fulc-10q_20190930.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission File Number: 001-38978

 

FULCRUM THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

47-4839948

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

26 Landsdowne Street
Cambridge, Massachusetts 

02139

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (617) 651-8851

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.001 per share

 

FULC

 

Nasdaq Global Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes        No  

As of November 8, 2019, the registrant had 23,340,544 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 


FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth are forward-looking statements. The words "anticipate," "believe," "continue" "could," "estimate," "expect," "intend," "may," "might," “outlook,” "plan," "potential," "predict," "project," "should," "target," "would," and the negative version of these words and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to those described under the “Risk Factors” section and include, among other things:

 

 

our ongoing Phase 1, Phase 2b, and Phase 2 open label clinical trials of losmapimod;

 

our investigational new drug application, or IND, enabling studies and planned Phase 1 clinical trial of FTX-6058;

 

the initiation, timing, progress and results of our drug target discovery screening programs;

 

the initiation, timing, progress and results of our current and future preclinical studies and clinical trials and our research and development programs;

 

our plans to develop and, if approved, subsequently commercialize losmapimod and any other product candidates, including in combination with other drugs and therapies;

 

the timing of and our ability to submit applications for, obtain and maintain regulatory approvals for losmapimod and other product candidates;

 

our expectations regarding our ability to fund our operating expenses and capital expenditure requirements with our cash and cash equivalents;

 

the potential advantages of our product candidates;

 

the rate and degree of market acceptance and clinical utility of our products;

 

our estimates regarding the potential market opportunity for our product candidates;

 

our commercialization, marketing and manufacturing capabilities and strategy;

 

our intellectual property position;

 

our ability to identify additional products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;

 

our estimates regarding expenses, future revenue, timing of any future revenue, capital requirements and needs for additional financing;

 

the impact of government laws and regulations;

 

our competitive position;

 

developments relating to our competitors and our industry;

 

our ability to maintain and establish collaborations or obtain additional funding; and

 

our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the "Risk Factors" section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments we may make or enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

i


Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018

1

 

Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2019 and 2018

2

 

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2019 and 2018

3

 

Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018

4

 

Notes to Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

23

Item 4.

Controls and Procedures

24

PART II.

OTHER INFORMATION

25

Item 1A.

Risk Factors

25

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

67

Item 6.

Exhibits

68

Signatures

69

 

 

 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Fulcrum Therapeutics, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

September 30,

2019

 

 

December 31,

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

101,597

 

 

$

72,797

 

Prepaid expenses and other current assets

 

 

3,625

 

 

 

1,298

 

Total current assets

 

 

105,222

 

 

 

74,095

 

Property and equipment, net

 

 

9,583

 

 

 

10,546

 

Restricted cash

 

 

1,092

 

 

 

1,092

 

Other assets

 

 

59

 

 

 

38

 

Total assets

 

$

115,956

 

 

$

85,771

 

Liabilities, convertible preferred stock, and stockholders’ equity (deficit)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,533

 

 

$

1,263

 

Accrued expenses and other current liabilities

 

 

3,583

 

 

 

2,497

 

Deferred lease incentive, current portion

 

 

469

 

 

 

469

 

Total current liabilities

 

 

8,585

 

 

 

4,229

 

Deferred rent, excluding current portion

 

 

1,527

 

 

 

1,402

 

Deferred lease incentive, excluding current portion

 

 

3,638

 

 

 

3,990

 

Other liabilities, excluding current portion

 

 

78

 

 

 

150

 

Total liabilities

 

 

13,828

 

 

 

9,771

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

Series A convertible preferred stock, $0.001 par value; no shares and 60,000,000 shares authorized, issued and outstanding as of September 30, 2019 and December 31, 2018, respectively

 

 

 

 

 

59,909

 

Series B convertible preferred stock, $0.001 par value; no shares and 40,000,000 shares authorized, issued and outstanding as of September 30, 2019 and December 31, 2018, respectively

 

 

 

 

 

79,761

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding

 

 

 

 

 

 

Common stock, $0.001 par value; 200,000,000 and 135,000,000 shares authorized as of September 30, 2019 and December 31, 2018, respectively; 23,340,419 and 2,791,764 shares issued as of September 30, 2019 and December 31, 2018, respectively; 22,557,871 and 1,587,953 shares outstanding as of September 30, 2019 and December 31, 2018, respectively

 

 

23

 

 

 

2

 

Treasury stock, at cost; no shares and 67,024 shares as of September 30, 2019 and December 31, 2018, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

236,783

 

 

 

4,452

 

Accumulated deficit

 

 

(134,678

)

 

 

(68,124

)

Total stockholders’ equity (deficit)

 

 

102,128

 

 

 

(63,670

)

Total liabilities, convertible preferred stock, and stockholders’ equity (deficit)

 

$

115,956

 

 

$

85,771

 

 

The accompanying notes are an integral part of these financial statements.

1


 

Fulcrum Therapeutics, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

13,496

 

 

$

6,963

 

 

$

58,985

 

 

$

18,324

 

General and administrative

 

 

3,510

 

 

 

2,125

 

 

 

8,742

 

 

 

5,923

 

Total operating expenses

 

$

17,006

 

 

$

9,088

 

 

$

67,727

 

 

$

24,247

 

Loss from operations

 

 

(17,006

)

 

 

(9,088

)

 

 

(67,727

)

 

 

(24,247

)

Other income, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

457

 

 

 

138

 

 

 

1,151

 

 

 

133

 

Other income

 

 

7

 

 

 

7

 

 

 

22

 

 

 

385

 

Net loss and comprehensive loss

 

$

(16,542

)

 

$

(8,943

)

 

$

(66,554

)

 

$

(23,729

)

Cumulative convertible preferred stock dividends

 

 

(796

)

 

 

(1,858

)

 

 

(7,128

)

 

 

(3,736

)

Net loss attributable to common stockholders

 

$

(17,338

)

 

$

(10,801

)

 

$

(73,682

)

 

$

(27,465

)

Net loss per share attributable to common stockholders, basic and diluted

 

$

(0.97

)

 

$

(8.08

)

 

$

(10.33

)

 

$

(23.28

)

Weighted average number of common shares used in net loss per share attributable to common stockholders, basic and diluted

 

 

17,785

 

 

 

1,337

 

 

 

7,133

 

 

 

1,180

 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

2


 

Fulcrum Therapeutics, Inc.

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(In thousands, except share amounts)

(Unaudited)

 

 

 

Series A Convertible

Preferred Stock

 

 

Series B Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Total

Stockholders’

Equity

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Deficit)

 

Balance at December 31, 2017

 

 

34,666,666

 

 

$

34,587

 

 

 

 

 

$

 

 

 

 

972,266

 

 

$

1

 

 

 

8,036

 

 

$

 

 

$

2,270

 

 

$

(35,536

)

 

$

(33,265

)

Issuance of Series A convertible preferred stock at $1.00 per share, net of issuance costs of $7

 

 

12,666,667

 

 

 

12,659

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

125,123

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

4

 

Repurchase of unvested restricted stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,599

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement of treasury shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,635

)

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

429

 

 

 

 

 

 

429

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,940

)

 

 

(6,940

)

Balance at March 31, 2018

 

 

47,333,333

 

 

$

47,246

 

 

 

 

 

$

 

 

 

 

1,097,389

 

 

$

1

 

 

 

 

 

$

 

 

$

2,703

 

 

$

(42,476

)

 

$

(39,772

)

Issuance of Series A convertible preferred stock at $1.00 per share, net of issuance costs of $5

 

 

12,666,667

 

 

 

12,663

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

187,421

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

8

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

462

 

 

 

 

 

 

462

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,846

)

 

 

(7,846

)

Balance at June 30, 2018

 

 

60,000,000

 

 

$

59,909

 

 

 

 

 

$

 

 

 

 

1,284,810

 

 

$

1

 

 

 

 

 

$

 

 

$

3,173

 

 

$

(50,322

)

 

$

(47,148

)

Issuance of Series B convertible preferred stock at $2.00 per share, net of issuance costs of $239

 

 

 

 

 

 

 

 

40,000,000

 

 

 

79,761

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

140,691

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

5

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

506

 

 

 

 

 

 

506

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,943

)

 

 

(8,943

)

Balance at September 30, 2018

 

 

60,000,000

 

 

$

59,909

 

 

 

40,000,000

 

 

$

79,761

 

 

 

 

1,425,501

 

 

$

1

 

 

 

 

 

$

 

 

$

3,684

 

 

$

(59,265

)

 

$

(55,580

)

Balance at December 31, 2018

 

 

60,000,000

 

 

$

59,909

 

 

 

40,000,000

 

 

$

79,761

 

 

 

 

1,587,953

 

 

$

2

 

 

 

67,024

 

 

$

 

 

$

4,452

 

 

$

(68,124

)

 

$

(63,670

)

Issuance of Series B convertible preferred stock in connection with asset acquisition, net of issuance costs of $34

 

 

 

 

 

 

 

 

12,500,000

 

 

 

25,466

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

134,013

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

5

 

Repurchase of unvested restricted stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43,922

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement of treasury shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(110,946

)

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

821

 

 

 

 

 

 

821

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36,843

)

 

 

(36,843

)

Balance at March 31, 2019

 

 

60,000,000

 

 

$

59,909

 

 

 

52,500,000

 

 

$

105,227

 

 

 

 

1,721,966

 

 

$

2

 

 

 

 

 

$

 

 

$

5,278

 

 

$

(104,967

)

 

$

(99,687

)

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

148,320

 

 

 

 

 

 

 

 

 

 

 

 

225

 

 

 

 

 

 

225

 

Repurchase of unvested restricted stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,451

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement of treasury shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,019

)

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

950

 

 

 

 

 

 

950

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,169

)

 

 

(13,169

)

Balance at June 30, 2019

 

 

60,000,000

 

 

$

59,909

 

 

 

52,500,000

 

 

$

105,227

 

 

 

 

1,870,286

 

 

$

2

 

 

 

1,432

 

 

$

 

 

$

6,453

 

 

$

(118,136

)

 

$

(111,681

)

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

116,167

 

 

 

 

 

 

 

 

 

 

 

 

35

 

 

 

 

 

 

35

 

Conversion of convertible preferred stock into common stock

 

 

(60,000,000

)

 

 

(59,909

)

 

 

(52,500,000

)

 

 

(105,227

)

 

 

 

16,071,418

 

 

 

16

 

 

 

 

 

 

 

 

 

165,120

 

 

 

 

 

 

165,136

 

Initial public offering, net of underwriting discounts, commissions and offering costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,500,000

 

 

 

5

 

 

 

 

 

 

 

 

 

63,996

 

 

 

 

 

 

64,001

 

Repurchase of unvested restricted stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,951

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement of treasury shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,383

)

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,179

 

 

 

 

 

 

1,179

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,542

)

 

 

(16,542

)

Balance at September 30, 2019

 

 

 

 

$