Fulcrum Therapeutics Stock Slides on $175M Offering
Capital raise comes just months after the failure of its lead drug candidate, fueling a strategic pivot to its sickle cell disease program.
Shares of Fulcrum Therapeutics (Nasdaq: FULC) fell in trading on Wednesday after the company announced the pricing of an upsized $175 million public offering, a move that signals substantial dilution for existing shareholders at a critical juncture for the biopharmaceutical firm.
The capital raise comes less than three months after Fulcrum’s former lead drug candidate, losmapimod, failed a pivotal Phase 3 clinical trial for treating facioscaphumeral muscular dystrophy (FSHD), forcing the company to discontinue the program. This offering marks a strategic reset, providing the necessary capital to advance its new lead asset for sickle cell disease (SCD).
According to the company's announcement, the offering consists of a mix of common stock and pre-funded warrants. The final deal size was increased from a previously targeted amount, indicating investor demand to fund the company's revised pipeline strategy. Goldman Sachs and Jefferies are acting as lead joint book-running managers for the offering.
The decision to raise a sum equivalent to roughly 25% of the company's recent market capitalization underscores the financial pressures following the major clinical setback in September. The failure of losmapimod to meet its primary endpoint in the Phase 3 REACH study was a significant blow, as it was the company's most advanced asset and represented a potential breakthrough for FSHD, which has no approved treatments.
With losmapimod shelved, Fulcrum has pivoted to focus on pociredir, an investigational oral treatment for sickle cell disease. The proceeds from the offering are expected to be used to fund the ongoing clinical development of pociredir and other earlier-stage programs. According to recent company updates, pociredir is currently in a Phase 1b trial and has shown promising preliminary results in its ability to increase fetal hemoglobin, which can mitigate the sickling of red blood cells.
Investors are now weighing the near-term pain of dilution against the long-term potential of Fulcrum's revamped pipeline. The stock had performed well leading up to the announcement, trading near its 52-week high of $15.74. This allowed the company to raise funds from a position of relative market strength, despite the clinical pipeline uncertainty.
Wall Street analysts, for the most part, have maintained a positive outlook, looking beyond the losmapimod failure to the potential of the SCD program. Prior to the offering, the consensus analyst price target for FULC stood at $18.56, suggesting experts believe there is still significant upside if the company's clinical pivot is successful.
Looking ahead, Fulcrum's trajectory will be closely tied to the clinical progress of pociredir. The company has guided that it expects to release additional data from the program's 12 mg dose cohort by the middle of 2025, with data from a 20 mg cohort anticipated by the end of the year. These readouts will be critical catalysts and will likely determine if this strategic reset can create new value for shareholders.