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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 June 30, 2021

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: (617651-8851

 

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 August 3, 2021, the registrant had 32,708,425 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 open label extension of our Phase 2b clinical trial for the treatment of facioscapulohumeral muscular dystrophy, or FSHD, and our ongoing Phase 2 open label clinical trial for the treatment of FSHD;

 

our ongoing Phase 1 clinical trial of FTX-6058 in healthy adult volunteers and our planned Phase 1b clinical trial of FTX-6058 in patients with sickle cell disease, or SCD;

 

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, FTX-6058 and any other product candidates, including in combination with other drugs and therapies;

 

the timing of and our ability to submit applications for, and obtain and maintain regulatory approvals for losmapimod, FTX-6058 and any 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., a wholly owned subsidiary of Bristol-Myers Squibb Company;

 

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 or a smaller reporting company as defined under the federal securities laws.

i


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.

SUMMARY RISK FACTORS

Our business is subject to a number of risks that if realized could materially affect our business, financial condition, results of operations, cash flows and access to liquidity. These risks are discussed more fully in the “Risk Factors” section of this Quarterly Report on Form 10-Q. Our principal risks include the following:

 

We have incurred significant losses since our inception. Our net loss was $70.8 million for the year ended December 31, 2020 and $36.6 million for the six months ended June 30, 2021. We expect to incur losses over the next several years and may never achieve or maintain profitability. As of June 30, 2021, we had an accumulated deficit of $258.3 million.

 

 

We will need substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts. We expect to devote substantial financial resources to our ongoing and planned activities, particularly as we continue our clinical trials of losmapimod, including our open label extension of our Phase 2b clinical trial for the treatment of FSHD and our Phase 2 open label clinical trial for the treatment of FSHD, continue our Phase 1 clinical trial of FTX-6058 in healthy adult volunteers, prepare for our planned Phase 1b clinical trial of FTX-6058 in patients with SCD, and continue research and development and initiate additional clinical trials of, and seek regulatory approval for, these and other product candidates.

 

 

The ongoing COVID-19 pandemic has and may continue to affect our ability to initiate and complete current or future preclinical studies or clinical trials, disrupt regulatory activities or have other adverse effects on our business and operations. In addition, this pandemic may continue to adversely impact economies worldwide, which could result in adverse effects on our business and operations.

 

 

We are early in our development efforts, and we only have two product candidates in clinical trials. If we are unable to commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed.

 

 

We may not be successful in our efforts to use our product engine to build a pipeline of product candidates. A key element of our strategy is to use our proprietary product engine to identify and validate cellular drug targets that can potentially modulate gene expression to address the root cause of rare diseases, with an initial focus on identifying small molecules specific to the identified cellular target.

 

 

Clinical drug development involves a lengthy and expensive process, with an uncertain outcome. The results of preclinical studies and early clinical trials may not be predictive of future results. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

 

 

Because we are developing some of our product candidates for the treatment of diseases in which there is limited clinical experience and, in some cases, using new endpoints or methodologies, the U.S. Food and Drug Administration or other regulatory authorities may not consider the endpoints of our clinical trials to predict or provide clinically meaningful results.

 

 

If serious adverse events or unacceptable side effects are identified during the development of our product candidates, we may need to abandon or limit our development of some of our product candidates.

 

 

We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

 

 


 

 

We rely, and expect to continue to rely, on contract manufacturing organizations to manufacture our product candidates. If we are unable to enter into such arrangements as expected or if such organizations do not meet our supply requirements, development and/or commercialization of our product candidates may be delayed.

 

 

We rely, and expect to continue to rely, on third parties to conduct our clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, which may harm our business.

 

 

We have entered into, and may in the future enter into, collaborations with third parties for the discovery, development or commercialization of product candidates, including our collaborations with Acceleron Pharma Inc. and MyoKardia, Inc. If our collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates and our business could be adversely affected.

 

 

If we are unable to obtain, maintain, enforce and protect patent protection for our technology and product candidates or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully develop and commercialize our technology and product candidates may be adversely affected.

 

 

If we fail to comply with our obligations in our intellectual property licenses and funding arrangements with third parties, or otherwise experience disruptions to our business relationships with our licensors, we could lose intellectual property rights that are important to our business.

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020

1

 

Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2021 and 2020

2

 

Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2021 and 2020

3

 

Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020

4

 

Notes to Consolidated Financial Statements

5

Item 2.

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

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

Controls and Procedures

34

PART II.

OTHER INFORMATION

35

Item 1A.

Risk Factors

35

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

76

Item 6.

Exhibits

77

Signatures

78

 

 

 

 


 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Fulcrum Therapeutics, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

June 30,

2021

 

 

December 31,

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

56,779

 

 

$

57,052

 

Marketable securities

 

 

68,771

 

 

 

55,862

 

Accounts receivable

 

 

 

 

 

2,000

 

Unbilled accounts receivable

 

 

657

 

 

 

531

 

Prepaid expenses and other current assets

 

 

2,304

 

 

 

4,065

 

Total current assets

 

 

128,511

 

 

 

119,510

 

Property and equipment, net

 

 

7,745

 

 

 

8,397

 

Restricted cash

 

 

1,092

 

 

 

1,092

 

Other assets

 

 

531

 

 

 

578

 

Total assets

 

$

137,879

 

 

$

129,577

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,498

 

 

$

4,079

 

Accrued expenses and other current liabilities

 

 

7,643

 

 

 

7,267

 

Deferred lease incentive, current portion

 

 

469

 

 

 

469

 

Deferred revenue, current portion

 

 

9,900

 

 

 

14,910

 

Total current liabilities

 

 

22,510

 

 

 

26,725

 

Deferred rent, excluding current portion

 

 

1,662

 

 

 

1,649

 

Deferred lease incentive, excluding current portion

 

 

2,817

 

 

 

3,051

 

Deferred revenue, excluding current portion

 

 

 

 

 

2,971

 

Total liabilities

 

 

26,989

 

 

 

34,396

 

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; 32,706,863 and 28,067,402 shares issued as of June 30, 2021 and December 31, 2020, respectively; 32,659,740 and 27,941,566 shares outstanding as of June 30, 2021 and December 31, 2020, respectively

 

 

33

 

 

 

28

 

Treasury stock, at cost; 21 shares as of June 30, 2021 and no shares as of December 31, 2020

 

 

 

 

 

 

Additional paid-in capital

 

 

369,133

 

 

 

316,775

 

Accumulated other comprehensive loss

 

 

(9

)

 

 

(2

)

Accumulated deficit

 

 

(258,267

)

 

 

(221,620

)

Total stockholders’ equity

 

 

110,890

 

 

 

95,181

 

Total liabilities and stockholders’ equity

 

$

137,879

 

 

$

129,577

 

 

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

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Collaboration revenue

 

$

4,381

 

 

$

2,000

 

 

$

9,170

 

 

$

2,750

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

17,378

 

 

 

12,775

 

 

 

33,712

 

 

 

27,257

 

General and administrative

 

 

6,685

 

 

 

5,149

 

 

 

12,183

 

 

 

10,213

 

Total operating expenses

 

 

24,063

 

 

 

17,924

 

 

 

45,895

 

 

 

37,470

 

Loss from operations

 

 

(19,682

)

 

 

(15,924

)

 

 

(36,725

)

 

 

(34,720

)

Other income, net

 

 

34

 

 

 

239

 

 

 

78

 

 

 

583

 

Net loss

 

$

(19,648

)

 

$

(15,685

)

 

$

(36,647

)

 

$

(34,137

)

Net loss per share, basic and diluted

 

$

(0.60

)

 

$

(0.66

)

 

$

(1.14

)

 

$

(1.47

)

Weighted-average common shares outstanding, basic and diluted

 

 

32,636

 

 

 

23,854

 

 

 

32,076

 

 

 

23,287

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(19,648

)

 

$

(15,685

)

 

$

(36,647

)

 

$

(34,137

)

Other comprehensive (loss) gain:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on marketable securities

 

 

(5

)

 

 

134

 

 

 

(7

)

 

 

81

 

Total other comprehensive (loss) gain

 

 

(5

)

 

 

134

 

 

 

(7

)

 

 

81

 

Comprehensive loss

 

$

(19,653

)

 

$

(15,551

)

 

$

(36,654

)

 

$

(34,056

)

 

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

 

 

 

2


 

 

Fulcrum Therapeutics, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)

 

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Gain (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2019

 

 

22,654,444

 

 

$

23

 

 

 

 

 

$

 

 

$

237,931

 

 

$

 

 

$

(150,801

)

 

$

87,153

 

Issuance of common stock under employee benefit plans

 

 

36,472

 

 

 

 

 

 

 

 

 

 

 

 

286

 

 

 

 

 

 

 

 

 

286

 

Vesting of restricted stock awards

 

 

102,221

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

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

 

 

4,029,411

 

 

 

4

 

 

 

 

 

 

 

 

 

64,313

 

 

 

 

 

 

 

 

$

64,317

 

Issuance of common stock under employee benefit plans

 

 

70,904

 

 

 

 

 

 

 

 

 

 

 

 

525

 

 

 

 

 

 

 

 

 

525

 

Vesting of restricted stock awards

 

 

330,344

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

5

 

Repurchase of unvested restricted stock awards

 

 

 

 

 

 

 

 

10,642

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement of treasury shares

 

 

 

 

 

 

 

 

(10,642

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,204

 

 

 

 

 

 

 

 

 

2,204

 

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

134

 

 

 

 

 

 

134

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,685

)

 

 

(15,685

)

Balance at June 30, 2020

 

 

27,223,796

 

 

$

27

 

 

 

 

 

$

 

 

$

306,961

 

 

$

81

 

 

$

(184,938

)

 

$

122,131

 

Balance at December 31, 2020

 

 

27,941,566

 

 

 

28

 

 

 

 

 

 

 

 

 

316,775

 

 

 

(2

)

 

 

(221,620

)

 

 

95,181

 

Issuance of common stock in connection with follow-on offering, net of issuance costs

 

 

4,600,000

 

 

 

5

 

 

 

 

 

 

 

 

 

47,402

 

 

 

 

 

 

 

 

 

47,407

 

Issuance of common stock under employee benefit plans

 

 

11,888

 

 

 

 

 

 

 

 

 

 

 

 

93

 

 

 

 

 

 

 

 

 

93

 

Vesting of restricted stock awards

 

 

40,982

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Repurchase of unvested restricted stock awards

 

 

 

 

 

 

 

 

1,836

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement of treasury shares

 

 

 

 

 

 

 

 

(1,836

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,073

 

 

 

 

 

 

 

 

 

2,073

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,999

)

 

 

(16,999

)

Balance at March 31, 2021

 

 

32,594,436

 

 

$

33

 

 

 

 

 

$

 

 

$

366,344

 

 

$

(4

)

 

$

(238,619

)

 

$

127,754

 

Issuance of common stock under employee benefit plans

 

 

30,008

 

 

 

 

 

 

 

 

 

 

 

 

242

 

 

 

 

 

 

 

 

 

242

 

Vesting of restricted stock awards

 

 

35,296

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Repurchase of unvested restricted stock awards

 

 

 

 

 

 

 

 

2,435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement of treasury shares

 

 

 

 

 

 

 

 

(2,414

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,546

 

 

 

 

 

 

 

 

 

2,546

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

(5

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,648

)

 

 

(19,648

)

Balance at June 30, 2021