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Item 2. Management’s Discussion and Analysis

2021-08-10 compared with 2021-05-06 · 158 added, 58 removed, 213 unchanged (50% of the section changed)

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We have identified drug targets to treat the root causes of facioscapulohumeral muscular dystrophy, or FSHD, and certain hemoglobinopathies, namely sickle cell disease, or SCD, and ß-thalassemia.

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 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.

In August 2019, we initiated a Phase 2b clinical trial, or the ReDUX4 trial, 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.

In April 2021, the FDA granted fast track designation to losmapimod for the treatment of FSHD.

We completed the ReDUX4 trial in January 2021 and presented full data from the trial at the FSHD International Research Congress on June 24, 2021.

We plan to meet with health authorities, including the U.S.

Food and Drug Administration, or FDA, in the second half of 2021 to determine the regulatory path for losmapimod in FSHD.

As a result of the COVID-19 pandemic, we announced in May 2020 that the ReDUX4 trial had been extended from 24 to 48 weeks to ensure the safety of participants during the pandemic.

This extension also enabled the collection of safety and efficacy data, including structural, functional and patient reported data, over a longer time period.

The primary endpoint was the change in DUX4-driven gene expression in affected skeletal muscle at 16 or 36 weeks, which was included as an experimental biomarker.

The trial was also designed to capture a wide range of data relating to FSHD progression in addition to safety, target engagement and pharmacokinetic data.

The secondary endpoints were evaluation of safety and tolerability in FSHD patients, pharmacokinetics in blood, losmapimod concentration in skeletal muscle biopsies, target engagement in blood and in muscle biopsies, and efficacy based on the whole-body skeletal muscle MRI biomarker.

The whole-body MRI scans evaluated changes in muscle fat infiltration, muscle fat fraction and lean muscle volume.

The muscles evaluated in the trial were classified as normal appearing (not affected by disease), intermediate (clearly affected by disease but not so severely fat replaced to have lost all function) or end stage (severely fat replaced and have lost most if not all function).

The exploratory endpoints included reachable workspace, timed up and go (TUG) test, an optimized timed up and go test for FSHD (FSHD TUG), muscle strength measured by hand-held dynamometry, other muscle function measures and patient reported outcomes.

The trial did not meet the primary endpoint.

The data from certain of the secondary and exploratory endpoints showed clinically relevant and nominally statistically significant benefits in the losmapimod treated group versus placebo on multiple measures of structural and functional FSHD progression and patient reported outcomes at 48 weeks.

Losmapimod was generally well-tolerated in the trial, with no drug-related serious adverse events reported.

Over the course of the trial there were three discontinuations, none of which were assessed to be related to losmapimod, and 99% of eligible participants elected to continue to receive treatment with losmapimod in the open label extension of the ReDUX4 trial.

We will continue to analyze data from each endpoint to determine their viability for future trials.

In the fourth quarter of 2020, we initiated a Phase 1 clinical trial of FTX-6058, our product candidate for certain hemoglobinopathies, namely SCD and beta-thalassemia, which is a novel upregulator of fetal hemoglobin.

The trial is an ongoing, randomized, double-blind, placebo-controlled trial designed to evaluate the safety, tolerability and pharmacokinetics of FTX-6058 in healthy adult volunteers.

In August 2021, we reported interim data from the cohorts completed to date in the single ascending dose, or SAD, portion of the trial and the multiple ascending dose, or MAD, portion of the trial.

In the SAD portion of the trial, healthy volunteers received a single oral dose of either placebo or 2, 4, 10, 20, 30 or 40 mg of FTX-6058.

In the MAD portion of the trial, healthy volunteers received an oral dose of placebo or 2, 6, or 10 mg of FTX-6058 daily for 14 consecutive days.

Subjects were seen 7 to 10 days after the conclusion of study drug or placebo for a safety follow-up.

Safety assessments are performed regularly throughout the trial.

The primary endpoint of this trial is safety and tolerability.

The trial is also collecting secondary pharmacokinetic measurements, including bioavailability and half-life assessments.

Exploratory measures were included to assess target engagement, HBG mRNA changes and F-reticulocyte changes.

We assessed target engagement of FTX-6058 as a change from baseline in the ratio of lysine 27 on histone H3, or H3K27me3, to total histone H3 in circulating monocytes.

H3K27me3 is a downstream target of polycomb repressive complex 2, or PRC2.

FTX-6058 is designed to bind embryonic ectoderm development and inhibit the transcriptional silencing activity of PRC2.

Pharmacodynamic parameters assessed include changes in HBG mRNA, or HBG1/2 mRNA which encodes for γ-globin, a component of fetal hemoglobin, and changes in F-reticulocytes, which are immature red blood cells that contain fetal hemoglobin, or HbF.

FTX-6058 has been generally well tolerated in all cohorts completed to date.

There were no serious adverse events reported and no discontinuations.

All treatment-emergent adverse events, or TEAEs, deemed at least possibly related were mild (Grade 1 or 2) in both the SAD and MAD cohorts.

There was one Grade 4 TEAE in the 10 mg MAD cohort, which was determined to be unrelated to FTX-6058.

No clinically significant changes in safety-related laboratory tests were reported during treatment periods for any of the FTX-6058 dose cohorts included in the analysis.

Results from the MAD cohorts showed maximal target engagement as evidenced by 70% – 80% reduction in baseline H3K27me3 levels, which we believe represents proof of mechanism.

The 10 mg dose showed a mean 4.5-fold induction in HBG mRNA at day 14 and mean 4.2-fold increases in F-reticulocytes at the safety follow-up, indicating increased HbF protein expression, which we believe represents proof of biology.

The kinetics observed across the target engagement and pharmacodynamic endpoints are consistent with the process of erythropoiesis in healthy individuals.

These results demonstrated a time- and dose-dependent relationship between target engagement, mRNA induction and F-reticulocyte increases.

The increases in F-reticulocytes indicate that the HBG mRNA increases observed with FTX-6058 treatment are translating to HbF protein production.

The table below presents the mean fold induction in HBG mRNA and increases in F-reticulocytes in subjects in the MAD portion of the trial at day 7, day 14 and at a safety follow-up 7 to 10 days after the 14-day treatment period.

A total of six subjects were dosed with FTX-6058 in each cohort and two subjects were dosed with placebo in each cohort.

HBG mRNA Mean Fold Induction for FTX-6058 versus Placebo

F-Reticulocyte Mean Fold Increase for FTX-6058 Versus Placebo

We anticipate presenting additional data from all Phase 1 dose cohorts at an upcoming medical meeting in the fourth quarter of 2021, pending abstract acceptance.

Based on the interim data, we anticipate initiating enrollment in a Phase 1b clinical trial in sickle cell patients in the fourth quarter of 2021.

The trial will be an open-label, multi-dose trial starting at 6 mg once-daily dosing and will include a treatment period of up to three months.

This trial will aim to demonstrate the safety, tolerability and pharmacokinetics/pharmacodynamic effects of FTX-6058 in people living with SCD (including induction of HbF protein).

This trial could provide the opportunity to demonstrate HbF protein induction in people living with SCD and will be used to help inform a potential Phase 2/3 trial, which we anticipate

initiating in 2023 .

These interim data also support the initiation of a clinical trial in non-SCD hemoglobinopathies (e.g., beta-thalassemia) for which we plan to submit an IND by year-end 2021.

We anticipate initiating a clini cal trial in non-SCD hemoglobinopathies in 2022.

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.

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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 $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.

Our net losses were $19.6 million and $36.6 million for the three and six months ended June 30, 2021, respectively, and $15.7 million and $34.1 million for the three and six months ended June 30, 2020, respectively.

As of June 30, 2021, we had an accumulated deficit of $258.3 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;

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 clinical development of losmapimod, including our ongoing open label extension of our Phase 2b clinical trial for the treatment of FSHD and our ongoing Phase 2 open label clinical trial 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 Phase 1b clinical trial of FTX-6058 in patients with SCD;

continue our ongoing preclinical studies;

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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 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.

As of June 30, 2021, we had $125.6 million in cash, cash equivalents, and marketable securities.

We believe that our existing cash, cash equivalents, and marketable securities as of June 30, 2021 will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2023.

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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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 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 .

For the three and six months ended June 30, 2021 , we recognized $2.3 million and $ 4.9 million, respectively, of collaboration revenue under the Acceleron Collaboration Agreement .

For the three and six months ended June 30, 2020 , we recognized $ 2.0 million and $2.8 million, respectively, of collaboration revenue under the Acceleron Collaboration Agreement .

As of June 30, 2021 and December 31, 2020 , we have recorded $ 4.0 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 June 30, 2021 , we had received $ 2.

7 million of cost reimbursement payments , $2.0 million of milestone payments, and no royalty payments under the Acceleron Collaboration Agreement.

As of June 30, 2021 , 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 June 30, 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.

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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 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.

For the three and six months ended June 30, 2021, we recognized $2.0 million and $4.2 million, respectively, of collaboration revenue under the MyoKardia Collaboration Agreement.

For the three and six months ended June 30, 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 June 30, 2021 and December 31, 2020, we have recorded $5.9 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 June 30, 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 June 30, 2021, we recorded unbilled accounts receivable of $0.1 million related to reimbursable research and development costs under the MyoKardia Collaboration Agreement for activities performed during the three months ended June 30, 2021.

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

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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 months ended March 31, 2021 and 2020.

The following table summarizes our external research and development expenses by program following nomination as a development candidate for the three and six months ended June 30, 2021 and 2020.

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

Three Months Ended

Six Months Ended

(in thousands)

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Results of Operations

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:

Comparison of the Three Months Ended June 30, 2021 and 2020

The following summarizes our results of operations for the three months ended June 30, 2021 and 2020, along with the changes in those items in dollars:

Three Months Ended

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Collaboration Revenue

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.

Collaboration revenue increased by $2.4 million from $2.0 million for the three months ended June 30, 2020 to $4.4 million for the three months ended June 30, 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 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.

For the three months ended June 30, 2021 and 2020, we recognized $2.3 million and $2.0 million of collaboration revenue under the Acceleron Collaboration Agreement, respectively.

For the three months ended June 30, 2021, we recognized $2.1 million of collaboration revenue under the MyoKardia Collaboration Agreement.

For the three months ended June 30, 2020, we did not recognize any collaboration revenue under the MyoKardia Collaboration Agreement as it had not yet been executed.

Research and Development Expenses

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

The following table summarizes our research and development expenses for the three months ended June 30, 2021:

Three Months Ended

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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.

Research and development expense increased by $4.6 million from $12.8 million for the three months ended June 30, 2020 to $17.4 million for the three months ended June 30, 2021.

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

$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.

$4.0 million in increased external research and development costs, primarily relating to our ongoing open label extension of our Phase 2b clinical trial of losmapimod for the treatment of FSHD, our ongoing Phase 2 open label clinical trial of losmapimod for the treatment of FSHD, our ongoing Phase 1 clinical trial of FTX-6058 in healthy adult volunteers and our planned Phase 1b clinical trial of FTX-6058 in patients with SCD;

$0.3 million in increased employee compensation costs, primarily due to increased research and development headcount;

$0.2 million in facilities costs;

$0.2 million in increased laboratory supplies costs, partially offset by less than a $0.1 million decrease in other costs.

General and Administrative Expenses

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

The following table summarizes our general and administrative expenses for the three months ended June 30, 2021:

Three Months Ended

(in thousands)

Employee compensation

Professional services

Facility costs

Total general and administrative expenses

General and administrative expenses increased by $1.6 million from $5.1 million for the three months ended June 30, 2020 to $6.7 million for the three months ended June 30, 2021.

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

$0.7 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;

$0.7 million in increased professional services costs;

$0.2 million in other costs.

Other Income, Net

Other income, net decreased by $0.2 million from $0.2 million for the three months ended June 30, 2020 to less than $0.1 million for the three months ended June 30, 2021.

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 Six Months Ended June 30, 2021

The following summarizes our results of operations for the six months ended June 30, 2021, along with the changes in those items in dollars:

Six 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 increased by $6.4 million from $2.8 million for the six months ended June 30, 2020 to $9.2 million for the six months ended June 30, 2021.

For the six months ended June 30, 2021 and 2020, we recognized $4.9 million and $2.8 million of collaboration revenue under the Acceleron Collaboration Agreement, respectively.

For the six months ended June 30, 2021, we

recognized $ 4.2 million of collaboration revenue under the MyoKardia Collaboration Agreement .

For the six months ended June 30, 2020 , we did not recognize any collaboration revenue under the MyoKardia Collaboration Agreement as it had not yet been executed .

Research and Development Expenses

The following table summarizes our research and development expenses for the six months ended June 30, 2021:

Six 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 $6.5 million from $27.3 million for the six months ended June 30, 2020 to $33.7 million for the six months ended June 30, 2021.

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

$5.7 million in increased external research and development costs, primarily relating to our ongoing open label extension of our Phase 2b clinical trial of losmapimod for the treatment of FSHD, our ongoing Phase 2 open label clinical trial of losmapimod for the treatment of FSHD, our ongoing Phase 1 clinical trial of FTX-6058 in healthy adult volunteers and our planned Phase 1b clinical trial of FTX-6058 in patients with SCD;

$0.6 million in increased laboratory supplies costs;

$0.2 million in increased employee compensation costs, primarily due to increased research and development headcount;

$0.1 million in increased facilities costs, partially offset by a $0.2 million decrease in other costs.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the six months ended June 30, 2021:

Six Months Ended

(in thousands)

Employee compensation

Professional services

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.

General and administrative expenses increased by $2.0 million from $10.2 million for the six months ended June 30, 2020 to $12.2 million for the six months ended June 30, 2021.

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

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$0.8 million in increased professional services costs;

$0.2 million in other costs.

Other Income, Net

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.

Other income, net decreased by $0.5 million from $0.6 million for the six months ended June 30, 2020 to less than $0.1 million for the six months ended June 30, 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.

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.

As of June 30, 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 June 30, 2021, we had cash, cash equivalents, and marketable securities of $125.6 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.

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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 the ATM Offering.

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.

As of June 30, 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 $47.4 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

The following table provides information regarding our cash flows for the six months ended June 30, 2021 and 2020:

Six Months Ended

(in thousands)

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash used in investing activities

Net cash provided by financing activities

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

Net decrease in cash, cash equivalents, and restricted cash

Net Cash Used in Operating Activities

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 used in operating activities was $34.0 million during the six months ended June 30, 2021 compared to net cash used in operating activities of $29.3 million during the six months ended June 30, 2020.

The increase in net cash used in operating activities of $4.7 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 to support the growth of our organization.

Net Cash Used in Investing Activities

Net cash used in investing activities was $13.9 million during the six months ended June 30, 2021 compared to net cash used in investing activities of $56.6 million during the six months ended June 30, 2020.

The decrease in net cash used in investing activities of $42.7 million was primarily due to lower net purchases of marketable securities during the six months ended June 30, 2021, as compared to during the six months ended June 30, 2020.

Net Cash Provided by Financing Activities

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.

Net cash provided by financing activities was $47.7 million during the six months ended June 30, 2021 compared to net cash provided by financing activities of $65.0 million during the six months ended June 30, 2020.

Net cash provided by financing activities during the six months ended June 30, 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 six months ended June 30, 2020 primarily consisted of net proceeds of approximately $64.4 million from the issuance of common stock in a private placement in June 2020.

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 March 31, 2021, will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2022.

Based on our current operating plan, we believe that our existing cash, cash equivalents, and marketable securities as of June 30, 2021, will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2023.

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 1 clinical trial of FTX-6058 in healthy adult volunteers and our planned clinical trial of FTX-6058 for the treatment of SCD;

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

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Contractual Obligations

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.

During the three and six months ended June 30, 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

7 unchanged sentences

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 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.

During the three months ended June 30, 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

4 unchanged sentences

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