Fulcrum Therapeutics, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Fulcrum is a clinical-stage biotechnology company developing treatments for genetically defined rare diseases; it had no product sales. Amounts below are in millions of dollars unless otherwise noted.
Financial performance and position
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Collaboration revenue | $4.9 | $1.8 | $14.1 | $4.6 |
| Research and development expense | $17.1 | $15.6 | $50.8 | $42.9 |
| General and administrative expense | $8.6 | $5.3 | $20.8 | $15.5 |
| Total operating expenses | $25.7 | $21.0 | $71.6 | $58.4 |
| Net loss | $(20.7) | $(19.0) | $(57.4) | $(53.1) |
| Basic and diluted loss per share | $(0.57) | $(0.70) | $(1.71) | $(2.16) |
| Cash used in operating activities | — | $(56.6) | $(33.8) |
Revenue was entirely collaboration-based, principally from Acceleron and MyoKardia (acquired by Bristol Myers Squibb); no product revenue was reported. Q3 revenue rose about 167% year over year, while quarterly net loss widened about 9%. For the first nine months, revenue more than tripled, but operating expenses increased 23% and net loss widened about 8%. R&D growth reflected work on losmapimod and FTX-6058; G&A growth chiefly reflected professional services and higher headcount. No gross margin is presented, and a product margin is not applicable at this stage.
At September 30, cash and cash equivalents were $65.5, marketable securities $174.9, and restricted cash $1.1. Cash, cash equivalents and marketable securities totaled $240.3. Current assets were $246.2 versus current liabilities of $20.6, an approximately 12.0x current ratio. Total liabilities were $24.9 and stockholders’ equity was $230.6. No material borrowings or credit facility were disclosed; the company said it had no committed external capital source.
Operating cash use increased to $56.6 from $33.8 for the comparable nine months, driven mainly by program spending, compensation and corporate costs. Investing cash use was $120.6, primarily reflecting purchases of marketable securities, rather than solely operating investment; financing provided $185.6, principally from public offerings. Net cash, cash equivalents and restricted cash increased $8.4. The company raised $47.4 net in a January public offering and $135.5 net in an August offering. Accumulated deficit was $279.0. Management estimated existing cash, cash equivalents and marketable securities would fund operations and capital expenditure requirements into 2024, subject to assumptions that could prove incorrect.
Programs, outlook and material risks
- Losmapimod for FSHD: The Phase 2b ReDUX4 trial was completed in January 2021 and did not meet its primary endpoint. Management reported clinically relevant, nominally statistically significant benefits on some secondary and exploratory measures at 48 weeks; the drug was generally well tolerated, with no drug-related serious adverse events reported. The company planned health-authority discussions by year-end 2021 and a program update in Q1 2022. FDA Fast Track designation had been granted.
- FTX-6058 for SCD and beta-thalassemia: In August 2021, interim healthy-volunteer Phase 1 results showed 70%–80% reduction in H3K27me3 at tested multiple doses; at 10 mg, mean HBG mRNA induction was 4.5-fold and F-reticulocytes increased 4.2-fold. Management described the candidate as generally well tolerated in completed cohorts, with no serious adverse events or discontinuations; one Grade 4 event was assessed as unrelated. Planned milestones were additional Phase 1 data by year-end 2021, Phase 1b SCD enrollment by year-end 2021, initial Phase 1b data in Q2 2022, and a potential Phase 2/3 start in 2023. The company also planned an IND for non-SCD hemoglobinopathies by year-end 2021 and a trial in 2022.
- Spending and financing: Management expected operating losses and negative operating cash flows to continue, with expenses rising as trials advance, new studies begin, and the company expands research, manufacturing and public-company capabilities. Further funding may be needed; equity financing could dilute shareholders, while debt or partnerships could impose restrictions or require relinquishing rights.
- Key risks: Clinical efficacy, safety, trial enrollment and regulatory outcomes remain uncertain; ReDUX4’s missed primary endpoint and the use of developing or novel endpoints heighten uncertainty for losmapimod. COVID-19 could disrupt trials, sites, vendors, supply and regulatory work. The company depends on contract research and manufacturing organizations, has no commercial products or sales infrastructure, and relies on intellectual-property protection and collaboration partners. Management cautioned that marketable-securities and operating-plan assumptions could lead to earlier cash depletion.
- Other disclosures: No material legal proceedings or off-balance-sheet arrangements were reported. The company stated disclosure controls were effective and reported no material change in internal control over financial reporting during the quarter. It does not expect to pay dividends in the foreseeable future.
Important facts for investors to verify
- Review full ReDUX4 results and upcoming regulatory discussions, especially the significance of the missed primary endpoint and the secondary/exploratory findings.
- Track FTX-6058 patient data, dose selection, safety, and whether the planned Phase 1b, IND and trial timelines are met.
- Reconcile collaboration deferred-revenue disclosures: the balance sheet reports $6.1 million total deferred revenue, while the notes describe $6.1 million for Acceleron and $4.4 million for MyoKardia; the MD&A also contains a different Acceleron deferred-revenue figure. The filing text does not provide a clear reconciliation.
- Assess cash burn against management’s runway estimate into 2024, including trial expansion, financing needs and potential dilution. Verify the impact of the January and August 2021 share offerings.
- Monitor collaboration progress and partner priorities, particularly following MyoKardia’s acquisition by Bristol Myers Squibb, as well as supply, intellectual-property and COVID-related risks.