Fulcrum Therapeutics, Inc. (FULC) Q3 2020 Earnings Report, Transcript and Summary

Good morning, and welcome to the Fulcrum Therapeutics Third Quarter 2020 Conference Call. [Operator Instructions]. I would now like to turn the call over to Christi Waarich, Director of Investor Relations and Corporate Communications at Fulcrum. Please proceed.

Thank you, Sonia. Good morning, and thank you for joining us. Earlier this morning, we issued a press release outlining our recent progress and financial results for the third quarter of 2020. If you don’t have a copy of the release, you can find in the Investor Relations section of our website at Fulcrumtx.com. 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 Robert Gould, President and Chief Executive Officer; Owen Wallace, Chief Scientific Officer; and Bryan Stuart, Chief Operating Officer. Let me quickly run through this morning's agenda. Robert will begin the call with an overview of our recent progress. Owen will provide updates on our sickle cell program and product engine, and Bryan will cover our financials. With that, it's my pleasure to turn the call over to Robert. Robert?

Thanks, Christi, and good morning, everyone. Thank you for joining us today. This quarter, we've seen tremendous progress throughout the company, as we strive to improve the lives of patients with genetically defined rare diseases in areas of high unmet medical need. In research and development, we made important progress with our program, evaluating Losmapimod, a selective p38 MAP kinase inhibitor, and facioscapulohumeral muscular dystrophy or FSHD. We're now in clinical development with FTX-6058, and screening healthy volunteers in our Phase 1 sickle cell trial. We initiated LOSVID, our Phase 3 trial with Losmapimod for the treatment of COVID-19. Our discovery product engine continues to grow. In July, we executed a collaboration with MyoKardia to identify therapeutics that address genetic drivers of cardiomyopathies. Our progress in FSHD and sickle cell disease, has been highlighted in multiple posters accepted at various scientific meetings. And we made key appointments to our management team. Before turning the call over to Owen to discuss the progress in our program to elevate fetal hemoglobin for the potential treatment of sickle cell disease and beta thalassemia, I'd like to review our program with Losmapimod for the treatment of FSHD. FSHD is a rare, progressive and disabling disease characterized by severe muscular degeneration that occurs as skeletal muscle is replaced by fat. Unlike other diseases that can be characterized by the aberrant expression of the gene, DUX4, the root cause of the disease. DUX4 expression results in apoptosis, muscle death and deterioration. This is the second most common muscular dystrophy, with no current treatment options. Losmapimod has previously demonstrated safety and tolerability in approximately 3,500 subjects across multiple indications, and is the only potential treatment in clinical development. This quarter, we presented multiple posters at the International Congress of the World Muscle Society. These posters highlighted our integrated approach to evaluating FSHD patients. We have also made tremendous progress with our clinical strategy, utilizing molecular biomarkers, imaging, functional readouts, and patient reported outcomes. These studies have enabled the design of clinical trials to evaluate potential benefits of Losmapimod in the FSHD patients. The encouraging data reported from our interim analysis, suggest Losmapimod may be reducing DUX4-driven gene expression, and that muscles with the highest DUX4-driven gene expression in pretreatment biopsies, show large reductions following treatment with Losmapimod compared to placebo. We remain on track to announce full data in the second quarter of 2021. Data will include the primary endpoint, reduction from baseline of DUX4-driven gene expression in all patients. Additionally, we'll report a pre-specified sensitivity analysis, assessing biopsies with the highest pre-treatment level of DUX4-driven gene expression, and key secondary and exploratory end points. We believe we'll be able to provide the most comprehensive assessment of any therapeutic in FSHD, with the totality of data in the second quarter next year, and we will not report topline results separately. We also look forward to the continued analysis of the ongoing single-center open-label study, which includes change from baseline in skeletal muscle, MRI biomarker, and several clinical outcome assessments in subjects who've been treated up to a year. For FTX-6058, we recently presented comparative pharmacology data and additional preclinical data supporting the future development in sickle cell disease and beta thalassemia. FTX-6058 is a highly potent, small molecule inhibitor of EED designed to induce the expression of fetal hemoglobin to treat the root cause of sickle cell disease. Owen will discuss this potentially promising and differentiated therapeutic option for patients in more detail, and we'll share more on December the 15th, when we host a key opinion leader symposium with sickle cell experts. Turning now to our COVID program. As a reminder, LOSVID is an international multi-center Phase 3 trial with Losmapimod for hospitalized subjects with COVID-19. The trial is designed to assess the safety and efficacy of a 15 milligram twice per day, oral dose of Losmapimod, compared to placebo for 14 days, on top of standard of care in approximately 400 subjects who are at risk of progression to critical illness based on older age and elevated systemic inflammation. The primary endpoint is the proportion of patients who progress to death or respiratory failure by day 28. While we saw some delays in opening trial sites in August and September, we continue to make progress in patient enrollment, and anticipate providing an update on the LOSVID trial in the first quarter of 2021. As part of our progress, we've also expanded our management team. I'm pleased to announce today that Curtis Oltmans will join Fulcrum at the end of the month as our general counsel. Curt brings a wealth of experience from his prior roles at DaVita, Array, Novo Nordisk, and Eli Lilly, covering a variety of legal roles, including regulatory and intellectual property. We've also appointed Dr. Alan Ezekowitz to serve as the Clinical Advisor, following the departure of Diego Cadavid, as announced in our release. Alan has served on our board since 2016, and has made important contributions to advancing our pipeline of clinical programs. Previously, Alan was Founder and CEO of Abide Therapeutics. And prior to Abide, he spent a number of years at Merck, where he served as the Senior Vice President in Clinical Research. We'll be launching a search for a Chief Medical Officer, but in the meantime, look forward to benefiting from Alan's expertise as part of our executive teams. I'm also pleased to announce that Kim Hazen has been promoted to Senior Vice President, Human Resources. Kim has been an invaluable member of the leadership team since she joined Fulcrum in 2017. Lastly, I'd like to thank everyone at Fulcrum who continues to be phenomenal through these challenging times. We've made a tremendous amount of progress, all while keeping our patient communities at the forefront of what we do. With that, I'll turn it over to Owen.

Thank you, Robert. To begin, I just want to add to some of the key points related to our FSHD program that Robert mentioned. We’re encouraged by the data indicating that Losmapimod may be reducing DUX4-driven gene expression, and that muscles with the highest DUX4-driven gene expression in pretreatment biopsies, showed the large reductions following treatment with Losmapimod compared to placebo. The full dataset we expect to announce in the second quarter of 2021, will bring us many new insights on the potential of Losmapimod to treat FSHD. We are grateful to our outstanding team of investigators, and so all the patients who continue to support this important clinical program. Now moving to FTX-6058, our candidate for sickle cell disease and beta thalassemia. We recently presented preclinical data, including comparative pharmacology during the Sickle Cell Disease, Research and Educational Symposium, and National Sickle Cell Disease Scientific Meeting in September, where we also disclosed EDD as our drug target. Sickle cell disease is a genetic disorder caused by a mutation in the adult form of hemoglobin. The result of the mutation is less efficient oxygen transport, and the formation of red cells that are sickled. Sickle cell patients typically suffer from serious complications, such as anemia, pain and vaso-occlusive crises. Sickle cell disease affects an estimated 100,000 patients in the United States, and millions worldwide. Increasing fetal hemoglobin can have a transformative impact for patients with sickle cell disease, including reducing both recurring events and mortality, and increasing the likelihood of asymptomatic presentation. We believe an oral small molecule, capable of raising fetal hemoglobin, has broad applicability across sickle cell patients, and has the potential to be a very impactful therapy. We have shown that FTX-6058, selectively upregulates fetal hemoglobin in both human cellular models and mouse models of sickle cell disease. The treatment of human CD34 positive cells from healthy and sickle cell disease donors with FTX-6058, resulted in fetal hemoglobin levels up to approximately 30% of total hemoglobin, with minimal undesirable effects on cell health. We believe that this was a superior preclinical profile relative to standard of care, hydroxyurea, and other mechanisms that have been reported to induce fetal hemoglobin, and that the impressive pharmacological profile of FTX-6058, supports its potential as a disease-modifying therapeutic that could have a broad impact on symptoms. Based on the data we've seen to-date, we believe FTX-6058 could be a transformative therapy for sickle cell disease. Our program has generated significant enthusiasm in the sickle cell community, with our unique mechanism of action, and we look forward to sharing more on our program at our upcoming KOL event on December 15, as well as hearing from Maureen Achebe and Dr. (indiscernible). With our IMD now open, we're excited to begin dosing in our Phase 1 trial in healthy adult volunteers this quarter. This Phase 1 trial will evaluate 6058’s safety, tolerability, pharmacokinetics, and target engagement in both a single ascending dose study and a multiple ascending dose study. We expect to report data from this Phase 1 trial in mid-2021, and advanced 6058 into sickle cell patients as quickly as possible. Additionally, our non-provisional composition of matter patent application is published, and we will have three posters at the American Society of Hematology Meeting next month as well. Moving to our research efforts, we are very pleased with the progress of our preclinical portfolio. Our discovery platform has resulted in the clinical programs we have discussed today, in addition to enabling the collaborations with Acceleron and MyoKardia. Fulcrum Seek has grown significantly this year. Fulcrum Seek is our proprietary connectivity map database that integrates the identification of druggable targets and signaling pathways in human cell models that recapitulate genetically defined diseases. This database consists of high dimensional RNA seq and high content imaging data to characterize the biological effects of our proprietary chemical probe and functional genomics libraries in complex cell models, in both healthy and diseased patients. The unique insights that we've gained from this approach, has resulted in several new discovery programs that have emerged from our Fulcrum Seek and Target identification platforms, which are currently being prioritized and advanced. With that, I'll turn the call over to Bryan for an update on our financials for the quarter. Bryan?

Thanks, Owen. We ended the third quarter of 2020 with $127 million in cash, cash equivalents and marketable securities. Based on our updated operating plan and projections, we believe this will support our operations into the second quarter of 2022, allowing us to advance Losmapimod and FSHD in COVID-19, advanced FTX-6058 in hemoglobinopathies such as sickle cell disease, and invest in our discovery stage efforts. Research and development expenses for the quarter ended September 30, 2020, were $15.6 million compared to $13.5 million in the third quarter of 2019. The increase of $2.1 million was primarily due to increased costs to support our ongoing planned clinical trials, as well as increased personnel related costs to support the growth of Fulcrum’s research and development organization. General and administrative expenses were $5.3 million for the third quarter of 2020, as compared to $3.5 million for the third quarter of 2019. The increase of $1.8 million was primarily due to increased costs associated with operating as a public company, as well as increased personnel related costs to support the growth of our organization. Our net loss was $19 million for the third quarter of 2020, as compared to a net loss of $16.5 million for the third quarter of 2019. Overall, we continue to expect several upcoming catalysts. We expect to report full data from ReDUX4 in FSHD, including muscle biopsy, exploratory, and clinical outcome assessments in the second quarter of 2021. We plan to begin dosing in our Phase 1 healthy volunteer trial with FTX-6058 for sickle cell disease this quarter, and report data mid-2021. We'll provide an update on our LOSVID trial in the first quarter of 2021, and we'll continue to advance our discovery programs from our product engine, while making progress with our partners at Acceleron and MyoKardia. We're very excited about the work ahead, as we continue to execute on our plans, and look forward to keeping you updated on our progress in the months ahead. Operator, you may now open up the line for questions

[Operator Instructions]. Our first question comes from Ted Tenthoff of Piper Sandler. Your line is now open.

Great. Thanks for the update. Good to hear from you all, and really exciting, the progress going on, both clinical and preclinical. I wanted to get a sense just with respect to the refinement of timing, both on LOSVID and ReDUX. What kind of updates should we be expecting from the COVID study? And is there any particular reason that we won't get topline data from ReDUX in the first quarter and just get the full readout per se? I think that’s what's the important part anyway. So, thanks.

Thanks, Ted. Let me take this, the second question on ReDUX and FSHD first. We believe we'll be able to provide the most comprehensive assessment of Losmapimod with the totality of the data that includes not only the DUX4- driven gene expression, but also MRI, whole body MRI and - as a key secondary endpoint, and then a number of exploratory end points that are looking at muscle function, measurements, patient-reported outcomes. We thought providing that complete package of data was the best way to assess the potential benefit of Losmapimod in the FSHD patients, rather than fragmenting it out.

That makes a lot of sense. Thank you.

Yes. Thanks, Ted. In terms of the lawsuit update, as we mentioned, site openings were slower than expected in August and September. And so we'll give an update on the status of the trial in the first quarter.

Excellent. Well, thanks for the update and congrats on all the good progress.

Thank you. And our next question comes from Joseph Schwartz of SVB Leerink. Your line is now open

Great. Thanks very much. I had a couple questions on 6058, given the recent disclosures. I was wondering if you could walk us through the different means of quantification of HBF elevation that you ran in your preclinical experiments, and describe for us what each of those measures like HPLC, mass spec and flow cytometry are telling you when you conclude that you could have potentially superior attributes relative to other agents.

Hi, Joe. This is Owen. Yes, we're very excited about the preclinical portfolio and sickle program. The data that we've generated I think is very consistent pre-clinically with what - the hereditary persistence of fetal hemoglobin phenotypes in sickle individuals. So these are people who have a sickle cell mutation, but also have another mutation that causes them to continue to express fetal hemoglobin. And many of these are asymptomatic, particularly if they achieve around 30% of fetal hemoglobin levels. In our preclinical models, particularly in the CD34 positive cells, we have looked at a variety of measures of fetal hemoglobin induction. One key attribute is the pet and cellularity of fetal hemoglobin induction. And this is measured by the number of F cells or the percent of F cells, which are fetal hemoglobin expressing cells. And we've used a flow cytometry to get an estimation of the percentage of F cells with 6058 treatment, and we're seeing upwards of 80 to 90% of the cells expressing fetal hemoglobin. So we think that's a very attractive profile. The other key measures that we have made are with regard to total fetal hemoglobin levels and induction. And we've looked at that in two different ways. One is using HPLC, which is really the gold standard for the measurement of fetal hemoglobin. And a complimentary technique is mass spectrometry. And again, using those two techniques, which are very consistent in their data, we're seeing upwards of 20% to 30% induction of fetal hemoglobin across multiple different human-derived cells, both sickle cell donor and healthy donors as well. So we think it's a very attractive preclinical profile.

Great. Thanks. That's helpful context. And then on your Phase 1 healthy volunteer study, will that be long enough to see fetal hemoglobin improvements, or should we be focused more on F cells? Do you have enough preclinical tox coverage to make that long enough that it could show some interesting signals?

The Phase 1 is really designed for safety, tolerability PK, target engagement. We don't anticipate dosing longer than two weeks in healthy volunteers. So we think there's a very low likelihood, just given the kinetics of red blood cell formation in healthy individuals, that we'll see an elevation of HBF, or even a significant increase in F cells in healthies. Our general strategy is to progress through the Phase 1 trial in healthy volunteers as rapidly as possible, and then move into sickle cell disease patients, because we believe that will offer the best opportunity to see an increase both in F cells and fetal hemoglobin, given the increased dynamics of blood cell production and formation in sickle patients relative to healthies.

Yes, that makes sense. Okay. Thank you for taking my questions.

Thank you. [Operator Instructions]. And our next question comes from Matthew Harrison of Morgan Stanley. Your line is open.

Good morning, everyone. This is Kostas on for Matthew. I have a quick question on 6058. Can you please talk a little bit about the development plans after the Phase 1? In particular, are you planning to also evaluate these compounds in beta thalassemia or the sickle cell disease? And are you also planning to evaluate it in combination with hydroxyurea, like other trials do, or as a monotherapy only? Thank you.

We - to touch on your last question first, Kostas, we have profiled the molecule in combination with hydroxyurea pre-clinically, and we believe that the profile is certainly additive potentially with standard of care in hydroxyurea. We also believe that a upregulator of fetal hemoglobin could be used in combination with some of the other approaches that are being pursued clinically for sickle cell disease. So, absolutely, that's on our radar screen. With regards to the development plan post Phase 1, we’re still working through all of those details. We’re definitely considering moving into beta thalassemia as well. We believe, as I just previously mentioned, that the opportunity to see an upregulation of fetal hemoglobin, can be most effectively measured likely in sickle cell disease patients. And then once we've got that initial data, certainly there's an opportunity to move into beta thalassemia patients as well.

Thank you.

Thank you. And ladies and gentlemen, this does conclude our question and answer session. I would now turn the call back over to Robert Gould for any further remarks.

I just want to thank you all for joining us today and for your support of Fulcrum. I also want to thank all the patients and investigators that have been participating with us as we move our clinical programs forward. The team here at Fulcrum hopes you all stay healthy and safe. Thank you.

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