Fulcrum Therapeutics, Inc. — 2020 Q1 Form 10-Q
Reporting period: Three months ended March 31, 2020; filed May 13, 2020. Fulcrum is a clinical-stage biopharmaceutical company developing treatments for genetically defined rare diseases. It reported no product sales.
Key financial results
| Metric | Q1 2020 | Q1 2019 |
|---|---|---|
| Collaboration revenue | $0.75 million | None |
| Research and development expense | $14.48 million | $34.63 million |
| General and administrative expense | $5.06 million | $2.60 million |
| Total operating expenses | $19.55 million | $37.23 million |
| Net loss | $18.45 million | $36.84 million |
| Net loss per share, basic and diluted | $0.81 | $24.29 |
| Net cash used in operating activities | $15.20 million | $9.90 million |
At March 31, 2020, cash and cash equivalents were $25.38 million and current marketable securities were $55.83 million, totaling $81.21 million in cash, equivalents and marketable securities. Total assets were $94.86 million; current liabilities were $14.18 million; total liabilities were $24.23 million. The filing reports no credit facility or committed external capital. Debt is not identified as a material funding source; disclosed capital lease obligations were small. Operating margins are not meaningful given the company’s pre-commercial, loss-making status.
Changes versus the prior comparable period
- Net loss narrowed by $18.39 million, primarily because Q1 2019 included $25.6 million of acquired in-process research and development expense related to the GSK losmapimod agreement. Excluding that one-time item, the comparison also reflects higher ongoing development and corporate costs.
- Research and development expense fell $20.15 million, while general and administrative expense rose $2.47 million as the company expanded and incurred public-company, personnel and professional-service costs.
- Operating cash use increased $5.31 million. Investing cash use rose to $56.40 million, primarily reflecting purchases of marketable securities; the reported $71.33 million decrease in cash, cash equivalents and restricted cash therefore includes a substantial transfer into securities.
- Collaboration revenue began under the Acceleron agreement: $0.75 million was recognized in Q1 2020. Deferred revenue was $9.6 million at quarter-end, and $0.3 million of unbilled receivables related to reimbursable research costs.
Outlook, risks and notable items
- Management expected the $81.2 million of cash, equivalents and marketable securities at quarter-end to fund operating expenses and capital expenditures into the third quarter of 2021. This is an estimate dependent on assumptions; management warned that funds could be depleted sooner and that additional financing may be required.
- Fulcrum expected expenses and operating losses to increase as it advanced losmapimod, prepared a planned Phase 1 trial of FTX-6058, and continued discovery and development. The filing provides no revenue or earnings guidance.
- COVID-19 disrupted ReDUX4 trial execution: sites were temporarily postponing trial activities. Fulcrum amended the Phase 2b trial from 24 to 48 weeks to support participant safety and allow biopsies at week 16 or week 36. The company planned an interim analysis in Q3 2020 and expected topline data from approximately 80 participants in Q1 2021. These were forward-looking expectations, not reported outcomes.
- At the time of filing, the company planned to submit an IND for FTX-6058 in the second half of 2020. Development, regulatory, manufacturing, enrollment and COVID-related delays were identified as key uncertainties.
- The Acceleron collaboration included a $10 million non-refundable upfront payment and potential research, development and sales milestones totaling up to $438.5 million, plus tiered royalties and research-cost reimbursement. Milestone and royalty receipts are contingent; none had been received by March 31, 2020.
- Losmapimod is licensed from GSK; composition-of-matter patents licensed from GSK were expected to expire February 10, 2023. The filing also describes milestone and royalty obligations under the GSK agreement.
- No material legal proceedings were reported. Management concluded disclosure controls and procedures were effective at the reasonable-assurance level, with no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether ReDUX4 enrollment, biopsy timing, interim analysis and topline-data timelines were achieved, and how COVID-19 affected trial quality, cost and schedule.
- Whether the stated cash runway into Q3 2021 remains supportable as clinical spending changes, and what financing actions may be needed.
- Whether FTX-6058’s IND and planned Phase 1 trial proceeded on the stated timeline.
- The pace of Acceleron research-cost reimbursements and any achievement of collaboration milestones; the headline potential payments are not guaranteed revenue.
- Losmapimod clinical and regulatory progress, including the implications of the GSK license terms and expected 2023 composition-patent expiry.