Earnings Call Transcript - FULC Q4 2021

Operator, Operator

Good morning and welcome to Fulcrum Therapeutics' Fourth Quarter and Full-Year 2021 Conference Call. Currently, all participants are in 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 Christi Waarich, Director of Investor Relations at Fulcrum. Please proceed.

Christi Waarich, Director of Investor Relations

Thank you, operator. Good morning and welcome to the Fulcrum Therapeutics conference call. Please be reminded that remarks made during this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These may include statements about our future expectations and plans, clinical development timelines, and financial projections. While these forward-looking statements represent our views as of today, they should not be relied upon as representing our views in the future. We may update these statements in the future, but we are not taking on an obligation to do so. Please refer to our most recent filings with the Securities and Exchange Commission for a discussion of certain risks and uncertainties associated with our business. With me on today's call are Bryan Stuart, President and Chief Executive Officer; Judy Dunn our President of R&D; and Esther Rajavelu, our CFO. Chris Morabito, our 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 and key updates. Judy will review our FSHD program and today’s update on the Phase 3 trial, and Esther will cover our financials, while Bryan will open the call for Q&A. With that, it's my pleasure to turn the call over to Bryan.

Bryan Stuart, CEO

Thank you, Christi. Good morning everyone and thank you for joining us today. At Fulcrum, our mission is to treat the root cause of rare genetic diseases. 2021 was a year of important clinical and corporate progress towards that mission and we are building our momentum in 2022 with meaningful updates across our pipeline. I’ll start with losmapimod, our candidate for FSHD, which is the second most common form of muscular dystrophy. We believe losmapimod is positioned to be the first to market therapy for this severe and debilitating disease. Today, we announced our plan to begin enrolling people with FSHD in REACH, our registration enabling Phase 3 clinical trial in the second quarter of 2022. 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 study, 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, including the FDA on RWS as the primary endpoint. The upcoming start of our Phase 3 trial marks a significant milestone for both Fulcrum and the FSHD community. There are currently no approved drugs and nothing else even in the clinic. People with FSHD suffer from progressive weakness, loss of function, independence, and mobility as the disease infiltrates their muscles. 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 measuring function including RWS. We are thrilled to be one step closer to bringing this important therapy to patients. Our second clinical program, FTX-6058, an oral HbF inducer for sickle cell disease and other hemoglobinopathies shows great promise in addressing important unmet needs in these patient populations. The current treatment landscape in sickle cell disease consists of therapies that only target select symptoms. HbF is the only mechanism that has been shown to broadly improve outcomes for key symptoms of sickle cell disease such as VOC events, pain, fatigue, and acute chest syndrome. A robust body of genetic data shows that increases in HbF in every patient are meaningful. Emerging clinical data from gene editing further supports the benefit of HbF induction, but in the case of gene editing, it comes with a tremendous treatment burden making it most likely to be used as a salvage therapy. We discovered FTX-6058 using our FulcrumSeek product engine. Pre-clinically, across multiple in vivo and in vitro assays, FTX-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. These data gave us confidence to advance FTX-6058 into our ongoing Phase 1b study, where we will be dosing people with sickle cell disease long enough to observe protein increases. Typically, people with sickle cell disease have starting HbF levels of 5% to 10%. As we’ve spoken to KOLs, we have consistently heard that a 5% to 10% increase in HbF beyond baseline levels would be transformative for patients and would be utilized as standard of care. We are highly encouraged that our robust preclinical data and Phase 1 healthy volunteer data predict that we can achieve these absolute increases that will be life changing for people with sickle cell disease. In December, we began enrolling the Phase 1b trial at a starting dose of 6 milligrams daily. We are on track to report initial data, including HbF protein levels in the second quarter of this year. This update will be the first look at protein data in people with sickle cell disease. Based on data from other HbF mechanisms and the process of erythropoiesis, the earliest we would anticipate seeing protein induction would be after one month of treatment, with maximum protein induction at 3 months to 5 months. For this initial data, in Q2, we would consider evidence of protein induction to be a very meaningful update. We also believe that FTX-6058 could be a transformative therapy for other hemoglobinopathies, such as beta-thalassemia, and we are on track to initiate a Phase 1b trial in the second quarter. FTX-6058 and losmapimod, as well as our ongoing collaborations with Merck and BMS 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 to modulate the root cause of genetically defined rare diseases. Notably, we expect to nominate our next development candidate by the end of this year and submit an additional new IND by the end of the first quarter of 2023. As we advance two potentially life-changing therapies through clinical development, expand our pipeline, scale up our discovery efforts, while building downstream clinical and commercial capabilities, we are well positioned to build a leading rare disease company supported with a strong financial foundation and a cash runway that takes us into 2024. With that, I'd like to turn it over to Judy to share more about our plans for losmapimod that we announced this morning.

Judy Dunn, President of R&D

Thank you, Bryan. FSHD is a genetic disorder that leads to relentlessly progressive muscular degeneration and replacement by fat. This disease initiates in the face and progresses to upper and lower limbs and core, leading to loss of function and ultimately the loss of independence. Losmapimod represents a potentially life-changing therapy for people living with FSHD. This mechanism inhibits the average expression of DUX4, the genetic root cause of FSHD responsible for the muscle degeneration, fat infiltration, and loss of function. As Bryan mentioned, currently, there are no approved therapies nor are there any other compounds in clinical development. Each day that people with FSHD go without therapy is another day that they risk losing strength, function, and the ability to perform basic activities, like brushing their hair, dressing themselves, or holding their child. This accumulation of disability can lead to loss of independence and mobility. We consistently hear from patients that their number one concern and requirement for a new therapeutic is to safely slow or stop disease progression in order to preserve the function that they have. Our Phase 2b trial ReDUX4 demonstrated that losmapimod slowed disease progression and improved function in people with FSHD. These data combined with the extensive safety and tolerability data generated in more than 3,600 people form the basis of losmapimod’s very compelling benefit-risk profile as an oral medication with the potential to address the urgent need for therapy in this patient population. ReDUX4 was the most comprehensive therapeutic trial ever conducted in FSHD. We gained tremendous insights on relevant clinical endpoints, as well as an understanding of the duration of time needed to show the impact of losmapimod on disease progression. We have applied those insights to the design of our Phase 3 trial REACH, giving us confidence that REACH is optimized to demonstrate statistically and clinically significant benefits of losmapimod in FSHD. Given the urgency to bring the therapy to market, we have been preparing for this trial and engaging with patients, experts, and regulators to inform our final design. We are pleased to report that we are on track to begin REACH shortly in the second quarter of this year. Before further describing REACH, I want to briefly highlight our learnings from ReDUX4 that informed our thinking about this Phase 3 design. ReDUX4 was a randomized placebo-controlled study that evaluated 80 people with FSHD over 48 weeks. In this trial, participants received either 15 milligrams of losmapimod twice daily or placebo. We were very encouraged by results from ReDUX4 in which a meaningful separation between treatment effects was observed in people receiving losmapimod versus those receiving placebo. Importantly, we saw clinically meaningful impacts on function, muscle structure, and patient-reported outcomes. Data from the trial also allowed us to identify endpoints that are sensitive to disease progression and drug effects in that timeframe. Starting with Reachable Workspace, a measure of accessible relative service area, we saw clinically relative improvements from baseline in the dominant arms of those treated with losmapimod, while those on placebo lost relative surface area over the course of the trial. Relative service area, including reaching above the shoulders and behind the back as measured by Reachable Workspace is highly correlated to the ability to perform activities of daily living and maintain independence. Using MRI, we also observed the slowing of muscle fat infiltration or MFI, an important marker of disease pathology. Muscles that already had some fat infiltration at baseline are the muscles most likely to demonstrate disease progression over 48 weeks. In these muscles, losmapimod showed a meaningful slowing of MFI compared to placebo. Losmapimod also preserved the health of muscles, which appeared normal at baseline, essentially stopping muscle fat infiltration, while patients on placebo worsened. Finally, in this trial, self-reported outcomes such as the Patient’s Global Impression of Change or PGIC were used to assess the recognized value of the treatment. At the end of the 48-week treatment period, people who received losmapimod reported feeling better than those who received placebo. Based on the ReDUX4 data, we engaged with regulators, including the FDA to gain feedback on the proposed design of the REACH study. Based on those interactions, we have selected Reachable Workspace as the primary endpoint for REACH. We have now finalized our trial design and are working to operationalize REACH. REACH will be a randomized double-blind placebo-controlled multinational trial to evaluate the efficacy and safety of losmapimod for the treatment of FSHD. The trial is expected to enroll approximately 230 adults. Participants will be randomized one-to-one to receive losmapimod administered orally as a 15 milligram tablet twice a day or placebo over a 48-week treatment period. The primary endpoint of this study is the absolute change from baseline in Reachable Workspace. As I outlined earlier, Reachable Workspace is a quantitative measure of upper extremity range of motion and function that specifically evaluates shoulder and proximal arm mobility with 3D motion sensor technology. Preserving this upper extremity function is critical for maintaining the ability for self-care and other activities of daily living that directly influence quality of life and independence. In addition to safety and tolerability, secondary endpoints include MFI, PGIC, and quality of life in neurological disorders for the Neuro QoL of the upper extremities. REACH will also include healthcare utilization questionnaires that will help inform our thinking about payer strategies as we prepare for a potential commercial launch. We are confident that we have selected reliable measures of disease progression in FSHD and that we will be able to clearly observe meaningful advantages for losmapimod compared to placebo after 48 weeks of treatment. As we advance REACH, we remain steadfast in our commitment to deliver a transformative drug for people with FSHD. As we announced this morning, we will be featuring two key opinion leaders in a virtual event hosted by Fulcrum on Thursday, March 24 from 10:00 A.M. until noon Eastern Time. We will be joined by Dr. Nicholas Johnson of the Department of Neurology at Virginia Commonwealth University; and Dr. Jay Han of the University of California, Irvine, one of the originators for Reachable Workspace as an endpoint. We look forward to sharing more about the unmet need in FSHD and REACH, and how losmapimod is well-positioned to be the first drug for people with FSHD. With that, I'll turn it over to Esther Rajavelu.

Esther Rajavelu, CFO

Thank you, Judy. I'm thrilled to be here today as part of the Fulcrum team and to share with you an update on our financials. We are operating from a position of financial strength ending the fourth quarter with 218.2 million in cash, cash equivalents, and marketable securities. Based on our current plans and projections, we expect this will fund our operations into 2024. During the fourth quarter of 2021, we recognized collaboration revenue of 5.1 million, compared to 4.2 million in the fourth quarter of 2020. The increase was primarily due to revenues associated with the milestone payment under our collaboration with Bristol. For the full year 2021, collaboration revenue was 19.2 million, compared to 8.8 million in 2020. This increase was due to the execution of the collaboration and license agreement with Bristol in July 2020, as well as an increase in revenue recognized under our collaboration with Merck. R&D expenses for the fourth quarter of 2021 were 18.9 million, compared to 16.1 million for the fourth quarter of 2020. R&D expenses for the full year 2021 was 69.7 million, compared to 59 million for the full year 2020. This increase was primarily due to the advancement of our clinical programs. G&A expenses in the fourth quarter of 2021 were 9.7 million, compared to 5.9 million for the fourth quarter of 2020. And for the full year 2021 were 30.5 million, compared to 21.4 million for the full year of 2020. This increase was primarily due to increased employee-related expenses and preparation for potential commercial launches of losmapimod for FSHD and FTX-6058 for sickle cell disease. Finally, our net loss for the fourth quarter of 2021 was 23.5 million, compared to a net loss of 17.7 million for the fourth quarter of 2020. Our net loss for the full year 2021 was 80.8 million, compared to a net loss of 70.8 million for the full year 2020. With that, I'll turn it back to Bryan.

Bryan Stuart, CEO

Thanks, Esther. As you've heard today, 2021 was a year of tremendous progress 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, and continue to build out our pipeline. We look forward to keeping you up to date on our progress throughout the year. Operator, you may now open the line for questions.

Operator, Operator

Thank you. The first question is from Dae Gon Ha with Stifel.

Dae Gon Ha, Analyst

Great. Good morning guys. Congrats on all the progress. I guess two on 6058 and one on FSHD. One, just going back to 6058, I recall you guys were doing a chronic tox study, preclinical chronic tox for the 6058 program. So, anything you can comment with regards to its progress, any signs or observations you've made, things like CPK for example? And then second question is, last month, you mentioned Cohort 1 is still enrolling for the 6058 program. So, can you comment on the rate of patient enrollment to the study given three sites are currently active and recruiting? And what's the cadence of readout investors can expect for the remainder of 2022, including the second quarter update? And then I'll just follow up with the REACH study question next.

Bryan Stuart, CEO

Yes. Absolutely. Thanks Dae Gon. Why don't I turn it over to Chris, we can give an update on the talks, which we had provided earlier this year, and then also talk about the guidance that we've provided for the 2Q update from the Phase 1b study.

Chris Morabito, Chief Medical Officer

Great. Hi, Dae Gon. Thanks for the question. So, as we reported, we have completed three-month toxicology studies and the results provided us with continued encouragement to continue pursuing clinical development as planned. We made no changes to our development plans based on the results from the two-month studies. We have entered chronic toxicology studies. We don't have any updates on that and no new findings to share at this point. Regarding your comments about CPK or creatine phosphokinase, we did see two unrelated events in Phase 1, but both of those cases were well after the last Phase dosing, in fact, 7 to 10 days after the last date of dosing, and they were deemed to be unrelated by the primary investigator who was overseeing the study treatment. So nothing new on that front. In regard to the Phase 1b trial, it is enrolling as you well stated. We have initiated enrollment sites and are actively recruiting additional sites as you also noted. The current dose is 6 milligrams and patients are anticipated to participate in this trial for up to three months. We have planned for up to 10 patients in each cohort. We are still in cohort 1 and we are certainly on track to provide an update in Q2 that will be meaningful for HbF and for other endpoints that are relevant to this trial.

Dae Gon Ha, Analyst

Okay, great. Thanks for the update. So, just pivoting to the REACH study, maybe a question for Judy or Chris. Can you talk about the powering assumptions baked into the Reachable Workspace that's going to be the primary endpoint? And notably following the discussions with the regulators, have you made any changes or updates to how you're going to quantify Reachable Workspace, I believe it was using the connect device previously, but any updates on that front? Thank you and congrats on all the progress.

Bryan Stuart, CEO

Yes. Thanks, Dae Gon. Why don't I turn it over to Judy and we could speak to at a high level our strategy as it relates to powering, and we can also talk a little bit more about Reachable Workspace and what we were able to observe in ReDUX4 as well.

Judy Dunn, President of R&D

Thanks, Dae Gon. Really appreciate the opportunity to talk about Reachable Workspace and how we are thinking about it for the REACH trial. As you know, in ReDUX4, we were able to show not only statistical significance, statistically significant values, but a p-value of less than 0.05 on REACH and on RWS. The RWS itself is a very important endpoint for us because it is quantitative. When we talk about FSHD, we're talking about the loss of function due to muscle degeneration, and this function really does impact activities of daily living. So, in the ReDUX4 trial, we were able to really understand the sensitivity of the Reachable Workspace scale and also understand the statistical implications, which you've asked about. When we met with regulators, we had a number of conversations that were very collaborative and we understood that what we were trying to achieve in looking at losmapimod’s ability to slow the disease progression and maintain function. What the regulators recognized was that Reachable Workspace is a functional endpoint and they were really supportive of our ability to use that as a primary endpoint in the REACH study. When we talked about powering, we are powering for a difference between placebo and losmapimod at week 48 on REACH and the power of the study is over 90% to detect a difference, which we believe is clinically meaningful.

Operator, Operator

And our next question comes from Joseph Schwartz with SVB Securities.

Joseph Schwartz, Analyst

Thanks very much. And let me also add my congrats on the progress you're making. So, I was just also, I have a question on FSHD first, and then 6058. In terms of the REACH study, given it's much larger than ReDUX4, but it seems to not require biopsies, I was wondering if you could talk about the push and the pull in terms of the cadence of enrollment that you expect, and when do you think you could achieve full enrollment and report data from REACH? And then also a timing question on 6058, the Phase 1b data in the second quarter, when should we expect you to report this data? I'm curious because it seems like the effect is not only dose dependent but time-dependent. I'm wondering if it's logically expected in the later part of the second quarter? So that way you can see the experience in patients treated for a longer period of time?

Bryan Stuart, CEO

Sure. Yes, thanks for the questions, Joe. And maybe I'll take the first question on FSHD and then turn it over to Chris Morabito for the second question. So, regarding REACH, we really wanted to build on our experience from the ReDUX4 trial that we previously conducted. I think one of the things that's very interesting about this particular disease, FSHD, is unfortunately, there are no approved therapies. It's such a progressive and devastating disease that when we enrolled in the Phase 2b trial ReDUX4, there was tremendous interest and enthusiasm from the patient community about a potential treatment. As a result, we were able to enroll that trial relatively quickly, faster than expectations. We ended up enrolling more patients than we anticipated, and that was due to this unmet need and the size of the patient population. So, as we transition here into the REACH trial, while we haven't provided guidance yet on exact timing, I think we continue to believe in here that the patient community is extremely enthusiastic about the opportunity to get involved in a registration trial for potentially the first treatment for FSHD. Why don't I turn it over to Chris, and we can talk more about the guidance for the sickle update.

Chris Morabito, Chief Medical Officer

Yes, hi, Joe. Thanks. So, we are on track to provide this guidance in Q2. The goal of that guidance is to provide a meaningful update specifically on HbF, the change from baseline in HbF, which we believe tightly correlates with clinical outcomes in patients. As you know, this is a 3-month trial. The participants can participate for up to three months of treatments. The longest treatment duration that we're going to have in any individual is up to 3 months. I think you're correct in your assumption that the data have shown that the effects of FTX-6058 are time-dependent and dose-dependent. We are seeing significant increases in HBG or HBG mRNA at 2 weeks, and we believe those will translate into HbF protein. The range of increase goes from 2.5-fold from baseline to up to 6-fold from baseline, and that's just in two weeks. The data actually hadn’t plateaued by two weeks, so it's possible that we haven't seen the maximum increase yet. We will dose out to three months and we want to have a number of patients with 3-months of data to provide substantial information about the absolute increase in HbF, and when we have those data in Q2, we'll be able to share them more publicly.

Joseph Schwartz, Analyst

Great. Thanks for the color.

Operator, Operator

Your next question comes from Matthew Harrison with Morgan Stanley.

Matthew Harrison, Analyst

Great. Good morning. Thanks for taking the question. I guess two for me. So, first on 6058, Bryan, could you just maybe contextualize the comment you made at the beginning of the call? And I just want to make sure, how you're trying to set expectations around the data we can expect? I believe you said something to the effect, given the amount of time required to get to peak protein production that you would view any amount of protein as a positive signal. Can you just help people think about the message you were trying to convey with that? And then I guess second, just on REACH, can you just talk about how much that trial is going to cost and how you think about allocation of capital to that program versus some of the rest of the programs? Thanks very much.

Bryan Stuart, CEO

Yes, sure Matthew. So, I think in terms of 6058, as we've indicated, our therapeutic goal is to see a two to three-fold increase in HbF. One of the things that's very encouraging is that those are the levels of both mRNA and protein that we observed preclinically. As we transitioned into the clinic, that was consistent with what we saw in the Phase 1 healthy volunteer trial. We come at this from a position of tremendous strength. There's ample human genetic data that clearly demonstrates the benefit of increasing HbF. This is extremely well understood by the community, and as we talk to clinicians and ask what would it take for this to be a transformational therapy, we consistently hear back that these 5% to 10% absolute increases would be transformative for patients. Looking towards this Phase 1b update, we hope to begin to see robust increases in HbF, to further reinforce our conviction in the potential to achieve levels that will be transformational for patients. As Chris mentioned, there are elements of dose and time dependency, but our hope is certainly that three months will be a sufficient duration to see robust increases in HbF. Why don't I turn it over to Esther, and we can discuss capital allocation for the REACH study.

Esther Rajavelu, CFO

Yeah. Thanks, Matt. So, we plan to initiate the Phase 3 REACH trial in the second quarter of 2022, and the trial, as Judy mentioned, will enroll about 230 patients. We demonstrated in our Phase 2b ReDUX trial that we enrolled very efficiently and in a timely manner because we have a strong network of relationships with the FSHD Patient Communities and know the treatment providers for this disease. Now, for the Phase 3 REACH trial, we're well-positioned with insights gained from the ReDUX4 trial to continue to be cost-effective. The guidance for our cash runway incorporates the cost of this trial. Another important point to keep in mind is that losmapimod could potentially be the first to market therapy for this untreated patient population. As we look at the unmet need in this indication, we believe the investment in this program will have a meaningful impact on the patient community.

Matthew Harrison, Analyst

Thanks very much.

Operator, Operator

Thank you. Your next question comes from Judah Frommer with Credit Suisse.

Judah Frommer, Analyst

Hi, good morning. Thanks for taking the question. First on 6058, can you comment on the enrollment timelines? There are several modalities recruiting in terms of SCD clinical trials and the timing doesn't always align, but is there any feedback from patients or investigators regarding enrollment for your trial versus potentially others that may have overlapping timelines?

Bryan Stuart, CEO

Yes. Hi, Judah. Thank you for your question. We have had nothing but excitement from sites and feedback from patients about participating in this trial. Frankly, we have not felt any competitive pressure here. The excitement stems from our evidence that confirms we are, in fact, what we promised to be, which is an oral HbF inducer. The mechanism behind HbF is well understood, its impact on this disease is well characterized and appreciated not just by the patient community, but also other physician communities. The fact that we can do this with an oral medicine is also traditionally quite compelling. So, we haven't felt any competitive pressure so far with enrollment and that's been a good sign.

Judah Frommer, Analyst

That's great. And then just switching gears to losmapimod, can you provide insights on conversations with the agency around how relevant DUX4 gene expression biopsies are in assessing disease burden? There's also a lot of natural history work being conducted. Did that come up in discussions in terms of a potential comparator, maybe not now, but if the trial was to happen at a later date whether natural history will be more helpful than it would be today?

Judy Dunn, President of R&D

Thanks for the questions. I'll take the question regarding DUX4 first. When we meet with regulators, their main concern is how patients function and feel. In the ReDUX4 trial, we demonstrated very clearly that we have an improvement in how patients function and patients recognize the value of the medicine. Regarding the DUX4 biomarker, there is significant biological and technological variability, and putting patients through a muscle biopsy when we know we can focus on what is ultimately most important—function for us and regulators—is crucial. Hence, they were very supportive of moving away from this biomarker in our case. In terms of the natural history study, we are involved in those studies, are monitoring them closely and utilized them, alongside DUX4, to design our REACH trial. We have utmost confidence in understanding the disease progression through this data.

Operator, Operator

Alright. We have a question from Ted Tenthoff with Piper Sandler.

Ted Tenthoff, Analyst

Great. Thank you very much. Good morning, everyone. I apologize, I turned the call a little bit late. So, if this has already been answered, I don't need to have you repeat. But when it comes, and Judy I found that last answer really interesting and informative. Thank you for that. When it comes to the primary point, what is a clinically meaningful change in Reachable Workspace? Have you given any sense for what the powering looks like with 230 patients, approximately 115 on the drug?

Judy Dunn, President of R&D

Ted, thanks for your question. I think that is really what people want to know about and what we are continuously working on to establish the clinical meaningfulness of this difference in terms of outcomes. We have many data points to, one, talk with the regulators to support Reachable Workspace, but also to help us understand the clinical relevance. First and foremost, there's a strong correlation between changes in Reachable Workspace and activities of daily living measured by other scales, like the Neuro QoL. While we prefer Reachable Workspace for its quantitative and reliability measures, we still utilize the connect system and the 3D technology that provides a different level of quantification. Additionally, we observed strong correlations between patient perception and changes in Reachable Workspace. We have also correlated those changes in muscle fat filtration and functional outcomes. We powered this study with over 90% to detect differences between placebo and drug at week 48, and our intuitive belief is that if you can reach more areas, you're going to be able to function better. We're working on quantifying this so we can communicate it effectively as the trial data is released.

Ted Tenthoff, Analyst

Great. That's really helpful. And then, if I may, just a quick clarification for Esther. The guidance that you gave for cash through year-end. I understand that that includes expenditures for the Phase 3, but that doesn't assume the Phase 3 readout by end of 2024, is that correct?

Esther Rajavelu, CFO

So, Ted, thanks for that question. We have not guided to readout by the end of 2024, just to be clear on the REACH trial. The Phase 3 REACH trial will have a 48-week treatment period with enrollment commencing in the second quarter of this year. We believe we're well-positioned to enroll efficiently but, as I said, we're not guiding beyond this time. With regards to your question about cash runway, we're fortunate to have a robust pipeline with three programs in the clinic this year. A potential new IND early next year and a highly productive discovery engine. Thus, we remain in a strong financial position and well-funded to execute on our plans through 2024.

Ted Tenthoff, Analyst

Great. Thank you.

Operator, Operator

Thank you, and our last question comes from Tiffany Tazeen with Bank of America. Please go ahead.

Unidentified Analyst, Analyst

Okay. I think that sounds like me. So, I'm going to go for it. Can you guys give me a little bit of color on when you expect to see the two to three-fold fetal hemoglobin impact? I think that it is reasonable to assume based on what you said that 3-months should show a robust effect, but it’s unclear, do you think 3-months would be enough time to show that two to three-fold increase? And then can you just remind us how many patients worth of data will be released? Thank you.

Bryan Stuart, CEO

Yes, thanks. In terms of the timing to see a two to three-fold induction, we focus on essentially two data points to guide us. One is the process of erythropoiesis. The second is, we looked at other mechanisms that induce HbF and the timing of those. In reviewing multiple mechanisms, we typically observed maximum HbF induction within about 3 to 5 months. The earliest HbF increases were observed around one month. This informs us going into the Phase 1b study; our expectation is that three months will be a sufficient time to see robust increases in HbF. We don't yet know if we will reach maximal levels; that will have to wait until we see results. In terms of guidance regarding the number of patients, we've announced up to three cohorts, with up to 10 patients per cohort currently enrolling in our first cohort, which is 6 milligrams. We haven't provided exact guidance for patient numbers yet but hope it will be sufficient to show robust HbF induction.

Unidentified Analyst, Analyst

Okay. And then the time it could take to get some maximum amount, just directionally speaking, would that be closer to 6 months or would you think it would be closer to a year?

Chris Morabito, Chief Medical Officer

Hi Tazeen. This is Chris. Going back to what Bryan said, we think it will take 3 to 5 months to see maximal increases. Certainly, at this Q2 update, we will be at patient dosing for up to 3 months; strong directional changes are expected. It may not be maximal, but we do expect to see robust increases in HbF by that time.

Unidentified Analyst, Analyst

Okay. So, I guess, closer to 6 months will be the answer. Thank you.

Operator, Operator

Thank you. And with that, we conclude the Q&A session. I will turn the call back to Bryan Stuart for his final remarks.

Bryan Stuart, CEO

Great. Thanks again for everybody’s time today, and we appreciate the continued support for Fulcrum. Have a great day.

Operator, Operator

Thank you, ladies and gentlemen, for participating in today's program. You may now disconnect and have a wonderful day.