FULC (2019 - Q3)

Good morning and welcome to the Fulcrum Therapeutics Third Quarter 2019 Conference Call. Currently, all participants are in a listen-only mode. There will be a question-and-answer session at the end of the call. I would now like to turn the call over to Peter Thomson, Vice President, Finance and Accounting at Fulcrum. Please proceed. Peter Th

Good morning. Welcome to Fulcrum’s third quarter 2019 conference call. We issued a press release earlier today reviewing our third quarter 2019 results and business updates which will be covered on this call. A replay of today’s call will be available on the investors and media section of our website. After our prepared remarks, we will open the call for Q&A. Before we begin, I’d like to mention that our call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These may include statements about our future expectations and plans, clinical development timelines, and financial projections. I encourage you to review our filings with the Securities and Exchange Commission including without limitation, our most recent quarterly report on form 10-Q which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. While these forward-looking statements represent our views as of today, they should not be relied upon as representing our views in the future. We may update these statements in the future, but we are not taking on an obligation to do so. With that, I will turn the call over to Robert Gould, Fulcrum President and Chief Executive Officer.

Thank you, Peter. Good morning, everyone, and welcome to our quarterly financial and corporate update call. Joining me today with prepared remarks is Bryan Stuart, our Chief Operating Officer; Owen Wallace, our Chief Scientific Officer; and Diego Cadavid, our Head of Clinical Development are also with us and will be available for questions. Today, I’d like to begin with an overview of our programs and our strategy. At Fulcrum, we aim to discover and develop therapeutics to treat genetically defined rare diseases by addressing their root cause. Given that a large number of rare genetic diseases have known mechanistic root causes, we believe there’s a significant opportunity to address a wide spectrum of these diseases. During the past quarter, we have made great progress in advancing our pipeline. We initiated two Phase 2 studies for our lead program with losmapimod, the most advanced clinical program in the industry for patients with facioscapulohumeral muscular dystrophy or FFHD. Our second program, FTX-6058 moved into IND-enabling studies with a goal to treat patients with select hemoglobinopathies including sickle cell disease and beta-thalassemia. Both of these programs were identified by Fulcrum’s proprietary product engine. The significant progress of each of these is powerful and tangible evidence of our approach to treat genetically defined diseases. As we have advanced clinically, we continue to evolve and strengthen our team. In September, we announced the appointment of Pamela Strode as Senior Vice President, Regulatory Affairs and Quality Assurance. Pam comes to Fulcrum with deep experience from large and small biopharma companies where she has led regulatory affairs and quality assurance across multiple therapeutic areas. Importantly, she has experience working with regulatory agencies to develop and advance therapies for rare diseases with unmet need. Before I review the progress in FSHD and hemoglobinopathies, I’d like to highlight our unique product engine. This discovery platform has enabled our two lead programs to progress into development within the first three and a half years of Fulcrum’s existence. Our approach to rebalance gene expression in patient-derived, tissue-relevant cell models is producing promising clinical development candidates for underserved patient populations. Our high throughput product engine and our proprietary database called FulcrumSeek are designed to identify previously unknown pathway relationships to steer target identification and small molecule drug candidate development. We believe our approach to the treatment of genetically defined diseases using a small molecule approach may offer significant advantages over other treatment modalities since small molecules can achieve broad biodistribution throughout the body, have an increased likelihood of tolerability, have well-defined manufacturing and quality control requirements, and can offer ease and patient access. Fulcrum’s product engine has enabled the progress of the lead programs in our pipeline. Our most advanced candidate is losmapimod, a selective p38 alpha/beta mitogen-activated protein kinase, MAPK inhibitor. Losmapimod is being evaluated in ongoing Phase 2 trials for the treatment of FSHD. And we began enrolling in these trials in August. FSHD is a serious and progressive disease characterized by muscular degeneration in which skeletal muscle is replaced by fat. There are no currently approved treatments for FSHD and no other known industry sponsored programs in clinical development. Patients with FSHD experience significant physical impairment and disability over time, which can severely impact their day-to-day function and quality of life. The root cause of FSHD is the aberrant expression of the DUX4 gene. Using our product engine, we made the novel discovery that P38 inhibitors including losmapimod, reduce the aberrant expression of the DUX4 gene. In February of this year, we obtained the exclusive worldwide license to losmapimod from GlaxoSmithKline, which allows Fulcrum to utilize the significant safety database that GSK generated with losmapimod during their previous studies in other indications. In October, we presented Phase 1 data from the losmapimod trial in FSHD patients at the International Annual Congress of the World Muscle Society. Losmapimod was well tolerated in FSHD patients with no serious adverse events reported with doses up to 15 mg taken orally, twice daily for 14 days. Importantly, we also showed that losmapimod achieved dose dependent concentrations in muscle and that are twice daily 15 mg dose resulted in sustained and robust target inhibition in blood. These levels of drug and targeted inhibition have been shown in preclinical studies to reduce DUX4 as well as DUX4 driven gene expression and restore muscle function. The data from the Phase 1 study supports the selection of 15 mg BID of losmapimod as the appropriate dose for our ongoing Phase 2 clinical trials. ReDUX4 is a Phase 2, randomized, double-blind, placebo controlled study to evaluate the efficacy and safety of losmapimod in FSHD patients over 24 weeks. We are in the process of enrolling 66 patients randomized one-to-one in the trial with a plan to open label extension to follow. The primary endpoint of the ReDUX4 study is DUX4 activity in effected skeletal muscle at 16 weeks as measured by quantitative RT-PCR in a panel of DUX4 regulated gene transcripts. Secondary endpoints include the continued evaluation of safety and tolerability, PK and blood, losmapimod concentration in skeletal muscle biopsies and targeted engagement in blood and in skeletal muscle. This study encompasses up to 20 sites across five countries including the U.S., Canada and three countries in Europe. In addition, exploratory endpoints include measures of clinical effect. We are evaluating functional impact on activities of daily living that patients have reported as significant. These include the ability to get out of bed, a test called optimized Timed-Up-and-Go or TUG, a measure of proximal arm and shoulder function referred to as reachable workspace functional tests or RWF with an objective evaluation using motion sensing technology adapted from a popular video game console and measures of skeletal muscle volume, fat infiltration and fat replacement by whole body MRI. We expect to obtain top-line data from this study in the third quarter of 2020. Our second ongoing Phase 2 trial of losmapimod is an open label study to evaluate longer term safety and tolerability of losmapimod in FSHD patients. The trial is running concurrently with ReDUX4 and at doses of 15 mg twice per day for up to 52 weeks. We are in the process of enrolling 16 subjects at a single site in Europe. Our FSHD program is a powerful example of our integrated approach to developing therapeutics. As we progressed from initial screening in our product engine to conducting a Phase 2b trial in two years, we are encouraged by our preliminary Phase 1 clinical results and are excited about the possibility of making a difference for patients with this serious disease, patients who have no treatment options. Now I’d like to move to discuss recent advances in our second product candidate, FTX-6058, for the potential treatment of certain hemoglobinopathies, including sickle cell disease and beta-thalassemia. Patients with these debilitating diseases suffer from serious clinical consequences. We are conducting IND-enabling studies for FTX-6058 and we anticipate filing an IND in mid-2020. Similar to our first program, we look to address the root cause of these diseases when selecting our development candidate, mutations or deletion of the hemoglobin gene HBB have been identified as a root cause of each of these diseases. Our approach is to increase levels of fetal hemoglobin or HbF to compensate for the mutated adult hemoglobin in these patients. In October, we announced preclinical research which shows treatment with FTX-6058 increases HbF levels to approximately 30% of total hemoglobin as measured by HPLC and mass spectrometry methods in human erythroid progenitor cells from multiple donors. Moving from our two lead programs to our discovery efforts, we are also continuing to strengthen our discovery pipeline by leveraging our product engine. We are conducting screens in four additional indications this year and we plan to conduct an additional six screens in 2020. Our current drug target identification and development efforts are focused on rare neuromuscular disorders, hemoglobinopathies, and CNS diseases. We also anticipate utilizing our product engine to discover drug targets for genetically defined diseases in other therapeutic areas. In addition to the targets that we prioritize for internal development, we may identify other drug targets that we would consider for development through partnerships. Based on this progress, we are pleased with our pipeline advances, especially as we move forward in Phase 2b for losmapimod and prepare to enter the clinic with FTX-6058. We never lose sight that we’re working to treat debilitating diseases. We believe that our gene expression oriented product engine will continue to provide a source of novel compounds going forward. With that, I will now turn the call over to Bryan Stuart, our Chief Operating Officer, to provide an update on our financial results for the third quarter.

Thank you, Robert. Good morning everyone and thank you for joining us today. Let me turn to our third quarter financial results which we reported in detail in our press release issued this morning. First, we ended the third quarter of 2019 in a strong financial position with $101.6 million in cash and cash equivalents. Based on our current operating plans, we continue to expect that our existing cash balance will fund our operating and capital expenditure requirements into the third quarter of 2021. Looking at our operating expenses, research and development expenses for the third quarter of 2019 were approximately $13.5 million, representing an increase of $6.5 million, compared to the third quarter of 2018. The year-over-year increase in research and development expenses was driven primarily by $2.5 million of cost incurred during the third quarter of 2019 associated with the achievement of a milestone due under the right of reference and license agreement with GlaxoSmithKline upon the initiation of our Phase 2 studies, as well as increased costs related to the advancement of losmapimod for the treatment of FSHD and increased personnel-related costs due to additional headcount to support the growth of Fulcrum’s research and development organization. General and administrative expenses for the third quarter of 2019 were $3.5 million. This represents an increase of $1.4 million, compared to the third quarter of 2018, driven by increased personnel-related costs due to increased headcount to support the growth of our organization, as well as well as increased consulting and professional fees. I will now turn the call back over to Robert.

Thank you, Bryan. Partnership with the patient community is essential to progressing our development efforts. And I would like to extend sincere gratitude to all who have contributed, including patients who have enrolled and those currently participating in Fulcrum’s clinical trials. Thank you also to our consultants who have participated in our progress to date. Finally, I’d like to thank all of the employees of Fulcrum to remain committed to executing on our goal of advancing therapeutics focused on improving the lives of patients with genetically defined diseases. We look forward to keeping you up to date on our progress. With that, I’ll now turn the call over to the operator for questions. Operator?

[Operator Instructions] Our first question comes from Dae Gon Ha with SVB Leerink.

Great, good morning. Thanks for taking our question. This is Dae Gon dialing in for Joe. So one question on losmapimod and one question on the hemoglobinopathy program if I may. So on losmapimod, I guess you’ve got a Natural History ReSOLVE study going on. So I guess how is that enrollment going? And just trying to gauge the sense of timing here as you’re going with two Phase 2 programs concurrently, so maybe if you can talk about enrollments across all three of these programs? And in terms of the end points, I guess, natural history will provide some meaningful insights there. So can we expect natural history data to come somewhat before Phase 2 to provide some context or what parameters or what numbers would you be looking forward to in the Phase 2 double-blind ReDUX4 study? And then on the hemoglobinopathy program, I guess if you can maybe talk to us a little bit about that 30% you saw in the human erythroid progenitor cells, can you remind us what the baseline you would normally expect a fetal hemoglobin in these cell types and what’s the translatability into hemoglobinopathy patients, particularly sickle cell and beta cell? Thanks.

Yes, thank you for the questions. So we’re pleased with the way enrollment is going. Just to remind you, the Natural History ReSOLVE study is a study that’s sponsored by the NIH and is being run at a number of clinical centers throughout the U.S. through a clinical trial network that had previously been set up. That enrollment is proceeding nicely. The projected number of patients is 220. And as of the end of this year or currently we are well on track to complete enrollment in that by the end of the year. The other Phase 2 studies that we’re going, the simultaneous Phase 2 studies, the open label-study is being run at a single site in Europe. And again, we’re pleased with how enrollment on that is going, as well as the ReDUX4 trial. In both those cases, we’re still on track with our projected enrollment and on track to release the top-line data from ReDUX4 in the third quarter of next year. The second question that you had was in that regard was related to interim look and end points around the ReSOLVE study. Those studies are – the ReSOLVE study is continuing to enroll patients and we’ll be projected to present those natural history studies in the course of interim analysis during the course of the next year. I’ll let Owen speak to the hemoglobin program.

Yes, thank you, Robert. The 30% number that you referenced was from our previously described study where we looked at the elevation of fetal hemoglobin in our CD34+ derived cells. And we saw a robust effect as you noted with our lead compound, FTX-6058. The baseline in these cells is somewhat variable depending on the donor. In this particular study, we saw around the 10% fetal hemoglobin baseline level. And this was elevated to approximately 30% as you noted. The translation to sickle cell patients and beta-thal patients is still a little bit uncertain. There are very few compounds that have gone into clinical development that have elevated fetal hemoglobin. So the translation back to preclinical studies is not very robust. What we could say is that we have benchmarked our compound and our mechanism with hydroxyurea, which is known to have a minimal effect in humans. We’ve also demonstrated a minimal effect in our cell lines and FTX-6058 has a considerably greater effect in our cell lines.

Great. Thanks for taking the question and congrats.

Thank you.

The next question comes from Matthew Harrison with Morgan Stanley.

Yes, do you have any updated thoughts on your regulatory plan in terms of engaging regulators ahead of the Phase 2 pivotal study with updates from the open label-study?

So the regulatory strategy for losmapimod is going to take advantage of the ongoing ReDUX4, the ongoing OL study, the natural history studies, as well as the open-label extension study, all of that data will be part of the package that we present for discussions with the U.S. and the EU regulatory authority. So I’d remind you that we have had several discussions already with the regulatory agencies, particularly the FDA, including a pre-IND meeting and then of course the discussion as we filed our IND and proceeded into the Phase 2 programs that we’ve described for you previously. We’ll be having additional conversations with the regulatory agencies as we move into 2020, including type B meetings that will be requested in the first half of next year. Also remind you that we have now hired Pam Strode as our Head of Regulatory Affairs. Pam brings a great deal of experience and interactions with the regulatory agencies around orphan diseases and approval in those areas. So as we move into 2020, we’ll be looking forward to continuing that dialogue with the FDA, particularly using the data coming out of all the studies that we’ll be generating.

Thank you. I’m not showing any further questions at this time. I’d like to turn the call back over to Robert.

Thank you, operator, and thank you all for joining Fulcrum’s first earnings call today and for your continued support. We look forward to updating you again in the near future. Thank you.

Ladies and gentlemen that does conclude today’s presentation. You may now disconnect and have a wonderful day.