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Item 2. Management’s Discussion and Analysis

2021-05-06 compared with 2020-11-10 · 91 added, 148 removed, 180 unchanged (57% of the section changed)

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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on March 4, 2021 .

Some of the informatio n contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertaintie s.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.

As a result of many factors, including those factors set forth in the “ Risk Factors ” section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

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In August 2019, we initiated a Phase 2b clinical trial, known as ReDUX4, and a Phase 2 open label clinical trial of losmapimod, our product candidate for FSHD, to evaluate the efficacy and safety of losmapimod in addressing the underlying cause of FSHD.

We submitted an investigational new drug application, or IND, for FTX-6058, our product candidate for certain hemoglobinopathies, in the third quarter of 2020, which came into effect in October 2020.

We plan to begin dosing subjects in a Phase 1 clinical trial of FTX-6058, to evaluate safety, tolerability and pharmacokinetics of FTX-6058 in healthy volunteers, in the fourth quarter of 2020.

FTX-6058 is a novel upregulator of fetal hemoglobin.

ReDUX4 is a randomized, double-blind, placebo-controlled multicenter international Phase 2b clinical trial in 80 subjects with FSHD to investigate the efficacy and safety of oral administration of losmapimod 15 mg twice per day.

The primary endpoint is to evaluate the reduction of DUX4-driven gene expression in affected sk eletal muscle biopsies.

The original design of ReDUX4 included a muscle biopsy at week 16 during the 24-week treatment period followed by an open label extension.

Sixteen of the 80 subjects have completed the 24-week treatment period and rolled over to the open label extension portion of the trial.

As a result of the COVID-19 pandemic, we have extended the ReDUX4 treatment period from 24 to 48 weeks through a protocol amendment to ensure the safety of the subjects and to allow for the opportunity for a biopsy at week 16 as originally intended or at week 36.

Approximately 68 subjects who did not complete the original 24-week treatment period remain active in the randomized portion of the trial.

The extension from 24 to 48 weeks also allows for a longer assessment in a placebo-controlled design of the skeletal muscle MRI secondary endpoint and the various exploratory clinical endpoints, such as reachable workspace, optimized time up and go test for FSHD , muscle function measures and patient reported outcomes.

We expect to present full data from the trial in the second quarter of 2021 .

We no longer intend to report topline data on the primary endpoint in the first quarter of 2021 because we believe that reporting the full data from the trial, including the primary endpoint, will allow for a more comprehensive assessment of the efficacy and safety of losmapimod for the treatment of FSHD.

We believe that the amendment to the trial protocol provides flexibility to address the challenges presented by the COVID-19 pandemic and supports collection of efficacy and safety data to support continued discussions with regulatory agencies regarding potential registration strategies.

In August 2020, we announced results from a pre-specified interim analysis of the primary endpoint of the ReDUX4 trial, which is the reduction from baseline of DUX4-driven gene expression in affected skeletal muscle after subjects have been treated with losmapimod or placebo.

Secondary and exploratory endpoints were not assessed as part of this analysis.

Results from the interim analysis in the first 29 randomized subjects indicate that DUX4-driven gene expression did not show a separation from placebo at 16 weeks.

However, in a pre-specified sensitivity analysis, those with the highest pre-treatment DUX4-driven gene expression in their muscle biopsy sample showed a large reduction in DUX4-driven gene expression following treatment with losmapimod compared to placebo.

The highest expressing muscle biopsies represent the top quartile of biopsies assessed based on baseline DUX4-driven gene expression.

The interim results included an analysis of the first 29 subjects who completed their 16-week biopsy out of the 80 subjects enrolled.

Pharmacokinetics, demographics and the primary endpoint were assessed.

The interim analysis was not powered for statistical significance and did not include individual patient level data.

Subjects were randomized to receive an oral dose of losmapimod 15mg (n=15) or placebo (n=14) twice per day.

While results showed a significant reduction in DUX4-driven gene expression in the muscle biopsies of subjects whose baseline biopsy showed the highest levels of DUX4 gene expression (38-fold decrease with losmapimod, n=3, and 5.4 fold-decrease with placebo, n=5), the population level data analysis of the reduction in DUX4-driven gene expression from all 29 subjects did not show a separation of losmapimod from placebo (3.7 fold increase with losmapimod, n=15, and 2.8 fold increase with placebo, n=14).

Results indicated that muscle biopsies within the higher range of DUX4-driven gene expression at baseline may be needed to observe a reduction.

In June 2020, we announced plans to evaluate losmapimod as a potential treatment for patients with COVID-19 .

On June 24, 2020, we announced that we received notification from the U.S.

Food and Drug Administration , or FDA , that we may proceed with initiating a Phase 3, randomized, double-blind, placebo-controll ed trial of losmapimod in higher risk hospitalized adults with COVID-19 , or the LOSVID trial.

The LOSVID trial is a Phase 3, international, multicenter trial designed to assess the safety and efficacy of a 15 mg twice per day oral dose of losmapimod compar ed to placebo for 14 days on top of standard of care in approximately 400 patients hospitalized with COVID-19 and at risk of progression to critical illness based on older age and elevated systemic inflammation.

W e began enrolling patients in the fourth qu arter of 2020.

The primary endpoint of the trial is the proportion of patients who progress to death or respiratory failure by day 28.

The trial’s secondary endpoints include clinical status on days seven and 14 as measured on the nine point W orld Health O rganization ordinal scale of COVID-19 severity, total number of study days free of oxygen supplementation, all-cause mortality, length of hospitalization and intensive care unit stay, adverse events and viral clearance.

We intend to conduct an interim anal ysis for futility and sample size re-estimation using an independent data monitoring committee when approximately 50 percent of subjects complete the 28-day visit .

We expect to provide an update regarding the timing of the LOSVID trial during the first qua rter of 2021 .

In October 2020, we announced that our IND came into effect for our Phase 1 clinical trial of FTX-6058 in healthy adult volunteers.

In this trial, we are evaluating the safety, tolerability and pharmacokinetics of FTX-6058.

The trial is comprised of four parts.

Part A will be a randomized, double-blind, placebo-controlled, single ascending dose (SAD) study in up to six cohorts.

Part B will be a randomized, double-blind, placebo-controlled, multiple ascending dose (MAD) study in up to four cohorts dosed once daily for 14 days.

Part C will be an open label pilot food effect study in subjects randomized to take FTX-6058 with and without a high-fat meal, and Part D will be an open label study to evaluate the potential of FTX-6058 to induce a liver enzyme known as CYP3A, which is involved in drug metabolism (using midazolam).

We expect to present full data from ReDUX4 at the virtual FSHD International Research Congress taking place June 24-25, 2021.

In the fourth quarter of 2020, we initiated a Phase 1 clinical trial of FTX-6058, our product candidate for certain hemoglobinopathies and a novel upregulator of fetal hemoglobin, to evaluate the safety, tolerability and pharmacokinetics of FTX-6058 in healthy volunteers.

We expect to present data from the Phase 1 clinical trial in mid-2021.

In addition, we anticipate initiating a clinical trial of FTX-6058 in patients with SCD in the second half of 2021.

In March 2021, we announced the discontinuation of our Phase 3, randomized, double-blind, placebo-controlled trial of losmapimod in higher risk hospitalized adults with COVID-19 following a strategic review.

Since inception, our operations have focused on organizing and staffing our company, business planning, raising capital, establishing our intellectual property, building our discovery platform, including our proprietary compound library and product engine, identifying drug targets and potential product candidates, in-licensing assets, producing drug substance and drug product material for use in clinical trials and conducting preclinical studies and clinical trials.

To date, we have primarily funded our operations through the issuance of common stock in a private placement and in our initial public offering, or IPO, the issuance of convertible preferred stock and convertible notes, and upfront payments received under our collaboration and license agreements.

To date, we have funded our operations primarily from the sale of shares of our common stock in public offerings, a private placement, and in “at-the-market” offerings, or the ATM Offering, through issuances of convertible preferred stock, and from upfront payments received under our collaboration and license agreements.

In January 2021, we issued and sold 4,600,000 shares of our common stock in a public offering at a public offering price of $11.00 per share, which includes 600,000 shares issued upon the exercise in full by the underwriters of their option to purchase additional shares at the public offering price, less underwriting discounts and commissions.

The net proceeds of the offering were $47.4 million, after deducting underwriting discounts and commissions and offering expenses.

We have incurred significant operating losses since our inception and we expect to continue to incur significant operating losses for the foreseeable future.

Our ability to generate product revenue sufficient to achieve profitability, if ever, will depend heavily on the successful development and eventual commercialization of one or more of our product candidates.

Our net losses were $19.0 million and $53.1 million for the three and nine months ended September 30, 2020, respectively, and $16.5 million and $66.6 million for the three and nine months ended September 30, 2019, respectively.

As of September 30, 2020, we had an accumulated deficit of $203.9 million.

Our net losses were $17.0 million for the three months ended March 31, 2021 and $18.5 million for the three months ended March 31, 2020.

As of March 31, 2021, we had an accumulated deficit of $238.6 million.

We expect our expenses and operating losses will increase substantially over the next several years in connection with our ongoing activities, as we:

continue our clinical development of losmapimod, including our ongoing Phase 2b and Phase 2 open label clinical trials for the treatment of FSHD, and our ongoing Phase 3 clinical trial for the treatment of COVID-19;

continue our clinical development of FTX-6058, including our ongoing Phase 1 clinical trial in healthy volunteers;

continue our clinical development of losmapimod, including our ongoing Phase 2b and Phase 2 open label clinical trials for the treatment of FSHD;

continue our clinical development of FTX-6058, including our ongoing Phase 1 clinical trial in healthy adult volunteers and our planned clinical trial of FTX-6058 in patients with SCD;

continue our ongoing preclinical studies;

advance clinical-stage product candidates into later stage trials;

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As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operatio ns through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements .

We may be unable to raise additional funds or enter into such other agreements or arrangements when ne eded on favorable terms, or at all.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements.

We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all.

If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates, or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

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If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

As of September 30, 2020, we had $127.0 million in cash, cash equivalents, and marketable securities.

We believe that our existing cash, cash equivalents, and marketable securities as of September 30, 2020 will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2022.

As of March 31, 2021, we had $143.9 million in cash, cash equivalents, and marketable securities.

We believe that our existing cash, cash equivalents, and marketable securities as of March 31, 2021 will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2022.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

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Under the terms of the Acceleron Collaboration Agreement, we received a $10.0 million upfront payment from Acceleron in December 2019.

In December 2020, we achieved $2.0 million of specified research milestones associated with the Acceleron Collaboration Agreement.

We are also eligible to receive up to $436.5 million in the aggregate in milestone payments with respect to certain research, developmental, clinical, regulatory and sales-related milestones, and tiered royalty payments based on Acceleron’s (and any of its affiliates’ and sublicensees’) annual worldwide net sales of products directed to any identified targets.

For the three and nine months ended September 30, 2020, we recognized $1.5 million and $4.3 million, respectively, of collaboration revenue under the Acceleron Collaboration Agreement.

For the three and nine months ended September 30, 2019, we did not recognize any collaboration revenue as we had not yet entered into the Acceleron Collaboration Agreement.

As of September 30, 2020 and December 31, 2019, we have recorded $7.4 million and $10.0 million, respectively, of deferred revenue associated with the Acceleron Collaboration Agreement, which is classified as either current or net of current portion in our consolidated balance sheets based on the period over which the revenue is expected to be recognized.

As of September 30, 2020, we had received $1.1 million of cost reimbursement payments and no milestone or royalty payments under the Acceleron Collaboration Agreement.

As of September 30, 2020, we recorded unbilled accounts receivable of $0.6 million related to reimbursable research and development costs under the Acceleron Collaboration Agreement for activities performed during the three months ended September 30, 2020.

In the future, we will recognize additional revenue associated with the $10.0 million upfront payment as we satisfy our performance obligation, and from reimbursement of costs incurred under the Acceleron Collaboration Agreement, and we may generate additional revenue from milestones and royalty payments under the Acceleron Collaboration Agreement.

We expect that our revenue will fluctuate from qu arter-to-quarter and year-to-year based upon our pattern of performance under the Acceleron Collaboration Agreement and as a result of the timing, amount, and achievement of milestones and reimbursement of costs incurred under the Acceleron Collaboration A greement.

For the three months ended March 31, 2021 and 2020 , we recognized $2.

6 million and $0.8 million, respectively, of collaboration revenue under the Acceleron Collaboration Agreement .

As of March 31, 2021 and December 31, 2020 , we have recorded $5.8 million and $7.9 million, respectively, of deferred revenue associated with the Acceleron Collaboration Agreement, which is classified as either current or net of current portion in our consolidated balance sheets based on the period over which the revenue is expected to be recognized.

As of March 31, 2021 , we had received $ 2.2 million of cost reimbursement payments , $2.0 million of milestone payments, and no royalty payments under the Acceleron Collaboration Agreement.

As of March 31, 2021 , we recorded unbilled accounts receivable of $0.

5 million related to reimbursable research and development costs under the Acceleron Collaboration Agreement for activities performed during the three months ended March 31, 2021 .

In the future, we will recognize additional revenue associated with the $10.0 million upfront payment and the $2.0 million of specified research milestones achieved in December 2020 as we satisfy our performance obligation, and from reimbursement of costs incurred under the Acceleron Collaboration Agreement.

In the future, we may also generate additional revenue from milestones and royalty payments under the Acceleron Collaboration Agreement.

We expect that our revenue will fluctuate from quarter-to-quarter and year-to-year based upon our pattern of performance under the Acceleron Collaboration Agreement and as a result of the timing, amount, and achievement of milestones and reimbursement of costs incurred under the Acceleron Collaboration Agreement.

On July 20, 2020, we entered into a collaboration and license agreement, or the MyoKardia Collaboration Agreement, with MyoKardia, Inc., or MyoKardia, pursuant to which we granted to MyoKardia an exclusive worldwide license under certain intellectual property rights to research, develop, make, have made, use, have used, sell, have sold, offer for sale, have offered for sale, import, have imported, export, have exported, distribute, have distributed, market, have marketed, promote, have promoted, or otherwise exploit products directed against certain biological targets identified by us that are capable of modulating up to a certain number of genes of interest with relevance to certain genetically defined cardiomyopathies.

MyoKardia was subsequently acquired by Bristol-Myers Squibb Company in November 2020.

The primary goal of the collaboration is to identify and validate potential biological targets for further research, in order to support the development, manufacture and commercialization of product candidates by MyoKardia for the potential treatment of certain genetically defined cardiomyopathies.

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The royalties are payable on a product-by-product basis during a specified royalty term, and may be reduced in specified circumstances.

For each of the three and nine months ended September 30, 2020, we recognized $0.3 million of collaboration revenue under the MyoKardia Collaboration Agreement.

For the three and nine months ended September 30, 2019, we did not recognize any collaboration revenue as we had not yet entered into the MyoKardia Collaboration Agreement.

As of September 30, 2020, we have recorded $12.2 million of deferred revenue associated with the MyoKardia Collaboration Agreement, which is classified as either current or net of current portion in our consolidated balance sheets based on the period over which the revenue is expected to be recognized.

We recorded no deferred revenue associated with the MyoKardia Collaboration Agreement as of December 31, 2019 as we had not yet entered into the MyoKardia Collaboration Agreement.

As of September 30, 2020, we had received no cost reimbursement payments and no milestone or royalty payments under the MyoKardia Collaboration Agreement, other than the $2.5 million payment as prepaid research funding in July 2020.

As of September 30, 2020, we recorded no accounts receivable related to reimbursable research and development costs under the MyoKardia Collaboration Agreement.

In the future, we will recognize additional revenue associated with the $10.0 million upfront payment, and from reimbursement of costs incurred under the MyoKardia Collaboration Agreement, including the $2.5 million prepaid research funding payment, and we may generate additional revenue from milestones and royalty payments under the MyoKardia Collaboration Agreement.

For the three months ended March 31, 2021, we recognized $2.2 million of collaboration revenue under the MyoKardia Collaboration Agreement.

For the three months ended March 31, 2020, we did not recognize any collaboration revenue in connection with this arrangement as we had not yet entered into the MyoKardia Collaboration Agreement.

As of March 31, 2021 and December 31, 2020, we have recorded $7.8 million and $10.0 million, respectively, of deferred revenue associated with the MyoKardia Collaboration Agreement, which is classified as either current or net of current portion in our consolidated balance sheets based on the period over which the revenue is expected to be recognized.

As of March 31, 2021, we had received no cost reimbursement payments and no milestone or royalty payments under the MyoKardia Collaboration Agreement, other than the $2.5 million payment as prepaid research funding in July 2020.

As of March 31, 2021, we recorded no accounts receivable related to reimbursable research and development costs under the MyoKardia Collaboration Agreement.

In the future, we will recognize additional revenue associated with the $10.0 million upfront payment as we satisfy our performance obligation, and from reimbursement of costs incurred under the MyoKardia Collaboration Agreement, including the $2.5 million prepaid research funding payment.

In the future, we may also generate additional revenue from milestones and royalty payments under the MyoKardia Collaboration Agreement.

We expect that our revenue will fluctuate from quarter-to-quarter and year-to-year based upon our pattern of performance under the MyoKardia Collaboration Agreement and as a result of the timing, amount, and achievement of milestones and reimbursement of costs incurred under the MyoKardia Collaboration Agreement.

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laboratory supplies;

in-process research and development, or IPR&D, expenses, which relate to IPR&D acquired as part of an asset acquisition for which there is no alternative future use;

costs related to compliance with regulatory requirements;

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We do not track our internal research and development expenses on a program-by-program basis as the resources are deployed across multiple projects.

The following table summarizes our external research and development expenses by program following nomination as a development candidate for the three and nine months ended September 30, 2020 and 2019.

The following table summarizes our external research and development expenses by program following nomination as a development candidate for the three months ended March 31, 2021 and 2020.

Pre-development candidate expenses, unallocated expenses and internal research and development expenses are classified separately.

Losmapimod external expenses include IPR&D expenses.

We nominated FTX-6058 as a development candidate in the third quarter of 2019.

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands)

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Research and development activities account for a significant portion of our operating expenses.

We expect our research and development expenses to increase significantly in future periods as we continue to implement our business strategy, which includes advancing losmapimod, for the treatment of both FSHD and COVID-19, and FTX-6058, expanding our research and development efforts, including hiring additional personnel to support our research and development efforts, and seeking regulatory approvals for our product candidates that successfully complete clinical trials.

We expect our research and development expenses to increase significantly in future periods as we continue to implement our business strategy, which includes advancing losmapimod for the treatment of FSHD, advancing FTX-6058 for the treatment of certain hemoglobinopathies, expanding our research and development efforts, including hiring additional personnel to support our research and development efforts, and seeking regulatory approvals for our product candidates that successfully complete clinical trials.

In addition, product candidates in later stages of clinical development generally incur higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

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Results of Operations

Comparison of the Three Months Ended September 30, 2020 and 2019

The following summarizes our results of operations for the three months ended September 30, 2020 and 2019, along with the changes in those items in dollars:

Comparison of the Three Months Ended March 31, 2021 and 2020

The following summarizes our results of operations for the three months ended March 31, 2021 and 2020, along with the changes in those items in dollars:

Three Months Ended

September 30,

(in thousands)

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Collaboration Revenue

Collaboration revenue was $1.8 million for the three months ended September 30, 2020.

We did not record any collaboration revenue during the three months ended September 30, 2019.

Collaboration revenue increased by $4.0 million from $0.8 million for the three months ended March 31, 2020 to $4.8 million for the three months ended March 31, 2021.

We recognize revenue under each of the Acceleron Collaboration Agreement and MyoKardia Collaboration Agreement based on our pattern of performance related to the respective identified performance obligation, which is the period over which we will perform research services under each of the Acceleron Collaboration Agreement and MyoKardia Collaboration Agreement.

For the three months ended September 30, 2020, we recognized $1.5 million of collaboration revenue under the Acceleron Collaboration Agreement.

For the three months ended September 30, 2019, we did not recognize any collaboration revenue as we had not yet entered into the Acceleron Collaboration Agreement.

For the three months ended September 30, 2020, we recognized $0.3 million of collaboration revenue under the MyoKardia Collaboration Agreement.

For the three months ended September 30, 2019, we did not recognize any collaboration revenue as we had not yet entered into the MyoKardia Collaboration Agreement.

For the three months ended March 31, 2021, we recognized $2.6 million of collaboration revenue under the Acceleron Collaboration Agreement.

For the three months ended March 31, 2020, we recognized $0.8 million of collaboration revenue under the Acceleron Collaboration Agreement.

For the three months ended March 31, 2021, we recognized $2.2 million of collaboration revenue under the MyoKardia Collaboration Agreement.

For the three months ended March 31, 2020, we did not recognize any collaboration revenue as we had not yet entered into the MyoKardia Collaboration Agreement.

Research and Development Expenses

Research and development expense increased by $2.1 million from $13.5 million for the three months ended September 30, 2019 to $15.6 million for the three months ended September 30, 2020.

The following table summarizes our research and development expenses for the three months ended March 31, 2021 and 2020:

Three Months Ended

(in thousands)

External research and development

Employee compensation

Laboratory supplies

Facility costs

Total research and development expenses

Research and development expense increased by $1.8 million from $14.5 million for the three months ended March 31, 2020 to $16.3 million for the three months ended March 31, 2021.

The increase in research and development expense was primarily attributable to the following:

$2.2 million in increased manufacturing costs associated with the production of losmapimod and FTX-6058 to support our ongoing and planned clinical trials;

$1.7 million in increased costs for external clinical activities as we continued our ongoing Phase 2b and Phase 2 open label clinical trials of losmapimod for the treatment of FSHD and Phase 3 clinical trial of losmapimod for the treatment of COVID-19, and as we prepared to advance FTX-6058 into a Phase 1 clinical trial;

$0.5 million in increased personnel-related costs due to increased headcount, including $0.2 million of increased stock-based compensation expense;

$2.5 million in decreased costs associated with the achievement of a milestone due under the right of reference and license agreement with GSK upon the initiation of a Phase 2 clinical trial of losmapimod, which was achieved during the three months ended September 30, 2019.

$1.7 million in increased external research and development costs, primarily relating to our ongoing Phase 2b and Phase 2 open label clinical trials of losmapimod for the treatment of FSHD and our discontinued Phase 3 clinical trial of losmapimod for the treatment of COVID-19, as well as our Phase 1 clinical trial of FTX-6058 in healthy adult volunteers and our planned clinical trial of FTX-6058 in patients with SCD;

$0.5 million in increased laboratory supplies costs, partially offset by a $0.2 million decrease in other costs.

General and Administrative Expenses

General and administrative expenses increased by $1.8 million from $3.5 million for the three months ended September 30, 2019 to $5.3 million for the three months ended September 30, 2020.

The increase in general and administrative expenses was primarily attributable to the following:

$1.1 million in increased consulting and professional fees, including for legal services, insurance premiums, recruiting, accounting, and tax;

$0.7 million in increased personnel-related costs, primarily due to increased general and administrative headcount to support the growth of our research and development organization, including $0.4 million of increased stock-based compensation expense.

Other Income, Net

Other income, net decreased by $0.4 million from $0.5 million for the three months ended September 30, 2019 to $0.1 million for the three months ended September 30, 2020.

The decrease in other income, net was primarily attributable to a decrease in investment income on our cash, cash equivalents, and marketable securities as a result of an overall decreased rate of return.

Comparison of the Nine Months Ended September 30, 2020 and 2019

The following summarizes our results of operations for the nine months ended September 30, 2020 and 2019, along with the changes in those items in dollars:

Nine Months Ended

September 30,

The following table summarizes our general and administrative expenses for the three months ended March 31, 2021 and 2020:

Three Months Ended

(in thousands)

Collaboration revenue

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income, net

Collaboration Revenue

Collaboration revenue was $4.6 million for the nine months ended September 30, 2020.

We did not record any collaboration revenue during the nine months ended September 30, 2019.

For the nine months ended September 30, 2020, we recognized $4.3 million of collaboration revenue under the Acceleron Collaboration Agreement.

For the nine months ended September 30, 2019, we did not recognize any collaboration revenue as we had not yet entered into the Acceleron Collaboration Agreement.

For the nine months ended September 30, 2020, we recognized $0.3 million of collaboration revenue under the MyoKardia Collaboration Agreement.

For the nine months ended September 30, 2019, we did not recognize any collaboration revenue as we had not yet entered into the MyoKardia Collaboration Agreement.

Research and Development Expenses

Research and development expense decreased by $16.1 million from $59.0 million for the nine months ended September 30, 2019 to $42.9 million for the nine months ended September 30, 2020.

The decrease in research and development expense was primarily attributable to a $25.6 million decrease in IPR&D expenses associated with the recognition of the fair value attributable to the right of reference and license agreement with GSK during the nine months ended September 30, 2019 as well as a $2.5 million decrease in milestone expense associated with the milestone payable to GSK upon the initiation of a Phase 2 clinical trial of losmapimod during the nine months ended September 30, 2019, partially offset by increases in research and development expenses as a result of the following:

$4.7 million in increased manufacturing costs associated with the production of losmapimod and FTX-6058 to support our ongoing and planned clinical trials;

$3.8 million in increased costs for external clinical activities as we continued our ongoing Phase 2b and Phase 2 open label clinical trials of losmapimod for the treatment of FSHD and Phase 3 clinical trial of losmapimod for the treatment of COVID-19, and as we prepared to advance FTX-6058 into a Phase 1 clinical trial;

$3.0 million in increased personnel-related costs due to increased headcount, including $1.3 million of increased stock-based compensation expense;

$0.8 million in increased costs for IND-enabling studies for FTX-6058.

General and Administrative Expenses

General and administrative expenses increased by $6.8 million from $8.7 million for the nine months ended September 30, 2019 to $15.5 million for the nine months ended September 30, 2020.

Professional services

Employee compensation

Facility costs

Total general and administrative expenses

General and administrative expenses increased by $0.4 million from $5.1 million for the three months ended March 31, 2020 to $5.5 million for the three months ended March 31, 2021.

The increase in general and administrative expenses was primarily attributable to the following:

$3.6 million in increased consulting and professional fees, including for legal services, insurance premiums, recruiting, accounting, and tax;

$3.0 million in increased personnel-related costs, primarily due to increased general and administrative headcount to support the growth of our research and development organization, including $1.4 million of increased stock-based compensation expense.

$0.3 million in increased employee compensation costs, including stock-based compensation expense, primarily due to increased general and administrative headcount to support the growth of our organization;

$0.1 million in increased professional services costs.

Other Income, Net

Other income, net decreased by $0.4 million from $1.2 million for the nine months ended September 30, 2019 to $0.7 million for the nine months ended September 30, 2020.

Other income, net decreased by $0.3 million from $0.3 million for the three months ended March 31, 2020 to less than $0.1 million for the three months ended March 31, 2021.

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We have not yet commercialized any of our product candidates, which are in various phases of preclinical and clinical development, and we do not expect to generate revenue from sales of any products for several years, if at all.

Through September 30, 2020, we have primarily funded our operations with aggregate gross proceeds of $300.5 million from the issuance of common stock in a private placement and in our IPO, the issuance of convertible preferred stock and convertible notes, an upfront payment received under the Acceleron Collaboration Agreement, and an upfront payment received under the MyoKardia Collaboration Agreement.

As of September 30, 2020, we had cash, cash equivalents, and marketable securities of $127.0 million.

As of March 31, 2021, we have funded our operations primarily with aggregate gross proceeds of $357.0 million from the sale of shares of our common stock in public offerings, a private placement, and the ATM Offering, through issuances of convertible preferred stock, and from upfront payments received under our collaboration and license agreements.

As of March 31, 2021, we had cash, cash equivalents, and marketable securities of $143.9 million.

On July 22, 2019, we completed an IPO of our common stock and issued and sold 4,500,000 shares of common stock at a public offering price of $16.00 per share, resulting in net proceeds of $63.9 million after deducting underwriting discounts and commissions and offering expenses.

On June 9, 2020, we issued and sold 4,029,411 shares of common stock in a private placement at a price of $17.00 per share, resulting in gross proceeds of $68.5 million, before deducting offering costs of $4.2 million.

In December 2019, we received a $10.0 million upfront payment upon execution of the Acceleron Collaboration Agreement.

On June 9, 2020, we issued and sold 4,029,411 shares of common stock in a private placement at a price of $17.00 per share, resulting in net proceeds of $64.2 million, after deducting offering costs.

In December 2019, we received a $10.0 million upfront payment upon execution of the Acceleron Collaboration Agreement and in January 2021 we received $2.0 million in specified research milestones under the Acceleron Collaboration Agreement.

In July 2020, we received a $10.0 million upfront payment and a $2.5 million payment as prepaid research funding under the MyoKardia Collaboration Agreement.

On August 11, 2020, we filed a shelf registration statement on Form S-3 with the SEC, which was declared effective on August 17, 2020, or the Shelf Registration Statement.

Under the Shelf Registration Statement, we may offer and sell up to $250.0 million of a variety of securities including common stock, preferred stock, warrants, depositary shares, debt securities or units duri ng the three-year period the commenced upon the Shelf Registration Statement becoming effective.

In connection with the filing of the Shelf Registration Statement, we entered into an Equity Distribution Agreement with Piper Sandler & Co., or Piper Sandler, as sales agent, pursuant to which we may offer and sell shares of our common stock with an aggregate offering price of up to $75.0 million under an “at-the-market” offering program, or the ATM Offering.

To date, we have not sold any securities under the S helf Registration Statement or shares under the ATM Offering.

The following table provides information regarding our cash flows for the nine months ended September 30, 2020 and 2019:

Nine Months Ended

September 30,

Under the Shelf Registration Statement, we may offer and sell up to $250.0 million of a variety of securities including common stock, preferred stock, warrants, depositary shares, debt securities or units during the three-year period that commenced upon the Shelf Registration Statement becoming effective.

As of March 31, 2021, we have issued and sold 550,000 shares of common stock under the ATM Offering, resulting in net proceeds of $5.7 million after deducting offering costs.

On January 22, 2021, we completed a public offering of our common stock and issued and sold 4,600,000 shares of common stock at a public offering price of $11.00 per share, resulting in net proceeds of $4 7 .4 million after deducting underwriting discounts and commissions and offering expenses.

The following table provides information regarding our cash flows for the three months ended March 31, 2021 and 2020:

Three Months Ended

(in thousands)

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Net (decrease) increase in cash, cash equivalents, and restricted cash

Net increase (decrease) in cash, cash equivalents, and restricted cash

Net Cash Used in Operating Activities

Net cash used in operating activities was $33.8 million during the nine months ended September 30, 2020 compared to net cash used in operating activities of $35.0 million during the nine months ended September 30, 2019.

The decrease in net cash used in operating activities of $1.2 million was primarily due to the receipt of a $10.0 million upfront payment and a $2.5 million payment as prepaid research funding associated with the MyoKardia Collaboration Agreement during the nine months ended September 30, 2020, partially offset by increased personnel-related costs, increased research and development costs as we continue to advance our lead programs, and increased general and administrative costs associated with operating as a public company.

Net Cash Used in Investing Activities

Net cash used in investing activities was $42.5 million during the nine months ended September 30, 2020 compared to net cash used in investing activities of $0.8 million during the nine months ended September 30, 2019.

The increase in net cash used in investing activities of $41.7 million was primarily due to net purchases of marketable securities during the nine months ended September 30, 2020.

Net cash used in operating activities was $16.2 million during the three months ended March 31, 2021 compared to net cash used in operating activities of $15.2 million during the three months ended March 31, 2020.

The increase in net cash used in operating activities of $1.0 million was primarily due to increased external research and development costs as we continue to advance our lead programs, increased employee compensation costs, and increased general and administrative costs associated with operating as a public company.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities was $12.4 million during the three months ended March 31, 2021 compared to net cash used in investing activities of $56.4 million during the three months ended March 31, 2020.

The increase in net cash provided by investing activities of $68.8 million was primarily due to higher net maturities of marketable securities during the three months ended March 31, 2021, as compared to net purchases of marketable securities during the three months ended March 31, 2020.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $64.9 million during the nine months ended September 30, 2020 compared to net cash provided by financing activities of $64.6 million during the nine months ended September 30, 2019.

Net cash provided by financing activities during the nine months ended September 30, 2020 primarily consisted of net proceeds of approximately $64.2 million from the completion of the private placement of the Company’s common stock in June 2020.

Net cash provided by financing activities during the nine months ended September 30, 2019 primarily consisted of net proceeds of approximately $64.4 million from the completion of our IPO in July 2019.

Net cash provided by financing activities was $47.5 million during the three months ended March 31, 2021 compared to net cash provided by financing activities of $0.3 million during the three months ended March 31, 2020.

Net cash provided by financing activities during the three months ended March 31, 2021 primarily consisted of net proceeds of approximately $47.4 million from the completion of the public offering of our common stock in January 2021.

Net cash provided by financing activities during the three months ended March 31, 2020 primarily consisted of net proceeds of approximately $0.3 million from the issuance of common stock under our benefit plans.

Funding Requirements

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As a result, we expect to incur substantial operating losses and negative operating cash flows for the foreseeable future.

Based on our current operating plan, we believe that our existing cash , cash equivalents , and marketable securities as of September 30, 2020 , will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 202 2 .

Based on our current operating plan, we believe that our existing cash, cash equivalents, and marketable securities as of March 31, 2021, will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2022.

However, we have based this estimate on assumptions that may prove to be wrong and we could exhaust our capital resources sooner than we expect.

Our funding requirements and timing and amount of our operating expenditures will depend largely on:

the progress, costs and results of our ongoing Phase 2b and Phase 2 open label clinical trials of losmapimod for the treatment of FSHD, our ongoing Phase 3 clinical trial of losmapimod for the treatment of COVID-19, and our ongoing Phase 1 clinical trial of FTX-6058;

the scope, progress, costs and results of discovery research, preclinical development, laboratory testing and clinical trials for our product candidates;

the progress, costs and results of our ongoing Phase 2b and Phase 2 open label clinical trials of losmapimod for the treatment of FSHD, our ongoing Phase 1 clinical trial of FTX-6058 in healthy adult volunteers and our planned clinical trial of FTX-6058 for the treatment of SCD;

the scope, progress, costs and results of discovery research, preclinical development, laboratory testing and clinical trials for our current product candidates in additional indications or for any future product candidates that we may pursue;

the impact of the COVID-19 pandemic on our business and operations;

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Contractual Obligations

During the three and nine months ended September 30, 2020, there have been no material changes to our contractual obligations and commitments outside the ordinary course of business from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations” in our Annual Report on Form 10-K filed with the SEC on March 5, 2020.

During the three months ended March 31, 2021, there have been no material changes to our contractual obligations and commitments outside the ordinary course of business from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations” in our Annual Report on Form 10-K filed with the SEC on March 4, 2021.

Off-Balance Sheet Arrangements

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The effects of material revisions in estimates, if any, will be reflected in the consolidated financial statements prospectively from the date of change in estimates.

During the three months ended September 30, 2020, there were no material changes to our critical accounting policies from those described in our Annual Report on Form 10-K filed with the SEC on March 5, 2020.

During the three months ended March 31, 2021, there were no material changes to our critical accounting policies from those described in our Annual Report on Form 10-K filed with the SEC on March 4, 2021.

Recently Issued Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis