Fulcrum Therapeutics, Inc. [FULC] Filings

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

10-Q 1 fulc-20240630.htm 10-Q 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, 2024

☐ 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 24, 2024, the registrant had 62,400,770 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, express or implied statements regarding:

•

our ongoing clinical trials of losmapimod and pociredir, including the effects of the revised inclusion and exclusion criteria on our trial of pociredir;

•

the timing of and our ability to submit applications for, and obtain and maintain regulatory approvals for losmapimod, pociredir 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 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, pociredir and any other product candidates, including in combination with other drugs and therapies;

•

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;

•

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;

•

our intellectual property position;

•

the progress and results of our recent collaboration and license agreement with Genzyme Corporation, a wholly-owned subsidiary of Sanofi, or Sanofi, under our collaboration agreement with MyoKardia, Inc., or MyoKardia, a wholly-owned subsidiary of Bristol-Myers Squibb Company, or under our 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;

•

our competitive position;

•

developments relating to our competitors and our industry;

•

our ability to maintain and establish collaborations, license agreements or obtain additional funding;

•

the impact global pandemics or other geopolitical events on our business and operations, including our clinical trials and development plans, as well as our future financial results; 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, license agreements, 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 $97.3 million for the year ended December 31, 2023. Our net income was $28.5 million for the six months ended June 30, 2024, primarily due to the $80.0 million upfront payment under our collaboration and license agreement with Sanofi. Excluding the potential for future milestone payments under our collaboration and license agreement with Sanofi, we expect to incur losses over the next several years and may never achieve or maintain profitability. As of June 30, 2024, we had an accumulated deficit of $481.1 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 and pociredir 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.

•

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 further 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, including others’ product candidates in the same class of drugs, we may need to abandon or limit our development of some of our product candidates.

•

We may not be successful in our efforts to use our discovery approach to build a pipeline of 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 recent collaboration and license agreement with Sanofi, our collaboration with MyoKardia, and our license agreement with CAMP4. If our collaborations are 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, as well as other geopolitical events that can impact our clinical trials or the supply chain, such as the Russian invasion of Ukraine or recent hostilities in Israel and the Gaza Strip. These events 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, 2024 and December 31, 2023	1
	Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2024 and 2023	2
	Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2024 and 2023	3
	Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	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	31
Item 4.	Controls and Procedures	31
PART II.	OTHER INFORMATION	32
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	73
Item 3.	Defaults Upon Senior Securities	73
Item 4.	Mine Safety Disclosures	73
Item 5.	Other Information	73
Item 6.	Exhibits	74
Signatures		75

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 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, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	86,702		$	25,563
Marketable securities		187,076			210,658
Unbilled accounts receivable		2,333			537
Prepaid expenses and other current assets		4,175			5,441
Total current assets		280,286			242,199
Property and equipment, net		4,408			5,216
Operating lease right-of-use assets		6,357			7,176
Restricted cash		1,216			1,092
Other assets		1,989			2,011
Total assets	$	294,256		$	257,694
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	3,584		$	2,757
Accrued expenses and other current liabilities		7,033			8,726
Operating lease liability, current		2,082			2,192
Total current liabilities		12,699			13,675
Operating lease liability, excluding current portion		7,570			8,629
Other liabilities, excluding current portion		197			197
Total liabilities		20,466			22,501
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; 62,250,631 and 61,915,367 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		62			62
Additional paid-in capital		755,228			744,940
Accumulated other comprehensive loss		(366	)		(136	)
Accumulated deficit		(481,134	)		(509,673	)
Total stockholders’ equity		273,790			235,193
Total liabilities and stockholders’ equity	$	294,256		$	257,694

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

Fulcrum Therapeutics, Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except per share data)

(Unaudited)


	Three Months Ended June 30,					Six Months Ended June 30,
	2024		2023			2024			2023
Collaboration revenue	$	80,000	$	880		$	80,000		$	1,175
Operating expenses:
Research and development		17,261		17,849			37,034			34,564
General and administrative		10,247		10,323			20,308			21,843
Total operating expenses		27,508		28,172			57,342			56,407
Income (loss) from operations		52,492		(27,292	)		22,658			(55,232	)
Other income, net		2,917		3,509			5,881			6,670
Net income (loss)	$	55,409	$	(23,783	)	$	28,539		$	(48,562	)
Net income (loss) per share, basic	$	0.89	$	(0.38	)	$	0.46		$	(0.80	)
Net income (loss) per share, diluted	$	0.87	$	(0.38	)	$	0.45		$	(0.80	)
Weighted-average common shares outstanding, basic		62,205		61,794			62,095			60,764
Weighted-average common shares outstanding, diluted		63,587		61,794			63,684			60,764

Comprehensive income (loss):
Net income (loss)	$	55,409	$	(23,783	)	$	28,539		$	(48,562	)
Other comprehensive gain (loss):
Unrealized gain (loss) on marketable securities		68		(549	)		(230	)		(403	)
Total other comprehensive gain (loss)		68		(549	)		(230	)		(403	)
Comprehensive income (loss)	$	55,477	$	(24,332	)	$	28,309		$	(48,965	)

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, 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
Balance at December 31, 2023		61,915,367		62		744,940		(136	)		(509,673	)		235,193
Issuance of common stock under employee benefit plans		214,094		—		1,651		—			—			1,651
Vesting of restricted stock awards		11,550		—		—		—			—			—
Stock-based compensation expense		—		—		3,916		—			—			3,916
Unrealized loss on marketable securities		—		—		—		(298	)		—			(298	)
Net loss		—		—		—		—			(26,870	)		(26,870	)
Balance at March 31, 2024		62,141,011	$	62	$	750,507	$	(434	)	$	(536,543	)	$	213,592
Issuance of common stock under employee benefit plans		98,844		—		377		—			—			377
Vesting of restricted stock awards		10,776		—		—		—			—			—
Stock-based compensation expense		—		—		4,344		—			—			4,344
Unrealized gain on marketable securities		—		—		—		68			—			68
Net income		—		—		—		—			55,409			55,409
Balance at June 30, 2024		62,250,631	$	62	$	755,228	$	(366	)	$	(481,134	)	$	273,790

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,
	2024			2023
Operating activities
Net income (loss)	$	28,539		$	(48,562	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense		855			1,133
Stock-based compensation expense		8,260			7,616
Net accretion of discounts on marketable securities		(2,295	)		(3,078	)
Changes in operating assets and liabilities:
Unbilled accounts receivable		(1,796	)		(427	)
Prepaid expenses and other current assets		1,266			242
Operating lease assets and liabilities		(350	)		(337	)
Other assets		22			110
Accounts payable		807			251
Accrued expenses and other liabilities		(1,693	)		(1,428	)
Deferred revenue		—			(421	)
Net cash provided by (used in) operating activities	$	33,615		$	(44,901	)
Investing activities
Purchases of marketable securities		(119,054	)		(143,832	)
Maturities of marketable securities		144,702			70,132
Purchases of property and equipment		(28	)		(366	)
Net cash provided by (used in) investing activities		25,620			(74,066	)
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		2,028			490
Net cash provided by financing activities		2,028			117,835
Net increase (decrease) in cash, cash equivalents and restricted cash		61,263			(1,132	)
Cash, cash equivalents, and restricted cash, beginning of period		26,655			36,190
Cash, cash equivalents, and restricted cash, end of period	$	87,918		$	35,058
Supplemental cash flow information
Cash paid for operating lease liabilities	$	1,478		$	1,646
Non-cash investing and financing activities:
Property and equipment purchases unpaid at end of period	$	19		$	47

The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of each of the periods shown above:


	June 30, 2024		June 30, 2023
Cash and cash equivalents	$	86,702	$	33,966
Restricted cash		1,216		1,092
Total cash, cash equivalents, and restricted cash	$	87,918	$	35,058

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

Fulcrum Therapeutics, Inc.

Notes to Consolidated Financial Statements

1. Nature of the Business and Basis of Presentation

Fulcrum Therapeutics, Inc. (the “Company” or “Fulcrum”) was incorporated in Delaware on August 18, 2015. The Company is focused on developing small molecules to improve the lives of patients with genetically-defined rare diseases in areas of high unmet medical need.

The Company is subject to a number of risks similar to other companies in the biotechnology industry, including, but not limited to, risks of failure of preclinical studies and clinical trials, dependence on key personnel, protection of proprietary technology, reliance on third party organizations, risks of obtaining regulatory approval for any product candidate that it may develop, development by competitors of technological innovations, compliance with government regulations, and the need to obtain additional financing. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing, and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance-reporting capabilities. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The accompanying consolidated financial statements and footnotes to the financial statements have been prepared on the same basis as the most recently audited annual consolidated financial statements and, in the opinion of management, reflect all normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of June 30, 2024 and the results of its operations and its cash flows for the three and six months ended June 30, 2024 and 2023. The results for the three and six months ended June 30, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2024 (the “Annual Report on Form 10-K”).

Sales of Common Stock

In January 2023, the Company completed a public offering of its common stock and issued and sold 9,615,384 shares of common stock at a public offering price of $13.00 per share, resulting in net proceeds of $117.3 million after deducting underwriting discounts and commissions and offering expenses.

Liquidity

The Company has incurred recurring losses and negative cash flows from operations since inception and has primarily funded its operations with proceeds from the sale of shares of its capital stock and from upfront payments received from collaboration and license agreements. As of June 30, 2024, the Company had an accumulated deficit of $481.1 million. The Company expects its operating losses and negative operating cash flows to continue into the foreseeable future as it continues to expand its research and development efforts. The Company expects to finance its future cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements.

The Company expects that its cash, cash equivalents, and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the date of issuance of these financial statements. However, the Company has based this estimate on assumptions that may prove to be wrong, and its operating plan may change as a result of many factors currently unknown to it. As a result, the Company could deplete its capital resources sooner than it currently expects. If the Company is unable to raise additional funds through equity or debt financings when needed, it may be required to delay, limit, reduce or terminate development or future commercialization efforts or grant rights to develop and market product candidates that it would otherwise prefer to develop and market itself.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Fulcrum Therapeutics Securities Corp., which is a Massachusetts subsidiary created to buy, sell, and hold securities. All intercompany transactions and balances have been eliminated.

Summary of Significant Accounting Policies

The significant accounting policies and estimates used in the preparation of the accompanying consolidated financial statements are described in the Company’s audited consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K. There have been no material changes in the Company’s significant accounting policies during the six months ended June 30, 2024, except as noted below with respect to the Company's accounting policies related to collaborative arrangements.

Collaborative Arrangements

At contract inception, the Company analyzes its collaboration arrangements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and are exposed to significant risks and rewards dependent on the commercial success of such activities, and therefore within the scope of ASC Topic 808, Collaborative Arrangements (ASC 808). This assessment is performed on an ongoing basis throughout the collaboration based on changes in the responsibilities of the parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and which elements of the collaboration are more reflective of a vendor-customer relationship and are therefore within the scope of ASC 606, Revenue from Contracts with Customers (ASC 606).

For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, either by analogy to authoritative accounting literature or by applying a reasonable and rational policy election. The Company evaluates the income statement classification for presentation of amounts due from or owed to collaborators associated with multiple activities in a collaboration arrangement based on the nature of each separate activity. The Company made an accounting policy election to account for research and development reimbursements received from its collaboration partner that are outside of the scope of ASC 606 as a reduction of research and development expenses to best reflect the economics and nature of the transaction in the context of the unit-of-account.

See Note 2, “Summary of Significant Accounting Policies”, in the Company’s audited consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K for the Company's accounting policies for arrangements within the scope of ASC 606.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amount of expenses during the reported periods. Estimates inherent in the preparation of these consolidated financial statements include, but are not limited to, estimates related to revenue recognition, accrued expenses, stock-based compensation expense, and income taxes. The Company bases its estimates on historical experience and other market specific or other relevant assumptions it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Actual results could differ from those estimates or assumptions.

Off-Balance Sheet Risk and Concentrations of Credit Risk

The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, marketable securities, and restricted cash. The Company’s cash, cash equivalents, and restricted cash are deposited in accounts at large financial institutions. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash, cash equivalents and restricted cash are held. The Company maintains its cash equivalents in money market funds that invest in U.S. Treasury securities, U.S. Treasury securities, and commercial paper. The Company’s marketable securities consist of U.S. Treasury securities, corporate bonds, and commercial paper, and potentially subject the Company to concentrations of credit risk. The Company has adopted an investment policy that limits the amounts the Company may invest in any one type of investment. The Company has not experienced any credit losses and does not believe it is exposed to any significant credit risk on these funds.

Recent Accounting Pronouncements

During the periods presented, the Company was not required to adopt any recently issued accounting standards. The Company does not expect any recently issued accounting standards to have a material impact on its financial statements.

3. Fair Value Measurements

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the fair value hierarchy classification of such fair values as of June 30, 2024 and December 31, 2023 (in thousands):


	Fair Value Measurements at June 30, 2024
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	32,041	$	32,041	$	—	$	—
U.S. Treasury securities		54,661		—		54,661		—
Marketable securities:
U.S. Treasury securities		25,235		—		25,235		—
Government agency securities		14,903		—		14,903		—
Commercial paper		4,454		—		4,454		—
Corporate bonds		142,484		—		142,484		—
Total	$	273,778	$	32,041	$	241,737	$	—


	Fair Value Measurements at December 31, 2023
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	25,563	$	25,563	$	—	$	—
Marketable securities:
U.S. Treasury securities		14,215		—		14,215		—
Government agency securities		65,107		—		65,107		—
Commercial paper		17,889		—		17,889		—
Corporate bonds		113,447		—		113,447		—
Total	$	236,221	$	25,563	$	210,658	$	—

There were no transfers between fair value levels during the three and six months ended June 30, 2024.

4. Cash Equivalents and Marketable Securities

Cash equivalents and marketable securities consisted of the following as of June 30, 2024 and December 31, 2023 (in thousands):


	Fair Value Measurements at June 30, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash equivalents:
Money market funds	$	32,041	$	—	$	—		$	32,041
U.S. Treasury securities		54,663		—		(2	)		54,661
Total cash equivalents		86,704		—		(2	)		86,702
Marketable securities:
U.S. Treasury securities		25,242		—		(7	)		25,235
Government agency securities		14,925		—		(22	)		14,903
Commercial paper		4,459		—		(5	)		4,454
Corporate bonds		142,814		2		(332	)		142,484
Total marketable securities		187,440		2		(366	)		187,076
Total cash equivalents and marketable securities	$	274,144	$	2	$	(368	)	$	273,778


	Fair Value Measurements at December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash equivalents:
Money market funds	$	25,563	$	—	$	—		$	25,563
Total cash equivalents		25,563		—		—			25,563
Marketable securities:
U.S. Treasury securities		14,229		10		(24	)		14,215
Government agency securities		65,182		23		(98	)		65,107
Commercial paper		17,891		8		(10	)		17,889
Corporate bonds		113,492		90		(135	)		113,447
Total marketable securities		210,794		131		(267	)		210,658
Total cash equivalents and marketable securities	$	236,357	$	131	$	(267	)	$	236,221

There were no sales of marketable securities during the three and six months ended June 30, 2024. As of June 30, 2024, the Company held 57 debt securities that were in an unrealized loss position for less than 12 months with an aggregate fair value of $159.0 million. As of June 30, 2024, the Company held 7 debt securities that were in an unrealized loss position for greater than 12 months with an aggregate fair value of $18.9 million. As of June 30, 2024, the aggregate fair value of marketable securities with a remaining contractual maturity of greater than one year was $3.1 million.

The Company has the intent and ability to hold its debt securities until recovery. As a result, the Company did not record any charges for credit-related impairments for its marketable securities for the three and six months ended June 30, 2024.

5. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):


	June 30, 2024			December 31, 2023
Lab equipment	$	9,613		$	9,682
Furniture and fixtures		600			600
Computer equipment		393			393
Software		199			199
Leasehold improvements		7,121			7,102
Total property and equipment		17,926			17,976
Less: accumulated depreciation		(13,518	)		(12,760	)
Property and equipment, net	$	4,408		$	5,216

Depreciation expense for the three months ended June 30, 2024 and 2023 was $0.4 million and $0.6 million, respectively. Depreciation expense for the six months ended June 30, 2024 and 2023 was $0.9 million and $1.1 million, respectively.

6. Additional Balance Sheet Detail

Prepaid expenses and other current assets consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Prepaid expenses	$	2,957	$	3,658
Prepaid sign-on bonuses subject to vesting provisions		17		71
Interest income receivable		1,201		1,712
Total prepaid expenses and other current assets	$	4,175	$	5,441

Accrued expenses and other current liabilities consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
External research and development	$	3,235	$	3,164
Payroll and benefits		2,723		4,712
Professional services		769		454
Other		306		396
Total accrued expenses and other current liabilities	$	7,033	$	8,726

7. Preferred Stock

As of June 30, 2024 and December 31, 2023, 5,000,000 shares of undesignated preferred stock were authorized. No shares of preferred stock were issued or outstanding as of June 30, 2024 and December 31, 2023.

No dividends have been declared since inception.

8. Common Stock

As of June 30, 2024 and December 31, 2023, 200,000,000 shares of common stock, $0.001 par value per share, were authorized.

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are not entitled to receive dividends, unless declared by the Company’s board of directors, subject to the preferential dividend rights of any preferred stock then outstanding. No dividends have been declared or paid by the Company since its inception.

As of June 30, 2024 and December 31, 2023, the Company has reserved for future issuance the following number of shares of common stock:


	June 30, 2024		December 31, 2023
Shares reserved for exercises of outstanding stock options		12,547,394		9,972,217

Fulcrum Therapeutics, Inc. [FULC] Filings
10-Q	[2024-07-31]
10-Q	[2024-05-13]
10-K	[2024-02-27]
10-Q	[2023-11-07]
10-Q	[2023-08-03]
10-Q	[2023-05-15]
10-K	[2023-03-09]
10-Q	[2022-11-08]
10-Q	[2022-08-11]
10-Q	[2022-05-09]
10-K	[2022-03-03]
10-Q	[2021-11-04]
10-Q	[2021-08-10]
10-Q	[2021-05-06]
10-K	[2021-03-04]
10-Q	[2020-11-10]
10-Q	[2020-08-11]
S-1	[2020-06-22]
10-Q	[2020-05-13]
10-K	[2020-03-05]
10-Q	[2019-11-14]
10-Q	[2019-08-26]
S-1	[2019-06-21]