Our Stock of the Week is Fulcrum Therapeutics (FULC). Fulcrum Therapeutics is a biopharmaceutical company that focuses on developing small molecules to treat rare diseases with unmet medical needs. The company has two main programs in clinical development.
The first is Losmapimod, which treats facioscapulohumeral muscular dystrophy (FSHD), a rare disease that causes fat to build up in skeletal muscles, leading to muscular atrophy. This can cause patients to lose their ability to perform daily activities, experience chronic pain, and lose mobility and independence.
The second is Pociredir which increases fetal hemoglobin expression to treat sickle cell disease (SCD) and other hemoglobinopathies.
What is most interesting about this stock is that it is set to release Phase 3 data for its REACH study of losmapimod in facioscapulohumeral muscular dystrophy in October. Dan Rosenblum of Sharkbiotech states that he views this as the most exciting biotech catalyst for the rest of the year, but it is super high risk.
We aren’t interested in betting on the outcome of Phase 3 data but rather are looking to trade the volatility, which should increase as the data release date approaches.
The main issue in the Reach study is that Phase 2b did not show a reduction in DUX4-driven gene expression, which was the goal, but the drug was effective and may have a different mechanism than anticipated. This makes the Phase 3 outcome more risky.
Analysts are quite optimistic about the stock. There are five buy ratings with an average price target of $17.75. Cantor gave the stock a price target of $23 on May 20.
The company entered into a collaboration and license agreement for the drug with Sanofi (SNF) on March 13, giving Sanofi the right to sell it outside the US. There was some concern that FULC did not get a strong deal, but it took place even after the Phase 2B deal.
In addition, there was sizable insider buying near the recent highs.
Technically, the stock is in a trading range under key resistance at $10. We are looking for increased volume and movement in front of the data in October. As always, we would not chase strength on Monday morning but will look to aggressively trade it as volatility develops.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and buy or sell anytime for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing positions in FULC. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.
