Earnings Call Transcript - FULC Q1 2022

Operator, Operator

Good morning and welcome to Fulcrum Therapeutics' First 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 now like to turn the call over to Naomi Aoki, Senior Vice President of Corporate Communications and Investor Relations at Fulcrum. Please proceed.

Naomi Aoki, Senior Vice President of Corporate Communications and Investor Relations

Thank you. Good morning and welcome to 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; Judy Dunn, our President of R&D; and Esther Rajavelu, our CFO. Chris Morabito, Chief Medical Officer; and Paul Bruno, our Executive Director of Corporate Development will also be available for Q&A. Let me run quickly through this morning's agenda. Bryan will begin the call with a corporate overview, key updates, and a review of upcoming milestones. Judy will review our FTX-6058 program, Esther will cover our financials, and then Bryan will open the call for Q&A. With that, it's my pleasure to turn the call over to Bryan.

Bryan Stuart, President and Chief Executive Officer

Thank you, Naomi. Good morning, everyone, and thank you for joining us today. At Fulcrum, our mission is to treat the root cause of rare genetic diseases and we are advancing two important clinical stage assets that support that mission. The first is our Phase 3 FSHD program that is positioned to be a first-to-market therapy for an untreated patient population. The second is our program for sickle cell disease and other hemoglobinopathies: a once-daily HbF inducer, with the potential to be the first oral therapy that can broadly improve outcomes for these diseases. We have made significant progress across these programs in the first quarter. I'll start with an update on FTX-6058, our oral HbF inducer for sickle cell disease and other hemoglobinopathies. 6058 shows great promise in addressing critical unmet needs in these patient populations. The current treatment landscape consists of therapies that only target select symptoms of sickle cell disease. HbF is the only mechanism that has been shown to broadly improve clinical outcomes, including anemia, VOC events, pain, fatigue, and acute chest syndrome. As the only agent in development with the potential to induce HbF, we believe that 6058 is uniquely positioned in the current and emerging landscape. In January, we announced that we had dosed our first patient in our Phase 1b trial at a starting dose of 6 milligrams. We plan to share initial data from the ongoing 6 milligram dosing cohort, including measures of HbF induction, at the European Hematology Association Congress taking place from June 9 through 12. We also plan to open the next dosing cohort in the Phase 1b trial this quarter, and we'll have more details to share on that cohort along with the data at EHA. Notably, this update will be the first look at HbF protein induction in people living with sickle cell disease receiving 6058. Based on data from other HbF mechanisms and the process of erythropoiesis, we would anticipate seeing signs of protein induction after one month of treatment, with potentially maximal protein induction at three to five months. As a reminder, our Phase 1b trial is an early proof of concept study that is designed to provide evidence over a range of doses that 6058 increases HbF. For this initial data, we would consider evidence of HbF induction as proof of concept for this program. Typically, people with sickle cell disease have HbF levels of 5% to 10%. However, a subset of people with sickle cell trait have additional mutations that result in elevated levels of HbF, a condition known as hereditary persistence of fetal hemoglobin. These individuals have little to no symptoms of sickle cell disease. These clinical and genetic data clearly demonstrate that increases in HbF improve outcomes. Based on this well-understood data, KOLs consistently state that an absolute 5% to 10% increase in the HbF baseline level beyond baseline levels would be transformative for patients and would be used as standard of care. Our robust preclinical data and our Phase 1 data in healthy volunteers give us reason to believe that we can achieve these absolute 5% to 10% increases that will be life-changing for people with sickle cell disease. We also believe that 6058 could be a transformative therapy for other hemoglobinopathies, including beta-thalassemia, and we are committed to developing 6058 in these patient populations as well. This morning, we updated the anticipated timing of the initiation of the trial in non-sickle cell hemoglobinopathies to the second half of the year. This shift in timing allows us to focus on expeditiously advancing our development plans in sickle cell disease, while remaining well-positioned to successfully execute a trial in other hemoglobinopathies. Moving on to losmapimod, our Phase 3 candidate for FSHD, which is the second most common form of muscular dystrophy. We remain on track to begin dosing patients in our Phase 3 REACH trial this quarter. As the first-ever Phase 3 trial in FSHD, REACH is a landmark study that brings us one step closer to delivering a potentially life-changing therapy to people with this severe and debilitating disease. Losmapimod is positioned to be the first-to-market therapy for FSHD and based on the data to date, we believe it has the potential to slow or stop disease progression and, in some cases, even improve function. REACH will evaluate losmapimod compared to placebo in adults with FSHD over a 48-week treatment period, with reachable workspace or RWS as the primary endpoint. The trial design reflects key learnings from the ReDUX4 Phase 2b trial, most notably that we can show a measurable clinical benefit in 48 weeks, and that RWS is a quantitative measure of function that is sensitive to disease progression in that timeframe. Based on these insights, and the data from ReDUX4 demonstrating clinical benefit, we aligned with regulators on key aspects of the design of REACH. In March, we presented data supporting RWS as a quantitative and relevant measure of function at the Muscular Dystrophy Association Clinical and Scientific Conference. That same month, we hosted an event with leading KOLs to discuss the unmet need in FSHD, key measures of disease progression, and the design of the REACH trial with a focus on RWS. Together with the FSHD Society, we also hosted a webinar on REACH for the patient community. Additionally, in April, at the American Academy of Neurology Annual Meeting, we presented clinical data supporting the potential of losmapimod and the design of REACH. We are proud of the progress that we have made with losmapimod. REACH marks an important milestone for Fulcrum and for the FSHD community. There are currently no approved drugs for FSHD and nothing else in the clinic. People with FSHD lose strength, function, independence, and mobility as the disease advances. There is an urgent need for a drug that can slow or stop disease progression. The data we reported last year from ReDUX4 demonstrate losmapimod's potential to do exactly that, showing delayed progression and improvement in measures of function. Losmapimod is also supported by an extensive safety and tolerability database. In addition to our progress with initiating REACH, we've also made significant gains in preparing for the potential of commercial launch. Beyond building internal infrastructure needed for success, we have progressed the commercial formulation of losmapimod. Additionally, we continue to engage with patients, care partners, and care providers to ensure losmapimod has the maximal potential to meet the community's expectations. 6058 and losmapimod, as well as our ongoing collaborations, are a testament to the power of FulcrumSeek, our product engine and the innovation backbone of our company. FulcrumSeek has allowed us to rapidly identify novel high-quality targets that modulate the root cause of rare genetic diseases, and it continues to power our pipeline. We remain on track to nominate our next development candidate by the end of this year, and submit what will be Fulcrum's fourth IND by the end of the first quarter of 2023. As we advance two potentially life-changing therapies through clinical development, while extending our pipeline, we are well-positioned to establish Fulcrum as a leading rare disease company supported with a strong financial foundation and a cash runway into 2024. With that, I'll turn it over to Judy.

Judy Dunn, President of R&D

Thank you, Bryan. As we look ahead to our data disclosure at EHA, I'd like to review our 6058 program for sickle cell disease and other hemoglobinopathies. Sickle cell disease is a genetic disorder of the red blood cells caused by a mutation in the HBB gene. It is the most common type of inherited hemoglobinopathy and affects an estimated 100,000 people in the United States and millions more worldwide. People with sickle cell disease experience anemia, vaso-occlusive crises or VOCs, and other serious morbidities such as stroke and acute chest syndrome. In addition to having a devastating impact on people's quality of life, these complications significantly increase the risk of dying from sickle cell disease. HbF induction is the only mechanism that has been shown to broadly improve outcomes for key symptoms of sickle cell disease. To build on Bryan's remarks about the transformative potential of HbF induction, consistent with the persistence of fetal hemoglobin data, numerous published analyses demonstrated that higher HbF levels lead to better clinical outcomes. A systematic review of the literature shows that increases in HbF of 3% to 7% are associated with fewer VOC events, strokes, hospital admissions, and transfusions, fewer incidences of acute chest syndrome, and decreased risk of mortality. These data support the view that we consistently hear from KOLs that increases of 5% to 10% fetal hemoglobin over baseline would be transformative for people with sickle cell disease. As the only oral HbF inducer in the clinic, we believe that 6058 has a tremendous opportunity to address the unmet medical need for better treatment options for people with sickle cell disease. We discovered 6058 using our FulcrumSeek product engine pre-clinically across multiple in vivo and in vitro assays, 6058 generated a consistent two to three-fold induction in HBG mRNA that translated into the same fold induction in HbF protein. Last year, we transitioned to the clinic and announced positive Phase 1 healthy volunteer data that demonstrated robust increases in HBG mRNA at multiple doses. 6058 was also generally well tolerated. We are now dosing people with sickle cell disease long enough to observe increases in HbF protein. As a reminder, the Stage 1b study is designed to have up to three dosing cohorts to allow us to explore a range of doses and identify the optimal dose to take into a registration enabling trial. We are currently dosing patients within the first dosing cohort at a 6 mg once daily dose. The data we are presenting at EHA in June will be initial data from a small number of subjects enrolled in this cohort and will include measures of HbF protein. For these initial data, we are looking to see evidence of HbF protein induction, which would provide proof of concept for this program. We expect to open our next dosing cohort in the Phase 1b trial this quarter, and we'll share additional details on that cohort along with the data update at EHA. We're pleased with the progress we've made in advancing both 6058 and losmapimod, both potentially life-changing therapies for populations with significant unmet medical needs. And with that, I'll turn it over to Esther.

Esther Rajavelu, CFO

Thanks, Judy. Today I will share with you an update on our financials. We are operating from a position of financial strength, ending the first quarter with $195.1 million in cash, cash equivalents, and marketable securities. Based on our current plans and projections, we expect this will support our operations into 2024. During the first quarter of 2022, we recognized collaboration revenue of $2.6 million, compared to $4.8 million during the first quarter of 2021. This decline is primarily tied to reduced research services we provided to our collaboration partners this quarter. First quarter 2022, research and development expenses were $17.8 million, compared to $16.3 million for the first quarter of 2021. G&A expenses were $10.8 million this quarter, compared to $5.5 million for the first quarter of 2021. These increases were primarily due to the advancement of our clinical programs, as well as increases in employee-related expenses to support our growth. Our net loss for the first quarter of 2022 was $28.9 million, compared to a net loss of $17 million for the first quarter of 2021. With that, I'll turn it back to Bryan.

Bryan Stuart, President and Chief Executive Officer

Thanks, Esther. As you have heard today, the first quarter of 2022 has been a productive one for Fulcrum. And we have even more to look forward to as we continue to advance our promising programs in FSHD, sickle cell disease, and other hemoglobinopathies, as well as to leverage FulcrumSeek to build out our pipeline. We look forward to sharing additional key updates later this quarter. Operator, you may now open the line for questions.

Operator, Operator

Thank you. Your first question comes from Judah Frommer from Credit Suisse. You may go ahead.

Judah Frommer, Analyst

Hi, thanks for taking the question and good morning. Just a couple. First, is there any way you can give us some kind of enrollment update for the first cohort of the 6058 Phase 1b and an idea potentially how many patients we can get data on at EHA that have been dosed out to 12 weeks? And then, on the second cohort, can you remind us of key considerations you'll have in terms of deciding whether you'll dose higher or lower in that cohort and what the read-throughs might be from that?

Bryan Stuart, President and Chief Executive Officer

Thanks for the questions, Judah. So why don't I turn it over to Chris who can speak to both of those, one that the first question on enrollment and the second question, just on the additional dosing cohorts and how we're thinking about that as we move forward here with the 1b.

Chris Morabito, Chief Medical Officer

Hi, Judah. Thanks for the good questions. So as you know, we are currently in the Phase 1b trial dosing the first cohort at six milligrams. And just to give you a reminder, the six milligram dose was selected based on the data that we developed in the Phase 1 trial in healthy volunteers, which showed that after just two weeks of dosing, we saw a 2.5-fold increase in HBG mRNA, which currently translates into what has the potential to be robust increases in patients that are dosed long enough. So the Phase 1b data that we're excited to share data on at EHA coming up in just a few weeks will be an update on initial patients from that cohort that have been treated in accordance with protocol. And as you remember, the protocol allows for the primary analysis of one month, which gives us flexibility in determining using data dosing decisions. I'll answer your next question in a second. And then out to three months, which should give us a sense about what the ultimate potential of this drug is. And before I answer the second question, the purpose of this study is early proof of concept, to give us a sense that we are translating HBG mRNA into protein, which ultimately has tremendous potential therapeutic benefit as Judy and Bryan both went through. It's also to provide us information about dose. And it should give us information about a range of doses and their effects on HbF, and people with sickle cell disease. So when we think about the next dose cohort and what that dose is, number one, we want to make a data-driven decision. So we will be looking at not only the healthy volunteer data but incoming data from the 1b study to inform our modeling and simulation. We will be looking at events, if any; we will be looking at how well patients enroll feeling about the drug and make a decision based on what the dose can be. And to remind you, we have the ability to go up or down with the next cohort. And the dose range for the next cohort, as stated, is between two and 20 milligrams.

Operator, Operator

And your next question comes from the line of Dae Gon Ha from Stifel. Your line is open.

Dae Gon Ha, Analyst

Hey, good morning, guys. Thanks for taking our questions. Maybe I'll just piggyback off of the 6058 question as well. So when we think about the data upcoming, I guess, in your prepared remarks, you talked about the 5% to 10% absolute improvement from baseline being transformative. But you also talked about two to three-fold induction seen pre-clinically. So can you maybe help us sort of set expectations going into EHA? Is it 5% to 10% or is it two to three-fold induction recognizing baseline levels could be somewhat variable? And then, just to follow-up on that, kind of curious on your third dose cohort. I know you have the optionality for that; you've been talking about cohorts 1 and 2 for now. So what would it take for you to consider, I guess, opting into cohort number 3? Thank you very much.

Bryan Stuart, President and Chief Executive Officer

Thank you for the question, Dae Gon. I'll address the first part, and then Chris Morabito will handle the dosing aspect. Firstly, as we have mentioned and as Judy noted earlier, given the strong data from individuals with hereditary persistence of fetal hemoglobin and the consistent insights we receive from key opinion leaders, we believe that achieving a 5% to 10% absolute increase in HbF would result in a transformative therapy that could be adopted as a standard treatment. This remains our objective for the program. As we approach the initial data, as Chris mentioned, our primary aim is to observe increases in HbF protein levels. Also, it's worth noting that when we shared our Phase 1 healthy volunteer data last year, we were dosing healthy individuals for only 14 days, which was too short a period to demonstrate that change. Our priority is to confirm that we are indeed increasing HbF. Additionally, we need to establish a clear pathway to achieve that 5% to 10% absolute increase. Our therapeutic goal remains unchanged. We have consistently reported two to three-fold induction in mRNA and protein levels in preclinical assessments, which is encouraging as we move towards patient data. However, as we start working with patients, it's essential to note that we report these fold increases because the assays use different baseline levels. Previous clinical trials and literature indicate that individuals living with sickle cell disease typically have baseline levels around 5% to 10%. Going forward, we will concentrate on the absolute increases in protein, as this aligns with the interests of clinicians and key opinion leaders regarding the data. Now, I’ll hand it over to Chris to discuss dosing.

Chris Morabito, Chief Medical Officer

Yes, hi Dae Gon. As Bryan mentioned, we're looking for data that support the path forward towards establishing what the therapeutic benefit of this drug is. And ultimately, that will be defined in the Phase 2 trial that we initiate, which we intend to be a pivotal trial. In order for us to get to that pivotal trial as fast as possible, we're doing this 1b over multiple cohorts. And to answer your question specifically about the third cohort, we'll make a data-driven decision if we have enough data after just two cohorts to inform the dose selection for the Phase 2 trial. If we need more data, we'll open up that third cohort.

Dae Gon Ha, Analyst

All right. If I can just maybe follow up on the preclinical data, just looking back at CTX001, there was a translational gap going from preclinical two to three-fold induction into what they're seeing in the clinic today, which is pretty phenomenal. Maybe a question for Paul, is there a translational gap that we should also expect with EED inhibition? Or is that not so much the case given the guide RNA versus EED inhibition mechanistic difference? Thanks again. Bye.

Paul Bruno, Executive Director of Corporate Development

Yes, thanks Dae Gon. So I mean, based on all the preclinical data that we generated to date, what I would say is for all of the HbF mechanisms that we've profiled, the way that it translates to the clinic is either the same level of induction or greater. So you know, there's always the potential, we could potentially see greater induction as we translate into the clinic. But we'll need to see what that looks like based on the emerging clinical data. And as Bryan alluded to earlier, while we're focused on the two to three-fold induction and the possibility for us to translate to greater levels in the clinic, what we're hearing from the KOL is that what we're seeing from emerging gene therapy data and from our FLR data suggest that a 5% to 10% increase over baseline levels would be transformative.

Operator, Operator

Your next question comes from the line of Ed Tenthoff from Piper Sandler. Your line is open.

Ted Tenthoff, Analyst

Great, thank you very much. And thanks for the very clear guidance and expectations on 6058. Just to switch it up a little bit on after REACH. What are your expectations for enrollment? How quickly do you think that study could enroll? Thanks.

Judy Dunn, President of R&D

Hi, Ted. In terms of when we think about REACH, what we know is the data that we have already collected from our vast experience with the ReDUX4 trial, as well as how we are hearing from patients and people who treat FSHD in terms of their enthusiasm for REACH. So we are confident that we have a great runway to a reasonable time for enrollment. And in fact, as you know, we're not doing an interim analysis in this program, primarily because we think that the enrollment fee will be such that we don't want to slow down the program. And so we think our timeline will be very reasonable, and perhaps better than the timeline or the rate of enrollment that we had on the initial ReDUX4 trial, primarily because of the enthusiasm that the patients and clinicians have based on the ReDUX4 data.

Operator, Operator

Your next question comes from the line of Joseph Schwartz from SVB. Your line is open.

Joseph Schwartz, Analyst

Great, thanks so much. I was wondering if you could frame out for us how much data we should expect for 6058 in EHA in June, in terms of like the number of patients and the duration of therapy? And then, how will you be reporting and interpreting data for different patients treated for different durations? Have you thought about the kinds of analyses that you'll be presenting? And how confident are you that you'll be able to interpret them? Clearly, just given the numbers, the different numbers, and perhaps low numbers of patients at different durations?

Bryan Stuart, President and Chief Executive Officer

Sure. Thanks for the question, Joe. Let me turn it over to Chris who can speak broadly about expectations for EHA, how we're thinking about this initial dataset.

Chris Morabito, Chief Medical Officer

Yes, Joe, it's Chris. So as mentioned before, we are showing initial data from the 6 milligram cohort. And the treatment duration is up to three months for those cohorts, which we expect to be able to provide a meaningful suggestion of the clinical benefit of 6058 in terms of its ability to increase HbF. We haven't guided specifically as to what we will show at EHA, and we look forward to being able to share those data at EHA. But we do intend to show what we think is a meaningful increase in HbF, informed by other clinical parameters and laboratory values that suggest the potential for therapeutic benefit in these patients.

Joseph Schwartz, Analyst

Thank you. Regarding the execution of the REACH trial, could you provide insight into how patient enrollment might impact the pace of the trial compared to the setup of the sites, especially considering the specialized procedures needed for patient evaluation? Which aspect do you believe will require the most effort for successfully executing REACH: site activation or patient enrollment? Thank you.

Bryan Stuart, President and Chief Executive Officer

Yes, thanks for the question, Joe. So in terms of REACH, I think one of the things that Judy alluded to is that we were very encouraged based on what we saw last time in our ReDUX4 Phase 2b trial. And just a reminder, that was 80 subjects. It was one of the largest trials ever done in FSHD, and I think in the rare disease space, there's always a question of how quickly can enrollment take place. And as Judy mentioned, there is such unmet need in FSHD, it's the second most prevalent form of muscular dystrophy. Not only is there nothing else approved, but there's not anything else even in the clinic. And as a result of that, and I think the enthusiasm for the program, the ReDUX4 trial was able to enroll very quickly with 80 subjects. So as we transition now to the Phase 3, and we think about that, both finding additional subjects for the trial, as well as, like you said, site activation, we're really able to leverage the success from ReDUX4 for both. So we're able to go back and utilize some of the same sites from ReDUX4 plus add additional sites. And unfortunately, for people living with FSHD, the dynamics haven't changed. Since we ran ReDUX4, there are no other therapeutic alternatives, there are no other programs in the clinic. So we think as a result of both of those, we will have a very clear path towards enrollment. And as that progresses, we intend to provide an update on both when enrollment should complete and when data should be available.

Operator, Operator

Your next question comes from the line of Matt Biegler from Oppenheimer. Your line is open.

Matt Biegler, Analyst

Hey guys, thanks for the questions. Two quick ones for me. We obviously talked a lot about HbF and precedents for protein expression, just in the development of sickle cell drugs. But something that I don't think gets talked about as much but probably should are benchmarks for positive cells. Are there any precedents that you can point to for the degree of pan-cellularity that you'd like to achieve for 6058 that could have meaningful downstream impacts on things like VOC? And second just a quick one in terms of can you tell us the actual data cutoff that will be included in the EHA presentation? Thanks.

Bryan Stuart, President and Chief Executive Officer

So why don't I turn it over to Paul, who can talk about pan-cellularity, including what we observed pre-clinically, which I think we find very encouraging. And then to turn it back over to Chris for EHA.

Paul Bruno, Executive Director of Corporate Development

Thanks, Bryan. Yes, in terms of upsells, the measurement itself is somewhat subjective; it's a little hard to compare across different studies. One thing I will note is that the greater the pan-cellularity, the greater that translation of potential clinical benefit. As Bryan alluded to in pre-clinical, we see very high levels of that cells near 100% pan-cellularity in our preclinical assays. Our hope is to see how that translates in the clinic as we are collecting endpoints to inform on that.

Chris Morabito, Chief Medical Officer

Yes, Matt, your second question is about data cutoffs. As mentioned, we're going to provide initial data on the six milligram cohort. We haven't guided specifically as to what we're going to show, but we intend to show data that should provide proof of concept, really proof of concept for 6058 in people with sickle cell disease.

Operator, Operator

Your next question comes from the line of Matthew Harrison from Morgan Stanley. Your line is open.

Unidentified Analyst, Analyst

Hi, thanks for taking our question. This is Matthew's colleague. We're curious about your confidence in starting a pivotal study for 6058 in early 2023, considering you're still determining the best dose and haven't finalized the second cohort's dosage. You're also planning for a third cohort with potential data-driven analysis. How did you establish the early 2023 timeline?

Bryan Stuart, President and Chief Executive Officer

Yes, absolutely, and you're right, our goal and I think as we've stated all along that if we're able to see robust HbF increases, our goal is to transition into a registrational trial as early as possible in 2023. We do believe that that is consistent with what we're hearing from the KOL that this would be a drug because of the benefits of HbF that would be broadly utilized and has the potential to be standard of care. Let me turn it over to Chris, who can talk about how we're thinking about the Phase 1b trial, looking at the different doses really in order to support that and to support the transitioning into a registrational trial, with as few doses as is feasible.

Chris Morabito, Chief Medical Officer

Agreed. We are currently doing everything we can to prepare for the study starting in 2023. Based on the strong preclinical and early clinical data from healthy volunteers, we expect to demonstrate early proof of concept. The next step will be determining the appropriate dose. Between now and the first patient in the Phase 2 trial, we will collect data to inform dose selection. We are manufacturing the drugs, initiating discussions with sites, and engaging with patients and their care partners to ensure we are ready to start the trial as soon as possible, so that our infrastructure is in place, and we can focus on selecting the dose.

Operator, Operator

Thank you. This concludes the Q&A session for today. I would like to turn the call over to Bryan Stuart for closing remarks.

Bryan Stuart, President and Chief Executive Officer

Thank you so much. Thanks, everybody, for joining us today. And we appreciate the continued support of Fulcrum. Have a great day.

Operator, Operator

This concludes today's conference call. You may now disconnect.

Naomi Aoki, Senior Vice President of Corporate Communications and Investor Relations

Goodbye.