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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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, 2023

☐ 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)

(617) 651-8851

(Registrant’s telephone number, including area code)

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	The 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.

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 July 27, 2023, the registrant had 61,822,554 shares of common stock, $0.001 par value per share, outstanding.

CAUTIONARY NOTE REGARDING 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 and include, among other statements, statements regarding:

•

our ongoing clinical trials of losmapimod;

•

our ability to resume clinical trials of FTX-6058 by resolving the full clinical hold placed by the U.S. Food and Drug Administration, or FDA, on our investigational new drug application, or IND, for FTX-6058 for the treatment of sickle cell disease, or SCD, on February 23, 2023;

•

the impact of our organizational streamlining and realignment of resources, including our anticipated cash runway;

•

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, if our product candidates are approved;

•

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 collaboration with MyoKardia, Inc., or MyoKardia, a wholly-owned subsidiary of Bristol-Myers Squibb Company, or under our recent exclusive global license agreement with CAMP4 Therapeutics Corp., or CAMP4;

•

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;

•

the impact of a pandemic or an outbreak of highly infectious or contagious disease, such as the COVID-19 pandemic, on our business and operations, including our clinical trials and development plans, as well as our future financial results;

•

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.

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. Such forward looking statements are subject to various risks and uncertainties. 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" and “Management’s Discussion and Analysis of Results of Operations” sections, 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 $109.9 million for the year ended December 31, 2022 and $48.6 million for the six months ended June 30, 2023. We expect to incur losses over the next several years and may never achieve or maintain profitability. As of June 30, 2023, we had an accumulated deficit of $460.9 million.

•

We are currently subject to a full clinical hold on our IND for FTX-6058 for SCD and we withdrew our separate IND for FTX-6058 related to beta thalassemia. We will need to resolve the clinical hold issues with the FDA in order to resume our Phase 1b clinical trial in SCD or other healthy volunteer studies or pursue development of FTX-6058 for beta thalassemia and any other hemoglobinopathies. Our business may be adversely affected if the clinical hold is not resolved in a timely manner or at all, or if other regulatory concerns lead to additional delays. We cannot guarantee that we will be able to respond to FDA’s requests in order to resolve the clinical hold.

•

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 and, pending resolution of the clinical hold, of FTX-6058 and continue research and development and initiate additional clinical trials of, and seek regulatory approval for, these and other product candidates.

•

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 FulcrumSeek, our proprietary product engine to build a pipeline of product candidates. A key element of our strategy is to use FulcrumSeek to identify and validate cellular drug targets that can potentially modulate gene expression to address the root cause of genetically-defined 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 FDA, 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, or CMOs, 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 and license agreements with third parties for the discovery, development or commercialization of product candidates, including our collaboration with MyoKardia and our license agreement with CAMP4. If our collaboration is not successful or we are not able to develop product candidates that we license-in, 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.

•

Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and financial condition and results of operations.

•

Our business was negatively impacted by the COVID-19 pandemic and may in the future be impacted by any future pandemics. In addition, this pandemic may continue to, and any future pandemics may, adversely impact economies worldwide, which could result in adverse effects on our business and operations.

iii

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
	Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	1
	Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2023 and 2022	2
	Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022	3
	Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION	31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	72
Item 3.	Defaults Upon Senior Securities	72
Item 4.	Mine Safety Disclosures	72
Item 5.	Other Information	72
Item 6.	Exhibits	73
Signatures		74

In this Quarterly Report on Form 10-Q, unless otherwise stated or as the context otherwise requires, references to “Fulcrum,” “Fulcrum Therapeutics,” “the Company,” “we,” “us,” “our” and similar references refer to Fulcrum Therapeutics, Inc. together with its consolidated subsidiary. The Fulcrum Therapeutics logo, FulcrumSeek and other trademarks or service marks of Fulcrum Therapeutics, Inc. appearing in this Quarterly Report on Form 10-Q are the property of Fulcrum Therapeutics, Inc. This Quarterly Report on Form 10-Q also contains registered marks, trademarks and trade names of other companies. All other trademarks, registered marks and trade names appearing herein are the property of their respective holders.

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, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	33,966		$	35,098
Marketable securities		244,198			167,823
Unbilled accounts receivable		656			229
Prepaid expenses and other current assets		4,127			4,369
Total current assets		282,947			207,519
Property and equipment, net		6,161			6,906
Operating lease right-of-use assets		8,137			9,063
Restricted cash		1,092			1,092
Other assets		1,995			2,105
Total assets	$	300,332		$	226,685
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	3,909		$	3,638
Accrued expenses and other current liabilities		7,875			9,551
Deferred revenue, current portion		513			934
Operating lease liability, current		2,507			2,602
Total current liabilities		14,804			16,725
Operating lease liability, excluding current portion		9,653			10,821
Other liabilities, excluding current portion		447			197
Total liabilities		24,904			27,743
Commitments and contingencies (Note 13)
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; 61,822,554 and 52,099,211 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		62			52
Treasury stock, at cost; no shares		—			—
Additional paid-in capital		737,466			612,025
Accumulated other comprehensive loss		(1,200	)		(797	)
Accumulated deficit		(460,900	)		(412,338	)
Total stockholders’ equity		275,428			198,942
Total liabilities and stockholders’ equity	$	300,332		$	226,685

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

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,
	2023			2022			2023			2022
Collaboration revenue	$	880		$	1,882		$	1,175		$	4,474
Operating expenses:
Research and development		17,849			25,019			34,564			42,850
General and administrative		10,323			11,098			21,843			21,857
Total operating expenses		28,172			36,117			56,407			64,707
Loss from operations		(27,292	)		(34,235	)		(55,232	)		(60,233	)
Other income, net		3,509			165			6,670			235
Net loss	$	(23,783	)	$	(34,070	)	$	(48,562	)	$	(59,998	)
Net loss per share, basic and diluted	$	(0.38	)	$	(0.83	)	$	(0.80	)	$	(1.47	)
Weighted-average common shares outstanding, basic and diluted		61,794			40,890			60,764			40,768

Comprehensive loss:
Net loss	$	(23,783	)	$	(34,070	)	$	(48,562	)	$	(59,998	)
Other comprehensive gain (loss):
Unrealized (loss) gain on marketable securities		(549	)		22			(403	)		(671	)
Total other comprehensive (loss) gain		(549	)		22			(403	)		(671	)
Comprehensive loss	$	(24,332	)	$	(34,048	)	$	(48,965	)	$	(60,669	)

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

Fulcrum Therapeutics, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital		Loss			Deficit			Equity
Balance at December 31, 2021		40,626,224		41		514,362		(397	)		(302,467	)		211,539
Issuance of common stock under employee benefit plans		47,627		—		395		—			—			395
Vesting of restricted stock awards		9,754		—		—		—			—			—
Stock-based compensation expense		—		—		3,847		—			—			3,847
Unrealized loss on marketable securities		—		—		—		(693	)		—			(693	)
Net loss		—		—		—		—			(25,928	)		(25,928	)
Balance at March 31, 2022		40,683,605	$	41	$	518,604	$	(1,090	)	$	(328,395	)	$	189,160
Issuance of common stock under employee benefit plans		324,180		—		2,764		—			—			2,764
Vesting of restricted stock awards		420		—		—		—			—			—
Stock-based compensation expense		—		—		2,879		—			—			2,879
Unrealized gain on marketable securities		—		—		—		22			—			22
Net loss		—		—		—		—			(34,070	)		(34,070	)
Balance at June 30, 2022		41,008,205	$	41	$	524,247	$	(1,068	)	$	(362,465	)	$	160,755
Balance at December 31, 2022		52,099,211	$	52	$	612,025	$	(797	)	$	(412,338	)		198,942
Issuance of common stock in connection with public offering, net of issuance costs		9,615,384		10		117,336		—			—			117,346
Issuance of common stock under employee benefit plans		38,903		—		348		—			—			348
Vesting of restricted stock awards		5,496		—		—		—			—			—
Stock-based compensation expense		—		—		4,253		—			—			4,253
Unrealized gain on marketable securities		—		—		—		146			—			146
Net loss		—		—		—		—			(24,779	)		(24,779	)
Balance at March 31, 2023		61,758,994	$	62	$	733,962	$	(651	)	$	(437,117	)	$	296,256
Issuance of common stock under employee benefit plans		50,912		—		141		—			—			141
Vesting of restricted stock awards		12,648		—		—		—			—			—
Stock-based compensation expense		—		—		3,363		—			—			3,363
Unrealized loss on marketable securities		—		—		—		(549	)		—			(549	)
Net loss		—		—		—		—		$	(23,783	)		(23,783	)
Balance at June 30, 2023		61,822,554	$	62	$	737,466	$	(1,200	)	$	(460,900	)	$	275,428

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

Fulcrum Therapeutics, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2023			2022
Operating activities
Net loss	$	(48,562	)	$	(59,998	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		1,133			1,212
Stock-based compensation expense		7,616			6,726
Net (accretion of discounts) amortization of premiums on marketable securities		(3,078	)		641
Changes in operating assets and liabilities:
Accounts receivable		—			2,143
Unbilled accounts receivable		(427	)		394
Prepaid expenses and other current assets		242			25
Operating lease assets and liabilities		(337	)		(42	)
Other assets		110			(1,563	)
Accounts payable		251			471
Accrued expenses and other liabilities		(1,428	)		3,448
Deferred revenue		(421	)		(2,929	)
Net cash used in operating activities	$	(44,901	)	$	(49,472	)
Investing activities
Purchases of marketable securities		(143,832	)		(15,166	)
Maturities of marketable securities		70,132			67,784
Purchases of property and equipment		(366	)		(1,564	)
Net cash (used in) provided by investing activities		(74,066	)		51,054
Financing activities
Proceeds from issuance of common stock in connection with public offerings, net of issuance costs		117,345			—
Proceeds from issuance of common stock under benefit plans, net		490			3,159
Net cash provided by financing activities		117,835			3,159
Net (decrease) increase in cash, cash equivalents and restricted cash		(1,132	)		4,741
Cash, cash equivalents, and restricted cash, beginning of period		36,190			36,504
Cash, cash equivalents, and restricted cash, end of period	$	35,058		$	41,245
Supplemental cash flow information
Cash paid for operating lease liabilities	$	1,646