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Edited Transcript of FULC.OQ earnings conference call or presentation 14-Nov-19 1:00pm GMT

Q3 2019 Fulcrum Therapeutics Inc Earnings Call

CAMBRIDGE Dec 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Fulcrum Therapeutics Inc earnings conference call or presentation Thursday, November 14, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Bryan E. Stuart

Fulcrum Therapeutics, Inc. - COO

* Owen B. Wallace

Fulcrum Therapeutics, Inc. - Chief Scientific Officer

* Peter G. Thomson

Fulcrum Therapeutics, Inc. - VP of Finance & Accounting

* Robert J. Gould

Fulcrum Therapeutics, Inc. - CEO, President & Director

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Conference Call Participants

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* Dae Gon Ha

SVB Leerink LLC, Research Division - Associate

* Matthew Kelsey Harrison

Morgan Stanley, Research Division - Executive Director

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Presentation

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Operator [1]

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Good morning, and welcome to the Fulcrum Therapeutics Third Quarter 2019 Conference Call. (Operator Instructions) I would now like to turn the call over to Peter Thomas -- Peter Thomson, Vice President of Finance and Accounting at Fulcrum, please proceed.

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Peter G. Thomson, Fulcrum Therapeutics, Inc. - VP of Finance & Accounting [2]

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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 time lines 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 identifies 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's President and Chief Executive Officer.

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Robert J. Gould, Fulcrum Therapeutics, Inc. - CEO, President & Director [3]

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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 is 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 2 Phase II studies for our lead program with losmapimod, the most advanced clinical program in the industry for patients with facioscapulohumeral muscular dystrophy or FSHD.

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 2 lead programs to progress into development within the first 3.5 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 bio distribution throughout the body, have an increased likelihood of tolerability, have well-defined manufacturing and quality control requirements and can offer ease in 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 p38a/ß mitogen activated protein kinase, MAPK inhibitor. Losmapimod is being evaluated in ongoing Phase II 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 the GSK generated with losmapimod during their previous studies in other indications.

In October, we presented Phase I 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 milligram taken orally twice daily for 14 days.

Importantly, we also showed that losmapimod achieved dose-dependent concentrations in muscle and that our twice daily 15-milligram 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 I study supports the selection of 15 milligram BID of losmapimod as the appropriate dose for our ongoing Phase II clinical trials.

ReDUX4 is a Phase II 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 1:1 in the trial with a planned open-label extension to follow. The primary endpoint of the ReDUX4 study is DUX4 activity in affected 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 in blood, losmapimod concentration in skeletal muscle biopsies and target engagement in blood and in skeletal muscle. This study encompasses up to 20 sites across 5 countries, including U.S., Canada and 3 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 work space functional tests, or RWS, 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 II 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 milligram 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 progress from initial screening in our product engine to conducting a Phase IIb trial in 2 years. We are encouraged by our preliminary Phase I 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 2 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 4 additional indications this year, and we plan to conduct an additional 6 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 IIb 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.

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Bryan E. Stuart, Fulcrum Therapeutics, Inc. - COO [4]

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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 II 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 increased consulting and professional fees.

I will now turn the call back over to Robert.

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Robert J. Gould, Fulcrum Therapeutics, Inc. - CEO, President & Director [5]

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Thank you, Brian. 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?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Dae Gon Ha with SVB Leerink.

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Dae Gon Ha, SVB Leerink LLC, Research Division - Associate [2]

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Great. 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 2 Phase II programs concurrently. So maybe, if you can talk about enrollments across all 3 of these programs? And in terms of the endpoints, I guess, Natural History will provide some meaningful insights there. So can we expect Natural History data to come somewhat before Phase II to provide some context? Or what parameters or what numbers would you be looking forward to in the Phase II 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 the fetal hemoglobin in these cell types? And what's the translatability into hemoglobinopathy patients, particularly sickle cell and beta-thal?

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Robert J. Gould, Fulcrum Therapeutics, Inc. - CEO, President & Director [3]

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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 are currently -- we are well on track to complete enrollment in that by the end of the year. The other Phase II studies that we're doing, the simultaneous Phase II 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 endpoints around the ReSolve study. Those studies are -- the ReSolve study is continuing to enroll patients and will be projected to present those natural history studies in the course of interim analysis during the course of next year. I'll let Owen speak to the hemoglobin program.

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Owen B. Wallace, Fulcrum Therapeutics, Inc. - Chief Scientific Officer [4]

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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 positive-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 a 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.

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Operator [5]

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Our next question comes from Matthew Harrison with Morgan Stanley.

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Matthew Kelsey Harrison, Morgan Stanley, Research Division - Executive Director [6]

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

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Robert J. Gould, Fulcrum Therapeutics, Inc. - CEO, President & Director [7]

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So the regulatory strategy for losmapimod is going to take advantage of the ongoing ReDUX4, the ongoing [OLS] study, the Natural History studies as well as the open-label extension study. All of that data will be part of a package that we present for discussions with the U.S. and EU regulatory authorities.

I'd remind you that, that we have had several discussions already with the regulatory agencies, particularly with the FDA, including a pre-IND meeting and then, of course, the discussion as we filed our IND and proceeded into the Phase II 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 now hired Pam Strode as our Head of Regulatory Affairs. Pam brings a great deal of experience in 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 will be generating.

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Operator [8]

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

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Robert J. Gould, Fulcrum Therapeutics, Inc. - CEO, President & Director [9]

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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.

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Operator [10]

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Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.