Business context and reporting period
Fulcrum Therapeutics, Inc. is a clinical-stage biotechnology company developing treatments for genetically defined rare diseases. This unaudited Form 10-Q covers the three months ended March 31, 2021; comparative figures are for the three months ended March 31, 2020 unless otherwise noted. The company had no product sales and reported collaboration revenue only.
Key programs were losmapimod for facioscapulohumeral muscular dystrophy (FSHD) and FTX-6058 for hemoglobinopathies, including sickle cell disease (SCD). The company also conducts discovery collaborations with Acceleron and MyoKardia, acquired by Bristol Myers Squibb in November 2020.
Financial performance and position
Amounts below are in millions of dollars except per-share data.
| Metric | Q1 2021 | Q1 2020 | Change |
|---|---|---|---|
| Collaboration revenue | $4.8 | $0.8 | +$4.0 |
| Research and development expense | $16.3 | $14.5 | +$1.9 |
| General and administrative expense | $5.5 | $5.1 | +$0.4 |
| Total operating expenses | $21.8 | $19.5 | +$2.3 |
| Operating loss | $(17.0) | $(18.8) | Loss narrowed by $1.8 |
| Net loss | $(17.0) | $(18.5) | Loss narrowed by $1.5 |
| Net loss per share, basic and diluted | $(0.54) | $(0.81) | |
| Net cash used in operating activities | $(16.2) | $(15.2) | Use increased by $1.0 |
Gross margin is not applicable to the reported collaboration revenue; the filing does not present a gross-profit measure. At March 31, 2021, cash and cash equivalents were $100.7 million and marketable securities were $43.1 million, totaling $143.9 million. Current assets were $147.0 million and current liabilities $22.6 million. Total liabilities were $28.7 million; the filing reports no credit facility or committed source of capital and only a small capital-lease obligation.
Accumulated deficit was $238.6 million. Total stockholders’ equity was $127.8 million. Operating cash use was partly offset by $47.5 million of financing cash inflow, principally net proceeds from the January 2021 stock offering; investing activities provided $12.4 million, mainly from marketable-security maturities.
Material changes versus the prior comparable period
- Revenue rose to $4.8 million from $0.8 million, comprising $2.6 million from Acceleron and $2.2 million from MyoKardia; the latter collaboration had not yet begun in Q1 2020.
- R&D expense increased mainly from higher external research and development costs, including spending on losmapimod and FTX-6058. G&A also increased, primarily due to employee compensation and professional services.
- Net loss narrowed despite higher operating expenses, mainly because of increased collaboration revenue. Other income fell to $0.04 million from $0.34 million as investment returns declined.
- In January 2021, Fulcrum sold 4.6 million shares at $11 per share, receiving $47.4 million net. Common shares outstanding rose to 32.6 million at quarter-end from 27.9 million at year-end 2020.
- Cash and marketable securities increased from $112.9 million at December 31, 2020 to $143.9 million at March 31, 2021.
Outlook, management commentary, risks and contingencies
- Management estimated existing cash, cash equivalents and marketable securities would fund operating expenses and capital requirements into the fourth quarter of 2022. The estimate depends on assumptions that may change; the company expects continued losses and negative operating cash flows and may need additional financing.
- Management expected to present full ReDUX4 Phase 2b losmapimod data at the FSHD International Research Congress on June 24–25, 2021, and Phase 1 FTX-6058 data in mid-2021. It anticipated starting an FTX-6058 trial in SCD patients in the second half of 2021.
- In March 2021, Fulcrum discontinued its Phase 3 losmapimod trial in higher-risk hospitalized adults with COVID-19 following a strategic review.
- Management expected R&D expenses to increase as programs advance. Principal risks include clinical-trial outcomes and timing, regulatory acceptance of endpoints, patient enrollment, safety, manufacturing and third-party dependence, COVID-19 disruption, intellectual-property protection, collaboration execution, and access to future capital.
- Collaboration revenue is variable and depends on the timing of research performance, cost reimbursements and milestones. Remaining milestone payments are generally contingent and excluded from transaction prices until uncertainty is resolved. Acceleron and MyoKardia may terminate their collaborations for convenience; MyoKardia’s acquisition by Bristol Myers Squibb adds potential reprioritization risk.
- Fulcrum reported no material legal proceedings, no material off-balance-sheet arrangements, and no material changes to contractual obligations outside the ordinary course. It reported no material change in internal control over financial reporting and concluded disclosure controls were effective at the reasonable-assurance level.
Important facts for investors to verify
- Whether losmapimod’s ReDUX4 results and other FSHD trial data support clinical benefit and the proposed endpoints.
- Whether FTX-6058 Phase 1 results support planned SCD patient testing, and whether the anticipated trial timing was achieved.
- Whether the projected cash runway into Q4 2022 remains valid against actual trial costs, operating cash use and financing needs.
- Progress and any termination or reprioritization of the Acceleron and MyoKardia collaborations, including receipts of reimbursements or contingent milestones.
- The dilution and financing implications of the January 2021 offering and any further equity, debt or collaboration financing.