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Fulcrum Therapeutics, Inc. (FULC)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 reflected a one-time collaboration revenue recognition: Fulcrum booked $80.0M from Sanofi, driving GAAP net income to $55.4M ($0.87 diluted EPS); absent milestones, management reiterated they expect to remain in a loss position, including FY 2024 .
  • Losmapimod Phase 3 (REACH) topline timing tightened from “Q4 2024” to “by end of October 2024,” with the company stating it is on track to complete FDA-agreed activities to define RWS clinical meaningfulness at topline; 232 of 234 eligible completers rolled into OLE (98%) .
  • Ex-U.S. commercialization partnership with Sanofi advanced: $80M upfront recognized this quarter; teams are coordinating prep for ex-U.S. regulatory filings and launch, while Fulcrum prepares for a potential U.S. NDA and launch .
  • Cash runway extended and reaffirmed: $273.8M cash/equivalents at 6/30/24; runway into 2027 including U.S. commercial build assumptions; key near-term stock catalyst remains REACH topline readout by late October 2024 .

What Went Well and What Went Wrong

What Went Well

  • Sanofi collaboration monetization and funding: Recognized $80.0M collaboration revenue and reiterated cost-sharing on global development; cash rose to $273.8M with runway into 2027, funding a fully resourced U.S. launch plan .
  • REACH execution and engagement: 260 patients enrolled; 234 completed Part A and 232 (98%) transitioned to OLE, indicating strong patient/physician engagement in FSHD with no approved therapies .
  • Regulatory/clinical readiness: Management says they are “on track to complete the activities agreed-upon with the FDA to define the clinical meaningfulness of RWS” at topline; they will report meaningful score difference as patient-level thresholds in proportions .

“Together, we look forward to delivering on our shared commitment to address the high unmet need of patients in the FSHD community.” — Alex Sapir, CEO .

What Went Wrong

  • Lack of recurring product revenue; earnings quality: The quarter’s profitability was driven by a one-time $80M recognition; management guided that excluding potential milestones, they expect to be in a loss position for the foreseeable future, including FY 2024 .
  • PIONEER (pociredir) timelines stretched: Site activations, especially at academic and ex-U.S. centers and narrower inclusion/exclusion criteria, are taking longer; company now expects to share study data in 2025 (12 mg and 20 mg cohorts) .
  • Endpoint novelty remains a risk variable: While FDA interactions are ongoing and other programs now use reachable workspace (RWS), ultimate approvability still hinges on establishing clinical meaningfulness of RWS as a primary endpoint in REACH .

Financial Results

MetricQ4 2023Q1 2024Q2 2024
Collaboration Revenue ($USD Millions)$0.87 $0.00 $80.00
Research & Development Expense ($USD Millions)$19.00 $19.77 $17.26
General & Administrative Expense ($USD Millions)$9.86 $10.06 $10.25
Total Operating Expenses ($USD Millions)$28.86 $29.83 $27.51
Operating Income (Loss) ($USD Millions)$(27.99) $(29.83) $52.49
Other Income, Net ($USD Millions)$3.24 $2.96 $2.92
Net Income (Loss) ($USD Millions)$(24.76) $(26.87) $55.41
EPS, Basic ($)$(0.40) $(0.43) $0.89
EPS, Diluted ($)$(0.50) $(0.43) $0.87
Cash, Cash Equivalents & Marketable Securities ($USD Millions, period-end)$236.22 $213.31 $273.78

Notes:

  • Q2 profitability reflects $80.0M ex-U.S. Sanofi upfront recognized as collaboration revenue; management expects losses to resume absent milestones .

KPIs (Pipeline/Execution):

  • REACH enrollment: 260 patients; as of 6/30/24, 234 completed Part A; 232 (98%) entered OLE .
  • REACH powering: Over-enrollment pushed powering to 96% based on FSHD1 assumptions (242 FSHD1 patients) .
  • Cash runway: Into 2027 (unchanged from Q1) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
REACH topline timing (losmapimod)Phase 3 toplineQ4 2024 By end of Oct 2024 Tightened earlier window
PIONEER data timing (pociredir)Phase 1b Cohort 3/4No specific date; update after “critical mass” Expect study data in 2025 New timing provided
Cash runwayCompany-levelInto 2027 Into 2027 Maintained
Profitability outlookFY 2024N/AExpect loss position excluding potential milestones New/clarified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’23 and Q1’24)Current Period (Q2’24)Trend
RWS endpoint and clinical meaningfulnessFDA engagement; plan to define meaningfulness with observational/exit interview work; data aligned with topline/NDA timeline “On track” to complete FDA-agreed activities by topline; meaningful score difference framed at patient-level proportions Converging toward topline-ready validation
Payer/pricing and accessPhysician education on RWS; early payer work suggested rare-disease pricing expectations; genetic testing likely needed Payers likely find it difficult to restrict access; pricing expected in “hundreds of thousands”; company to prevent genetic testing from being an access barrier Increasing payer clarity and access planning
Sanofi partnershipAnnounced with $80M upfront; cost-share; retain U.S. focus $80M recognized; joint ex-U.S. prep for filings/launch Operationalizing ex-U.S. pathway
Pociredir executionReinitiation post-hold; site activation underway Academic/ex-U.S. site activation longer than expected; data in 2025; cohorts at 12 mg and 20 mg Slower near-term cadence; clearer 2025 milestone
Commercial readinessU.S. launch planning; leadership additions (CMO) Plan to appoint CCO in Q3; runway assumes fully resourced 2026 U.S. launch Advancing toward launch build

Management Commentary

  • “We are on track to report top line data for the Phase III REACH trial of losmapimod by the end of October… we continue to prepare for the potential NDA filing and the U.S. commercial launch” — Alex Sapir, CEO .
  • “We are on track to complete the activities agreed-upon with the FDA to define the clinical meaningfulness of RWS at the time of reporting topline data.” — Company press release .
  • “For the second quarter of 2024, we had net income of $55.4 million… For the foreseeable future, excluding potential milestones under our Sanofi collaboration, we expect to be in a loss position, including for the year ended December 31, 2024.” — Alan Musso, CFO .
  • “Pociredir… site activations… taking longer than initially expected… We expect to have study data to share in 2025.” — Alex Sapir .

Q&A Highlights

  • RWS clinical meaningfulness and endpoint risk: FDA has not set a prespecified numeric threshold; focus is on within-patient “meaningful score difference,” reported as proportions exceeding threshold(s) at topline .
  • Powering and population: REACH powering based on FSHD1 ReDUX4 data; over-enrollment to 260 increases powering to ~96%; 18 FSHD2 patients randomized 9/9 across arms .
  • Payers/pricing and access: Early payer work suggests rare disease-like pricing; company expects difficulty restricting access in absence of treatments; genetic test confirmation to be required and supported operationally .
  • Commercial build: Planning to announce Chief Commercial Officer in Q3; runway assumes “properly resourced” launch .
  • Pociredir enrollment/operations: Academic/ex-U.S. site timelines extend activation; aim for ~20 sites; expect data sharing in 2025; inclusion criteria narrow; 12 mg and 20 mg cohorts remain the plan .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2024 EPS and revenue was unavailable at the time of analysis due to access limits; we cannot quantify beats/misses against consensus. As a result, estimates comparisons are not shown.
  • Given the one-time $80M collaboration revenue recognition in Q2, investors should normalize for this item when calibrating forward estimates and model quarterly losses absent milestone inflows .

Key Takeaways for Investors

  • The primary near-term stock catalyst is REACH topline by end of October 2024; management indicates FDA-aligned work to define RWS meaningfulness will be ready at topline, reducing interpretability risk at readout .
  • Q2 profitability was non-recurring, driven by $80M Sanofi revenue recognition; model a return to losses starting Q3 absent milestones, with runway into 2027 funding a fully resourced U.S. launch plan .
  • High OLE uptake (98% of eligible REACH patients) and prior 10% RWS delta in Phase 2 support clinical momentum; however, approvability hinges on RWS meaningfulness and totality of REACH endpoints (including MFI, dynamometry, PGIC) .
  • Ex-U.S. risk is de-risked by Sanofi partnership; Fulcrum retains U.S. focus where payer sentiment and rare disease pricing context appear constructive, with genetic testing readiness a key enabling strategy .
  • Pociredir execution is pushing to 2025 data; timelines reflect academic/ex-U.S. site realities and narrower inclusion criteria; positive HbF precedent exists from earlier cohorts, but clinical de-risking remains ahead .
  • If REACH is positive and FDA alignment on RWS holds, the commercial narrative (pricing, access, genetic testing, payer education) appears increasingly executable, with leadership hires and budget runway in place .
  • Trading setup: Q2 optics benefited from one-time revenue; forward stock performance likely dominated by binary REACH outcome and clarity on RWS meaningfulness at topline rather than quarterly P&L cadence .

Supporting Press Releases (Q2 2024)

  • Q2 results/business update press release (financials, REACH status, Sanofi collaboration) .
  • Earnings call scheduling release (procedural) .
  • FSHD Society congress presentations (REACH baseline characteristics and RWS-related work) .