Fulcrum Therapeutics, Inc. — Q2 2023 Form 10-Q
Business context and period. Clinical-stage biotechnology company focused on genetically defined rare diseases. This unaudited report covers the quarter and six months ended June 30, 2023. Fulcrum has no product sales; collaboration revenue is its reported revenue. Its principal clinical programs are losmapimod for FSHD and FTX-6058 for sickle cell disease (SCD), which was under FDA clinical hold.
Financial highlights
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Collaboration revenue | $0.9m | $1.9m | $1.2m | $4.5m |
| Research and development expense | $17.8m | $25.0m | $34.6m | $42.9m |
| General and administrative expense | $10.3m | $11.1m | $21.8m | $21.9m |
| Net loss | $23.8m | $34.1m | $48.6m | $60.0m |
| Net loss per share, basic and diluted | $0.38 | $0.83 | $0.80 | $1.47 |
- Q2 other income, primarily investment interest, was $3.5m, compared with $0.2m a year earlier; six-month amounts were $6.7m and $0.2m. No operating-profit margin is meaningful given the company’s development-stage operations and losses.
- Six-month operating cash use was $44.9m, versus $49.5m in 2022. Investing activities used $74.1m, principally reflecting purchases of marketable securities; financing provided $117.8m, mainly from the January public offering.
- At June 30, cash and cash equivalents were $34.0m and marketable securities were $244.2m, totaling $278.2m. Current assets were $282.9m and current liabilities $14.8m. Total liabilities were $24.9m; no borrowings are reported. Operating lease liabilities totaled $12.2m, including $11.5m in the lease schedule.
- Accumulated deficit was $460.9m. Stockholders’ equity was $275.4m. Shares outstanding increased to 61.8m from 52.1m at December 31, 2022, largely following the public offering.
Changes and operating developments
- Q2 collaboration revenue fell $1.0m year over year, and six-month revenue fell $3.3m. The Acceleron collaboration had ended effective October 1, 2022; MyoKardia revenue also declined as research services were performed.
- R&D expense declined $7.2m in Q2 and $8.3m for the half year. The comparisons include a $5.0m GSK milestone expense in 2022 upon REACH trial initiation; lower FTX-6058 spending during the hold also contributed. Losmapimod external costs increased in the six-month comparison as REACH advanced.
- Lower operating expenses and higher investment income reduced net losses year over year. The January 2023 offering generated $117.3m net proceeds from 9.6m shares sold at $13.00 per share.
Outlook, risks and contingencies
- Management estimates existing cash, cash equivalents and marketable securities will fund operating expenses and capital needs into mid-2025. The filing cautions that this estimate depends on assumptions and that additional financing may be required; there are no committed external funding sources.
- Management expects losses and negative operating cash flows to continue, with expenses expected to increase as development advances. REACH enrollment was expected to complete in Q3 2023, with topline data expected in Q4 2024.
- The FDA placed a full clinical hold on the FTX-6058 SCD IND on February 23, 2023, citing hematological malignancies observed in nonclinical toxicology studies. Enrollment and dosing were suspended; Fulcrum withdrew its separate beta-thalassemia IND. Resumption depends on resolving FDA concerns, with no assurance the hold will be lifted.
- In July 2023, after quarter-end, Fulcrum licensed CAMP4’s Diamond Blackfan Anemia program. The upfront payment amount was undisclosed; potential payments include up to $35m in development/regulatory milestones and $35m in sales milestones, plus tiered royalties. Fulcrum is responsible for development and regulatory costs.
- A securities class action filed in April 2023 alleges misleading statements and omissions concerning the FTX-6058 clinical hold. The company intends to defend itself; the filing reports no legal costs incurred during the quarter or half year and does not provide a clear loss estimate.
- Other material risks include clinical-trial uncertainty, dependence on third-party manufacturers and trial providers, potential need for further capital, and the possibility of adverse events or regulatory delays. Management reported disclosure controls were effective as of June 30, 2023.
Key facts for investors to verify
- FDA communications and the evidence needed to resolve the FTX-6058 hold, including any safety implications.
- Actual REACH enrollment completion and whether the expected Q4 2024 topline-data timing remains achievable.
- Cash burn, investment balances and the assumptions supporting the mid-2025 runway estimate; potential financing needs and dilution.
- The CAMP4 license’s undisclosed upfront payment, accounting treatment and resulting development commitments.
- Developments in the securities litigation and any subsequent estimate of potential exposure.