Fulcrum Therapeutics, Inc. (FULC) Earnings Call Transcript & Summary

Great. Good afternoon again, everybody. Thanks for joining us for the next session. I'm Matthew Harrison, one of the biotech analysts here at Morgan Stanley. Very pleased to have Fulcrum with us for the next session. Quickly before we get started, I just need to read a disclosure statement. Please note that all important disclosures, including personal holdings disclosures and Morgan Stanley disclosures, appear on the Morgan Stanley public website at morganstanley.com/researchdisclosure. So pleased to have Bryan Stuart, the CFO; and Chris Morabito, the CMO with us. I'm going to go backwards, Bryan, and we're going to start with -- or maybe not exactly backwards, but I thought we'd start with losmapimod, which is probably not the thing you've been getting the most questions on recently, but I think probably important to touch on because hopefully, we're going to have some sort of update here about regulatory discussions, et cetera.

So maybe you could just help people think about what we have to look forward to in terms of an update on that program? And what you may or may not be able to do with the data you have in hand?

Yes. No, absolutely. So I think as we've mentioned in the past, we really view losmapimod and the program in FSHD as being the first validation of our approach at Fulcrum, which is to look at genetically defined rare diseases that have known root causes to look to be able to screen and identify a target that could modulate gene expression and, therefore, come up with a root cause treatment. So just by way of background, FSHD is the second most common form of muscular dystrophy. There are no approved drugs. There's nothing else in the clinic, and it's really a devastating disease. So patients are typically diagnosed when they're in their late teens or early 20s. And essentially, fat infiltrates muscle throughout the rest of their lives. So they'll lose strength, they'll lose function, they'll lose independence and really an area of very meaningful unmet need. So we uniquely identified with FulcrumSeek, our product engine, that p38 inhibition reduces DUX4-driven gene expression. And DUX4 is the root cause of the disease. So we were able to actually in-license a compound. So there was a drug that GSK had developed broadly for inflammatory disease called losmapimod. Had a safety and tolerability profile. It had been dosed in about 3,500 subjects, and we were able to in-license that and execute a Phase IIb trial called ReDUX4, which was the most advanced trial ever run in FSHD. And maybe I'll let Chris Morabito speak to what we saw in the trial, what makes us enthusiastic, and then ultimately, what will lead to our interactions with the FDA before the end of this year, which will then determine our path forward in the clinic.

Yes. Thanks, Bryan, and thanks for the question, Matthew. So as Bryan said, the genetic root cause of FSHD is aberrant and in fact stochastic expression of DUX4, which has really no physiologic purpose in normal adults. This aberrant expression does cause muscle fat infiltration, which leads to degeneration, which causes the muscular dystrophy findings that these patients experience. It is progressive. It's variably progressive. And we designed a trial, the ReDUX4 study, in order to understand the effects of losmapimod on that progression. We heard from patients quite clearly that the #1 concern from patients and the #1 objective from patients in a new therapeutic would be to slow down or halt disease progression. So ReDUX4 was designed and completed to be the largest therapeutic trial in FSHD, 48 weeks, looking at losmapimod, 15 milligrams twice daily versus placebo. And in that trial, we assessed for changes in DUX4-driven gene expression by muscle needle biopsy. And then importantly, beyond that, we look for changes in structure assessed by MRI, clinical function assessed by clinical outcome assessments, which I'll review briefly and also patient-reported outcome. So in the end, what we found is that we found -- we didn't achieve the primary endpoint, which was driven a muscle biopsy changes in DUX4. We saw no change in either the placebo or in the treated group on DUX4, and that was an unexpected finding. We had a tremendous amount of variability. And we believe that the heterogeneity induced by the muscle, needle biopsy impacted our ability to assess the change in DUX4-driven gene expression. But more importantly, we saw downstream effects of what DUX4-driven gene expression inhibition would do. And we saw effects on structure, assessed by MRI. We saw effects on clinical outcome assessments and on patient-reported benefits. So just very briefly on those 3 things because it speaks directly to what we expect to see in our upcoming trial. So on MRI, we saw that there was actually a less infiltration of fat in patients who are treated with losmapimod compared to placebo, which speaks to the preservation of muscle structure in these patients with muscular dystrophy. In terms of clinical outcome assessments, we saw preservation and function measured by specifically the reachable workspace, and we saw trends towards improvement in the timed up and go assessment, which is a lower extremity assessment of function. Further, these clinically relevant findings were corroborated by changes in strength that we identified in this trial. Patients treated with losmapimod, for example, had not just loss of -- inhibition of loss of strength, but actually improvement in shoulder strength, which is consistent with the findings in reachable workspace that we identified in this trial. And then finally, we saw that patients benefited from this by their own report. Patients on drug felt better compared to patients on placebo at the end of the 48-week treatment period. Fortunately, this is still an ongoing study. We have an open-label extension. All patients are now volunteered to go into this, and 97% of participants agreed to go into the open-label extension, are now on drug and they're continuing on therapy. So we will get continual looks at those data as they come in. One brief word on safety and tolerability before I talk about the next steps. We have found, as Bryan had said, already a 3,500 patient data set, giving us information about safety and tolerability. Overall, positive data set in terms of tolerability. And this trial, the ReDUX4 study, confirmed those findings. So we have now about 3,600 patients who have been exposed to drug. And so far, there have been no unexpected findings. And the benefit risk that we're seeing in this remains actually quite favorable, especially for a disease for which there are no therapies. So in terms of next steps and what to expect, we have, as you know, indicated that we will be talking with regulators before the end of the year. We're on track to do so, and we will be providing clarity when we have that clarity from the regulators, and that should come in due course. We're currently planning for the next clinical trial, which is our base case scenario. That clinical trial is well informed by the existing data from ReDUX4 and by additional data that we have generated from an open-label study and from natural history experience as well. We know what can work in this patient population. We have seen now a loss of -- we saw inhibition of loss of function in patients who are treated with losmapimod in very meaningful ways. And we're using that information directly to inform the design of the confirmatory trial, which increases the probability of success of the trial for sure, but also we think expeditiously brings forward a medicine to patients who are in great need for one.

Okay. Helpful. Very helpful background. I guess a follow-up to that would be, if you could get a filing path from this data set, like what do you think you need to convince the regulators of? And what would be the path to sort of that upside potential?

Sure. So the regulators are mostly going to be concerned about how patients function and feel and obviously survive. And what we've demonstrated so far is that losmapimod has a profound effect on function and on feel. So we look forward to being able to talk with the investigators and demonstrate these data -- the regulators and demonstrate these data to them, get their feedback certainly. But as I indicated, the benefit risk here is quite clear. And as we discuss the benefit risk with regulators, we're optimistic that they too will see that the benefit here is important for patients and that they will work with us to look for the most expeditious path forward towards an approval.

Okay. And then I guess one more question then we can -- then we can move on to sickle cell. But I guess how much of a headwind? Or is it that you need to sort of overcome the fact that obviously, when you design the study and how you think about the mechanism of the drug, right? You weren't able to demonstrate a link between sort of changes in that underlying mechanism with the functional outcomes that you observed. And so how much of that is a headwind towards maybe convincing regulators that the functional benefits are directly drug-related, I guess?

Yes. Let me just clarify that just a little bit. So we do know from our preclinical experience that losmapimod does reduce DUX4 and it does so in FSHD model. So those data are quite clear and quite compelling. And we were able to relate the amount of target engagement to the amount of DUX4. And in our clinical trial, we see very robust target engagement. And when we extrapolate, we make the assumption based on what we see in terms of target engagement that, in fact, we are decreasing DUX4-driven gene expression. We're just not able to measure that difference because of the way we did the biopsy in the study. On top of that, and more importantly, we see these functional benefits, which do show nominal statistical significance and are clinically meaningful. So yes, it is not straightforward in that, we did not hit our primary endpoint. But this is the first trial in this patient population where we actually do demonstrate the potential for clinical and patient benefit. And I think that's quite compelling. So yes, of course, there will be some headwinds, but we're optimistic that the arguments that support the benefit to patients will be strong enough to pass them

And then Matthew, maybe just one other point that I would add. I think as we went forward with this trial initially, obviously, we were very focused on a molecular biomarker. So this biopsy taken via needle into an affected muscle. And the big question that we always got externally was obviously a molecular biomarker is very interesting. But when in a muscular dystrophy trial, as Chris mentioned, function is always going to be what's most important from a regulator perspective as well as how patients feel patient-reported outcomes. I think just the one part that we were extremely pleased about is while the molecular biomarkers, as Chris mentioned, ended up being confounding, the downstream benefits were observed, and they were observed in a 48-week trial with only 80 subjects. And we did achieve statistical significance. We achieved clinically meaningful benefit across a number of these measures. So ultimately, we view those as being very positive, and we look forward to interacting with regulators.

Okay. Perfect. And then just from a communication standpoint, should we expect to hear something from you this year, if you're having the meeting late this year? Or are you going to wait for minutes before communicating the screen, in which case we might not hear from you until next year?

Yes. I think the latter is right. I think we want to engage and plan to with regulators this year. As soon as we have clarity on what a Phase III trial would look like, we'll certainly share that.

Okay. Okay. Good. Great. So why don't we talk about sickle cell. Obviously, some promising data there a few weeks ago now, maybe it was a month ago, I can't really remember. You guys, I'm sure, will remind me. But I think the biggest question that I get here is just really about the translatability from healthy volunteers to patients. And so I think that's what we should spend most of the time on. So maybe you could address that, but I'm sure you want to give some people, who maybe don't know the story as well, some background on the drug.

Yes. Maybe I'll start with just a high-level overview. And I think a lot of people are familiar with sickle cell disease. Obviously, a devastating disease. And despite some recent advancements, there's still a tremendous unmet need. Over 100,000 people affected in the U.S. and millions more worldwide. So what is unique about sickle cell disease, as we know from human genetics, that if you can induce fetal hemoglobin that you can essentially reduce and/or completely eliminate the symptoms of the disease. So we know this from hereditary persistence of fetal hemoglobin. And these are patients that both have the sickle mutation as well as a second mutation that causes them to express fetal hemoglobin. So we know what the treatment is for the root cause of the disease. We went through a very similar approach in that. We did screening, utilizing our discovery engine. We uniquely identified that EED inhibition can increase fetal hemoglobin expression. And rather than in-licensing chemical matter, this was a case where we used our own medicinal chemistry. We created our compound. And then we've quickly been advancing that into the clinic. I think one of the things that we were most excited about is the preclinical data that we generated and the fact that we were able to observe across multiple assays and models this consistent two to threefold induction of both HbF protein as well as mRNA. So we know that sickle cell patients typically express about 5% to 10% fetal hemoglobin. And we know that as you begin to increase, as I mentioned, the fetal hemoglobin, you eliminate the symptomology. And when you get towards this 25% to 30% level, that the patients effectively have no symptoms and that can be curative. So we were very much focused on this two to threefold induction. And I think what was most promising about the program, preclinically, is that we saw this very consistent two to threefold induction across these different assays. So when we looked in CD34 positive cells, either from healthy donors or donors with sickle cell disease, when we looked in the Townes mouse model, when we looked in a wild-type mouse, we've just very consistently saw independent of the starting fetal hemoglobin levels, two to threefold induction. And again, with the big opportunity for that, if it translates into patients, to be able to get to these very meaningful levels. I'd say the last point as we think about translatability. And I think one of the things that has us very enthusiastic about the data is it's very similar to what CRISPR Therapeutics and Vertex have generated with BCL11A gene editing. So what they saw preclinically was starting with fetal hemoglobin and CD34 positive cells of about 8% to 10%. They saw a threefold induction. And that's very similar to what we observed preclinically. And obviously, that has translated well into the clinic. And I think we believe that to be able to achieve these levels and meaningful increases in fetal hemoglobin and do it with a small molecule, could really be transformative for patients. So I think that consistency that we saw in our preclinical data as well as the translatability that we've seen from these assays with other programs, that's what has us confident as we go into -- begin dosing sickle cell patients. And obviously, Chris Morabito can speak to the healthy volunteer data that we saw, but very, very consistent and very impressive.

Yes. Great. So I'll do that now. So the -- in -- middle of August, we reported out interim results from the ongoing Phase I study. This Phase I study is a healthy human volunteer study. It's primarily to look at safety and tolerability. We looked at pharmacokinetics as well. And we took advantage of the opportunity to look at some pharmacodynamic markers. The study consists of 2 major parts. There's a single ascending dose part, where we go with steps up through multiple dose levels. I won't talk further about that. There is a multiple ascending dose section as well, which is still ongoing. And we reported out dose levels of 2, 6 and 10 milligrams treated -- used to treat these healthy volunteers for 14 days, followed by a 7- to 10-day follow-up. And I'd point these times out for one major reason, and that is to relate that to what we would expect to see in this population of people at -- on these pharmacodynamic markers. So by 10 to 14 days, we should start to see induction of HBG mRNA. And we certainly did look for that. And I'll report those results out, verbally, in a minute. At about 21 days, we should start to see some changes in F-reticulocytes, which are reticulocytes that contains some amount of HbF. It wouldn't be about until maybe 2 to 3 months when we would start to see protein. So we do not specifically aim to look for protein expression in healthy volunteers in this particular study. So the interim results are as follows: first and foremost, safety and tolerability. Locking into the study, we had no identified risks. We now can report that we have a relatively benign tolerability and safety profile. We've had no SAEs. We've had no discontinuation so far. There have been treatment-related adverse events as one would in a Phase I trial. These were all grade 1 or 2, so mild AEs and all self-resolved. There was one Grade 4 unrelated treatment-emergent adverse event in a subject who had received 10 milligrams for 14 days at safety follow-up. So 7 days after the termination of the treatment period. He had an elevated increase in creatine phosphokinase related to some hard labor he had done the day before. So, so far, everything in the tolerability and safety data set encourage us to continue dosing further, which we are doing now. In terms of pharmacodynamics, I'll start with the HBG mRNA. What we saw up through 10 milligrams is a dose proportional increase in HBG mRNA induction up to 4.5 fold. So while Bryan had said, we've been seeing two to threefold induction, and that was really our goal post ultimately for patients. Already in healthy volunteers, we're seeing 4.5 fold in terms of induction of transcript. Similarly, we're seeing about 4.2 fold induction in F-reticulocytes. It's dose proportional as well, minimal effect, no effect at 2 milligrams, start to see an effect at 6. And then by day 21 to day 24, at the 10-milligram dose level, we're seeing now this 4.2 fold induction in F-reticulocytes. So that's a surrogate for HbF, but it doesn't quantify the change in HbF, and we don't have those data, so I can't report them. We wouldn't expect to see that actually until we had dosed longer. So, so far, we're seeing a robust induction. We are seeing some evidence of translation into HbF, which is very encouraging for us. And as I said, we are continuing to dose higher to see whether the induction levels change with higher dose levels. Now in terms of translatability, I think Bryan touched on some of our key data so far, which inform our confidence in this to translate into patients. And that's the CD34 data, which we presented back in August. So in CD34 ex vivo model, looking at both normal and sickle patient bloodlines, we do see a two to threefold induction consistent in both types of cell lines. So the same kind of induction on HbF in sickle as we see in normals. So that gives us confidence right from the bat that we should be seeing at least the same amount of translation in both populations. Further, we have reasons to believe that the sickle environment, the erythropoiesis environment, is revved up and perhaps more permissive for HbF induction through EED inhibition and FTX-6058. There is rapid hemolysis in patients with sickle, which means there's rapid erythropoiesis and a very revved up erythropoietic system. On top of that, adding EED inhibition has the potential to have potential impacts on HBG mRNA production. Could be that we actually exceed what we expect to see in healthies. Having said that, we will take this into patients as soon as we possibly can. We're gearing up for a Phase Ib study, which will include sickle patients in multiple jurisdictions, broad representative sample. And we'll be looking specifically up to 3 months for changes in HbF in order to give us a lot more data to inform on that amount of translatability. Our goalpost remain the same, we're still looking for a very -- we think is clinically relevant fold, two to threefold increase in HbF, which can have a profound impact on patients' outcomes and could, in fact, induce a functional cure. If we see more than that, we would be thrilled. And certainly, as those data come in, we'll be looking very carefully, and we do look to report out on those data by the end of Q2 of next year.

And can you comment at all on the impact baseline levels have? I mean I think one of the common questions I get is that baseline levels in healthy volunteers are quite low. And so seeing a fourfold increase off of that might be much easier than off of 5% to 10%. So just how should people think about that?

Yes. So our preclinical data, as Bryan outlined, don't -- show that, that may not be true. So there's no reason for us to believe that a lower HbF level or HBG level at baseline would mean that there's more induction. There's no reason at all. And for us, our perspective on this informed by our preclinical data is that it's the fold increase that's the most relevant, not the starting point. Across multiple different starting points through all of our modeling so far and our tests so far, we do see this consistent two to threefold induction.

Okay. And then in terms of Phase II, maybe just remind people about the level of evidence that they should expect to get out of that study. And then I think, as a follow-up, just to make sure it's in the back of your mind while we're talking about this. The regulatory path in sickle cell, I think, has been evolving. And so maybe you could talk about, as part of the level of evidence you generated in Phase II, what that sets you up for in terms of regulatory?

Right. So the way we'll step through this is we'll have this Phase I study, which reported out the final results of this year. It's still ongoing. We'll finish up in the next quarter. Then we'll have our Phase Ib study, which will start in patients this year and will take with rolling in data about a year to complete. And we have about 3 dose cohorts anticipated, about 10 patients per dose cohort. We'll start with 6 milligrams, and then we'll decide what our next dose level is based on the data that are incoming as that experience rolls out. We anticipate that the next study after the Phase Ib will be a potential pivotal study. So a Phase II/III study, where we aim to use HbF as a potential surrogate and then also look for clinical outcomes. This is informed mostly by the current development paradigms. We haven't yet had the interactions with the regulators, and we do anticipate doing so before we get too much further down the planning for the study. But we'd like to do that with some patient data from the Phase Ib study. So we're aiming to do that at some point in the first half of next year. But that's our thinking about how we're planning for that registration path.

Matthew, I think we would also add. I think we're certainly encouraged that the FDA has taken a constructive view towards other therapeutics in this space. I think they truly do recognize how meaningful the unmet need is. And we have the benefit here of there being just a tremendous amount of data relative to the patient benefit that will come from inducing fetal hemoglobin. So we think all of those things are in our favor. But obviously, we'll have to have the interactions with regulators.

Yes. And I guess a follow-up question to this is, given the data we have from bluebird and the data we have from Vertex, CRISPR, obviously, the follow-on of this should be a significant reduction in VOCs. And so I'm wondering, is it possible to design a modestly sized Phase II study where you could actually, as a secondary endpoint, demonstrate a significant reduction in VOCs as well?

Right. So when I said clinical endpoints, that's exactly what I meant. So using HbF at an interim time point and then having the study be long enough where we can actually see VOC changes. Everyone else has been doing annualize them, but we'll see after we talk to the regulators.

Okay. Okay. And then just a follow-up in the last, I guess, couple of minutes we have, just on doses for Phase Ib.

Yes.

I think it's clear to people why you're starting at 6. Maybe just talk about the range that you might explore there? And what sort of the hope would be, just given the fact that you saw a nice dose response in healthy volunteers?

Right. So we are seeing a nice dose response after 2 weeks of treatment. And what we see in these data is evidence that if we dose a little bit longer, we could see the same magnitude of induction as we're seeing at the higher dose levels, but later in time. So one hypothesis is that we could still achieve a 4.5 fold -- approximate 4.5-fold induction in HBG mRNA and an HbF at a lower dose if we dose longer. So when we think about our next dose level for the Phase II, we'll let the data inform this, but it could be that we actually dose down. And it could be we dose up, if we see opportunity to get more induction or it could be that we have a hybrid approach in which we dose at a high dose to achieve maximal HBG induction via maximal target engagement very quickly and then dose down so that patients have a continued high impact on HBG and therefore, in HbF.

Okay. Okay. makes sense. I mean, maybe just last thing. Remind us, Bryan, just cash and sort of runway. I know you have a pretty substantial amount of cash, but just remind people where you are from a runway perspective?

Yes. So we had, as of the end of June, about $125 million in cash, and that was prior to the financing that we just did. So this gives us runway into 2024, which we think, positions us very well for both of these clinical programs. Obviously, a lot of our focus is, and we view both of these clinical programs, as really being validation of our approach. And at the same time, we continue to really focus on other genetically defined rare diseases. There are 7,000 rare diseases, about 4,000 have known genetic causes, and we now have the ability to screen and look to identify targets and root cause treatments at a scale which is much larger than when we started the company. So we think that positions us well to advance programs internally, and at the same time, also continue to do collaborations as we've done with Acceleron and MyoKardia in the past. So we're very enthusiastic about the position that we're in and should have some meaningful inflection points here in the near term.

Okay. Great. Good. Bryan, Chris, thanks very much for being here.

Thank you.

Thank you, Matthew. We appreciate it.