecedented, but we will be filing our new drug application with a patient safety database that includes over 3,600 patients. So, I think for a rare disease such as FSHD with a prevalence of 30,000, have 3,600 patients in the patient safety database is quite remarkable. And I think one of the encouraging signs is the drug does have a fairly sort of unremarkable AE profile, and we've demonstrated that in our ReDUX4 study and expect to replicate that in our REACH study. And then, Alan -- sorry, Iain, maybe to Kristen's second question.

Yes. So, we'll have data from the ReDUX4 Phase 2 study, remember that enrolled 80 patients, and there's been a high rate of retention in the open-label extension of that study now up to exceeding three years of exposure in some of those patients, the ones that were enrolled at the very earliest in that study. We have about 11 patients in a separate open-label study in Europe that also has a prolonged duration of treatment. And then in the REACH study itself, there are 260 patients. And as Alex mentioned in the original remarks, a very high proportion of those are electing to rollover into the open-label extension. And so, they will continue to experience exposure to losmapimod as we move towards filing. So, there is not only a large safety database from other indications that preceded the work that we had done, but also a large and growing safety database for this relatively a rare disease.

Our next question will be coming from the line of Joseph Schwartz of Leerink Partners.

Thanks for the update -- sorry. So, I was wondering a couple of things on pociredir first and then losmapimod. Can you talk a little bit more about why it's taking longer to proceed with the Cohort 3 group of patients for pociredir, is it the IRB level? Is it enrollment? Can you give us any clear progress update? And maybe talk about what initiatives you have to accelerate things? And then I have a question on losmapimod?

Sure. That's great, Joe. Thanks for the question. This is Alex. I'll take the first one and then depending on what the second question is, we'll figure out who we can triage that one, two. Yes. So, as I mentioned, and maybe I'll give a little bit more color the seven or eight sites that were involved in the PIONEER trial prior to the initiation of the clinical hold, which happened, I think, in February of 2023. Most of those sites tended to treat younger patients that didn't have the disease severity that was matching our new inclusion/exclusion criteria that we reached agreement on with the agency in order to get off clinical hold. So many of those existing sites would have been terrific to reactivate it would have taken several months to get the new protocol through the IRB, all the contracting had been done. But because what we were hearing from those PIs is that they did not have those patients essentially, we had to activate all new sites both in the U.S. as well as in countries outside of the U.S., specifically in Africa. Our goal is still to -- our goal is still to activate about 15 to, call it, 17, 18 sites in the U.S. and a handful of sites outside of the U.S. So, we should have 20 sites, which should be more than adequate to enroll these 20 patients in these next 2 cohorts. So, I think it's really just -- it's this long lead time of activating these sites, many of which are academic sites. And as many of you know, it can take up to nine months from contracting to IRB approval, all of the back and forth at the sites to get these sites activated again at these major academic institutions. In terms of what we're doing to try to speed that up, I think we're trying to do -- I think we're doing a couple of things. Number one, when a contract provision comes in, we're typically returning that around in about 24 to 48 hours. So, the people in our legal group knows that PIONEER is the top priority and anything that comes in from PIONEER gets put to the top of the pile. Unfortunately, we're sort of at the whim of the large institutional bureaucracy and unfortunately, things just take time. But I will say that of the sites that we have activated, and we have activated a number of sites, they continue to be very encouraged of the transformational potential that pociredir could bring to their patient population. There is a relatively small number of patients, somewhere between 7.5% to 10% of that 100,000 that I mentioned that do meet our inclusion/exclusion criteria. So, call it about 10,000 patients. But we believe that's more than an adequate number to be able to recruit these 20 patients. And as I mentioned, we will expect to have data that we can share with everybody sometime in 2025. And maybe turning to your losmapimod question?

Yes. That was helpful color on pociredir. So as far as losmapimod goes, I was wondering if you could talk about the output that will emerge from the work define the minimally clinically relevant difference on the RWS. Is this just one single number? Is it a range which might provide more context? And how do you feel about the ability of losmapimod to provide a benefit, which exceeds whatever you define as the MCD?

Sure. Thanks, Joe. I think to answer that, let me turn that one over to Iain as well.

Yes. Thanks, Joe. And just to clarify, I think the number that in the FDA terminology is the meaningful score difference. And I think the important thing to emphasize about that is that, that's not a mean score for the overall population that needs to be exceeded, but that's the score for a within patient change. So that's understanding what a change in the reachable workspace score is for an individual patient. And so, what that's most likely to be reflected in looking at the clinical trial data is proportions of patients -- individual patients that exceed that meaningful score difference. So, I think that's just conceptually a way of thinking about it. That's an important piece of it. And that's really the focus of this. There might well be a range of these depending on the outputs of that work, and we'll report that at the time of the top-line data.

And our next question will be coming from the line of Dae Gon Ha of Stifel. Your line is open.

Good morning. Thanks for taking my question. I'll stick my two questions with the losmapimod side of things. Specifically, on powering, so maybe a question for Iain. So, the first question is, you previously talked about powering for REACH as having benefited from the over enrollment. I think it was 96% to show 10% placebo-adjusted RSA. Just to clarify, was this just for the FSHD type 1 or inclusive of type 2? And now that you do have the type 2 baseline characteristics disclosed, like what would that powering be, if any, different from the original one? And then second question on powering as well. Just curious, have you guys done additional sensitivity analysis around sort of the evolving resolve natural history data? And what might that mean for the powering of REACH? Thanks so much.

That's great. Thanks, Dae Gon, and thanks for the question. Yes, Iain, do you want to take that one?

Yes. Dae Gon, as I think we've articulated before, the powering for REACH was based on specifically the FSHD 1 patient population. And that's because the data that we used for the powering was from ReDUX4 and that study enrolled only FSHD type 1. And so that was the approach that was taken even though the primary endpoint for the REACH trial will include not only the type 1s but also the type 2s. And so, the powering -- initially, the powering was based on 210 FSHD type 1 patients, and that was the powering at 93%. And the expectation was that we would, in addition, have 20 FSHD type 2 patients who pushed the total up to 230. The over-enrollment pushed the total enrollment from 230 to 260, and the type 1s went from 210 to 242. And so that's really the comparison for the powering was the 210 to 242 type 1s moving it from 93% to 96%. As you've indicated, we have the baseline characteristics. We know there are 18 FSHD type 2 patients. And we also know that the randomization is stratified for that. So, the expectation is that there will be 9 and 9 in each of the groups, placebo and active.

Great. Thanks again for the question, Dae Gon. Lisa?

And our next question will be coming from the line of Gregory Renza.

Yes. Alex and team, congrats on the progress. We're looking forward to the data in October. Alex, just on losmapimod, as you touched a bit about upon payer engagement, maybe just give us a glimpse of what that engagement will and has been looking like what do you see as the potential tailwinds from the potential data package and losmapimod's profile? Maybe what do you foresee as some of the greatest challenges when it comes to establishing the value proposition and assuming that the data cards flip as you foresee?

Yes. Great. Great question, and thanks for that. Yes, I think so, we've done some payer research following the results of the ReDUX4 study results. And what we heard from the payer community, and again, we probably went out and talked at the time to about 15 or so payers. The majority of those were U.S.-based payers. And I think what we heard across the board is it will be difficult to restrict access to this drug when approved for patients given the fact that there are clearly nothing available and nothing used off-label to help these patients with FSHD. I think the other thing that we heard from that payer research when probing a bit on what they expected the pricing to look like for the drug, and we have not given any specific guidance around pricing, but what we clearly heard back from the payers is they would expect this to look very similar to other rare disease drugs that have been priced in the, call it, hundreds of thousands of dollars every year per patient. I think it's also important to remind people that patients that will start on this drug, we assume will more than likely stay on this drug for very, very long periods of time. And we've been seeing that now greater than 85% of patients in the ReDUX4 study are still on drug after a three-year period of time. So, once we get the REACH trial results, Greg, we'll go ahead and do more significant payer research. But to your question around the tailwind, and we spent a lot of time thinking about this. I think that one of the biggest tailwinds we'll have with payers is the requirement for a confirmed genetic test at the time or prior to the approval of the drug. And what we know right now from the work that we've done is only about 20% to 30% of patients are actually receiving a confirmed genetic test. So, if every payer -- we're operating under the assumption that payers will require that confirmed genetic test before approving the drug. And so, we're doing a lot of work now. And there's a lot of examples out there of other rare diseases in which payers have required genetic tests. So, this is not a new concept. We're essentially sort of replicating the playbook of many other rare disease products that have come before us. But we will make sure at the time of launch that a lack of -- or we will make sure that genetic testing does not become an impediment to access and whether that's through partnership that we do with the FSHD society or whether we do it directly and provide genetic testing free of charge to patient. We're working through that right now to make sure at the time of launch, that does not become the tailwind that you mentioned.

That's helpful. Maybe related and as Alan has provided some detail on your runway. Just how are you coordinating the urgency about the planning for building a commercial organization when it comes to the leadership in such a capability and slotting that with respect to the data coming?

Yes, great question, Greg, and thanks for asking it. Yes. So, we are -- we have begun building out our commercial organization. I would expect that sometime in the third quarter of this year, we will announce the appointment of our Chief Commercial Officer. And one of the things that I said to this individual, while I was interviewing with them is we will make sure that we properly resource this launch. We will make sure that if it's a question of do we fund it or do not fund it, we will always err on, we should fund it instead of not funding because we have to make sure that this is properly resourced. And as Alan mentioned in one of the earlier questions, the runway guidance that we have provided assumes a launch that we have very properly resourced beginning in 2026. Is that fair, Alan?

Our next question will be coming from Matthew Biegler of Op. Co. Your line is open.

We were curious if in your discussions with the FDA they'd ever asked for more data around the losmapimod's mechanism of action. As you mentioned, AVIDITY had some biomarker DUX4 reduction. clinically. I know preclinically you showed that, but you hadn't been able to clinically. So, I'm just kind of curious if you'd be open to rerunning archived biopsies from ReDUX using maybe a more sensitive assay if the FDA wanted you to? Or if not, if you think, really, at this point, the FDA is only concerned with validating the RWS tool?

Yes. Thanks, Matt. Great question. And let me turn that over to Iain as well.

Matt, thanks. The issue of going back to biomarkers has not been something that's come up in any of discussions with the agency. The focus, I think, has very much been on the endpoints, given that it's a functional endpoint and the secondary endpoint similarly, are functional or related to muscle health. So, we haven't up to this point, received any specific requests around that. So, we don't have any specific plans to do so. The evidence that we have both in the original discovery of losmapimod as well as in the characterization of it was done in muscle cells derived from patients with FSHD, and you can perform the characterizations of the effect on DUX4 and all the downstream transcript pretty convincingly in that in vitro system where you don't have competition from other cell types and issues related to the biopsy and so on. And I think those data are very robust and show the mechanism of action on -- of losmapimod on the reductions of DUX4 and the downstream transcripts.

Okay. That makes sense. And maybe just squeeze one on the REACH 3 guidance. Is this a revision or just more fine-tuning from the prior guidance, which was year-end? And if it's a revision, kind of what are some of the factors driving that fit faster cadence going from year-end to now end of October.

Yes, Matt, this is Alex. Yes. No, it's nothing more than simply fine-tuning. We -- as we're getting closer and we're seeing the last handful of patients having their last visit, we feel very confident in terms of our ability to report out the top line results by the end of October.

[Operator Instructions]. There are no more questions in the queue. I would like to turn the call back to Alex for closing remarks. Please go ahead.

That's great. Thanks so much, Lisa. And again, thanks, everybody, for joining. Thanks to everyone for your interest in all the great things we're doing here at Fulcrum. And I guess before we conclude, I want to remind everyone that we continue to make progress with our Phase 1 PIONEER trial of pociredir, and are on track to report top-line data for the Phase 3 REACH trial by the end of October of this year. In parallel, we continue to prepare for the potential NDA filing and commercial launch of losmapimod in the U.S. With our cash runway into 2027, we believe we are well positioned to execute on our corporate objectives and look forward to building on this momentum in the months and years ahead. And as I always like to do, before we jump off the call, I would be remiss if I did not extend my sincere appreciation and gratitude to my fellow Fulcrum teammates, to the physicians we work with to advance our clinical studies, to our partners at the FSHD society and finally and most importantly, to the patients and family and their families around the world. Without you and your commitment to become involved in clinical trials, none of what we do would be possible. Thanks again to everyone who joined the call this morning. Please stay safe and healthy. Thanks so much.