Fulcrum Therapeutics, Inc. (FULC) Q2 2024 Earnings Call Transcript

Good morning and welcome to Fulcrum's Therapeutics Second Quarter 2024 Financial Results and Business Update Conference Call. 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. After a brief introduction, we'll segue into our pipeline, I'll then ask Alan to review the financials. 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 have 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 you know, 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 evaluates 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 outcomes assessment, or COA Group at the 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 patients, or 98%, chose to enroll in Part B, the open-label extension of the study in which all patients receive the 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. 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. 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.

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 general proof that the reachable workspace is beneficial? And then are there multiple analyses that they requested? Do they all 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 clinical milestones and commercial activity?

Yes. It's great. Thanks, Corinne, and thanks for the question. If there are any more follow-up questions, maybe just speak up a little bit. You were a little difficult to hear. I think in terms of your questions around reachable 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. Since the reachable workspace has not previously been used for any approvals, there are no pre-established criteria. There has not been a numerical criterion put forward by the agencies for this. The work we are doing is 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. There is no pre-specified numerical value for that, and the results from our work 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 anticipates a full success scenario. It funds the 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 the clinic from that work. It encompasses our expectations 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. Given that it is a new endpoint that hasn't been previously used for approval, I am wondering now that we have two data sets supporting the endpoint if this helps, in your opinion, de-risk 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. It is encouraging for us to see that others are using this particular endpoint in FSHD. We certainly had hints from the agency that they are hearing about this as we engage with them around our discussions regarding reachable workspace. It also reinforces the point that we made previously that we haven't been suggested an alternative primary endpoint in FSHD. We're overall encouraged by those reports that have been coming out.

Yes. And the thing I would add, Kristen, this is Alex, is that you 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 to use our primary endpoint.

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

Thanks, Kristen. I'll take the first question, and Iain will address the second one. One of the truly unique aspects of losmapimod is that we will be submitting our new drug application along with a patient safety database that includes over 3,600 patients. Given the rarity of FSHD, with a prevalence of 30,000, having 3,600 patients in the database is quite significant. A positive indicator is that the drug has a relatively standard adverse effects profile, which we have established in our ReDUX4 study and anticipate will be similar in our REACH study. Now, Iain, you can respond to Kristen's second question.

Yes. We'll have data from the ReDUX4 Phase 2 study, which enrolled 80 patients, and there's been a high rate of retention in the open-label extension of that study now exceeding three years of exposure for 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. As Alex mentioned in his original remarks, a very high proportion of those are electing to roll over into the open-label extension. They will continue to experience exposure to losmapimod as we move towards filing. There is not only a large safety database from other indications that preceded the work we had done, but also a large and growing safety database for this relatively rare disease.

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

Thanks for the update. Sorry. 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 determine who can address that. As I mentioned, 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 matched our new inclusion/exclusion criteria agreed upon with the agency in order to get off clinical hold. Therefore, many of those existing sites would have been terrific to reactivate, but it would have taken several months to get the new protocol through the IRB; all the contracting has been done. But because we heard from those PIs that they did not have those patients, we had to activate all new sites both in the U.S. and in countries outside of the U.S., specifically in Africa. Our goal is to activate about 15 to 18 sites, which should be more than adequate to enroll these 20 patients in these next two cohorts. I think it's really just a long lead time for activating these sites, many of which are academic sites. As many of you know, it can take up to nine months from contracting to IRB approval, all of the back and forth at these major academic institutions. In terms of what we're doing to try to speed that up, when a contract provision comes in, we're typically returning that around in about 24 to 48 hours. Our legal group knows that PIONEER is the top priority, and anything from PIONEER gets put to the top of the pile. Unfortunately, we're at the whim of the large institutional bureaucracy, and things take time. That said, from the sites that we have activated, they continue to be very encouraged about 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 I mentioned that do meet our inclusion/exclusion criteria, so about 10,000 patients. However, we believe that's adequate to recruit these 20 patients, and it's expected that we'll have data to share with everyone sometime in 2025. Maybe turning to your losmapimod question?

Yes. That was helpful color on pociredir. As far as losmapimod goes, I was wondering if you could talk about the output that will emerge from the work defining 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. To answer that, let me turn that over to Iain as well.

Yes. Thanks, Joe. The number that in FDA terminology is the meaningful score difference. It's important to emphasize that this is not a mean score for the overall population that needs to be exceeded, but the score for a within patient change. We're looking to understand what a change in the reachable workspace score is for an individual patient. This is likely reflected in looking at the clinical trial data, examining the proportions of individual patients that exceed that meaningful score difference. That's an important piece of it. There may well be a range 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: 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? Now that you do have the type 2 baseline characteristics disclosed, what would that powering be, if any, different from the original one? The second question on powering: Have you guys done additional sensitivity analysis around 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. The powering for REACH was based specifically on the FSHD type 1 patient population because the data that we used for the powering was from ReDUX4, which enrolled only FSHD type 1. This approach was taken even though the primary endpoint for the REACH trial includes not only the type 1s but also the type 2s. The initial powering was based on 210 FSHD type 1 patients, achieving an efficacy threshold of 93%. We expected to have 20 FSHD type 2 patients, which pushed the total enrollment to 230. The over-enrollment pushed the total from 230 to 260, with type 1 patients increasing from 210 to 242. As you've indicated, we have the baseline characteristics, and we know there are 18 FSHD type 2 patients. The randomization is stratified for that, so we expect there will be 9 in each group, placebo and active.

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

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 on payer engagement, maybe just give us a glimpse of what that engagement will and has been looking like. What do you see as potential tailwinds from the potential data package and losmapimod's profile? What do you foresee as some of the greatest challenges when it comes to establishing the value proposition assuming the data cards flip as you foresee?

Yes. Great question, and thanks for that. We have done some payer research following the results of the ReDUX4 study. What we heard from the payer community, and we probably reached out to about 15 or so payers, mostly U.S.-based, is that it will be difficult to restrict access to this drug when approved for patients given that there is clearly nothing available and no alternatives used off-label to help these patients with FSHD. We also found that payers expect the pricing to resemble other rare disease drugs typically priced in the hundreds of thousands of dollars annually per patient. It's important to remind people that patients who start on this drug are likely to remain on it for extended periods. More than 85% of patients in the ReDUX4 study are still on the drug after three years. Once we get the REACH trial results, we'll conduct more significant payer research. Regarding the tailwind, one of the biggest ones we have is the requirement for a confirmed genetic test before drug approval. Only about 20% to 30% of patients currently receive this confirmed test. We assume payers will require it before approval. We are working to ensure that lack of testing does not become a hindrance to access for patients. We will be looking at partnerships with the FSHD society or offering genetic testing free of charge to patients. We're working through that right now.

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

Yes, great question, Greg, and thanks for asking it. We have begun building out our commercial organization. I expect that sometime in the third quarter of this year, we will announce the appointment of our Chief Commercial Officer. I told this individual during interviews that we will ensure we properly resource this launch. If ever there's a question of whether to fund it or not, we should always err on funding it. As Alan mentioned in one of the earlier questions, the runway guidance we provided assumes a properly resourced launch 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 had ever asked for more data around 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 re-running 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. 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 discussions with the agency. The focus has been on the endpoints, given that it's a functional endpoint, and the secondary endpoints are also functional or related to muscle health. We haven't received specific requests around that. We don't have specific plans to do so. The evidence we have from the original discovery of losmapimod and its characterization was done using muscle cells derived from patients with FSHD. You can convincingly perform the characterization of its effect on DUX4 and the downstream transcript in that in vitro system. Those data are robust and illustrate the mechanism of action 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? If it's a revision, what are some of the factors driving that faster cadence going from year-end to now end of October?

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

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. 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 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. 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, most importantly, to the patients 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.

Thank you for today's conference call. You may disconnect.