Fulcrum Therapeutics, Inc. — Q3 2020 Form 10-Q
Reporting period: Three and nine months ended September 30, 2020. Fulcrum is a clinical-stage biopharmaceutical company developing treatments for genetically defined rare diseases. Amounts below are in U.S. dollars; financial statement amounts are converted from thousands to millions.
Financial results and position
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Collaboration revenue | $1.8m | — | $4.6m | — |
| Research and development expense | $15.6m | $13.5m | $42.9m | $59.0m |
| General and administrative expense | $5.3m | $3.5m | $15.5m | $8.7m |
| Total operating expenses | $21.0m | $17.0m | $58.4m | $67.7m |
| Net loss | $19.0m | $16.5m | $53.1m | $66.6m |
| Basic and diluted loss per share | $0.70 | $0.97 | $2.16 | $10.33 |
No product sales were reported; collaboration revenue came from the Acceleron and MyoKardia research and license agreements. Product gross margin is not applicable, and the filing does not report a meaningful operating margin for this development-stage business.
- Cash flow: Net cash used in operations was $33.8m for the first nine months of 2020, versus $35.0m in 2019. Investing used $42.5m, primarily reflecting net purchases of marketable securities; financing provided $64.9m, mainly from the June private placement. Cash, cash equivalents and restricted cash decreased $11.5m.
- Liquidity: At September 30, cash and cash equivalents were $85.2m and marketable securities were $41.8m, totaling $127.0m. Current assets were $132.1m and current liabilities $26.5m. Management expected available cash, cash equivalents and marketable securities to fund operations and capital needs into Q2 2022, subject to assumptions and potential changes in plans.
- Balance sheet and funding: Total assets were $142.2m, total liabilities $37.2m, and stockholders’ equity $105.0m. Accumulated deficit was $203.9m. The filing reports no credit facility or committed external funding source; it also describes a $250m shelf registration and an at-the-market program of up to $75m, with no shares sold under the ATM through quarter-end.
- Debt and commitments: No material conventional borrowing or credit facility is reported. The company disclosed $20.0m of remaining minimum headquarters lease payments, including $1.1m of restricted cash supporting a letter of credit.
Changes versus the prior comparable period
- Q3 net loss widened by $2.4m year over year as operating expenses rose $3.9m and other income declined; new collaboration revenue partly offset expenses.
- Nine-month net loss narrowed by $13.5m. R&D expense fell $16.1m, primarily because 2019 included $25.6m of acquired losmapimod in-process R&D and a $2.5m GSK milestone. Lower prior-year one-time costs more than offset higher 2020 manufacturing, clinical, personnel and FTX-6058 development costs.
- Nine-month G&A increased $6.8m, reflecting higher professional and consulting costs and added personnel, including public-company costs.
- Cash and cash equivalents declined from $96.7m at December 31, 2019 to $85.2m, while marketable securities increased from none to $41.8m. In June 2020, Fulcrum raised $68.5m gross in a private placement of common stock, or approximately $64.2m net of costs.
Outlook, developments and risks
- Losmapimod for FSHD: A prespecified interim analysis of 29 participants found no separation from placebo on the primary endpoint across the overall group at 16 weeks. A sensitivity analysis of the highest-baseline-expression subgroup showed a reduction versus placebo, but included only three losmapimod and five placebo participants and was not powered for statistical significance. The company extended the ReDUX4 treatment period from 24 to 48 weeks amid COVID-19 disruptions and expected full trial data in Q2 2021, replacing its earlier plan for Q1 topline primary-endpoint data.
- Losmapimod for COVID-19: The Phase 3 LOSVID study planned approximately 400 higher-risk hospitalized patients. Enrollment began in Q4 2020 after delays in site activation; management expected to update trial timing in Q1 2021. Risks include recruitment and pandemic-related disruption, changing standard of care, competing therapies or vaccines, and uncertain efficacy and regulatory outcomes.
- FTX-6058: Its IND came into effect in October 2020, after quarter-end. The company planned a Phase 1 healthy-volunteer study in Q4 2020 to assess safety, tolerability and pharmacokinetics.
- Collaborations: The MyoKardia agreement, signed in July 2020, provided a $10m upfront payment and $2.5m prepaid research funding. Acceleron and MyoKardia agreements may also provide research reimbursements, milestones and royalties, but those potential payments depend on future research, development and commercial events.
- Risks and contingencies: Fulcrum expects ongoing losses and negative operating cash flows and may need additional financing; equity funding could dilute shareholders, while collaboration funding could require rights to be shared. Clinical, regulatory, manufacturing, intellectual-property, collaboration and COVID-19 risks remain material. No material legal proceedings were reported. The company said disclosure controls were effective and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether full ReDUX4 results support clinical benefit, particularly in light of the overall interim primary-endpoint result and the small sensitivity-analysis subgroup.
- LOSVID enrollment, timing, interim analysis plans and subsequent trial results.
- Whether FTX-6058 Phase 1 testing began as planned and what safety and pharmacokinetic data show.
- Actual cash burn and runway relative to management’s Q2 2022 estimate, including future trial, manufacturing and collaboration costs.
- Terms and potential dilution from future use of the shelf registration or ATM program, and progress toward collaboration milestones or reimbursements.
- Losmapimod intellectual-property position: the licensed composition-of-matter patents are expected to expire February 10, 2023, while company-owned patents relate to methods of treating FSHD.