Fulcrum Therapeutics (NASDAQ:FULC) Q1 2021 Earnings Call

0:00 Good morning and welcome to Fulcrum Therapeutics' first quarter 2021 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 now like to turn the call over to Christy Warwick, Director of Investor Relations and Corporate Communications at Fulcrum. Please proceed.

0:25 Thank you, Operator. Good morning and welcome to the Fulcrum Therapeutics conference call to discuss our first quarter 2021 financial results and recent corporate highlights. Earlier today, we issued a press release. For those of you who don't have a copy, you can access it in the investor relations section of our website at fulcrumcx.com. 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.

1:10 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 filing to the Securities and Exchange Commission for discussion of certain risks and uncertainties associated with our business. With me on today's call are Brian Stewart, President and CEO, Chris Moxon, Chief Scientific Officer, Peter Thompson, Vice President, Finance and Accounting, and Judith Dunn, President, Research and Development. Let me quickly run through this morning's agenda. Brian will begin the call with a corporate overview, Chris will provide a more detailed review of our program in sickle cell disease and our product engine, and Peter will cover our financials. With that, it's my pleasure to turn the call over to Brian. Brian?

1:54 Thank you, Christy. Good morning, everyone, and thank you for joining us today. It's been an exciting and fast-moving quarter for Fulcrum. We continue to make important progress across our clinical development programs, discovery collaborations, and product engine, and expect to have meaningful updates from multiple key initiatives in the near term. I'd like to first start with our product engine, FulcrumSeq, which is a powerful and differentiated approach that serves as the innovation backbone for our company. FulcrumSeq has allowed us to rapidly identify novel, Thank you for joining us. Fulcrum C creates an unparalleled opportunity to efficiently grow our pipeline of therapeutics and develop root cause treatments for genetically defined rare diseases.

2:56 With this in mind, our goal is to bring forward two INDs over the next 24 months. The full-lose MAPIMOD data from Redux 4 and FSHD will be presented next month at the FSHD International Research Conference. I'll have more to share on that in a few minutes, but these data will provide new insights that will inform the clinical path forward in FSHD. Following data availability, we'll meet with the FDA to discuss the path to registration. And with FDX 6058, we'll have data from the Phase 1 trial in healthy adult volunteers mid-year, and we anticipate initiating dosing in people living with sickle cell disease by the end of the year. Additionally, we have further enhanced our leadership team with the appointment of Dr. Judith Dunn as our President of Research and Development, and today we announced the appointment of Dr. Chris Morabito as our Chief Medical Officer.

3:46 Both Judy and Chris have extensive experience in drug discovery and clinical development. Judy has held multiple roles in global research and development, including leadership roles at Roche and Pfizer, and Chris also has extensive leadership experience at biotech companies, including most recently as Chief Medical Officer at Cardurian. Prior to Cardurian, Chris held leadership roles at Takeda, Sanofi, and Merck. We are thrilled to have both of them as part of our team. Now let's turn to Liz Mappamod for FSHD. As a reminder, FSHD is a rare progressive and disabling disease characterized by severe muscular degeneration that occurs as skeletal muscle is replaced by fat. We estimate there are approximately 16,000 to 38,000 patients in the U.S. and similar incidents worldwide, leading to an estimated global patient population of 300,000 to 780,000 patients.

4:39 There are currently no approved therapeutics for FSHD, and Fulcrum is advancing the only known industry-sponsored clinical trial evaluating a potential treatment. Our development program in FSHD builds on the established safety of losimethamide demonstrated in approximately 3,600 subjects. We have made tremendous progress with our integrated FSHD clinical development strategy, evaluating molecular biomarkers as well as structural and functional measures, and patient-reported outcomes. This strategy includes natural history studies to better understand disease progression, preparatory studies to establish a biomarker and clinical endpoints, as well as studies that have demonstrated muscle penetration and target engagement for losmethamide.

5:27 Recently, at the virtual Muscular Dystrophy Association Conference in March, We presented new data related to the use of imaging biomarkers and clinical outcome assessments for FSHD. Presentations included development of a whole body muscle skeletal MRI protocol. Data show this can capture heterogeneity and provide important information about disease severity. Meaningful composite MRI measurements demonstrated correlation with relevant FSHD functional endpoints. Specifically, These data were the first to demonstrate strong correlations of muscle fat infiltration and muscle fat fraction with timed up-and-go, FSHD timed up-and-go, and reachable workspace, which measure impact on function.

6:14 This work has helped to inform the design of fulcrum's current ongoing studies of losamapamide in patients with FSHD, which include a single-site Phase II open-label study, as well as Redux IV. As a reminder, REDUX4 is an international, Phase IIb, double-blind, placebo-controlled trial of losmaphimodin in approximately 80 subjects with genetically confirmed FSHD. We are on track to report results from this trial next month. We and others in the field have demonstrated that Dux4 expression occurs on a spectrum, and we believe that all people with FSHD will have muscles that exhibit high Dux4-driven gene expression. Biomarker data reported from Redux4's interim analysis indicated that muscles with the highest Dux4-driven gene expression in pretreatment biopsies showed larger reductions following treatment with losmethamide compared to placebo.

7:09 We look forward to the Redux4 data readout, which will include the entirety of the biomarker data, as well as outcomes from structural, functional, and patient-reported measures. We'll be encouraged if we continue to observe evidence of trends similar to the interim analysis and high-expressing muscle biopsies from Los Mapamon-treated patients. Additionally, we'll be encouraged if we observe trends of benefit in secondary endpoints like muscle skeletal MRIs, clinical outcome assessments, or patient-reported outcomes. We believe Los Mapamon has the potential to establish a new treatment paradigm for people living with FSHD and reflects our continued commitment to research that targets genetically-defined rare diseases with high unmet needs. I would like to now turn the call over to Chris.

7:55 Thanks, Brian. Our unique research focus at Fulcrum positions us to pursue targeted indications where we believe we can develop safe and effective therapies to rebalance gene expression. By working to understand and then target the root cause of the disease, we have the best chance to optimize the potential efficacy of treatments and more broadly transform the way these diseases are being treated. This research approach has enabled us to rapidly progress clinical programs intended to treat serious diseases beyond FSHD, including select hemoglobinopathies such as sickle cell disease and beta thalassemia. Sickle cell disease is the most common type of inherited hemoglobinopathy and affects an estimated 100,000 people in the United States and millions more worldwide. It's a genetic disorder caused by mutation in the adult form of hemoglobin.

8:42 The result of the mutation is less efficient oxygen transport and the formation of sickle red cells. People living with sickle cell disease typically suffer from serious complications, which can lead to anemia, pain and vaso-occlusive crises, or POCs, as well as shortened lifespan. Increasing fetal hemoglobin can have a transformative impact for patients, including reduced recurring pain crisis events, reduced mortality, and increased likelihood of asymptomatic presentation. We believe significant unmet need remains with existing sickle cell disease treatments. Most therapies focus on the symptoms, either on reducing pain episodes or ameliorating anemia. More elaborate attempts aimed at functional cures, namely hematopoietic stem cell transplants and cell therapies often utilize harsh conditioning residues, which have inherent safety risks that may limit when and how they will be utilized.

9:35 We believe there's a great opportunity with FDX6058, a projected oral, once-daily therapy intended to treat the root cause of the disease, and therefore potentially address both anemia and DOCs. People living with sickle cell disease and beta thalassemia represent a diverse global population in great need of an effective therapy that can be accessed and administered with ease. We believe that an oral small molecule that can meaningfully increase levels of fetal hemoglobin will not only provide the therapeutic benefit and convenience of oral administration, but also the distribution at scale that this global population needs. Thus, we believe FTX6058 has the potential to be an impactful therapy. Recently, at the American Chemical Society meeting, we presented the medicinal chemistry strategy for FTX6058, including some initial PK data from the single ascending dose, or SAD, portion of our Phase 1 trial in Healthy Volunteers.

10:33 FTX6058 selectively upregulates fetal hemoglobin in a pancellular manner in both human cellular models and mouse models of sickle cell disease. The treatment of human CD34 positive cells from healthy and sickle cell disease donors with FTX6058 resulted in fetal hemoglobin levels of up to approximately 30% of total hemoglobin with no observed effects on cell health. We believe this is a superior preclinical profile relative to the standard of care hydroxyurea, as well as other mechanisms that have been reported to induce fetal hemoglobin. I'm also pleased to report that our Composition of Matter Patent has been issued, giving us patent protection until 2040. We continue to enroll in our Phase 1 SAD portion and recently began enrolling in the Multiple Ascending Dose, or MAD, portion of the trial.

11:22 This Phase 1 study in Healthy Volunteers is evaluating safety, tolerability, pharmacokinetics, and target engagement of FTF6058. Based on our PK-PD modeling, We anticipate that the pharmacological doses will be in the 6 mg to 20 mg range, which is where we anticipate maximum levels of target engagement. Recent reports suggest that red blood cell half-life in healthy volunteers is approximately 30 days, which may limit the opportunity to observe effects on fetal hemoglobin in a 14-day MADS study. However, we will be measuring fetal hemoglobin mRNA levels and the number of reticulocytes containing fetal hemoglobin to monitor potential early signs of efficacy. We expect to report data from the SAD and MAD cohorts mid-2021, which is when we'll also outline our future clinical plans.

12:12 And we anticipate dosing the first cohort of people living with sickle cell disease by the end of this year. We intend to continue our dialogue with the FDA and other health authorities as the program progresses. As the data warrants, we plan to seek orphan drug, fast-track, and breakthrough therapy designations. The opportunity to bring a new oral therapy to people living with sickle cell disease is a very exciting prospect for us, with the potential to be a significant advance in treatment in the years ahead. Moving to our research efforts, we are very excited about the productivity of our proprietary target discovery platform, FulcrumSeq. We have several discovery programs that span our core focus areas of muscular, hematologic, and CNS disorders. Our unique approach is designed to identify starting points that are more technically enabled from a drug discovery perspective as evidenced by the rapid progression from target ID to IND for our FSHC and sickle cell programs.

13:09 For the targets currently being assessed, we continue to explore both internal medicinal chemistry campaigns as well as opportunities to in-license advanced chemical matter. Our goal is to bring forward two INDs over the next 24 months. FulcrumSeq has advanced significantly on many fronts. Multiple advances in next-generation sequencing and cell biology have allowed us to model complex human biology and generate data at unprecedented scale. The convergence with the knowledge of the root cause of genetically defined rare disease creates the ability for fulcrum to discover and develop potential treatments for rare diseases with a level of productivity that was historically not possible. Whether through the use of patient-derived cells or via the application of single-cell genomics to patient biopsies, that reveal the dysregulated cell states and biological drivers of a given disease, the resulting high-fidelity assays offer a remarkable level of clinical relevance and translatability.

14:06 From this sophisticated product engine, we use machine learning algorithms to analyze the large amounts of functional, morphological, and transcriptional data that are generated with great precision and at great scale. The result is highly de-risked targets that are extensively enabled for further characterization. We believe FulcrumSeq is an important evolution in our product engine to identify targets informed by clinical biology and thus more predictive of desired therapeutic outcomes. Moreover, FulcrumSeq has supported the development of the clinical programs discussed today and has enabled our ongoing collaborations with Acceleron and Myocardia, which continue to proceed well. In summary, we believe we are well-positioned to deliver a constant stream of therapeutic innovation from our labs and with our partners.

14:52 With that, I'll now turn the call over to Peter.

14:55 Thanks, Chris. We ended the first quarter with $143.9 million in cash, cash equivalents, and marketable securities. Based on our current plans and projections, we continue to expect this will support our operations into the fourth quarter of 2022. Collaboration revenue for the first quarter of 2021 was $4.8 million compared to $0.8 million of collaboration revenue recognized during the first quarter of 2020. Research and development expenses for the first quarter of 2021 were $16.3 million compared to $14.5 million in the first quarter of 2020. General and administrative expenses for the first quarter of 2021 were $5.5 million as compared to $5.1 million for the first quarter of 2020.

15:41 And our net loss was $17 million for the first quarter of 2021. compared to a net loss of $18.5 million for the first quarter of 2020. With that, I'll turn it back to Brian. Brian?

15:58 Thanks, Peter. We have a lot of work ahead as we continue to execute on our plans. We'll report complete Los Mapamod data from Redux 4 at the FSHDIRC. We'll have data from the Phase 1 trial with FDX 6058 and Healthy Volunteers mid-year and anticipate initiating a trial in people with sickle cell disease by the end of the year. and we plan to bring forward two INVs from our product engine over the next 24 months. In closing, we expect many significant advancements and clinical updates across our pipeline and I look forward to keeping you updated on our progress in the months ahead. Operator, you may now open the line for questions. As a reminder, To ask a question, you will need to press star 1 on your telephone.

16:47 To withdraw your question, press the pound or hash key. Your first question comes from Joseph Schwartz with SVB Lyrinc.

16:59 Hi, good morning. This is Kelly Gerskis on for Joe Schwartz. Could you tell us a bit about the FSHD patients you enrolled in Redux for? Where are they in their disease progression? And is there anything you can share with us regarding baseline characteristics, such as maybe how many of those muscle biopsies would be considered high-expressing? Thanks.

17:24 Yeah, thank you for the question. I would say in terms of baseline characteristics, we'll certainly be able to share more when we have the full data set at the IRC. But at a high level from an inclusion criteria perspective, we tried to keep a relatively broad inclusion criteria. So there's a clinical severity score that ranges from 1 to 5. And we tried to select patients that were between 2 and 4. So these are patients that are symptomatic and showing signs of the disease and their muscles are affected by the disease, but they're not patients that are completely wheelchair-bound. So, we try to be very well-balanced in our inclusion criteria, but also have a broad range of patients that are actively being affected by the disease.

18:21 Makes sense. Thanks. And maybe one more. Given this phenomenon that the highest X4-expressing muscles are able to show the best reductions, What are your expectations for the primary endpoint, and should we really be focusing more on the pre-specified sensitivity analysis?

18:40 Yeah, I think we were certainly encouraged by the interim analysis with the results that we saw and the large reductions that we saw in the LosMapimod arm relative to placebo. At the same time, just as a reminder, the interim analysis only focused on the primary endpoint for a subset of the patients. So it was only the first 29 patients, and it was only the primary endpoint. The benefit that we have in the full dataset is that we'll be able to see the biomarker data across all of the patients, both on lesmaphemide and placebo. We'll be able to see the pre-specified sensitivity analysis, and additionally, we'll be able to observe all of the structural, functional endpoints, as well as patient-reported outcomes. So as we go into this data, As we mentioned, we'll certainly be encouraged if the interim analysis is recapitulated and we observe large reductions in the highest expressing muscle biopsies.

19:39 Additionally, we'll obviously be very encouraged if we identify trends of benefit across any of the secondary exploratory or patient-reported outcomes. And just as a reminder, any trends of benefit would truly be unprecedented as there are no therapeutic alternatives available for these patients today.

19:59 Great, looking forward to June.

20:03 Thank you. Your next question comes from Ted Tenthoff with Piper Sandler.

20:11 Hey, thank you so much, and congrats on all the progress. So just thinking about redox for a minute, assuming positive data, you know, what does that look like, and what could we expect as next potential steps? Thank you. Yeah, hi, Ted. Good morning.

20:29 I think we would emphasize we would certainly be very encouraged by either recapitulating the interim analysis and seeing a reduction in the highest expressing muscle biopsies or observing these trends of efficacy in any of the secondary exploratory endpoints or patient-reported outcomes. So that's certainly what we'll be focused on as data gets analyzed. and on the other side of that, we'll certainly plan on engaging with the FDA. As we've talked about in the past, it's unfortunate that there are no therapeutics available for these patients today. There's no other industry-sponsored programs in the clinic and we'll look forward to engaging with the agency. I would also add, we were very encouraged last year that the FDA held a patient-focused drug development day for FSHD and they were able to engage directly with people living with FSHD as well as advocacy as well as family members to truly understand the impact of the disease on the patients who are affected by it. So we found that very encouraging and we'll look forward to interacting with the agency on the other side of data.

21:45 Great. Thank you very much. And for the patients, really cool for you guys. Thanks, Ted. Your next question comes from Matthew Harrison with Morgan Stanley. Hi, good morning. This is Kostas on for Matthew. Two questions from us, one on sickle cell disease, the other on FSHD. On sickle cell disease, from what we understand, the projections about the clinical doses were mostly driven by the preclinical AUC findings. and based on your data that you recently presented, the AUC in clinic was about 1.5 times higher than your projected. So we are wondering if this has any impact on your expectations around efficacious or maximum target engagement doses for phase two.

22:37 Thank you.

22:39 So why don't I turn it over to Chris to speak to our dosing projections.

22:43 Yeah, thank you very much for the question. So you're right, we did see greater exposure, higher than expected exposure at the lower doses. And that may mean, in fact, that we do see higher levels of target engagement at lower doses in the healthy volunteer subjects than we initially modeled. Either way, we will be encouraged if we see significant levels of target engagement, either at lower doses or the doses that we initially modeled. And again, the intent of the study is to not only understand safety and tolerability, Thank you very much. And just one follow-up. Have you already selected the doses in Phase 2 or not? You haven't finalized that. We have not finalized that, and we are still very much in the midst of the Healthy Volunteer study. Great, thank you. And one quick on FSHD. Are you planning to top-line any data ahead of the Congress, or you will be presenting everything at the Congress?

23:54 Thank you. Hi, Costas. I think our plan right now is to present full data at the FSHD IRC, and that will be in late June, and we're excited to do that. Great, thank you, and we look forward to it. Again, ladies and gentlemen, if you have a question at this time, please press star and then the number one. Your next question comes from Tazeen Ahmed with Bank of America.

24:27 Good morning, guys. Thanks so much for taking my questions. One question on sickle cell. As you look forward to the development of this particular program, Thank you so much for joining us. Secondly, as we look to the rest of your pipeline, what is your longer-term goal of how many programs you'd like to have in the clinic at any given time, and what might be some areas of focus for the company, indication-wise, that you could potentially share? Thank

25:24 you. Thank you for the questions. I'll turn it over to Chris to speak to the first question on fetal hemoglobin induction. I think one of the things we're Thank you very much. Thank you, Brian. We're still in the midst of designing our clinical trials in patients living with sickle cell disease. We're still in the midst of designing our clinical trials in patients living with sickle cell disease.

26:23 But to build upon what Brian talked about, again, we believe that FTX 6058 has the opportunity to be a best-in-class therapy. Oral, once daily administration, the therapeutic benefits of elevating fetal hemoglobin, as Brian spoke to, and really the distribution and scale that this global patient population needs. And certainly we'll be looking for elevation of fetal hemoglobin, but we also understand that, again, The levels of fetal hemoglobin induction that we have observed preclinically have the potential to provide benefit to patients all along the spectrum. That is, you can elevate fetal hemoglobin to levels that would significantly reduce the risk of shortened lifespan that these patients unfortunately experience or elevate fetal hemoglobin significantly to reduce the risk of recurring events.

27:11 And we certainly have seen evidence preclinically that we have the ability to elevate fetal hemoglobin levels to those that are associated with asymptomatic presentation. So we remain extremely excited about the molecule and its potential in the clinic.

27:27 And then regarding your second question, in terms of the productivity of the product engine, I think as we stated, we intend and our goal is to have two new INDs over the course of the next 24 months. and I think most importantly, as we think about fulcrum seek, we're extremely enthusiastic about the advances that we've made. So as we look at our two clinical programs to date, those have come from our earlier version of the product engine. We're extremely excited about those. But I'll turn it over to Chris and we can just speak to some of the advances in scale in our discovery efforts, which we believe should really facilitate not only these next two INDs, but a very rich clinical development pipeline in the years ahead.

28:10 Yeah, Fulcrum Seek, the advances we have made with Fulcrum Seek truly are astounding. This allows us not only to double down on the areas where we've had success already in muscle and hematology and build upon the deep R&D expertise that we now have, that allows us to, frankly, consider other franchise areas, other therapeutic areas. And with the scale of Fulcrum Seek, we can potentially screen an entire franchise in one shot. So this allows us to readily consider new therapeutic area opportunities in-house as well as through new partnerships in a much more integrated fashion. So, again, we remain very, very excited about the opportunity that Fulcrum Seek presents for the future. Okay, thank you.

28:57 I'm showing no further questions at this time. I would now like to turn the call back to Brian Stewart.

29:04 Thank you. Thank you all for joining us today and for your support of fulcrum. Have a great day. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Goodbye.