Fulcrum Therapeutics, Inc. (FULC) CEO Robert Gould on Q4 2019 Results - Earnings Call Transcript

Fulcrum Therapeutics, Inc. (NASDAQ:FULC) Q4 2019 Earnings Conference Call March 5, 2020 8:00 AM ET

Company Participants

Christi Waarich - Director of Investor Relations and Corporate Communications

Robert Gould - President and Chief Executive Officer

Owen Wallace - Chief Scientific Officer

Bryan Stuart - Chief Operating Officer

Diego Cadavid - Senior Vice President of Clinical Development

Conference Call Participants

Matthew Harrison - Morgan Stanley

Joseph Schwartz - SVB Leerink

Tazeen Ahmad - Bank of America

Operator

Good morning and welcome to the Fulcrum Therapeutics Fourth Quarter and Full Year 2019 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 and Corporate Communications of Fulcrum. Please proceed.

Christi Waarich

Thank you, Jimmy. Good morning. Welcome to Fulcrum Therapeutics conference call to discuss our fourth quarter and full year 2019 financial results and recent corporate highlights. Earlier today we issued a press release. For those of you who don't have a copy, you can access it 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 filing for 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, our Chief Scientific Officer; Bryan Stuart, our Chief Operating Officer and Diego Cadavid, Senior Vice President of Clinical Development. Let me quickly run through this morning's agenda. Robert will begin the call with an overview of our recent progress and an update on progress with those next month. Owen will discuss our program in sickle cell disease and Brian will cover our financials before opening the call for Q&A.

With that, it's my pleasure to turn the call over to Robert. Robert?

Robert Gould

Thank you, Christi. Good morning, everyone. And thank you for joining us today. At Fulcrum, we're committed to discovering and developing therapeutics to treat genetically defined diseases by addressing the root cause. Supported by our proprietary drug discovery platform and compound library, we have the unique ability to systematically approach drug discovery and develop small molecule therapies for the treatment of rare diseases. 2019 was an important year for Fulcrum, and we made tremendous progress toward the fulfillment of our mission. I'm excited about the strong execution and the opportunities ahead.

I want to take a moment to highlight some of our recent accomplishments. I'm pleased to share with you that we've seen evidence of dose dependent targeted engagement in skeletal muscle with losmapimod in our Phase I trial. This builds on our previously announced Phase I data where we reserved dose dependent concentrations of drug in skeletal muscle of FSHD patients and target engagement and blood. Last week, we were excited to announce that enrollment was complete in the ReDUX4 Phase IIb trial with losmapimod, our lead candidate for the treatment of facioscapulohumeral muscular dystrophy or FSHD.

This and the completion of enrollment in the Phase II single site open label study is a testament of the commitment of patients to participate with us in this exciting trial. With that completion of enrollment, we initiated the ReDUX4 open label extension. We've also received orphan drug designation and expanded our patent portfolio for losmapimod and we'll be presenting multiple abstracts that have been accepted at the Muscular Dystrophy Association and American Academy of Neurology Annual Meetings this spring. We continue to move through IND enabling studies with FTX-6058 for the potential treatment of select hemoglobinopathies and we are continuing to grow our discovery portfolio through our collaboration with Acceleron announced in December while building on our continued internal efforts.

With 2020 well underway, we look forward to continuing our efforts. So let's jump in with the discussion of losmapimod and review how we're working to establish the standard of care for patients with FSHD. FSHD is a progressive disease characterized by severe muscular degeneration that a skeletal muscle is replaced by fat. We estimate there are approximately 16,000 to 38,000 patients in the US and a similar incidence worldwide. There are currently no approved drugs for FSHD and we're advancing the only known industry sponsored clinical trial evaluating a potential treatment. Unlike other diseases that can be characterized by the lack of a gene, FSHD is characterized by the unwanted expression of the gene DUX4, which experts have identified as the root cause of the disease.

We at Fulcrum discovered the losmapimod a selective p38 kinase inhibitor to reduce the expression of DUX4 in preclinical studies. We therefore believe losmapimod represents a potential novel therapeutic option for FSHD patients. Building upon the established safety of losmapimod previously demonstrated in approximately 3,500 patients and other indications, we showed in our Phase I trial that our twice daily 15 milligram dose resulted in sustained and robust targeted inhibition. These levels of drug in targeted inhibition have also been shown in preclinical studies to reduce DUX4 as well as DUX4 driven gene expression.

As I mentioned, just last week, we announced that we completed enrollment in our ReDUX4 Phase IIb trial. We also announced that the Phase II open label trial with losmapimod has finished enrollment. I'd like to thank the more than 500 patients who have participated in our losmapimod program including those in our Phase I and II trials, the ongoing natural history trials and preparatory studies. ReDUX4 is an international Phase IIb double blind placebo controlled trial of losmapimod in patients with genetically confirmed FSHD. The primary endpoint of this 24 week trial is a change from baseline in DUX4 driven gene expression in affected skeletal muscle.

Our own evidence as well as independent evidence suggests that we do not have to turn DUX4 off completely to provide benefit. There's a spectrum of DUX4 expression in FSHD presentation that suggests that even an incremental reduction may be beneficial to patients. Thus we believe, as to independent researchers that any reduction in DUX4 driven gene expression has the potential for benefit to patients. We remain on track to report top line data from ReDUX4 for in the third quarter of this year, and look forward to sharing these data with you. Last week, we also announced the initiation of the open label extension. This portion of the ReDUX4 study remains blinded, but allows participants from ReDUX4 who have completed 24 weeks of dose and to continue treatment and for patients randomized to placebo who have completed 24 weeks of dosing to initiate treatment.

Losmapimod orphan drug designation also highlights the critical unmet need for a treatment for this disease and provides support for the work we're doing in this space. We're confident that we have the resources in place to bring losmapimod through the clinic efficiently. And with our expanded intellectual property portfolio are in a leading position to deliver our first to market therapy to a global patient population that lacks any alternatives. We believe losmapimod has the potential to establish a new treatment paradigm for FSHD patients. And our continued work demonstrates our expertise in addressing the root cause of genetically defined diseases that have a high unmet medical need. We're excited for the year ahead as we approach important data for our lead program and look forward to keeping you updated on our ongoing progress.

I'd now like to turn the call over to Owen to provide an update on our second program FTX-6058 in select hemoglobinopathies.

Owen Wallace

Thanks Robert. As you've heard, Fulcrum takes an innovative patient driven approach to drug discovery and development. We've pursued targeted indications where we believe we can develop safe and effective small molecule therapies to rebalance gene expression. In our work across various indications, we consistently aim to address the root causes of disease to increase the potential efficacy of these treatments, and more broadly, transform the way these diseases are being treated. This research approach has enabled us to make keep progress in treating serious diseases beyond FSHD, such as sickle cell disease. We are currently advancing FTX-6058 through IND enabling studies as a potential treatment for people living with sickle cell disease.

Sickle cell disease is the most common type of inherited hemoglobinopathy. Its root cause is a mutation in the beta hemoglobin gene HBB. Human genetics have taught us that it's possible to overcome the disease symptoms associated with this mutation. And this can occur to the expression of fetal hemoglobin or HbF. People with the HBB mutation, but who also have another genetic mutation that allows them to express fetal hemoglobin have reduced or no symptoms associated with the sickle cell disease mutation. By increasing the levels of HbF to compensate for the mutated hemoglobin in sickle cell patients, we believe that we can develop and deliver a potent, effective and selective therapy for people living with this devastating hematological disease. Driven by this scientific rationale, we are developing FTX-6058 as a potential best in class therapy for the treatment of sickle cell disease.

FTX-6058 is a small molecule that we believe has the potential to provide distinct advantages over biologics and gene therapies currently being used or developed by allowing for convenience oral daily dosing. We believe there remain significant limitations with the current sickle cell disease treatments. Most focused on pain managements are a reduction of pain episodes. The standard of care hydroxyurea carries a black box warning. In contrast to the many other therapies in development for this debilitating disease with FTX-6058 we are aiming to address the root cause of sickle cell disease by increasing the expression of fetal hemoglobin, which has the potential to impact multiple aspects of the disease that affect these patients. We are pleased with the preclinical data and plan to submit an IND for this program in the second half of 2020. And we'll keep you updated on our plans for our first Phase I study.

With that, I'll now turn the call over to Bryan to provide an update on our financial results for the fourth quarter and full year 2019.

Bryan Stuart

Thanks, Owen. We ended 2019 with $96.7 million in cash and cash equivalents, which includes the $10 million that we received in December from a research and discovery collaboration with Acceleron. Based on our current operating plan and projections, we believe our cash and cash equivalents will support our operations into the third quarter of 2021, allowing us to advance losmapimod past our key Phase IIb data and bring FTX-6058 into the clinic, while continuing to invest in our discovery stage efforts.

Research and Development expenses for the quarter ended December 31, 2019, were approximately $12.1 million, compared to $6.9 million for the fourth quarter of 2018. R&D expenses for the full year 2019 were $71.1 million, compared to $25.2 million for the full year 2018. This year-over-year increase was primarily due to three drivers.

The first being increased costs related to the advancement of losmapimod for the treatment of FSHD. The second, a $28.1 million increase in onetime costs associated with the agreement to in-license losmapimod from GlaxoSmithKline, including $25.6 million of costs associated with the issuance of Series B preferred stock to GSK during 2019. And third, increased personnel related costs to support the growth of our research and development organization.

General and administrative expenses for the quarter ended December 31, 2019, were $4.4 million as compared to $2.4 million for the fourth quarter of 2018. G&A expenses for the full year were $13.1 million, compared to $8.3 million for the full year 2018. This increase was primarily due to increased personnel related costs to support the growth of our organization as well as increased costs associated with operating as a public company.

2020 is poised to be another important year for Fulcrum with several upcoming catalysts. We'll losmapimod data from ReDUX4 towards the end of the third quarter of this year. We will also have multiple losmapimod presentations at upcoming medical meetings including both MBA in March and AAN in April. We will submit the IND for FTX-6058 and disclose the target in the second half of the year. And we're also planning on initiating our Phase I trial for FTX-6058 by the end of the year. Additionally, we're continuing our efforts to advance additional treatments for genetically defined rare diseases with our proprietary product engine, both internally and through partnerships.

Operator, you may now open the line for questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from Matthew Harrison with Morgan Stanley. Your line is now open.

Matthew Harrison

Great. Good morning. Thanks for taking the question. I guess two for me, one, Robert, you talked about a little bit more, I think maybe some muscle biopsy data to talk about PK with losmapimod. Can you just talk a little bit more about what you have now there? And then secondly, if to an extent you can tell us what additional steps, we need to finish with people going off with these programs before you can file the IND? Thanks.

Robert Gould

Thanks Matthew. So let me speak first to the PK data that we generated with losmapimod, both in healthy volunteers as well as in FSHD patients. As you recall, losmapimod had been a 3,500 patient exposures with GlaxoSmithKline, GSK previously and we did a Phase Ia study in which we verified the PK properties at 7.5 and 15 milligrams single dose in healthy volunteers and verified the fact we could achieve plasma concentrations that were equivalent to GSK. We then repeated these studies with 14 days of dosing in FSHD patients because GSK had previously not evaluated in Muscular Dystrophy patients. We saw the same pharmacokinetic properties in FSHD patients as we saw in healthy volunteers.

Furthermore, we wanted to ensure that losmapimod penetrated into the muscle of FSHD patients and achieved target engagement in the muscle of FSHD patients. So we have verified target engagement in the blood of healthy volunteers and the blood of the FSHD patients. And now we've verified that the drug is highly penetrated into muscle essentially, equivalent drug concentrations in the muscle of FSHD patients as we see in the plasma of those patients. And additionally, we achieved significant – we achieved the same level of target engagement in the muscle as we achieved in the blood. So we're very encouraged by this, and it supports our moving forward with the 15 milligram dose. I'll let Owen answer the question about the – where we need to go next with the filing on the hemoglobinopathy program.

Owen Wallace

Yeah. Thanks for the question, Matt. Yeah, we're very encouraged with the progress of 6050 ACE and our preclinical pharmacology testing is now well completed. As we've reported previously, we've seen very robust elevation of fetal hemoglobin in our preclinical models. Our IND enabling toxicology work is nearing completion. The life phase work is done. We're now waiting the toxicology reports. And the additional work that needs to be done is essentially some limited formulation work to enable the Phase I study and then essentially writing and filing the IND.

Matthew Harrison

Perfect. Thanks for the answers.

Operator

Thank you. Our next question comes from Joseph Schwartz with SVB Leerink. Your line is now open.

Joseph Schwartz

Great, thanks very much, and congrats on all the progress. Sort of a follow on to the first question that was asked, based on the target engagement that you observed for losmapimod in terms of the drug concentration in muscle, how would you expect this to translate into or how would you think about how this would translate into – reduce gene expression at the 15 milligram dose?

Robert Gould

Yeah, thanks, Joe. So we've achieved plasma and multiple concentrations of drug and levels of target engagement that we think are going to lead to a robust targeted ambition of the gene expression data in the skeletal muscle biopsies and that's the data that will be learning and revealing in the third quarter this year from the ReDUX4 double blind placebo controlled trial, everything is extremely well behaved thus far.

Joseph Schwartz

Okay, so there's no way that you could systematically hazard a guess based on what you've seen pre-clinically or otherwise, to know based on concentration in muscle of the drug and it's stoichiometric properties, how you would, how you would estimate the expected targeted – sorry, the expected reduction in gene expression.

Robert Gould

I think it may be premature for us to speculate on that, but what we do know is that we get significant inhibition of the DUX4 driven gene expression of these same concentrations.

Joseph Schwartz

Right, okay and then what reduction index for driven gene expression and in combination of functional improvements on secondary endpoints would you like to see in order to approach regulators or advanced to a Phase III before doing so.

Robert Gould

Yeah, thanks. Maybe I'll let Diego speak to that as our Head of Clinical Development.

Diego Cadavid

Yeah, thanks you for the question. Joseph. We believe any reduction in DUX4 has the potential to provide clinical benefit. We have designed a trial to address the root cause of the disease versus placebo in patients who have affected muscles that we are biopsy in before treatment and after many weeks of treatment, we believe it will see a separation between Phase I losmapimod in the result for trial because it is it cause of the disease, it will translate into clinical benefit over time, the only question is how fast and in which functional endpoints. And as you know, FSHD can be heterogeneous. The younger population is more affected in the upper body and so on. So different patients would probably be benefit to a different degree. The key is the treatment on the root cause.

Joseph Schwartz

Yeah, okay, that makes sense. Thanks for taking my questions.

Operator

Thank you. [Operator Instructions] Our next question comes from Tazeen Ahmad with Bank of America. Your line is now open.

Tazeen Ahmad

Hi, good morning. Thanks for taking my questions. The first is can you just give us a little bit more color on what exactly you're going to be releasing at the top line results later this year? Specifically are you going to be releasing any data on functional measures and then I have a follow up.

Robert Gould

Yeah, I think at this point, the top line data that we'll be revealing the third quarter is the primary endpoint, which is the reduction in DUX4 driven gene expression. Our plan is then through the fourth quarter to – as we analyze the data to reveal or disclose the rest of the data, the exploratory and secondary endpoints, which include the clinical endpoints that you were referring to.

Tazeen Ahmad

So in terms of safety and tolerability, I guess what should we be looking for? What is the concern if any, based on what you know about the history of the drugs?

Diego Cadavid

Yeah, this is Diego. So we and FSHD community has the benefit that losmapimod was extensively studied for safety and tolerability in over 3,500 people up to a year. So these data is very reassuring. However, we're very carefully assessing it also in FSHD. We reported late last year, our Phase I safe gen tolerability including as a 50 milligram, twice per day dose and that was again very reassuring and we continuously checking safety and tolerability in the ongoing Phase II studies. And we will report that also either towards the end of the year together with the rest of the data.

Tazeen Ahmad

Okay, and maybe if I could tack on the last one, if this Phase IIb data shows what you expected to show and it seems clinically meaningful not only in the primary and secondary endpoints. Have you had any preliminary discussions with FDA about whether or not additional studies would you needed?

Diego Cadavid

Yes, we have been engaging the FDA from the beginning including when we were considering the IND filing. It has been a very productive dialogue. The FDA knows that this is of high unmet needs and as you know they granted the orphan drug designation, we continue to work with them. They are aware that we are collecting data not only in the context of the drug trials, but also the ongoing large natural history study. And we plan to meet with them and share all the data and we are confident that we will find a path forward to make this therapy available to these patients who need it.

Robert Gould

So then maybe I'll just tack on and remind you of the patient focused drug development day that the FDA is going to be holding on April 21. That will be webcast and will provide opportunity to continue the process – the education process with the FDA. That's being sponsored and run by the FSHD society. And we're just thrilled that they've taken this initiative with the FDA.

Tazeen Ahmad

Okay, thank you.

Operator

Thank you. And I'm showing no further questions in the queue at this time, I'd like to turn the call back to Robert Gould for any closing remarks.

Robert Gould

Thanks Jimmy. In closing, we've made important progress over the course of 2019. And we're really excited and looking forward to our catalyst ahead in 2020. At our core will always maintain our commitment to putting the patient first and being innovative across the entire company as we advanced promising therapies targeting the root cause of genetically defined diseases. I want to thank you all for joining us today and for your support of Fulcrum. We look forward to keeping you updated on our progress. Have a great day.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude your program. And you may now disconnect.