Fulcrum Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Fulcrum is a clinical-stage biopharmaceutical company developing treatments for genetically defined rare diseases. It reported no product-sales revenue; reported revenue came from collaborations.
Financial performance and liquidity
| Metric | Q2 2022 | Six months 2022 |
|---|---|---|
| Collaboration revenue | $1.9 million | $4.5 million |
| Research and development expense | $25.0 million | $42.9 million |
| General and administrative expense | $11.1 million | $21.9 million |
| Net loss | $34.1 million | $60.0 million |
| Basic and diluted loss per share | $0.83 | $1.47 |
| Cash used in operating activities | Not separately provided | $49.5 million |
- At June 30, 2022, cash and cash equivalents were $40.2 million and marketable securities were $128.8 million, or $169.0 million combined. Restricted cash was an additional $1.1 million.
- Total assets were $195.2 million; total liabilities were $34.5 million, including $14.6 million of operating lease liabilities. The filing reports no credit facility or committed capital sources; it does not identify outstanding borrowings.
- Accumulated deficit was $362.5 million. The company has not generated product revenue and expects continuing losses. Gross margin and product margins are not applicable to the reported collaboration revenue.
Changes versus prior comparable periods
- Q2 collaboration revenue declined 57% year over year; six-month revenue declined 51%. The main factor was lower Acceleron collaboration revenue, with the agreement’s termination to take effect October 1, 2022.
- Q2 net loss widened to $34.1 million from $19.6 million; six-month net loss widened to $60.0 million from $36.6 million. Higher development and administrative expenses contributed.
- Six-month operating cash use rose to $49.5 million from $34.0 million. Investing activities provided $51.1 million, mainly from net maturities of marketable securities; financing provided $3.2 million, primarily from employee benefit plans.
- R&D expense included a $5.0 million GSK milestone triggered by initiation of the REACH Phase 3 trial for losmapimod. The milestone was recorded as R&D expense.
Outlook, developments, and risks
- Management estimated that June 30 cash, cash equivalents, and marketable securities would fund operations into mid-2024, based on assumptions and successful implementation of its subsequent operational realignment. The filing also states cash resources are expected to cover at least 12 months from issuance of the financial statements.
- In August 2022, the company announced a plan to prioritize its two clinical programs and reduce planned headcount by 25%. It projected $40–$50 million in cumulative savings into mid-2024; the restructuring’s financial impact was still being evaluated.
- Losmapimod’s REACH Phase 3 trial for FSHD began in Q2 2022. FTX-6058 Phase 1b initial-cohort data showed increases in fetal hemoglobin among three evaluable subjects, including a reported increase of up to 6.3% over baseline. Six subjects enrolled; three were not evaluable for HbF at the cutoff because of non-adherence or protocol deviation. No serious treatment-emergent adverse events were reported in this initial cohort. The company planned to complete three cohorts by year-end 2022 and initiate a registrational trial in 2023.
- The company expected to submit its next IND application in 2023. It cautioned that clinical results, enrollment, regulatory requirements, manufacturing, collaboration funding, and capital-market conditions could affect timelines and spending.
- Key risks include early-stage drug development and uncertain trial outcomes, continuing funding needs and potential dilution, reliance on third-party manufacturers and trial operators, competition, intellectual-property protection, and possible COVID-19-related disruption. The filing notes losmapimod composition-of-matter patents licensed from GSK were expected to expire February 10, 2023.
- The company had a $50.0 million ATM offering program but had sold no shares under it through June 30, 2022. It reported no material legal proceedings. Disclosure controls and procedures were assessed as effective.
Important facts for investors to verify
- Whether the announced workforce reduction and cost savings are completed and achieved, and whether the mid-2024 cash-runway estimate remains supported by actual spending.
- Enrollment, evaluability, safety, and efficacy progress in REACH and the FTX-6058 studies, including the basis and limitations of the early FTX-6058 findings.
- How Acceleron’s termination affects remaining collaboration revenue, and the continued progress and funding terms of the MyoKardia collaboration.
- Future cash burn, access to financing, potential ATM usage or dilution, and any changes to clinical development priorities.
- Losmapimod patent coverage and the implications of the expected expiration of the licensed composition-of-matter patents.