Fulcrum Therapeutics Inc

NASDAQ:FULC

Earnings Call Analysis

Earnings Call Transcript 2023-Q3

[Operator]

Good morning, and welcome to Fulcrum Therapeutics Third Quarter 2023 Financial Results and Business Update Conference Call.

[Operator Instruction]

This call is being webcast live on the Investors section of Fulcrum's website at www.frontx.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 time lines and financial projections. While these forward-looking statements represent Fulcrum [ rules ] 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 any 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; and Dr. Ian Fraser, [ Entelo ] Chief Medical Officer. After providing updates on our key programs, there will be a brief Q&A in which Alex, Alan and Ian will be available to answer your questions. With that, it's my pleasure to turn the call over to Alex. Sir, you may begin.

[Alexander Sapir, executive]

That's great. Thanks, [ Towanda ], and thanks to all of you for joining us today. We are pleased with the progress that we've made in the Third Quarter of 2023, advancing our 2 clinical assets, losmapimod and [ Vocera ]. In addition, we remain well capitalized with a cash position of $257 million as of September 30 and have extended our cash runway into 2026. Through our strategic review and budget process only on our essential priorities.

So what I'd like to do this morning is to provide an update on our 2 key programs, losmapimod for Facioscapulohumoral Muscular Dystrophy, or FSHD, and [ posterior ] previously referred to as FTX-6058 for sickle cell disease, after which I'll turn it over to Alan for some financial highlights.

So let's start with our most advanced program, losmapimod. Just as a quick reminder, losmapimod is a selective p38 alpha beta MAP kinase inhibitor and is currently in Phase III development for the treatment of FSHD for which there are currently no approved treatment options.

FSHD is a form of muscular dystrophy with an estimated patient population of 30,000 in the U.S. alone. The disease is characterized by a slow and progressive loss of muscle function over many years. resulting in significant impairment of upper extremity function and mobility. As a result, many patients are unable to perform many of the life's daily activities that we all take for granted, like reaching for a cup of coffee in the kitchen cabinet brushing your teeth, feeding one's self and even practicing good hygiene.

These critical factors and our insights on the genetic underpinnings of FSHD drove us to identify and develop a safe and effective treatment option with the potential to slow disease progression for these patients. In September of this year, we completed enrollment in REACH, our global Phase III trial for losmapimod, which we initiated in June of 2022.

We believe that the rapid pace of enrollment of the 260 patients into the trial is a real testament to the high unmet need of this rare disease. We are on track to report top line in the Fourth Quarter of 2024, which will bring us 1 step closer to delivering the first-ever FDA-approved therapy for FSHD.

Now let me just give quick reminder to everybody about REACH. REACH is a 48-week trial intended to be registration enabling both in the U.S. and in ex U.S. geographies. The primary endpoint for the study is the change from baseline in the relative surface area or RSA score, which is a quantitative assessment of reachable workspace or RWS.

This is a measure of upper extremity range of motion and function that specifically evaluates shoulder and arm mobility using 3D motion sensor technology. Preserving this upper extremity function is critical for patients to maintain their independence and their ability to perform some of these activities of daily limiting that I spoke about earlier.

As part of this study, we'll also be looking at other key secondary endpoints like muscle fat infiltration or MFI, which is an important marker of disease pathology measured by whole body MRI as well as reported quality of life measures and health care utilization questionnaires that will help inform our thinking on our payer strategy as we begin preparing for a commercial launch here in the U.S. We are pleased to have reached. There is no pun intended there, this critical milestone, and we look forward to sharing with everyone top line results in the Fourth Quarter of next year.

So let me now move on to pociredir, our oral fetal hemoglobin inducer, or HPF for short for the potential treatment of patients with sickle cell disease. In August 2023, the FDA lifted the clinical hold on our investigational new drug application for pociredir for the potential treatment of sickle cell disease.

Our interactions with the FDA were productive and collaborative throughout the hold, and we're pleased to have aligned on a revised inclusion, exclusion criteria that targets a more severe patient population for this Phase Ib study. I think it's also important to note that there were no changes in the protocol-defined dose escalation scheme or the 3-month treatment duration.

We are working hard to resume enrollment in the Phase Ib study at the 12-milligram dose followed by the 20-milligram dose of pociredir. Each of these dose cohorts are scheduled to enroll 10 patients. We are reactivating current sites as well as identifying new sites in the U.S. and ex-U.S. that are excited to participate.

Now as many of you know, activating new sites takes time, given the contracting and IRB approval process. I think once we have a few months of enrollment under our belt, we'll be in a far better position to estimate when we would expect to have results of the 12 and the 20-milligram to share with everyone.

I just want to take a minute and talk about why we're so excited about pociredir given the fact that this is only in a Phase Ib study. So data that we obtained prior to the clinical hold demonstrated that pociredir increased total fetal hemoglobin of a magnitude that could translate into a meaningful improvement in disease severity. Specifically, after only 42 days of treatment, we observed up to a 10 percentage point increase in fetal hemoglobin from baseline or total fetal hemoglobin of approximately 25%.

We believe that as an oral HBF inducer, we believe that pociredir has the potential to provide a differentiated therapeutic option for patients living with sickle cell disease. Addressing the significant unmet need in sickle cell remains a key priority for us, and we look forward to providing further updates on our progress.

So with that clinical update, I'll now turn it over to Alan, our Chief Financial Officer, who will provide an update on our financials. Alan has been a great addition to the team since joining in August, and he will be invaluable as we move into the next phase of growth. and continue to advance our mission of delivering these transformative therapies. So Alan, over to you.

[Alan Musso, executive]

Thank you, Alex. Let me start with our cash position. We ended September 30, 2023, with cash, cash equivalents and marketable securities of $257.1 million. And during the Third Quarter, our net cash burn was $21.1 million. We continue to operate from a strong financial position. And based on our recent operating results and current projections, we now expect our cash runway to extend into 2026. An update from our prior guidance of mid-2025.

In the Third Quarter of 2023, our collaboration revenue was $0.8 million. That compares to $1.2 million for the Third Quarter of 2022. Our research and development expenses were $18.2 million for the Third Quarter of 2023 compared to $15.4 million for the Third Quarter of 2022.

The increase of $2.8 million was primarily due to increased costs associated with the advancement of our Phase III REACH trial, including the completion of enrollment during September of 2023. Our general and administrative expenses were $10 million for the Third Quarter of 2023 as compared to $9.7 million for the Third Quarter of 2022. The increase of $0.3 million was primarily due to increased facilities, professional services and software costs.

Our net loss was $24 million for the Third Quarter of 2023, and that compares to $23.7 million for the Third Quarter of 2022, and with that, let me turn it back over to Alex.

[Alexander Sapir, executive]

Great. Thanks, Alan, and again, great to have you on the team. So [ Towanda ], let's go ahead and open it up for questions.

[Operator]

[Operator Instructions]

Our first question comes from the line of Corrine Jenkins with Goldman Sachs.

[Corinne Jenkins, analyst]

This is Craig on for Corinne. So I had 1 specifically related to pociredir. And I guess with the Phase Ib study, what do you guys hope to see in order to consider moving forward the program? And based on that, what do you think you need to show from a risk-benefit point of view in order to get the FDA to maybe reconsider the current patient population you're evaluating the agent to maybe a broader one?

[Unknown Executive]

Yes. It's great. Thanks for the question, Craig. And let me turn that over to Iain Fraser, our Chief Medical Officer. Ian has really been instrumental in driving those conversations with the FDA. So I think he's probably best equipped to answer that question.

[Iain Fraser, executive]

Yes. Thanks, Alex, and thanks for the question. As Alex mentioned earlier, at the 12-milligram dose that we've studied to date, which was only a partial cohort, essentially only 3 patients and the longest duration of 42 days. So just 6 weeks halfway into the treatment period, we were seeing rises of around 10 percentage points in the fetal hemoglobin.

Obviously, it depends where your baseline HBF starts out as to where you end up and there was at least 1 patient there started out at about 15%, relatively high and reached 25%, which we believe and I think backed by the literature that once you enter the high 20% range of total HBF that you significantly impact the symptoms of sickle cell disease.

That's the range that I think will be most convincing to reach. And I think what we're trying to demonstrate with this is with the 12-milligram dose as we extend the duration of dosing out to the full 3 months how much higher do we get the field hemoglobin to rise and across the entire cohort at different baseline fetal hemoglobin, how high do each of those individuals reach.

So that's our intent. That's the target towards which we are shooting. And as we've articulated previously, based on our earlier healthy volunteer data, we believe that there is even further incremental efficacy to be gained as we go up from 12 milligrams to the next dose around 20 milligrams, and we fully expect that, that will outperform even the 12-milligram dose.

So that's the directionality that we expect that the region of total HBF that we think will be significantly transformative, and that's what the data we'll be looking for as we start to dose in this cohort.

[Alexander Sapir, executive]

Yes. And then, Craig, this is Alex. Let me just sort of answer specifically your question about what do you feel like we need to show to the FDA to expand the patient population beyond where we are today. I think the -- obviously, the FDA looks at everything from a risk benefit perspective. And right now, we've shown some benefit, albeit in a very small number of patients.

So if we're able to achieve what Iain spoke about, we'll take that information back to the FDA and have what we believe is a very sort of thoughtful discussion armed with much more data to show how this drug can benefit patients. And from there, we believe that over the long run, we will be able to expand that patient population.

I think what's important to remember is that there's been a lot of talk recently over the past couple of weeks with the [ Vertex CRISPR ] cell and gene therapy compound as well as blue birds. And I think that if you look at the level of fetal hemoglobin that they're able to get up to in the 30s -- we do believe that with -- based on what we've been able to show prior to the whole, we believe that with 3 months of dosing with the 12-milligram and potentially 3 months of dosing with the 20 milligram, we may be able to get up to similar levels. And I think that's very, very exciting for the sickle cell community and for the patients specifically.

[Operator]

Our next question comes from the line of Dae Go Ha with Stifel.

[Dae Gon Ha, analyst]

This is [ Beazer ] on for Dae Go Ha. Just a couple on Poferator. How challenging has it been to refine some of the prior trial sites? To participate in the trial at this point. Can you share some color on that? And what are some of the questions that they're having about the clinical hold and how they can feel more comfortable about drug safety? And then a follow-up to that is we know that you're not exactly sure about 1 you're going to have data on pociredir, but is it more or like going to be midyear or year-end or somewhere in between, if not at a conference, maybe just a presentation for the company?

[Alexander Sapir, executive]

Yes, that's great. Thanks. Let me start and then Iain, please feel free to jump in if I miss anything. So yes, so just as a quick reminder, we had sites in the Phase Ib study prior to the initiation of the hole. And it's just as a reminder, that was an all-comer study.

So our plan specific, and they were all U.S. sites, our plans, specifically in the U.S. is to double the number of -- is to double the number of sites, specifically in the U.S. as well as to look outside of the U.S. as well. And we feel that we need to go to a greater number of sites simply because we have a more narrowly defined inclusion/exclusion criteria.

So it will be a more difficult trial to enroll than we have in the past. I think what I think what we've been hearing from physicians, and I'd like Iain to comment on this as well. But I think what we've been hearing from physicians is the benefits that this drug as an oral HBF inducer can provide to patients, right?

We've been able to show up until now that with 6 weeks of dosing at a 12-milligram dose, we can get patients to total fetal hemoglobin levels of 25. And I think that's I think that's really exciting for the -- I think that's really exciting for the sites and the physicians that are going to participate in this study.

And I think it's also very exciting for the patients as well. I think in terms of when we think we'll be able to show that, I think right now, our focus has really been on engaging with the centers. Once we have those centers stood up, we've got a couple of IRBs that have already approved it. We have 1 site that is ready to start receiving drug. And we're also doing a lot with the community sickle cell community in and around those sites to really sort of educate the community about this very, very interesting study that the center is now participating in.

So that's really been our focus. I think at this point, [ Benaron ], I think if I was to give you sort of any indication. The only thing I would know with great certainty is that in that indication or that guidance would be incorrect. So I think give us a couple of months, let us get a couple of months of patient enrollment under our belt.

As I've said in the past. And I think at that point, we'll be in a much better position to provide more specific guidance that I feel more comfortable about. So anything else you think around the [ centers in ]?

[Iain Fraser, executive]

Yes. Thanks, Alex. I can provide a little bit of color around the types of sites themselves. And as Alex alluded to earlier, it was an all-comer study. And so we were at a number of sites that started out essentially as pediatric sites. And because of the way that sickle cell disease care is administered. A lot of the pediatric sites hold on to their older patients as they go into adulthood because they don't have great partners to transfer those patients to. And so we had a number of those sites within the study originally.

Those are obviously somewhat younger patients overall, less treatment experienced and less severe impact of disease, just given the duration that they've experienced. And what we're finding as we go out is that a number of those sites feel that they don't have quite the level of severity or previous treatment experience that we might need for the protocol. And so those are sites that are not continuing, but some of them clearly still do have those patients.

So that's been 1 experience, and then we've also broadened our net and are looking at a number of sites that treat exclusively adults that obviously do have many of these more severely impacted patients. And so we are bringing them into the fold as well. So we're casting a wide net. We've noticed those subtleties of the patient populations at the different sites. And we're meeting with lots of investigators.

[Operator]

Our next question comes from the line of Joseph Schwartz with SVB Inc.

[Joseph Schwartz, analyst]

It's Joe Schwartz from [ Leerink ] Partners. I was wondering if you could talk some more about how the new inclusion criteria negotiated with the FDA could influence the profile of disease severity? Which will be reflected in the future cohorts for the Phase Ib for pociredir? And do you think that pociredir will still be able to generate an increase in hemoglobin which is sufficient for generating a clinical benefit in patients with more severe disease? I guess I'm wondering if you think the patients in future cohorts will have as much of an opportunity to reach the 20% range you referenced earlier if they're starting out at lower baseline levels compared to those who were treated previously?

[Alexander Sapir, executive]

Yes. Great question. I think to answer that, let me turn that 1 over to Iain.

[Iain Fraser, executive]

Yes, absolutely. And it's 1 that we've given a lot of thought to, and I think it will be interesting to see the data as it rolls out. I think I'd make a couple of comments about it. One is in the 16 patients that we've treated thus far in the Ib study as a pretty high rate of baseline fetal hemoglobin. And while we don't have full 3 months data in all of them, the initial trajectory of increase in HBF is pretty consistent across all of those.

So it didn't seem as though it was higher a steeper rate at the higher baseline HBF and the low ones appear to be responding just as well. So that's the first point. The second point is, I think the mechanism of action being distinct from that of HEU has some advantages in this respect. Obviously, we'll need to demonstrate that as we move into the more severely impacted patients, but it's not operating through a stress erythropoiesis-type response, which HU is.

There's some discussion about whether that mechanism might be susceptible to depletion of stem cells or fatigue in the marrow or whatever description you want to append to it. So I think the differentiated mechanism of action acting through alterations in gene transcription are likely to be successful in that more severely impacted patient population, but we'll get the patients in and we'll have to demonstrate that in the clinic, and that's our expectation.

[Joseph Schwartz, analyst]

Interesting. And then could you just walk us through the calculus you employed to develop the estimate that your inclusion criteria for pociredir covers 7,500 to 10,000 sickle saltation in the United States. And I'm just wondering how confident you are in that estimate as you engage with the sites now? And what do you expect the screen failure rate for patients to be going forward?

[Alexander Sapir, executive]

Yes, maybe as it relates to the screen failure rate, I'll ask Iain to answer that. But yes, let me give a bit of color, Joe, in terms of how we got to that number. I think what's important to remember in looking at the in looking at the inclusion/exclusion criteria. These are people that have either tried or failed on some of these advanced therapies or for whatever reason, don't have access to the advanced therapies, Boxelador and crizanlizumab because of the simple fact that they don't have proper insurance or their co-pays are too high.

So let me give you some high-level numbers. We know that from in 2019, when both Box and CRIZ launched through 2022, both of those products each generated about 10,000 prescriptions. We know that about 25% of those prescriptions never converted to a patient start. And our assumption there is that those patients simply didn't have proper insurance cover or didn't have access didn't have access to the drug due to payer-related issues.

What we also know is that during the first year, you sold about 30% discontinuation rate with VOX, we don't actually have specific numbers for crizolizumab discontinuation rates in the first year. But you could always -- you could assume that it's probably similar to VOX, maybe a little bit higher because it does require sort of infusions at an infusion center.

So sort of doing all of that math gets you to around sort of 75 to 10,000 patients. Where that number may be overestimated is the fact that not all of those patients meet the patient severity criteria, but where that number may be an underestimate is the fact that it doesn't include any prescriptions in 2023. We only have prescriptions through 2022.

So sort of taking all of those numbers into consideration that's how we sort of arrived at the 75 to 10,000 patients in the U.S. that meet that inclusion/exclusion criteria, which represents about 5% to 10% of the total 100,000 patient population. Did you want to address your second question?

[Iain Fraser, executive]

Yes. So this is Ian. We haven't projected a screen fail rate at this point. I can tell you that for the initial phase of the study, where we recruited 16 patients, that screen fail rate was a little over 50%. So it was a relatively high screen fail rate at that point. And we're sort of carrying that forward at the moment even though patient population is likely to be more severe. We have more experience with the sites and with the education of the sites around the protocol and so expect to be able to help with patient selection in that fashion.

[Operator]

Our next question comes from the line of Edward Tenthoff with Piper Sandler.

[Edward Tenthoff, analyst]

So no one ever asked a question on poor little losmapimod. So I guess I'll be the 1 to ask it. With all of the -- with the data coming in the back half of next year, what are some of the commercial prep that you're doing? And as you kind of project out here, what's the calculus between keeping it and launching it yourself, partnering it, maybe partnering it overseas? Just update us on sort of where your head is on that.

[Alexander Sapir, executive]

Yes, absolutely. Thanks so much for the question. And I appreciate you asking a question on losmapimod. Thank you. So Yes. So just as a quick reminder, we would have -- we plan to have top line results in the Fourth Quarter. We would then file the NDA sometime in early 2025 for an approval sometime in 2026.

We've been very clear that we believe that we can launch this drug quite successfully in the U.S. with a fairly sort of modest commercial infrastructure, while at the same time, looking for partners ex U.S. and we will begin the process of sort of standing up that commercial organization at the end of this year, beginning of next year, starting with our first kind of key hire, which would be that which would be that Chief Commercial Officer.

And I think 1 of the reasons that we're so excited about our ability to be able to do this ourselves is a fairly sort of concentrated market. It's a fairly small number of neuromuscular specialists that treat these patients with FSHD. They're very, very well organized from a patient advocacy standpoint, and we have an excellent relationship with the FSHD Society.

And the fact that there are currently no treatment options and the drug that's probably the closest behind us is probably 2 to 3 years, [ Roche's ] product, that's a [ Myostatin ] inhibitor. It's 2 to 3 years behind us. we believe that we really do have an opportunity to be successful with this launch in the U.S., doing it ourselves and the ability to help a tremendous number of patients in the U.S. as well as working collaboratively with a partner ex U.S. to help patients around the world.

[Edward Tenthoff, analyst]

That's super helpful. And I do think it will garner more attention as we get into the New Year. So thanks for the update.

[Operator]

Our next question comes from the line of Matthew Biegler with Oppenheimer & Company.

[Matthew Biegler, analyst]

I will also jump on the FSHD bandwagon here. I wanted to ask maybe about some different scenarios for REACH 3. And specifically, if you saw a path forward if the study doesn't hit or maybe narrowly misses the reachable workspace end point? Like do you think the biomarker endpoint might be sufficient, I guess, taking a page out of [ Sarepta's ] playbook and what we've seen now over the last couple of weeks. What kind of what are your thoughts there?

[Iain Fraser, executive]

Yes. Thanks, Matt. So just to be clear, in terms of biomarkers in REACH, we are not evaluating the DUCs for transcripto which was evaluated in the Phase II study is that's not really a feasible clinical trial measure to make. What we do, however, are a number of secondary endpoints that are different than the reachable workspace endpoint. And those include the MRI endpoints, which I guess could be considered a biomarker, which evaluates the accumulation of fat in muscle tissue that still has what looks like normal contractile muscle in dispersed with fat.

And so that we also showed in the Phase II study as for the reachable workspace, that you've got a stabilization of that fat accumulation relative to the placebos who showed an increase. So we think that, that's clearly an important secondary endpoint. We also have an evaluation of dynamometry, so conventional muscle strength testing, which we're evaluating. We have some patient-reported outcomes that reflect on both patient global impression of change, but also some specific questions related to FSHD itself. And so there are a number of those secondaries that I think will be important to consider irrespective of what happens to the primary endpoint.

But if as you articulate the primary misses narrowly, I think having all of those secondaries trending in a favorable direction towards losmapimod over placebo will be extraordinarily helpful and persuasive in that context.

[Alexander Sapir, executive]

Yes. And Matthew, this is Alex. The only other thing I would add to what Ian said is going back to something I said earlier regarding pociredir and how the FDA looks at everything from a risk benefit perspective. I think what's also important to note is that when we file our NDA with the FDA, we will have over 3,600 patients in our patient safety database. And this has been shown to be a very, very safe drug.

And so I think that, that is a really important sort of piece of information that the FDA will look at as it considers the safety and efficacy data in totality and decides whether to approve this drug or not for patients for which they had [indiscernible].

[Operator]

We have a follow-up from the line of Dae Gon Ha with Stifel.

[Dae Gon Ha, analyst]

Just 1 more question from us. For FSHD, can you remind us of the powering for REACH and the assumptions that went into it for the regional workspace? Given that it's a mobility test, how should we think about it in the context again of the recent [ IMbark ] trial failure and what read-through for the powering assumptions for REACH?

[Iain Fraser, executive]

Yes. So REACH was powered based on the observed data from [ ReDUX4 ] from the Phase II study. And you may recall that was an 80-patient study, 40 in each arm. And essentially, what we took was the change from baseline to the treatment effect losmapimod minus placebo on the reachable workspace, and also assess the variability in the measurement in that particular cohort and then applied it to the power calculations for the REACH study.

The REACH study was originally powered on a total enrollment of 230 patients with an expectation that 210 of them would be FSHD type 1 and 20 of them would be type 2 and that's a reflection of the relative epidemiology of type 1 versus type 2. Type 1 is overwhelmingly the most prevalent, 95% or so of that. The [ ReDUX4 ] study enrolled only type 1s and so even though we are enrolling some type 2s in the REACH study, we powered the study on only the type 1.

So the study was powered on an expectation of 210 type patients in the REACH study, and that gave us a power of 93% or 94% using the magnitude of change and the standard deviation from [ ReDUX AR ].

As it turns out, when we cut off screening for the REACH study based on what we thought the screen fail rate was going to be in order to reach those 230 patients the screen fail rate dropped down, and we ended up enrolling a number of more patients. And so at the end of the day, the total enrollment was 260 instead of 230 and of that 260 there were 18 FSHD type 2s. So we now have 242 FSHD 1.

So 242 versus the original powering around 210, so that bumps the power up into over 95% using the same assumptions from [ Reduc 4 ].

So that was an inadvertent over enrollment. That wasn't our intention. But was a reflection of the enthusiasm at the sites and the fact that the sites have gotten better at screening the patients until the screen fail rate dropped down. And so that's where we stand based on our actual enrollment now in REACH.

[Operator]

Ladies and gentlemen, this concludes the question and answer portion of the call. I would now like to turn the call back over to Fulcrum's CEO, Alex for closing remarks.

[Alexander Sapir, executive]

Thanks, [ Towanda ]. So just to quickly wrap up, we remain, as we always have, deeply committed to treating the root cause of genetically defined rare diseases and bringing these transformative therapies to patients.

Before we conclude today's call, as I always like to do, I'd just like to extend my sincere appreciation and gratitude to my fellow Fulcrum teammates to the physicians we work with to advance our clinical trials and finally and most importantly, to the patients who participate in our clinical trials as well as their families. Without them, we would not be able to achieve our goals as a company. Thanks again, everyone, who joined the meeting who joined the call this morning. Please stay safe and healthy.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.