fulc-10q_20200930.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, 2020

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 4, 2020, the registrant had 27,462,565 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 clinical trials of losmapimod, including our ongoing Phase 2b and Phase 2 open label clinical trials for the treatment of facioscapulohumeral muscular dystrophy, and our ongoing Phase 3 clinical trial for the treatment of the novel coronavirus, or COVID-19;

 

our ongoing Phase 1 clinical trial of FTX-6058;

 

the impact of the COVID-19 pandemic on our business and operations and our future financial results;

 

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, cash equivalents, and marketable securities;

 

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;

 

the progress and results of our collaborations with Acceleron Pharma Inc. and MyoKardia, Inc.;

 

i


 

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.

 


Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019

1

 

Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019

2

 

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2020 and 2019

3

 

Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019

4

 

Notes to Consolidated Financial Statements

5

Item 2.

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

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

32

Item 4.

Controls and Procedures

33

PART II.

OTHER INFORMATION

34

Item 1A.

Risk Factors

34

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

80

Item 6.

Exhibits

82

Signatures

83

 

 

 

 


 

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,

2020

 

 

December 31,

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

85,221

 

 

$

96,713

 

Marketable securities

 

 

41,804

 

 

 

 

Unbilled accounts receivable

 

 

592

 

 

 

 

Prepaid expenses and other current assets

 

 

4,495

 

 

 

3,370

 

Total current assets

 

 

132,112

 

 

 

100,083

 

Property and equipment, net

 

 

8,395

 

 

 

9,205

 

Restricted cash

 

 

1,092

 

 

 

1,092

 

Other assets

 

 

616

 

 

 

59

 

Total assets

 

$

142,215

 

 

$

110,439

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,634

 

 

$

2,186

 

Accrued expenses and other current liabilities

 

 

8,743

 

 

 

5,496

 

Deferred lease incentive, current portion

 

 

469

 

 

 

469

 

Deferred revenue, current portion

 

 

13,609

 

 

 

3,989

 

Total current liabilities

 

 

26,455

 

 

 

12,140

 

Deferred rent, excluding current portion

 

 

1,634

 

 

 

1,559

 

Deferred lease incentive, excluding current portion

 

 

3,169

 

 

 

3,521

 

Deferred revenue, excluding current portion

 

 

5,965

 

 

 

6,011

 

Other liabilities, excluding current portion

 

 

7

 

 

 

55

 

Total liabilities

 

 

37,230

 

 

 

23,286

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

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 shares authorized; 27,459,196 and 23,335,514 shares issued as of September 30, 2020 and December 31, 2019, respectively; 27,277,983 and 22,654,444 shares outstanding as of September 30, 2020 and December 31, 2019, respectively

 

 

27

 

 

 

23

 

Treasury stock, at cost; no shares as of September 30, 2020 and December 31, 2019

 

 

 

 

 

 

Additional paid-in capital

 

 

308,827

 

 

 

237,931

 

Accumulated other comprehensive income

 

 

31

 

 

 

 

Accumulated deficit

 

 

(203,900

)

 

 

(150,801

)

Total stockholders’ equity

 

 

104,985

 

 

 

87,153

 

Total liabilities and stockholders’ equity

 

$

142,215

 

 

$

110,439

 

 

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,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Collaboration revenue

 

$

1,848

 

 

$

 

 

$

4,598

 

 

$

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

15,640

 

 

 

13,496

 

 

 

42,897

 

 

 

58,985

 

General and administrative

 

 

5,312

 

 

 

3,510

 

 

 

15,525

 

 

 

8,742

 

Total operating expenses

 

 

20,952

 

 

 

17,006

 

 

 

58,422

 

 

 

67,727

 

Loss from operations

 

 

(19,104

)

 

 

(17,006

)

 

 

(53,824

)

 

 

(67,727

)

Other income, net

 

 

142

 

 

 

464

 

 

 

725

 

 

 

1,173

 

Net loss

 

$

(18,962

)

 

$

(16,542

)

 

$

(53,099

)

 

$

(66,554

)

Cumulative convertible preferred stock dividends

 

 

 

 

 

(796

)

 

 

 

 

 

(7,128

)

Net loss attributable to common stockholders

 

$

(18,962

)

 

$

(17,338

)

 

$

(53,099

)

 

$

(73,682

)

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

 

$

(0.70

)

 

$

(0.97

)

 

$

(2.16

)

 

$

(10.33

)

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

 

 

27,261

 

 

 

17,785

 

 

 

24,621

 

 

 

7,133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(18,962

)

 

$

(16,542

)

 

$

(53,099

)

 

$

(66,554

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on marketable securities

 

 

(50

)

 

 

 

 

 

31

 

 

 

 

Total other comprehensive (loss) income

 

 

(50

)

 

 

 

 

 

31

 

 

 

 

Comprehensive loss

 

$

(19,012

)

 

$

(16,542

)

 

$

(53,068

)

 

$

(66,554

)

 

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

other

comprehensive

 

 

Accumulated

 

 

Total

Stockholders’ Equity

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

income (loss)

 

 

Deficit

 

 

(Deficit)

 

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

 

 

 

 

 

 

 

 

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

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

22,557,871

 

 

$

23

 

 

 

 

 

$

 

 

$

236,783

 

 

$

 

 

$

(134,678

)

 

$

102,128

 

Balance at December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,654,444

 

 

 

23

 

 

 

 

 

 

 

 

 

237,931

 

 

 

 

 

 

(150,801

)

 

 

87,153

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

138,693

 

 

 

 

 

 

 

 

 

 

 

 

290

 

 

 

 

 

 

 

 

 

290

 

Repurchase of unvested restricted stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement of treasury shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,787

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,693

 

 

 

 

 

 

 

 

 

1,693

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(53

)

 

 

 

 

 

(53

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,452

)

 

 

(18,452

)

Balance at March 31, 2020

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

22,793,137

 

 

$

23

 

 

 

 

 

$

 

 

$

239,914

 

 

$

(53

)

 

$

(169,253

)

 

$

70,631

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

401,248

 

 

 

 

 

 

 

 

 

 

 

 

530

 

 

 

 

 

 

 

 

 

530

 

Issuance of common stock in connection with private placement, net of placement agent fees and offering costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,029,411

 

 

 

4

 

 

 

 

 

 

 

 

 

64,313

 

 

 

 

 

 

 

 

 

64,317

 

Repurchase of unvested restricted stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,642

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement of treasury shares