FULC Fulcrum Therapeutics Inc

 

 

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

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)

 

(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.

 

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

 

 

 

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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:

 

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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:

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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.

 

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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.

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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.

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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.

 

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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