Fulcrum Therapeutics, Inc. — Q2 2021 Form 10-Q
Business context and reporting period. Fulcrum is a clinical-stage biotechnology company developing treatments for genetically defined rare diseases. This unaudited quarterly report covers the three and six months ended June 30, 2021. Its two clinical-stage candidates were losmapimod for facioscapulohumeral muscular dystrophy (FSHD) and FTX-6058 for sickle cell disease (SCD) and other hemoglobinopathies. The company had no product-sales revenue.
Financial results and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Collaboration revenue | $4.4 million | $2.0 million | $9.2 million | $2.8 million |
| Research and development expense | $17.4 million | $12.8 million | $33.7 million | $27.3 million |
| General and administrative expense | $6.7 million | $5.1 million | $12.2 million | $10.2 million |
| Net loss | $19.6 million | $15.7 million | $36.6 million | $34.1 million |
| Basic and diluted loss per share | $0.60 | $0.66 | $1.14 | $1.47 |
Amounts are shown as losses where applicable. As the company had no product sales and relied on collaboration revenue, conventional product gross margins are not applicable; the filing does not report a gross margin measure. Operating loss was $19.7 million for Q2 2021 and $36.7 million for the first half.
- Cash and liquidity: At June 30, cash and cash equivalents were $56.8 million and marketable securities were $68.8 million, totaling $125.6 million. Including $1.1 million of restricted cash, cash, cash equivalents and restricted cash totaled $57.9 million.
- Cash flow: First-half operating cash use was $34.0 million, investing cash use was $13.9 million, and financing cash provided was $47.7 million. The financing total primarily reflects $47.4 million of net proceeds from the January 2021 stock offering. The company reported a $0.3 million net decrease in cash, cash equivalents and restricted cash.
- Debt and obligations: The filing reports no credit facility or committed capital source and no material change in contractual obligations. It does not identify material interest-bearing debt. Total liabilities were $27.0 million, including deferred collaboration revenue and lease-related balances. Headquarters minimum lease payments totaled $18.3 million as of June 30, 2021.
- Equity and dilution: Stockholders’ equity was $110.9 million and accumulated deficit was $258.3 million. The January public offering issued 4.6 million shares and generated $47.4 million net proceeds; 32.7 million common shares were outstanding as of June 30. As of August 3, 32,708,425 shares were outstanding.
Material changes versus prior comparable periods
- Q2 collaboration revenue rose $2.4 million year over year, principally reflecting revenue recognized under the MyoKardia collaboration, which began in July 2020, alongside higher Acceleron revenue. First-half revenue increased $6.4 million.
- Q2 R&D expense increased $4.6 million and first-half R&D expense increased $6.5 million, primarily due to external clinical and research costs for losmapimod and FTX-6058. First-half external R&D spending on FTX-6058 rose to $5.6 million from $2.3 million.
- Q2 G&A expense increased $1.5 million; first-half G&A increased $2.0 million, mainly from employee compensation and professional services.
- Net loss widened by $4.0 million in Q2 and $2.5 million for the first half. Lower investment income partly reflected reduced returns on cash and securities. Loss per share was lower than the comparable periods, while weighted-average shares increased substantially following equity financing.
- First-half operating cash use increased $4.7 million. Investing cash use fell $42.7 million, primarily because net purchases of marketable securities were lower than in the prior-year period.
Outlook, management commentary and key risks
- Runway and funding: Management believed June 30 cash, cash equivalents and marketable securities would fund operating expenses and capital expenditure requirements into the first quarter of 2023. The filing cautions that this estimate depends on assumptions that may prove incorrect. The company expects continued losses and will need additional financing; it has no credit facility or committed external funding source.
- Losmapimod: The Phase 2b ReDUX4 trial was completed in January 2021 and did not meet its primary endpoint, change in DUX4-driven gene expression. Management reported clinically relevant and nominally statistically significant benefits on certain secondary and exploratory structural, functional and patient-reported measures at 48 weeks; the drug was generally well tolerated, with no drug-related serious adverse events reported. The company planned to discuss the regulatory path with health authorities in the second half of 2021. FDA granted fast track designation in April 2021. The filing emphasizes uncertainty over whether trial endpoints will be accepted as clinically meaningful or support approval.
- FTX-6058: In August 2021, after quarter-end, the company reported interim Phase 1 results in healthy volunteers: the 10 mg multiple-dose cohort showed a mean 4.5-fold HBG mRNA increase at day 14 and a mean 4.2-fold increase in F-reticulocytes at follow-up, with 70%–80% reduction in baseline H3K27me3 reported as target engagement. Management planned a Phase 1b SCD trial in Q4 2021, a potential Phase 2/3 trial in 2023, and an IND for non-SCD hemoglobinopathies by year-end 2021, with a clinical trial anticipated in 2022. These are forward-looking plans, not outcomes.
- Principal risks: Clinical failure or delay, uncertain regulatory requirements and endpoints, patient recruitment challenges, COVID-19-related disruption, reliance on CROs and contract manufacturers, financing and dilution risk, competition, collaboration-partner decisions, and intellectual-property protection. The losmapimod composition-of-matter patents licensed from GSK were expected to expire February 10, 2023; the company also described its own FSHD method-of-use patents. MyoKardia had been acquired by Bristol Myers Squibb in November 2020, and the company warned that partner reprioritization could affect collaboration progress.
- Other matters: No material legal proceedings were reported. The company stated that disclosure controls and procedures were effective and that no material change in internal control over financial reporting occurred during the quarter. Interest-rate sensitivity was described as not material for an immediate 10% rate change; the company did not hedge foreign-currency exposure and reported minimal or no foreign-currency liabilities.
Investor facts to verify
- Review the full ReDUX4 data and regulatory feedback, particularly the missed primary endpoint, the evidentiary status of secondary and exploratory findings, and the path to a registrational trial.
- Track complete FTX-6058 Phase 1 results and execution of the planned SCD and non-SCD studies, including safety, durability and HbF-related measures in patients.
- Test the cash-runway estimate against actual quarterly cash burn, trial expansion and manufacturing costs; assess when and on what terms additional capital may be needed.
- Monitor collaboration revenue recognition, deferred revenue consumption, reimbursements and milestone receipts, distinguishing recognized revenue from cash collected and contingent milestone opportunities.
- Assess potential dilution from future equity issuance and outstanding options; verify changes in share count and the status of the ATM program.
- Confirm manufacturing supply, clinical enrollment, COVID-19 effects, partner commitment, and the practical scope and remaining duration of relevant intellectual-property protection.