Earnings Call: Q3 2022

Nov 8, 2022

Good morning, and welcome to Fulcrum Therapeutics' third quarter 2022 conference call. Currently, all participants are in a listen-only mode. There will be a question-and-answer session at the end of this call. I would like now to turn the call over to Stephanie Ascher, from Stern Investor Relations. Please proceed. Thank you, Caroline. Good morning, and welcome to the Fulcrum Therapeutics 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 our future expectations and plans, clinical development timelines, and financial projections. While these forward-looking statements represent our views as of today, they should not be relied upon as representing our views in the future. We may update these statements in the future, but we are not taking on an obligation to do so. Please refer to our most recent filings with the Securities and Exchange Commission for a discussion of certain risks and uncertainties associated with our business. With me on today's call are Bryan Stuart, President and Chief Executive Officer, and Esther Rajavelu, our CFO. Paul Bruno, our Senior Vice President of Corporate Development, will also be available for Q&A. Let me quickly run through this morning's agenda. Bryan will begin the call with a corporate overview and key updates, including on our clinical programs. Esther will cover our financials, and Bryan will open the call for Q&A. With that, it's my pleasure to turn the call over to Bryan. Thanks, Stephanie. Good morning, everyone, and thanks for joining us today. At Fulcrum, our mission is to treat the root cause of genetically defined rare diseases. In this quarter, we have continued to make progress towards bringing transformative therapies to patients. Currently, we have two clinical programs with the potential to dramatically transform the treatment paradigm in sickle cell disease and FSHD. We are committed to moving both programs through the development and regulatory process as rapidly as possible to address the significant unmet needs that we know exist in these patient populations. We are also continuing to invest in our research engine and expect to file our next IND in 2023. At our last update, we announced a strategic realignment to prioritize our internal investments in our two key value-driving clinical programs intended for the treatment of FSHD and SCD. This extended our runway into mid-2024 at that time. In August, we closed an underwritten public offering that resulted in net proceeds of approximately $81 million that has extended our runway further, and we are in a strong cash position that enables us to continue to execute on our mission. Esther will provide details on our financials later in the call. Moving on to our clinical programs, starting with our phase 1b sickle cell disease program. SCD is a debilitating disease that for far too long has lacked effective and tolerable treatment options. HBF induction is the only mechanism which has been shown to broadly improve outcomes and reduce both the frequency and severity of SCD symptoms such as VOCs, anemia, pain, fatigue, and acute chest syndrome. FTX6058 is an HBF-inducing agent that has the potential to address the unmet need in sickle cell disease, including symptoms not addressed by current therapies. Several independent lines of evidence, including human genetics and emerging gene editing data, support our therapeutic goal that a 5%-10% increase in HBF above baseline can reduce both mortality and morbidity associated with SCD. An oral therapy that can produce robust increases in HBF has been a therapeutic goal in sickle cell disease for some time, which is why the initial data from our FTX6058 1B trial are so exciting. We have shown compelling proof of concept that FTX6058 rapidly induces HBF protein in sickle cell disease patients and demonstrated that it is able to achieve absolute HBF increases within the range that clinicians have targeted for a potential future standard of care. As our work on the phase 1b trial continues, we will continue to focus on understanding the effect of FTX-6058 across multiple dose cohorts and the consistency in response with FTX-6058, both as monotherapy and in combination with hydroxyurea. In addition to our ongoing 6-mg and 2-mg dose cohorts, we have selected 12 mg as the dose for our next cohort and plan to continue enrollment into 2023. Our goal is to have high-quality data across multiple cohorts to inform our plans for a registration-enabling trial in 2023. We have been focused on clinical trial operations and trial conduct. During the second half of the year, we have increased the number of sites that are participating in the program and have targeted our recruitment efforts in areas with meaningful populations of people living with sickle cell disease. We are focused on building connections and partnerships with the SCD community because we understand that local community-based organizations have been on the front lines of the fight to treat sickle cell disease. The feedback that we have received from the community has been clear. The accessibility, and ease of use of a new SCD therapy is extremely important. Our approach of developing an oral small molecule that can be taken once a day and deliver robust HBF induction has been met with very positive response from patients and healthcare providers. Now moving on to our FSHD program, where we are currently enrolling the phase three REACH trial. 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 continue to be well-positioned to bring the first-to-market therapy for this relentless and devastating disease that is the second most common form of muscular dystrophy. People with FSHD lose strength, function, independence, and mobility as the disease advances, seeing their quality of life decline as a result. There is an urgent need for a disease-modifying therapy that can help patients with FSHD maintain their quality of life. Data from our phase 2 ReDUX4 trial indicates that losmapimod has potential to slow or stop disease progression, and in some cases, even improve function in FSHD patients. In October, at the World Muscle Society meeting in Halifax, Nova Scotia, we shared 96-week data from our open-label extension trial in the ongoing phase 2b ReDUX4. Over 97% of patients in the initial 48-week trial decided to remain in the study during the open label extension. Top line results showed that participants in the initial treatment arm who continued to receive losmapimod demonstrated maintenance of effect through a 96-week period, as measured by change in reachable workspace or RWS from baseline. Notably, those who crossed over from placebo to losmapimod after the initial 48-week trial period demonstrated slowed disease progression based on the same measures. Losmapimod also continued to maintain its favorable safety profile and was generally safe and well-tolerated. We have strong conviction in this program, and our interactions with patients and the clinical community continue to reinforce the potential for losmapimod to become the standard of care for FSHD. We expect to complete enrollment for the phase 3 trial in 2023. As we continue to make progress on our two lead programs, we are very excited to welcome two additions to our executive leadership team. Dr. Santiago Arroyo joined Fulcrum yesterday as our Chief Medical Officer. Dr. Arroyo is a neurologist by training with two decades of experience in drug development. He most recently served as the Chief Medical Officer of Momenta Pharmaceuticals through its acquisition by Johnson & Johnson. We have great confidence in Dr. Arroyo's experience and leadership, and are incredibly pleased to have him at the helm of our clinical organization as we look towards having two registrational enabling trials in 2023. We have also appointed Dr. Jeff Jacobs as our Chief Scientific Officer. Dr. Jacobs has more than 25 years of experience in drug discovery and has led, co-led, and mentored multiple discovery programs from concept stage to IND enabling studies. Dr. Jacobs was most recently the Chief Scientific Officer at Goldfinch Bio, and will be joining Fulcrum as of December first. We are thrilled to have both on board to lead our efforts towards filing our next IND in 2023. With that, I will hand the call over to Esther to review our third quarter financial results. Thank you, Bryan. As Bryan mentioned, in the third quarter, we strengthened our balance sheet and cash position with our equity offering in August. We announced an underwritten public offering of approximately 11 million shares of common stock at an offering price of $7.82 per share. The gross proceeds from this offering were approximately $85 million before the deduction of underwriting discounts and other offering-related expenses, and resulted in net proceeds of $81 million to the company. This offering, in addition to the strategic realignment plan that we announced during our second quarter call, enables us to operate our business from a position of financial strength and to remain focused on executing on our key value-driving programs. Now turning to the third quarter financials. During the third quarter of 2022, collaboration revenue was $1.2 million, compared to $4.9 million during the third quarter of 2021. Our third quarter 2022 operating expenses remained relatively stable at $25 and a half million, compared to $25.7 million for the third quarter of 2021. R&D expenses were $15.4 million for the third quarter of 2022, as compared to $17.1 million for the third quarter of 2021. G&A expenses were $9.7 million for the third quarter of 2022, compared to $8.6 million for the third quarter of 2021. Our net loss for the third quarter of 2022 was $23.7 million, compared to a net loss of $20.7 million for the third quarter of 2021. We ended the third quarter with a cash equivalents and marketable securities balance of $221.8 million. Based on our current operating plans, we expect that our cash will be sufficient to fund our operating expenses and CapEx requirements into late 2024. We are operating from a position of financial strength and remain disciplined about deploying capital appropriately to our key value drivers. With that, I'll turn it back to Bryan. Thank you, Esther. This third quarter for Fulcrum was focused on execution, and we've been able to make major strides in both of our lead programs. As we move into the fourth quarter with a new clinical and scientific leadership team, we are well-positioned to establish Fulcrum as a leading rare disease company as we advance two potentially life-changing therapies and continue to leverage our research engine to expand our pipeline, all supported by a strong financial foundation. With that, I'll turn it back to the operator for questions. Thank you. We'll now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. The first question comes from Matthew Harrison with Morgan Stanley. Please go ahead. Hi. Thanks for taking our questions. This is Wen Zhang live for Matthew. I have two questions. One about dosing and one about the trial execution of the FTX-6058 program. In terms of the dosing, what's the rationale to choose 12 mg? And how does this dosing say about what you have seen related to combo with hydroxyurea? And the second question is, how is the trial executed so far given you mentioned it will continue enrollment into 2023, which is kind of delay from the previous guidance of year-end 2022? And what is your plan for data disclosure of the trial? Thank you. Great. Yeah, thank you for the questions. Let me start with the rationale on dosing, and then I'll speak to trial execution and let Esther speak to data disclosure. In terms of our rationale, I think one of the things is, as we mentioned, and maybe we'll start off with our therapeutic goal for the program has always been to see increases in HBF of 5%-10% above baseline, knowing that all of the human genetics data, the emerging gene editing data, all of that points to this being a transformative therapy with a small molecule once daily if we can achieve that. We were excited by what we saw at the 6-milligram dose as we shared at EHA, realizing that that was an early dataset, and we wanted to generate more data. As we mentioned at that time, we wanted to get experience with both monotherapy and in combination with HU at both the 6- and 2-milligram dose. We are actively doing that, and that gives us the comfort based on the PK/PD modeling that we've done, as well as the data that has been emerging from 6 and 2 to move towards the 12-milligram dose. The plan is at the 12-milligram dose, just like the other dose cohorts, to get data both monotherapy and in combination with hydroxyurea. In terms of trial execution, this has been a big focus of the company. One of the things that we mentioned at EHA is that we were transitioning towards observed dosing. We are now utilizing that. I think what we can say is we believe it is effective. Our goal from a trial execution perspective, as we've spoken to, is less about quantity of data and number of patients, but more about high-quality data, making sure that we are generating good data from patients that are adherent that will really help inform our next trial, with our goal of that being a registrational trial. I think that is proceeding well. We are going to be continuing enrollment into 2023, and that will be focused on all three dose cohorts, and we believe that that is gonna be able to provide sufficient data to transition into that registrational trial. I'll let Esther speak to disclosure. Yeah. I think with regards to the data disclosure, we'll have more information for you in the first quarter. Okay. Thanks. Thank you. The next question comes from Dae Gon Ha with Stifel. Please go ahead. Great. Good morning. Thanks for taking our questions, and congrats on all the progress. So maybe a question on FTX-6058, and then another follow-up for FTX-6058. If we look back at the phase 2 CRISS study, if I'm looking at it correct, they had about 12 sites. GBT440 study had about 1, out in the UK. You've got about 7 right now that I'm seeing. I know it's dated October. So what are you actually hearing from boots on the ground with regard to rate of enrollment? And aside from the UNC site that you've recently added, I think it was in September, I guess, what additional strategies can you implement to expedite enrollment, to make it more of a 1H 2023 complete enrollment rather than a 2H? A follow-up, I guess, would be when we look at the ClinicalTrials.gov entry in September. You updated it so that it now adds up to three additional cohorts. N has been increased to 40 versus 20 previously. I guess, any insight that you can provide in terms of what we can look forward to beyond the 12-milligram cohort? Thanks so much. Thanks, Dae Gon. Maybe I'll first speak to the changes that we made to accommodate additional cohorts, and then I'll turn it over to Paul, and we can talk about some of our efforts in enrollment and recruitment. In terms of the additional cohorts, and I think as we mentioned at that time, we don't have current plans to go beyond the 3 dose cohorts. However, we did wanna provide the flexibility to potentially do so based on the data that we see. At this point, our plan is the 2 mg, the 6 mg, and the 12-milligram dose cohorts. But should the data lead us in a direction where we think it would be helpful to dose additional cohorts, we've allowed ourselves the flexibility to do that. I'll turn it over to Paul to speak about enrollment. Thanks, Bryan. Yeah, just with regards to enrollment, again, our priority right now is enrolling a high number of high-quality patients as opposed to focusing purely on quantity. We think opening additional sites, you know, beyond a single site simply gives us the flexibility to make sure that we're enrolling the highest quality patients in this initial phase 1b study. Operator, can you move to the next question, please? Sure. Thank you. I'm sorry. The next question comes with Judah Frommer with Credit Suisse. Please go ahead. Hey, good morning, guys. Thanks for taking the question. Just circling back on the 12 mg dose selection. Can you give us an idea of how that's impacted or informed by the 2 mg and six mg phase 1b data that you're seeing versus the healthy data that you presented that went up to 10 and maybe the relationship that you're seeing on PK/PD in healthy versus patients? Yeah. Good morning, Judah. As you referenced, and I think we spoke about a little bit at the time at EHA, we wanted to get experience at the 6-milligram cohort and the 2-milligram cohort with HU and in monotherapy prior to dosing higher. We now have that experience. We now have the comfort to be able to dose up to the 12-milligram cohort. Obviously, we're very excited to do so. One of the things that we'll want to understand, as we've spoken about, is when we looked at our healthy volunteer data, we saw a relatively robust target engagement across all doses. There was a difference in mRNA that we saw at the different dose levels. That's something that we're gonna wanna understand better as we look at this 12-milligram data, not only to understand obviously safety and tolerability, but to also see if there are differences in protein induction at the different levels. Again, starting off with the base of a lot of excitement and enthusiasm that we have with the HBF increases that we shared at EHA. That's how we were thinking about it. Okay. Then just on timing of the decision, and the ability to dose higher. Your new CMO and CSO, do they have any input into the 12 mg, or that was kind of in place when you started conversations with them? How do you see them kind of impacting the program going forward? We did make this decision along with both, I think we can just say our internal team as well as external advisors and a DMC. Obviously, I think most importantly, particularly on the clinical side, we're thrilled to have Santiago joining. He has tremendous experience in rare disease drug development at Momenta, at Pfizer, having led a number of very significant programs. His experience, Jeff's experience on the preclinical side, I think, puts us in a tremendous position. Obviously, as you can tell, I don't think we could be more excited about having both of them join the organization. Great. Congrats. Operator, can you move to the next question, please? Sure. The next question comes with Matt Biegler with Oppenheimer. Please go ahead. Hey, guys. Thanks for taking our question. Just wondering if you're in a position yet to see whether the efforts to improve on patient noncompliance are bearing fruit. If you could just kinda remind us again what those efforts are and if you're in a position yet to talk about what's working and what's not working, I think any color would be great. Thanks. Yeah. Hi, Matt. Thanks for the question. Just as a reminder to everybody as you're referencing, one of the things that we shared at EHA is that we were transitioning to observed dosing. Observed dosing is commonly used in a lot of small molecule drug development programs. It tends to be very effective. We put that in place at that time. I think what we can say at this point is that, yes, we do believe it's been effective. This element of the trial has been a big focus of ours internally, and we're pleased that as we've implemented this, we do believe that it's working. Thanks. Operator, next question, please. Next question comes with Joseph Schwartz with SVB Securities. I'm sorry. Please go ahead. Hi. Thanks so much, and congrats on the progress. I was wondering if you can give us any insight into where you are in enrollment with cohort two. Do you think that cohort two enrollment could also stretch into 2023, or is it just cohort three? How many patients are you hoping to generate data on in combination with HU versus monotherapy? I have a follow-up, please. Yeah. Good morning, Joe. Yeah, thanks for the questions. I think at this point, we are actively enrolling in both the 2- and 6-milligram cohort. We've been pleased with the progress that we're making, both as monotherapy and in combination with HU. I think one of the things that we've been talking about and we've emphasized today, it really is this focus on quality data, and that's going to drive our decision-making. As we get more data, both monotherapy and HU, we wanna really understand the variability. I think if obviously, if there's greater variability, we'll have a desire for more patients. If there's less variability in the data, I think that will allow us to proceed more quickly. We're really going to make a data-driven decision. I think we can say as we sit here at this point, to be able to be moving forward with 3 dose cohorts, monotherapy and in combination, we feel like that's gonna put us in a very strong position to generate the dataset that will allow us to transition into a phase 2/3 trial. Okay. Yeah. Yeah, thanks so much. So I was wondering if you could give us any sense of whether you've seen any impact from the video monitoring on enrollment. It seems like that would certainly help enforce compliance, but I just didn't know if in this space where it's already fairly difficult to find patients to participate, if that was serving as any headwind now that you've implemented that on enrollment. I think Joe, at what we can say at this point is we believe it's been effective. We've implemented this. As we mentioned, this is used broadly across the field in a number of different programs. I think we're pleased with the results. We think it's been effective, and we'll continue to utilize it. In terms of headwinds, we don't believe so. This is not something that is invasive by any means. It's something that we can execute on. I think patients have been more than happy to participate in it, and it's gonna allow us to generate the highest quality dataset, and most importantly, the best data to make the right dosing decisions moving forward. Okay, great. Thanks for all the helpful color. Yeah. Thanks, Joe. Thank you. This concludes the Q&A session for today. I would like now to turn the call over to Bryan Stuart for closing remarks. Great. Thank you. Thanks everyone for joining us, and we very much appreciate the support of Fulcrum. Have a great day. This conference is now concluded. Thank you for attending today's presentation. Thank you all for joining us today and for your support.