Fulcrum Therapeutics, Inc. (FULC) Q4 2023 Earnings Call Transcript

Good morning and welcome to Fulcrum Therapeutics Fourth Quarter and Full Year 2023 Financial Results and Business Update Conference Call. Currently all participants are in listen-only mode. 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, plans, clinical development timelines, and financial projections. While these forward-looking statements represent Fulcrum's view of today, this should not be relied upon as presenting 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 filing 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, and Dr. Iain Fraser, Interim Chief Medical Officer. After providing updates on our key programs, there will be a brief Q&A in which Alex, Alan, 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. Thanks, Valerie, and thanks to all of you for joining us today. 2023 was a year in which we both completed enrollment in our Phase 3 REACH trial for losmapimod for facioscapulohumeral muscular dystrophy, or FSHD for short, and resolved the clinical hold for pociredir, which allowed us to resume clinical testing in patients with sickle cell disease. In the fourth quarter, we continued to drive forward our two key clinical programs and advance our pre-clinical pipeline, and with our cash runway that extends into 2026, I do believe that we are well-positioned to execute our corporate objectives and deliver on key milestones in 2024 and beyond. So at this point, let me go a bit deeper and elaborate on the progress we've made toward our goal of delivering transformative therapies to improve the lives of patients with rare genetic diseases. Let's start with our most advanced program, losmapimod, which is an oral small molecule p38 alpha/beta MAP kinase inhibitor currently in Phase 3 development for the treatment of FSHD. Now, FSHD is a rare form of muscular dystrophy with an estimated US prevalent patient population of 30,000. FSHD 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. As a result, many patients are unable to perform daily life activities that you and I take for granted, such as reaching for a cup of coffee, reaching for a cup in the kitchen cabinet, brushing your teeth, feeding yourself, even practicing good hygiene. About 20% of patients ultimately become wheelchair-bound. Despite the high unmet need, there are currently no approved treatment options for these patients. So in our quest to bring hope for these patients, in September of last year, we completed enrollment in our global Phase 3 trial for losmapimod, with a total of 260 patients enrolled in the trial. The trial initiated in June 2022 and 15 months later we had surpassed our enrollment expectations, which we believe is a real testament to the high unmet need for this rare disease. We are on track to report top-line data in the fourth quarter of 2024, which will bring us one step closer to delivering the first-ever FDA-approved therapy for FSHD patients. So, just a quick reminder of some of the details around the Phase 3 study, which we call REACH. REACH is a 48-week trial intended to be registration-enabling both in the US and in ex-US geographies. The primary endpoint for REACH is a change from baseline in the relative surface area, or RSA, which is a quantitative assessment of reachable workspace. RSA is an objective measure of upper extremity range of motion and muscle function that specifically evaluates shoulder and arm mobility using 3D motion sensor technology. In our Phase 2 study, losmapimod demonstrated a 10% change in the RSA score relative to placebo at 48 weeks. Based on interactions with the FDA, we are currently assessing the extent to which a change in the RSA score is considered meaningful to patients. Additionally, key secondary endpoints include muscle fat infiltration or MFI, which is an important marker of disease pathology measured by whole-body MRI, shoulder dynamometry, as well as self-reported quality of life measures that will help inform our thinking on our payer strategy as we begin preparing for a commercial launch here in the US. Now turning to pociredir, our oral HbF inducer for the potential treatment of patients with sickle cell disease, or SCD for short. Sickle cell is a lifelong inherited blood disorder that severely impacts quality of life for approximately 100,000 people in the US and approximately 4.4 million people worldwide. Historically, the standard of treatment for sickle cell disease has involved blood transfusions, pain medications, and hydroxyurea, focusing primarily on symptom relief. And 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 safe and accessible therapeutic options that are broadly protective of sickle cell symptomatology. As a first-in-class oral small molecule HbF inducer, we believe pociredir has the potential to address a critical unmet need for patients. In August of 2023, the FDA lifted the clinical hold for pociredir. It is also important to note that there were no changes either in the protocol-defined dose escalation scheme or the three-month treatment duration. Clinical trial sites have now been activated and others have been selected and are going through the necessary steps for site activation in order to be ready for patient recruitment for the Phase 1b study we call PIONEER. Based on the revised inclusion-exclusion criteria, we will be enrolling patients with high disease severity. Cohort three of the PIONEER study will evaluate pociredir at the 12 milligram once-daily dose followed by cohort four at the 20 milligram once-daily dose. Both cohorts are expected to enroll approximately 10 patients each. We look forward to providing specific guidance on readout of the 12 milligram and 20 milligram cohort as we have additional sites activated and a good basis to project enrollment trajectory. We are looking forward to building on the encouraging clinical data obtained prior to the clinical hold, which demonstrated that pociredir increased total HbF of a magnitude that could translate into a meaningful improvement in disease severity. More specifically, after only 42 days of treatment, we observed up to a 10 percentage point increase in HbF from baseline or a total HbF of approximately 25%. 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. Addressing the significant unmet need in the sickle cell community remains a key priority for us, and we are excited to build on this momentum in the years ahead. So that's the clinical update. For the financial update, let me turn it over to Alan Musso, our Chief Financial Officer, who will walk you through some of the numbers.

Thanks, Alex. I'll now go over our results for the fourth quarter and full year ended December 31, 2023, beginning with the results for the quarter. Collaboration revenue was $0.9 million for the fourth quarter of 2023 compared to $0.7 million for the same period in 2022. Our research and development expenses were $19 million for the fourth quarter of 2023, compared to $18.6 million for the same period in 2022. The increase of $0.4 million was primarily due to higher personnel costs. General and administrative expenses were $9.9 million for the fourth quarter of 2023 compared to $10.1 million for the same period in 2022. The decrease of $0.2 million was primarily due to lower professional service costs. For the fourth quarter of 2023, Fulcrum reported a net loss of $24.8 million compared to $26.1 million for the same period in 2022. Now I’ll review the results for the year ended December 31, 2023. Collaboration revenue was $2.8 million for the year ended December 31, 2023, compared to $6.3 million for the same period in 2022. The lower collaboration revenue during 2023 was attributable to the completion of activities under our collaboration agreement with Acceleron, which terminated in October 2022, and due to a decrease in revenues under our collaboration agreement with MyoKardia as we completed our research services during the fourth quarter of 2023. Our research and development expenses were $71.8 million for the year ended December 31, 2023, compared to $76.8 million in 2022. The decrease in 2023 was primarily attributable to a $5 million milestone obligation incurred upon the initiation of the REACH clinical trial in the second quarter of 2022 under our license agreement with GlaxoSmithKline. Our general and administrative expenses were $41.7 million for each of the years ended December 31, 2023 and 2022. The net loss was $97.3 million for the year ended December 31, 2023 compared to $109.9 million in 2022. Now turning to the balance sheet, we ended 2023 with cash, cash equivalents, and marketable securities of $236.2 million, compared to $202.9 million as of December 31, 2022. This increase in our cash position is primarily due to net proceeds from our January 2023 equity offering of $117.3 million, partially offset by our net cash used in operating activities in 2023. During the fourth quarter of 2023, our cash burn was $20.9 million. We continue to operate from a strong financial position with a cash runway into 2026. And with that, let me turn the call back over to Alex.

Great. Thanks so much, Alan. So, as all of you can see, we are well-positioned for a very exciting 2024 and are encouraged by the progress across our two clinical programs, losmapimod, which has first-in-market potential for patients with FSHD, and pociredir, which has best-in-class potential for patients living with sickle cell disease. So at this point, Valerie, let's go ahead and open it up for questions.

Our first question comes from Matthew Biegler of Oppenheimer. Your line is open.

Hey, good morning, guys. I just wanted to maybe tag on something you said about on the regulatory side of the coin here for losmapimod. Can you just walk us through your interactions with the FDA and where you are with discussions on the clinical benefit for reachable workspace? And I guess what you'll need to show in REACH to make them happy? Thanks.

Yeah, thanks so much, Matt, for the question. Let me just say a couple of things and I'll turn it over to Iain to go into a bit more detail. So, the REACH study is a very well-powered study with the 260 patients that we had enrolled. We've got a 96% powering on that study, and we believe that, that study has the potential to be registration-enabling based on our interactions to date with FDA. But I think more specifically, to answer your question around reachable workspace, let me turn that one over to Iain.

Yeah. Thanks, Alex. And thanks, Matt. So, obviously there are no drugs approved for FSHD, and so there's no precedent in the regulatory sphere for an endpoint. However, we have had a number of productive and indeed ongoing discussions with the FDA involving both the review division, which is in neurology, as well as the COA division. We're executing on a plan that we've agreed upon with them that we believe will establish the clinical meaningfulness of the reachable workspace. Specifically, there are a couple of components to that. The first is that we're generating additional data from observational studies in FSHD. So this is not involving any treatment with losmapimod, but observing these patients, as requested by the agency to identify what is for them the most appropriate measures of change in upper extremity function. This is achieved through evaluating items on patient-reported outcomes. The next step will be to apply those back to the REACH data themselves in order to derive what is the clinically meaningful threshold for reachable workspace. Secondly, we are conducting a number of exit interviews of patients that have gone through the REACH study. This will help to enhance our understanding as well as FDA's understanding of what a change in RWS means for them. Our expectation is that at the very latest, these data would all be available at the time of NDA submission. Of course, ultimately, FDA will make the final determination as to what is considered clinically meaningful, considering the totality of evidence.

Okay. So effectively we can say that there needs to be a little bit more validation work done on the RWS assay. Is that a fair characterization?

Well, I think the validation work on the instrument itself, in terms of the test, retest capabilities, the training process that goes into it, the provision of the technical pieces, all of that has been done and is really quite satisfactory. I think it's the last remaining piece around the clinical meaningfulness, and what is considered minimally clinically significant change.

Understood. Thanks a lot.

Yeah, thanks, Matt.

Thank you. One moment, please. Our next question comes from the line of Corinne Johnson of Goldman Sachs. Your line is open.

Good morning. This is Craig on for Corinne. I guess one for us. How familiar are physicians with reachable workspace endpoint? And can you describe some of your physician education efforts that you're planning once you have the data?

Yeah, great question, Craig. And thanks for asking that. I'll start, and then I'll certainly turn it over to Iain, if he has any others. So I would say that reachable workspace is not a standard instrument that neuromuscular specialists currently use when evaluating their patients with FSHD; it is somewhat of a novel instrument. In terms of the answer to your question about what we're doing from an educational standpoint to really train them on what reachable workspace is and what a change in reachable workspace actually means, we're doing a number of programs throughout the year. We've got a program in two weeks at the MDA conference, the CME program, in which we're actually spending a lot of time with the physicians that have signed up for that program, walking through what is reachable workspace, what is a normal baseline for patients, and what does a change in reachable workspace actually mean. The clinical meaningfulness of that change, going back to the first question that Matt asked, will ultimately be determined once we have the REACH data. However, there are a number of activities that we're doing this year and in 2025 to really educate physicians on reachable workspace so that when the data does come out, they've got some context for those results. Iain, anything you would add?

No, the only thing I would add, perhaps, is that all of the investigators in our clinical studies, both the ReDUX4 Phase 2 as well as REACH in Phase 3, are very well familiar with it now because of their participation in the study. They obviously speak to their colleagues as well. There is some level of dissemination through the clinical trials themselves. In addition, as Alex said, we have some CME programs that are designed to inform and educate physicians around that.

Got it. Thank you very much.

All right. Thanks, Craig.

Thank you. One moment, please. Our next question comes from the line of Joseph Schwartz of Leerink Partners. Your line is open.

Hi. Good morning. I'm Joori Park dialing in for Joe. Thank you for taking our question. The first one is on losmapimod. Given reachable workspace isn't a standard instrument, how can physicians measure benefit in the real world if they don't have access to the tools? Are there other metrics that could track with reachable workspace or clinically meaningful benefits? And I have a follow-up. Thank you.

Thank you for the question. To answer that, I will hand it over to Iain, our Chief Medical Officer.

Yeah, I think the advantage of reachable workspace is that it provides a quantitative assessment that treating physicians typically use in a more qualitative sense, to understand how their patients are doing. It allows us to put some numbers around those qualitative terms. Since there haven't been any therapies that alter the course of the disease available to date, there's really been no need to do that; all the therapy is symptomatic to this point. It's really about adding quantitative measures around the more qualitative sense in the clinic. The important pieces to point out here are, number one, that reachable workspace has been shown previously, prior to Fulcrum's involvement, that FSHD patients exhibit a decline in their reachable workspace over time. That's in a small natural history study that was published several years ago, and that's consistent with clinical observations around measuring muscle strength by more traditional measures like dynamometry, for example. We know that, in addition, the reachable workspace correlates with instruments, patient-reported outcome instruments, such as the Neuro-QoL Upper Extremity questionnaire, and that work has been published. We've also shown from our Phase 2 data a correlation between the reachable workspace and the shoulder abductor dynamometry. The shoulder abductor is a major muscle component of that. There are correlations that have been observed in reachable workspace. Probably most importantly, it's that documentation of the decline experienced by these patients, and that's what the patients report is this inevitable decline over time. That's something that the treating physicians and caregivers also report. There’s consistency in the measure from that respect as well.

Okay, got it. Thank you. And then my second question is on pociredir. I know that baseline characteristics like HbF can play a role in how much HbF you can achieve. So would it be possible to provide patient baseline characteristics ahead of your next update so we can better contextualize and appreciate the data when they are released? Thank you very much.

Yeah, this is Iain again. So maybe I can just add that we do have in our corporate presentation on the web the data from the initial 16 patients that were enrolled in the study that includes a plot of their HbF, which includes the baseline fetal hemoglobins they went in with. The comment that I would make there is that there was a range of baseline HbFs. I think, speaking from memory, it was about 3% at the low end and just under 20% at the high end. We know that in the sickle cell patient population in general, it's around 5% to 10%, which is sort of the average baseline. So we've seen to date a pretty widespread across baseline HbFs. While we don't have three months of data in all of those patients, certainly the initial slope of the increase in HbF across all of those baselines looked pretty similar. It didn't appear that those starting out higher had a lower response or vice versa. The critical piece of this is where do the patients end up after three months. It looks like from the six-milligram data that we have, which is the highest dose that's gone out to three months, may not even be plateauing fully at three months. We will, once we have the data around the fetal hemoglobin, reveal those baseline HbFs as well, because it is an important component.

Thank you. One moment, please. Our next question comes from the line of Dae Gon Ha of Stifel. Your line is open.

Hey, good morning. Thanks for taking our questions and congrats on all the progress. Three questions, if I may. One. Alex, have you guys actually started some pre-commercialization work with the payers specifically? I think there was quite a bit of questions around physicians and their comfort as well as the regulators. But how do payers feel about the reachable workspace and the magnitude you showed so far? Second, sticking with losmapimod, the 10% change you detected in ReDUX4; I was wondering if you could go into a little bit more on the test, retest variability you mentioned in an earlier question. Any other evidence you can point to that gives us some comfort around your Phase 3 REACH powering, and then I've got a follow-up on the pociredir story.

Okay, great. Yeah, I'll take question one and then I'll turn question number two over to Iain, and then we'll come back to you for question number three. Thanks, Dae Gon; really good question. So, yeah, we have done some initial payer work both in the US as well as ex-US, and I don't remember the specifics of the study that we did, but I think it was around 10 payers that we had spoken to and shared with them the target product profile and shared with them the results of the ReDUX4 study. They obviously were well aware that there were no available treatment options for these patients. The objective of the work that we did was really to try to understand their thoughts around pricing. What we heard loud and clear from those payers is that they would expect that when this drug gets approved and comes to market, it would command rare disease type pricing, such as in the hundreds of thousands of dollars. A good comp to look at would be the pricing that Biogen has with SKYCLARYS. SKYCLARYS targets Friedreich's ataxia, again, a neuromuscular disease, not a lot of mortality, but high morbidity. Very similar to what we see with FSHD with one key difference: FSHD is about four times the size of that population. The payer work that we've done, albeit somewhat limited to date, has really been around pricing. We believe payers will require confirmed genetic testing of FSHD before approving the product. Currently, because there are no treatment options for these patients, very little genetic testing is done. Those that are done are clunky, taking a lot of time to get results, and can be expensive with variable insurance coverage. This is an area we're going to spend a lot of time on in 2024 and 2025 to really streamline the process because it needs to be more efficient by launch, based on our belief that payers will require confirmed genetic testing before agreeing to approve the drug. So, on the second question, Iain, maybe I'll turn that one over to you.

Yes, briefly, just to recap, the ReDUX4 reachable workspace data, as you indicated, showed that ten percentage point treatment effect difference derived from a repeated measures model. That is the same model that will be used for the REACH study. Just to recap, that includes evaluations at baseline, week four, week 12, 24, 36, and 48. It's not just a single comparison of week 48 out to the baseline value. It incorporates all those measures over time. The treatment effect difference on an RSA unit score was about 0.05 with a baseline reachable workspace score in those patients of 0.54 to 0.53; that's five quadrants of the theoretical max there would be 1.25 to contextualize that. The data points that were used to power the Phase 3 REACH study included 230 patients originally projected and 260 finally enrolled. With respect to the test, retest, I don't have that number in front of me, but we can circle back to you with that. That is in published literature, and certainly can confirm that aspect outside of the ReDUX4 study. The variability in change from baseline in reachable workspace, that standard deviation went into the power calculations for the REACH study. We’re incorporating treatment effect size with the variability from that in ReDUX4.

Okay, appreciate the color there. Switching gears to pociredir. Alex, on the site activation, it seems like you're making some progress on certain sites that have already been activated, but you're also going out to activate more. Just wondering, for those you're working on now, what are some pushes and pulls you’re hearing from them before they can get on board? What pieces of data are you looking to collect to further expand the TAM of pociredir long-term?

Thank you for your questions, Dae Gon. To provide some context, at the ASH meeting, we engaged in one-on-one discussions with about 30 leading experts in sickle cell. Although a few physicians expressed reluctance to participate in the study due to its scale and novelty, many were quite interested, especially considering the potential benefits pociredir could offer to their patients. We're focusing on sites that are keen to participate and are omitting those that are not interested. We’ve pinpointed a number of sites eager to take part. Currently, our focus is on obtaining IRB approvals and finalizing contracts. What would you like to know about the second part of your question?

Yeah, with regards to the trial, the PIONEER trial, your long-term goal is to eventually expand the TAM, right, given the high severity of disease right now? So what kind of data are you looking to collect in PIONEER before you can look to expand that?

Yes, absolutely, Alex. The agency thinks of this in terms of risk and benefit. They have articulated this in dealings with gene therapy approaches associated with significant risk, including malignancy, as seen with the bluebird product. However, they feel that they understand the upside and benefits of those therapies much better than they do with something like pociredir, which is still in early development. The initial approach in the PIONEER study is to articulate at doses likely to be therapeutic—12 and 20 milligrams once daily—what kind of fetal hemoglobin inductions we can see. Demonstrating that based on our initial experience at the 12-milligram dose, which only went out to six weeks, we feel that patients will be able to reach high 20% maybe even low 30% ranges where the disease becomes transformative. It’s really about filling out efficacy, at least initially on HbF, before going back to the agency to relax some of the inclusion-exclusion criteria and extend dosing beyond the three months, which is the context of the current trial.

Excellent. Thank you very much, guys.

Yeah, thanks, Dae Gon.

Thank you. 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. Yeah, thanks so much, Valerie. And I guess, just to wrap up, as you can see from our progress that we've made and our plans for 2024, we remain deeply committed to treating the root causes of genetically defined rare diseases and bringing these transformative therapies to patients. Before we conclude today's call, as I always do, I would like to extend my sincere appreciation and gratitude to my fellow Fulcrum teammates, the physicians we work with to advance our clinical studies, and finally, and most importantly to the patients and their families. Thanks again to everyone who joined this morning. Please stay safe and healthy. Thanks so much.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.