Q4 2023 Fulcrum Therapeutics Inc Earnings Call

Participants

Alex Sapir; President, CEO, & Director; Fulcrum Therapeutics Inc

Alan Musso; Chief Financial Officer, Treasurer; Fulcrum Therapeutics Inc

Ian Frazier; Interim Chief Medical Officer; Fulcrum Therapeutics Inc

Matthew Biegler; Analyst; Oppenheimer & Co., Inc.

Andrea Park; Analyst; Leerink Partners

Dae Gon Ha; Analyst; Stifel

Presentation

Operator

Good morning and welcome to Fulcrum Therapeutics Fourth Quarter and Full Year 2023 financial results and business update conference call. (Operator Instructions) This call is being webcast live and can be accessed on the Investors section of Broadcom's website at www.fulcrumtx.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 Security Litigation Reform Act of 1995. These may include statements about the Company's future expectations, plans, clinical development timelines and financial projections. While these forward-looking statements because it presents for growth view of today, they should not be relied upon as representing the company's views in the future. Fulcrum may update these statements in the future, but it's not taking on an obligation to do so. Please refer to focus most recent filing 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 Frazier, Interim 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.

Alex Sapir

That's great. Thanks, Valerie. And thanks to all of you for joining us today. 2023 was a year in which we both completed enrollment in our Phase 3 REACH trial for losmapimod for vascular scaffold, low humeral muscular dystrophy or FSHD for short and resolve the clinical hold for Procera here, which allowed us to resume clinical testing in patients with sickle cell disease in the fourth quarter, we continued to drive forward our two key clinical programs and advance our preclinical pipeline and with our cash runway that extends into 2026. I do believe that we are well positioned to execute our corporate objectives and deliver on key milestones in 2024 and beyond.
So at this point, let me go a bit deeper and elaborate on the progress we've made toward our goal of delivering transformative therapies to improve the lives of patients with rare genetic disease.
Let's start with our most advanced program, losmapimod, which is an oral small molecule p38 alpha-beta MAP kinase inhibitor currently in Phase 3 development for the treatment of FSHD. It is HD. is a rare form of muscular dystrophy with an estimated U.S. prevalence patient population of 30,000. Fshd is characterized by a slow but relentless loss of muscle function year after year, resulting in significant impairment of upper extremity muscle function and mobility. As a result, many patients are unable to perform daily life activities that you and I take for granted, such as reaching for a cup of coffee reaching for a company, the kitchen cabinet brushing, your teeth feeding yourself, even practicing good hygiene and about 20% of patients ultimately become wheelchair-bound despite the high unmet need. There are currently no approved treatment options for these patients. So in our quest to bring hope for these patients in September of last year, we completed enrollment in our global Phase 3 trial for LookSmart's mode with a total of 260 patients enrolled in the trial. The trial initiated in June 2022 and 15 months later, we had surpassed our enrollment expectations, which we believe is a real testament to the high unmet need for this rare disease. We are on track to report top line data in the fourth quarter of 2024 which will bring us one step closer to delivering the first ever FDA approved therapy for FSHD patients.
So just a quick reminder of some of the details around the Phase 3 study, which we call reach reaches a 40 week excuse me, reaches a 48 week trial intended to be registration enabling both in the US and in ex U.S. geographies. The primary endpoint for REACH is a change from baseline in the relative surface area or RSA., which is a quantitative assessment of reachable workspace or as a as an objective measure of upper extremity range of motion and muscle function that specifically evaluates excuse me, that specifically evaluates shoulder and our mobility using 3D motion sensor technology in our Phase 2 study losmapimod demonstrated a 10% change in the RSA. score relative to placebo at 48 weeks. And based on interactions with FDA, we are currently assessing the extent to which a change in the RSA. score is considered meaningful to patients. Additionally, key secondary endpoints include muscle fat infiltration or MFI., which is an important marker of disease pathology measured by whole-body MRI shoulder, Dina monetary, as well as self reported quality of life measures that will help inform our thinking on our payer strategy.
As we begin preparing for our commercial launch here in the US.
Now turning to Procera here, our oral HbF inducer for the potential treatment of patients with sickle cell disease or SCD. for short, sickle cell is a lifelong inherited blood disorder that severely impacts quality of life for approximately 100,000 people in the US and approximately 4.4 million people worldwide. Historically, the standard of treatment for sickle cell disease has involve blood transfusions, pain medications and hydroxy urea, focusing primarily on symptom relief. And while exciting scientific progress has enabled the advancement and more recently the approval of gene editing therapeutic approaches. We believe there remains a high unmet need for safe and accessible therapeutic options that are broadly protective of sickle cell symptomatology as a first-in-class oral small molecule HbF inducer. We believe procedure has the potential to address a critical unmet need for patients.
And just as a quick reminder, in August of 2023, the FDA lifted the clinical hold for POC. are there. And I think it's also really important to note that there were no changes either in the protocol defined dose escalation scheme or for three-month treatment duration. Clinical trial sites have now been activated and others have been selected and are going through the necessary steps for site activation in order to be ready for patient recruitment for the Phase Ib study we call PIONEER. Based on the revised inclusion exclusion criteria. We will be enrolling patients with high disease disease severity. Cohort 3 of the PIONEER study will evaluate procedure at the 12 milligram once daily dose followed by cohort four at the 20 milligram once daily dose. Both cohorts are expected to enroll approximately 10 patients each. And we look forward to providing specific guidance on readout of the 12 milligram and 20 milligram cohort as we have additional sites activated and a good basis to project enrollment trajectory. We're looking forward to building on the encouraging clinical data obtained prior to the clinical hold, which demonstrated that post COD or increased total HbF of a magnitude that could translate into a meaningful improvement in disease severity. More specifically, after only 42 days of treatment, we observed up to a 10 percentage point increase in HBR from baseline for total HBR of approximately 25%. We believe that for Sierra there as an oral HbF inducer has the potential to provide a differentiated therapeutic option for people living with sickle cell disease. Addressing the significant unmet need in the sickle cell community remains a key priority for us, and we are excited to build on this momentum in the years ahead.
So that's the clinical update for the financial update. Let me turn it over to Alan Musso, our Chief Financial Officer, who will walk you through some of the numbers out over to you.
Thanks, Alex.

Alan Musso

I'll now go over our results for the fourth quarter and full year ended December 31st, 2023, beginning with the results for the quarter in collaboration revenue was $0.9 million for the fourth quarter of 2023 compared to 0.7 million for the same period in 2022. Research and development expenses were $19 million for the fourth quarter of 2023 compared to $18.6 million for the same period in 2022. The increase of $0.4 million was primarily due to higher personnel costs.
General and administrative expenses were $9.9 million for the fourth quarter of 2023 compared to $10.1 million for the same period in 2022. The decrease of $0.2 million was primarily due to lower professional service costs and for the fourth quarter of 2023, Falcon reported a net loss of $24.8 million compared to $26.1 million for the same period in 2022.
I'll now review the results for the year ended December 31st, 2023. Collaboration revenue was $2.8 million for the year ended December 31st, 2023 compared to $6.3 million for the same period in 2022. Lower collaboration revenue during 2023 was attributable to the completion of activities under our collaboration agreement with Acceleron, which terminated in October 2022 and due to a decrease in revenues under our collaboration agreement with MyoKardia.
As we completed our research services during the fourth quarter of 2023, research and development expenses were $71.8 million for the year ended December 31st, 2023, compared to $76.8 million in 2022. The decrease in 2023 was primarily attributable to a $5 million milestone obligation incurred upon the initiation of the REACH clinical trial in the second quarter of 2022 under our license agreement with GlaxoSmithKline, general and administrative expenses were $41.7 million for each of the years ended December 31st, 2023 and 2022. The net loss was $97.3 million for the year ended December 31st, 2023, compared to $109.9 million in 2022.
And now turning to the balance sheet. We ended 2023 with cash, cash equivalents and marketable securities of $236.2 million compared to $202.9 million as of December 31st, 2022. This increase in our cash position is primarily due to net proceeds from our January 2020 third, 2023 equity offering of $117.3 million, partially offset by our net cash used in operating activities in 2023. And during the fourth quarter of 2023, our cash burn was $20.9 million. We continue to operate from a strong financial position with a cash runway into 2026.
And with that, let me turn the call back over to Alex.

Alex Sapir

Great. Thanks so much, Alan. So as all of you can see, we are well positioned for a very exciting 2024 and are encouraged by the progress across our two clinical programs, losmapimod, which has the potential for which has first in market potential for patients with FSHD and five series here, which has best-in-class potential for patients living with sickle cell disease.
So at this point, Valerie, let's go ahead and open it up for questions.

Question and Answer Session

Operator

(Operator Instructions) Matthew Biegler, Oppenheimer.

Matthew Biegler

Hey, guys, just wanted to maybe on some of the site about on the regulatory side of the coin here for Lowe's maximum. Can you just walk us through your interactions with the FDA and where you are with discussions on the clinical benefit for reachable workspace? And I guess what you'll need to show in reach to make them happy. Thanks.

Alex Sapir

Yes, thanks so much, Matt, for the question and let me let me just say a couple of things. I will turn it over to Ian to go in a bit more detail. So the REACH study is a very well-powered study with the 260 patients that we had enrolled. We've got a 96% powering on that study. And we believe that that study has the potential to be registration-enabling based on our interactions to date with FDA.
But I think more specifically to answer your question around reachable workspace, let me turn that one over to Ian?

Ian Frazier

Yes. Thanks, Alex, and thanks, Matt. So obviously, there are no drugs approved for for FSHD. And so there's no precedent in the regulatory sphere for an endpoint. However, we have had a number of productive and indeed ongoing discussions with FDA involving both the review division, which is in neurology as well as the core division. And we are executing on a plan that we've agreed upon with them that we believe will establish the clinical meaningfulness of the reachable workspace. Specifically, there are a couple of components to that. First is that we are generating additional data from observational studies in FSHD. So this is not involving any treatment with plasma. I've been observing these patients as requested by the agency to identify what is for them the most appropriate measures of change in upper extremity function. And this is achieved through evaluating items on patient-reported outcomes. The next step will be to apply those back to the REACH data themselves in order to derive what is the clinically meaningful threshold for reachable workspace.
And then secondly, we are conducting a number of exit interviews. We have patients that have gone through the REACH study. And this will help to enhance our understanding as well as FDA's understanding of what a change in our RWS. means for them and our expectation is that at the very latest, these data would all be available at the time of NDA submission. And of course, ultimately, FDA will also ultimately make the final determination as to what is considered clearly clinically meaningful considering the totality of evidence.
Okay. So effectively, we can say that there needs to be a little bit more validation work done on the RWSSA., is that a fair characterization and why you think that the validation work on the instrument itself in terms of the test retest capabilities, the training process that goes into the provision of the technical pieces of it. All of that has been done, and it's really quite satisfactory. I think it's the last remaining pieces around that the clinical meaningful, listen, what is considered minimally clinically significant change on our side.

Operator

Corinne Johnson, Goldman Sachs.

Good morning.

Alan Musso

This is Greg on for Corinne. I guess one for us, how familiar are physicians with the reachable workspace endpoint? And can you describe some of your physician education efforts that you're planning once you have the data?

Alex Sapir

Yes. Great. Great question, Greg, and thanks. Thanks for asking that I'll start, and I'll certainly turn it over to Ian if he has any others. So I would say that reachable workspace is not a standard of instruments that neuromuscular specialist currently use when evaluating their patients with FSHD, it is somewhat of a novel instrument. And so in terms of the answer to your question about what we're doing from an educational standpoint, really train them on on what reachable workspace is and what a change in reachable workspace actually means we're doing a number of programs throughout the year. We've got a program in two weeks at the at the MDA conference, a CME program in which we're actually spending a lot of time with the physicians that have signed up for that program when they walk through what is reachable workspace? What is a what is a normal baseline for patients? And what does the change in reachable workspace actually mean from the clinical meaningfulness of that change.
Going back to the first question that Matt asked will ultimately be sort of determined once we have the rich data, but there's a number of activities and that we're doing this year and in 2025 to really educate physicians on reachable workspace so that when the data does come out, they've got some they've got some context for those of those results in anything you would add?

Ian Frazier

And no, the only thing I would add perhaps are obviously all of the investigators in our clinical studies, both the redox for Phase 2 as well as reach in Phase 3. We are very well familiar with it now because of their participation in the study, and they obviously speak to their colleagues as well. So I think there's some level of dissemination to the clinical trials themselves. And then additionally, as Alex said, we have some CME programs designed to to inform and educate physicians around Got it.

Thank you very much.

Alex Sapir

Thanks, Greg.

Operator

Joseph Schwartz, Leerink Partners.

Andrea Park

Hi, good morning, Andrea Park dialing in for, Joe. Thank you for taking our questions on the first one is on both multi-mode and given reachable workspace is in a standard instrument now how can physicians measure benefit in the real world if they don't have access to the tools or other other metrics that could track with reachable workspace or clinically meaningful benefits and I have a follow-up.

Alex Sapir

Thank you.
Okay, that's great. Yes, I think come to Thanks for So much for the question. I think to answer that, let me turn that over to Ian, our Chief Medical Officer.

Ian Frazier

I think the advantage of the reachable workspace is that it provides a quantitative assessment that the treating physicians typically use in a more qualitative sense to understand how their patients are doing. So it allows us to put some numbers around those qualitative terms. And since there haven't been any therapies that alter the course of the disease available to date, there's really been no no need to do that. All the therapy is symptomatic to this point. So it's really adding a little bit off and quantitative measures around the more qualitative sense in the clinic.
I think the important pieces to point out here are number one that the reachable workspace has been shown previously prior to fulcrum involvement and the FSHD patients exhibit a decline in their reachable workspace over time. That's in a small natural history study that was published several years ago, and that's consistent with clinical observations around measuring muscle strength by more traditional measures like dynamometer. For example, we know that that In addition, the reachable workspace correlates with instruments patient-reported outcome instruments such as the neuro called upper extremity a questionnaire and that work has been published. And we've also shown from our Phase 2 data, the correlation between the reachable workspace and the shoulder at Dr. Dina monetary and it's the shoulder at dynamometer because obviously reachable workspace is focused on the upper extremity and the shoulder at doctors that major muscle component of that. So there are correlations that have been observed in the reachable workspace. And as I say, probably most importantly, it's the documentation of the decline experienced by these patients. And that's what the patients report is. This inevitable decline over time. And that's something that they're treating physicians and caregivers also report. And so there's consistency in the measure from that respect as well.

Andrea Park

Got it. Thank you. And then my second question is on poker. Dear I know the baseline characteristics like HBM, I can play a role in how much HPFU. can achieve. So would it be possible to provide patient baseline characteristics ahead of the next update that we can better contextualize and appreciate the data when they're released. Thank you very much.

Ian Frazier

And yes, this is Ian again. So maybe I can just add that we do have in our in our corporate presentation on the web data from the initial 16 patients that were enrolled in the study that includes a plot of their of their HbF and it includes the baseline fetal hemoglobin that they went in with. The comment that I would make there is that there was a range of baseline HBS. and I think speaking from memory, it was about 3% at the low end and just under 20% at the at the high end. And we know that in the sickle cell patient population in general, it's around five to 10 percentage of that. The average baseline to we've seen to date a pretty wide spread across baseline HBF.s. And while we don't have three months data in all of those patients, certainly the initial slope of the increase in HbF across all of those baselines look look pretty similar. So it didn't appear that that those that were starting out higher had a lower response or vice versa. I think where the critical piece of this is where did the patients end up with after three months. It looks like from the six milligram data that we have, which is the highest dose that's gone out to three months may not even be plateauing fully at the three months mark. And so that will obviously need to be evaluated further as we move through the process. But we will once we have the data around the fetal hemoglobin, we will reveal those baseline HPX. as well because it is an important component.

Operator

Dae Gon Ha, Stifel.

Dae Gon Ha

Good morning. Thanks for taking our questions and congrats on the progress of three questions. If I may one, Alex, have you guys actually started some pre-commercialization work with the payers specifically, I think there was quite a bit of questions around physicians and their comfort as well as the regulators, but how to payers feel about the reachable workspace and the magnitude you showed so far?
Second, sticking with low Snapper mine, the 10% change you detected in redox four. I was wondering if you could go into a little bit more on the test retest variability. I mentioned to an earlier question on any other evidence you can point to that kind of gives us some comfort around your Phase 3 REACH powering. And then I've got a follow up on the Presidio story.

Alex Sapir

Okay, great. Yes, why don't I I'll take question one and then I'll turn the question over to over to Ian and then we'll come back to you for question number three.
Thanks, begun. I think really a really good question. So yes, I hope we have done some some initial payer work both in the U.S. as well as ex U.S. And I don't remember the specifics of the study that we did, but I think it was around 10 payers that we had spoken to and shared with them the target product profile and shared with some of the results of the readouts for study. And they obviously were well aware that there was no available treatment options for these for these patients. The objective of the work that we did was really trying to understand their thoughts around pricing. And what we heard loud and clear from those from those payers is that they would expect that when this drug gets approved and comes to market that it would command rare disease type pricing such as you know, in the hundreds of thousands of dollars, I think probably a really good come to look at would be the pricing that Biogen has with Sky Clara. So it's a set, clear targets, Friedreich's ataxia, again, neuromuscular disease, not a lot of mortality, but but high morbidity. So very very similar to what we see with FSHD. The biggest difference between FA. and FSHD. is is the prevalent population F. and CT. is about four times the size. So the payer work that we've done, albeit somewhat limited to date has really been around has really been around pricing. And the feedback that we've heard from payers that they would say would expect this as the first entrant in a rare disease to be priced in the hundreds of thousands of dollars similar to other rare disease therapies. I will say dig on the other thing that we're also doing well with this hasn't been confirmed with payers. I think our instinct is that payers will require a confirmed genetic test of FSHD before approving the product. And as of right now, because there are no treatment options for patients with FSHD, very little genetic testing is done and of the genetic testing. It is done. It's clunky in that it takes a lot of time to get these genetic tests back and they're expensive. Sometimes the insurance company will pay for it. Sometimes they won't. So that's an area that we're going to spend a lot of time on in 2024 and 2025 to really streamline that, that process of genetic testing because right now it is it is not as efficient as we feel like it needs to be at the time that we launch, given our instinctive assumption that payers will require confirmed genetic testing before agreeing to add to approve the drug.
So on the second question, and maybe I'll turn that one over to you, Ian.

Ian Frazier

Yes, sure. So briefly, just to recap the redox form reachable workspace data, as you indicated, showed that on 10 percentage points treatment effect difference that was derived from repeated measures model that was used to assess that endpoint, and that is the same model that will be used for the REACH study.
And just to recap, that includes evaluations at baseline week for week 12, 24, 36 and 48. So it's not just a single comparison of the week 48 out to the baseline value. So it incorporates all of those measures over time and the treatment effect. The difference on an RSA unit score was about 0.05 with a baseline and reachable workspace score in those patients of 0.54 to 0.53, that's five quadrants. So the theoretical max, there would be 1.25 from just to contextualize that. So those are those are the data points that we use to power the Phase 3 REACH study from 230 patients originally projected at 260 originally at five to finally enrolled in that study with respect to the test retest. So we do have that. I don't have that number in front of you and we can circle back to you with that. That's in that's in the published literature that certainly can confirm that aspect outside of the readout for study, the variability in the change from baseline in reachable workspace and that standard deviation went into the power calculations for the REACH study. And so we are incorporating not just the treatment effect size, but also the variability from that reduction.

Dae Gon Ha

Okay. I appreciate the color there. On switching gears, to Pocerady or Alex, on the site activation, it seems like you're making some progress on certain sites that have already been activated, but you're also going out to activate more just wondering for those that you're working on now, what are some pushes and pulls you're hearing from them before they can get on board? And sort of separate to that is what piece of data, are you looking to collect to further expand the TAM of Procera there longer-term? Thanks so much, guys.

Alex Sapir

Yes, great question. Of the things you're asking, though, is, yes. I think some of the or actually let me back up a little bit. So at the at the ASH meeting, we had an opportunity to probably interact on a one to one-on-one basis with maybe 30 of the top thought leaders in the again in sickle cell. And I think while there were a minority of physicians that said that they weren't interested in participating in this study, primarily because of the fact that it is a small study and it's a new site and it's going to take nine months to get that site up and running, and they may only be able to give us sort of one to two patients for the time being, we're going to sit on the sidelines and come back to us once you are ready to enroll in a larger sort of Phase 2/3 study. So that so the sites that we're talking to right now are all sites that have I've expressed an interest and a lot of those are many of those physicians that we spoke to at ASH. I would say the majority of those physicians that we spoke to were very interested in the potential that procedure could bring to their patients. So all the on sites that we're talking with right now, we sort of screen out all those that are no longer interested. And so we're essentially have identified a series of sites that are very interested in participating. And essentially, we're just going through going through the getting the IRBs to approve it, getting the contracts getting the contracts through.
And the second question, second part of that question, begun.

Dae Gon Ha

Yes, with regards to the trial, the PIONEER trial I mean, your long-term goal is to eventually expand the TAM right now given the high severity of disease right now. So what kind of data are you looking to collect? And Pioneer before you can look to expand that?

Alex Sapir

Yes, great question. And I think some of that has to do with conversations that we've had with the agency to date and it has been intimately involved in those conversations. Maybe I'll turn that one over to Ian.

Ian Frazier

Yes, absolutely, Alex. And it is clear that that that the agency thinks of this in terms of risk and benefits. And they articulated that certainly in terms of their dealings with the gene therapy approaches in particular, which we know are associated with with pretty significant risks, including malignancy and with the black box warning going to the Bluebird product. However, they feel that they understand the upside and the benefits of those therapies and much better than they do with something like Presidio, which is still in early development. So I think the initial approach here is in the context of the PIONEER study. This three-month study is really to articulate fully at doses that we think are likely to be therapeutic, which are the 12 and potentially the 20 milligram once daily doses, what sort of fetal hemoglobin inductions we can see in those patients. And I think really demonstrating that and based on our initial experience at the 12 milligram dose, which only went up to six weeks or so, we feel that there are patients will be able to reach that high 20%, maybe even low 30% range where the disease becomes transformative. And so it's really filling out the efficacy side at least in the first instance on HBF. before being able to go back to the agency and to relax some of the inclusion exclusion criteria in the first instance and be to extend the dosing beyond the three months, which is the context of the current trial platform.

Dae Gon Ha

Thank you very much, guys.

Ian Frazier

Yes, thanks, Dae Gon.

Operator

Thank you. This concludes the question-and-answer portion of the call. I will now turn the call back over to Fulcrum's CEO, Alex, for closing remarks.

Alex Sapir

Thanks so much, Valerie and I guess just to wrap up, as you can see from our progress that we've made and our plans for 2024, we remain deeply committed to treat the root causes of genetically defined rare diseases and bringing these transformative therapies to patients.
And before we conclude today's call, as I always do, I would like to extend my sincere appreciation and gratitude to my fellow fulcrum teammates to the physicians we work with to advance our clinical studies and finally, and most importantly to the patients and their families. Thanks again to everyone.
Who joined this morning and please stay safe and healthy. Thanks so much.

Operator

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.