Good morning and welcome to the Fulcrum Therapeutics Conference Call. [Operator Instructions]. I'd now like to turn the call over to Christi Waarich, Director of Investor Relations and Corporate Communications at Fulcrum. Please proceed.

Thank you, Anthony. Good morning, and thank you for joining us. Earlier today, we issued two press releases: one, outlining the results of our interim analysis for losmapimod in FSHD; and another outlining our recent corporate progress and financial results for the second quarter of 2020. You can find both of these in the Investor Relations section of our website at fulcrumtx.com. Please be reminded that remarks made during this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These may include statements about our future expectations and plans, clinical development time lines and financial projections. While these forward-looking statements represent our views as of today, they should not be relied upon as representing our views in the future. We may update these statements in the future, but we are not taking on an obligation to do so. Please refer to our most recent filings with the Securities and Exchange Commission for a discussion of certain risks and uncertainties associated with our business. With me on today's call are Robert Gould, President and Chief Executive Officer; Diego Cadavid, Senior Vice President of Clinical Development; Owen Wallace, Chief Scientific Officer; and Bryan Stuart, Chief Operating Officer. Let me quickly run through this morning's agenda. Robert will begin the call with an overview of our recent progress. Diego will discuss the interim results of the ReDUX4 trial in more detail as well as our focus program. Owen will provide updates on our sickle cell program and FulcrumSeek, and Bryan will cover our financials. With that, it's my pleasure to turn the call over to Robert. Robert?

Thank you, Christi. Good morning, everyone, and thank you for joining us today. I first want to thank our team who has been phenomenal through the past several months as you'll see from all of the progress we have to report on our call today. I'd like to begin with an overview of the interim analysis from our ReDUX4 trial in facioscapulohumeral muscular dystrophy or FSHD. Today, we announced interim results from the first 29 subjects from our Phase IIb ReDUX4 trial in FSHD. This interim analysis looked at the primary end point of DUX4-driven gene expression and did not look at any functional or exploratory end points, while losmapimod was generally well tolerated with no drug-related serious adverse events reported. This is the first data ever generated from a placebo-controlled clinical trial to evaluate the impact of a therapy on the root cause of FSHD. While there was not a separation at the 16-week cutoff from placebo in analysis of the overall population, we were very encouraged to see that those muscle biopsies with the highest pretreatment DUX4-driven gene expression in a prespecified sensitivity analysis showed a large reduction. On the COVID front, we were very pleased to be able to announce a new program last quarter to develop a therapeutic to treat hospitalized patients with COVID-19 and very quickly got the green light from the FDA to initiate a Phase III clinical trial. Top line results from this pivotal study are projected to read out in first quarter 2021. We also continue to make progress with FTX-6058, an oral small molecule therapeutic designed to induce expression of fetal hemoglobin in select hemoglobinopathies. We plan to begin clinical development before the end of the year and look forward to being able to expand our pipeline efforts to address the…

Thank you, Robert. ReDUX4 is our international Phase IIb, double-blind, placebo-controlled trial of losmapimod in 80 subjects we genetically confirm FSHD. The primary end point of the trial is the change from baseline in DUX4-driven gene expression in affected skeletal muscle. In the wake of COVID-19, we extended the ReDUX4 trial from 24 to 48 weeks, with an open-label extension to follow. Subjects received a muscle biopsy at baseline on either 16 or 36 weeks. Due to the stochastic nature of DUX4 expression and wide range of DUX4 expression between muscles within an individual patient, we utilized MRI-guided biopsy to identify those muscle areas most likely to express DUX4. MRI can accurately identify affected muscles, but it cannot determine the level of DUX4-driven gene expression within an individual patient's muscle. To address this challenge in identifying muscle biopsies with high baseline DUX4-driven gene expression, in order to quantify a reduction, we prespecified a sensitivity analysis of the different ranges of expression. Results from the interim analysis highlighted a greater than 1,000-fold difference between pretreatment muscle biopsies with higher and lower DUX4-driven gene expression. This confirms what we say in preclinical research, where all the FSHD subjects' derived cell lines used preclinically had high baseline DUX4-driven gene expression, and we observed a reduction in all of them. As a result of the 1,000-fold difference in DUX4-driven gene expression observed between biopsies, we believe that observing a reduction may require capturing muscle biopsies with higher baseline expression. As shown on Slide 13, muscle biopsies with higher baseline provide greater dynamic range to observe a reduction compared to muscle biopsies with lower baseline. Using a prespecified sensitivity analysis based on learnings from our open-label study, the interim analysis evaluated the treatment effect on DUX4-driven gene expression in muscle biopsies with the highest baseline…

Thanks, Diego. Our hemoglobinopathy program has continued to advance towards clinical development, and we plan to initiate our Phase I trial in sickle cell disease by the end of the year. Our approach is focused on the upregulation of fetal hemoglobin, which could be beneficial for both sickle cell disease and beta-thalassemia. Our clinical candidate FTX-6058 has been profiled broadly in preclinical in vitro and in vivo models of sickle cell disease, and we have seen robust elevation of HbF at concentrations that we believe will be readily achieved in humans based on the pharmacokinetic profile of the compound. We've had an abstract accepted for oral presentation at the 14th Annual Sickle Cell Disease Research & Educational Symposium next month, and we filed our nonprovisional patent application. We also continue to make progress on our research and early clinical portfolio. We have advanced our work on FulcrumSeek, our proprietary connectivity map database that integrates the identification of druggable targets and signaling pathways in human cell models that recapitulate genetically defined diseases. This platform melds cellular modeling, high-content technologies, pharmacogenomics and machine learning. We generate high dimensional data using RNA-seq and high-content imaging to create a database of profiles from our proprietary chemical probe library and functional genomics in complex cell models. Using a scalable cloud-based data architecture and AI and machine learning tools to classify the chemical probes and targets, we select those that modulate gene expression to treat the down root cause of genetically defined diseases. Our collaboration with Acceleron continues to advance, and we recently announced a research and discovery collaboration with MyoKardia. Under the agreement, Myokardia will have access to Fulcrum's unique proprietary target discovery engine to identify therapies that control the expression of genes that are known to be the underlying drivers of genetic cardiomyopathies. Fulcrum will be eligible to receive research reimbursement, development and commercial milestone payments of approximately $300 million for the first product and up to $150 million for additional products as well as tiered royalties. These collaborations highlight the broad applicability of our product engine to discover and develop new treatments in genetically defined rare diseases with high unmet need. With that, I'll now turn the call over to Bryan for an update on our financial results for the quarter. Bryan?

Thanks, Owen. We entered the second quarter of 2020 with $131.7 million in cash, cash equivalents and marketable securities, not including the $12.5 million we received from MyoKardia since the close of the quarter. Based on our current operating plan and projections, we believe this will support our operations into the first quarter of 2022, allowing us to advance losmapimod in FSHD, reach top line data in the LOSVID trial and bring FTX-6058 into the clinic while continuing to invest in our discovery-stage efforts. Research and development expenses for the quarter ended June 30, 2020, were $12.8 million compared to $10.9 million in the second quarter of 2019. The increase of $1.9 million was primarily due to increased personnel-related costs to support the growth of Fulcrum's research and development organization as well as increased costs related to the advancement of losmapimod for the treatment of FSHD. General and administrative expenses were $5.1 million for the second quarter of 2020 as compared to $2.6 million for the second quarter of 2019. The increase of $2.5 million was primarily due to increased costs associated with operating as a public company as well as increased personnel-related costs to support the growth of our organization. Our net loss was $15.7 million for the second quarter of 2020 as compared to a net loss of $13.2 million for the second quarter of 2019. Overall, we continue to expect several upcoming catalysts. We expect to report top line data from our Phase III LOSVID trial in COVID-19 in the first quarter of 2021. We expect to report top line data from ReDUX4 in the first quarter of 2021, with full data including exploratory and clinical outcome assessments in the second quarter of 2021. We also plan to initiate the Phase I trial with FTX-6058 in sickle cell disease and disclose the biochemical target by the end of the year. And we'll continue to advance our discovery programs from our product engine while making progress with our partners at both Acceleron and Myokardia. We're very excited about the work ahead as we continue to execute on our plan and look forward to keeping you updated as our progress continues in the months ahead. Operator, you may now open the line for questions.

[Operator Instructions]. Your first question comes from the line of Joseph Schwartz from SVB Leerink.

Congrats on all the progress. I was wondering if you could talk a little bit about what the effects on drug and placebo for the patients in the other quartiles look like. And what do you see driving the overall effect? Is it patients in the highest DUX4 quartile? And then as a follow-up, are you implementing any adjustments or enhancements to ReDUX4 now to learn from this finding? And can you make any adjustments given you've already obtained pretreatment biopsies from all of the patients?

Thanks, Joe. This is Robert. As we showed in the overall analysis of the total population, there was no separation from placebo. We were encouraged by the highest quartile showing the 38-fold reduction in losmapimod-treated patients. But the overall effect did not separate from placebo. I think your second question was are we going to make adjustments to the ReDUX4 trial. Now we're excited about the results we've seen to date. We're continuing to look forward to collecting the MRI data and the clinical outcome assessment. We will be generating additional data on the marker of health genes, including markers of muscle growth, inflammation, apoptosis markers. And those additional analyses, we think, give us insight into the continued progression of effective drug on the disease. We also have 36-week biopsies that have not yet been assayed or assessed. As we mentioned, we've -- these 29 patients only represent about 1/3 of the patients that are in the overall 80-patient trial. So we'll be collecting the rest of the data as we proceed.

And your next question comes from the line of Dae Gon Ha from BTIG.

So Robert or maybe even Diego, I wanted to dig into the data you presented a little bit. To the extent possible, I was wondering if you can talk about the methodology of -- or I guess what gene or genes are behind this delta Ct as you assay it from the qPCR? I mean we've seen some several candidate genes from the literature as well as from your previous publications or presentations at AAN, for example. Is this one gene like MBD3 L2 or ZSCAN4? Is it a composite summation score that's being presented? And I guess just related to that, is there a variability -- if you were to look at individual genes, like do you actually see differential effects of losmapimod depending on what gene you look at? And I've got a follow-up.

Yes. No, thank you for the question. This is Diego. So this primary end point uses a panel of DUX4 regulated genes. It's very similar to the one we reported at AAN 2020. This was the result of really a careful selection process that began with what's known in the literature and then advancing it through what we observe in cell lines and in muscle biopsies. So we ended up with a small panel of genes. Each one had its own validated qPCR assay. In addition, it includes 3 housekeeping genes that are optimized for human skeletal muscle, and that is how we derive the delta Ct. We don't have access to the individual genes as part of this interim analysis. It's just an early look using the whole panel. But as part of next steps, those opportunities will come.

Great. And then on the data again, just wondering, this highest quartile was determined, I guess, on a relative basis. So I guess if we look forward to, say, all of n of 80-patient data, once you collect them given that, I guess, progression of gene expression seems to be fairly stagnant over time, what is the cutoff going to be? Or is that going to be a moving target as you collect the remaining 61 -- or a 51-patient data?

Yes. So you are correct. This quarter was defined on all baseline biopsies from the 29 subjects. As we accumulate more data, remember, this is really the first clinical trial level doing this. We will learn more about what could be a potential cutoff for high DUX4. We believe that every patient and every muscle, at least at some point, has very high DUX4. And it's encouraging that we have seen a reduction in those biopsies. This sensitivity analysis was pretty specified because as we have seen in our preparatory studies and in some early biopsies obtaining the open-label study that this distribution of DUX4 is observed when you do MRI-guided biopsies.

Okay. And then last question for me is, do you have any hypothesis around why losmapimod would be able to induce expression of DUX4-driven genes?

Yes. I think there's a correction there. It's not that it induces expression. What this interim analysis is showing in the biopsies with the highest expression is a reduction relative to placebo. And we have some idea of what the mechanism of action could be, but there's really no definite proof.

And your next question comes from the line of Tazeen Ahmad from Bank of America.

Can you maybe tell us in a real-world setting what proportion of these -- what you define as high expressing patients make up the overall FSHD population? Do you have any sense for that?

Thanks, Tazeen. We don't actually think there's high and low expressing patients. All of the FSHD patients are expressing muscle -- are expressed in DUX4 and causing the FSHD. By MRI, what we are doing is optimizing our biopsy sample to the higher expressing muscles within the patients. They're high in the Ritchie score, the more expression of DUX4-driven gene expression there is and the more effective the patients are. The Ritchie score is the clinical severity score that's used to score these patients. And that's an important concept. It's not that there are high and low expressing patients, but rather there are high and low expressing biopsies as we do these needle biopsies.

Okay. So taking that into account, for the rest of the 2/3 of the patients for what we await the biopsy results, if we get a similar trend on expression that's observed through the biopsies, do you think FDA would accept assessments of the DUX4 expression just from the biopsies that did have the high expression? Meaning do you think that this, in any way, changes the potential of trying to apply -- let's say, if the full data set looks similar to this and you have this prespecified analysis, do you think it changes your view on FDA's receptivity to being able to apply with this data set rather than needing to do a Phase III?

Yes. We think that all the FSHD patients are -- have the potential to benefit from the treatment with losmapimod because of the significant unmet need and because of the common root cause of the DUX4 driving the disease. As we proceed through the rest of the fall and complete the study, we're going to be looking at the totality of the data that we have to continue the conversations with the FDA that we have. Just to remind you, DUX4-driven gene expression is the primary end point. We have important other assessments, including MRI, looking at muscle volume, fat infiltrate as well as a number of clinical assessments around reachable workspace, timed up and go and a very rich clinical trial looking at the potential benefit of losmapimod across the entire patient population and across the entire presentation of the disease.

Okay. And maybe the last question. I know you haven't publicly stated your powering assumptions for the study, but is there any thought about potentially increasing the number of patients in the study? Or are you comfortable with what you have?

Yes. No, we believe -- originally, we had a plan for 66 subjects. We increased the sample to go to 80, randomized one-to-one, and we don't have a plan to increase enrollment. We believe this number of patients is sufficient. And also in addition, we enrolled 14 patients in a separate study, the open-label study at a single site, which are all ongoing on drug, and they will provide additional data. We also have the open-label extension of ReDUX4. So all the patients on placebo eventually will roll on into losmapimod, and that gives us an additional opportunity to explore what treatment effects losmapimod is having.

And your next question comes from the line of Ted Tenthoff from Piper Sandler.

Congrats on the preliminary findings, definitely encouraging, and I'm looking forward to more data. I'm wondering just kind of thinking about this with respect to tissue penetration and biodistribution, again, appreciating that FSHD is more muscle focused, whereas COVID is probably more [long] tissue focused. But any takeaways from what you saw in this first group of patients to the ongoing Phase III study just in terms of, obviously, target engagement but also distribution?

Yes. Thanks, Ted. As part of this interim analysis, we did measure losmapimod muscle concentrations in the patients that received losmapimod, and that was greater than the 100 nanomolar concentration that we've seen previously. So very great consistency with our prior results that we had reported. Additionally, in the preclinical studies, we showed good biodistribution of losmapimod in the preclinical species. So we don't think there is a read-through in terms of the mechanisms. GSK had previously done a whole body autoradiography assessment, again, showing good exposure throughout all the tissues of the body. As we had shown previously in our earlier studies, we were seeing a good target inhibition, good reduction in target engagement, Hsp27 phosphorylation in our Phase I studies. And so we think that the LOSVID trial, the trial of losmapimod in COVID patients, has a good chance of having great exposure based on all the data we've generated to date.

[Operator Instructions] Our next question comes from the line of Joseph Schwartz from SVB Leerink.

I wanted to follow up on something that was raised earlier regarding the increases in DUX4 gene expression that were detected across so many placebo as well as drug-treated patients and get your thoughts on what do you make of this. Do you think this is actually happening? Or is it best attributed to assay variability, particularly at low levels of DUX4 gene expression? And what is the concordance between the amount of DUX4 gene expression as quantified by MRI and muscle fat infiltration and STIR positivity relative to biopsies? And is there any way to determine how much DUX4 gene expression might be in patients' muscles with less invasive means having seen this data? Be interesting to get your thoughts now that we have additional information.

This is Owen. I'll take the first part and then maybe let Diego comment as well. We don't think there is a meaningful increase. Certainly, there's no separation between losmapimod and placebo. And I think it gets to this point around the dynamic range between high expressing biopsies and low expressing biopsies. We see more than 1,000-fold change in expression. And I think when you're in that very low range, there's just natural variability and a likelihood that you might see a nominal increase, but I don't think it's a meaningful increase. I think we're much more encouraged by the data with high expression because we think we've got a sufficient dynamic range at that point to actually measure this 38-fold reduction that we observed, which is a lot greater than placebo.

And then I'll address the MRI because that's a really important question. So there's really no other way to measure DUX4 activity or DUX4-driven gene expression except molecularly taking tissue out of a muscle. So we are limited on our ability to sample. And if you want to sample multiple times, we chose to do needle biopsies, which are actually small pieces. So because of that limitation, from the design of the study, we incorporated this whole body quantitative MRI. Unlike needle biopsies, we have a large coverage of almost every affected muscle. And we really are encouraged the fact that we extended the placebo control to 48 weeks, it's now giving us a much longer runway to look at this process. DUX4 is clearly linked to MRI activity, loss of muscle and increase of fat. And as the muscle is replaced by fat, there is loss of function and disability. I call that connecting the dots. That's very clear from the literature.

And your next question comes from the line of Matthew Harrison from Morgan Stanley.

I guess maybe 2 for me. First one, can you just talk a little bit more specifically about why, if you think you have the right amount of drug levels in the muscle, are you not seeing DUX4 reduction broadly across all patients? Are you suggesting that there's a group of patients that just don't have enough DUX4 expression for you to lower it? I guess it's not clear to me. Maybe you could just touch on that a little bit, and then I have a follow-up.

Again, this is Owen again, Matt. Yes, we think that when we're in these lower levels, there are relatively few transcripts that are actually being amplified by the qPCR. And there's variability from biopsy to biopsy. So we think that it's just very difficult to detect a robust reduction when you're already down at a very low level. So that's why we've really focused on these high expressing initial muscle biopsies because we can see a robust dynamic range there. We actually identified this initially from our analysis of the open-label study, where we demonstrated the same phenomenon that with patients at an initial high level at baseline, there was an ability to look for a reduction, whereas there was much more variability in the low expressing muscle biopsies.

Okay. And then maybe could you just comment on your view then? In these patients, are there other gene expressions or other biomarkers that you could look at to see or get some conviction whether or not modulating the disease with patients that have low levels is going to actually impact motor function or other clinically measurable aspects of the disease?

Yes. This is Owen again. So again, just to reiterate, we think that all patients have both high and low expressing muscles as their disease progresses. And we think that in addition to reducing DUX4, which is dependent on the biopsy, there's also an ability, as you ask, to look at more general markers of muscle health. So as a part of our qPCR panel, we actually looked across multiple other genes, and they have not yet been analyzed, but we think that those genes will actually offer potentially a great chance to look at things like myogenesis inflammation, adipogenesis, et cetera. So we have 24 additional muscle health transcripts that can be evaluated that I think will give us that picture that you're asking about.

And there are no further questions at this time. I'll turn the call over to Robert Gould.

So I want to thank you all for joining us today and for your support of Fulcrum. We hope you and your families all stay healthy and safe as we continue to explore the exciting opportunities we have ahead of us at Fulcrum. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.