4D Molecular Therapeutics, Inc. (FDMT) Earnings Call Transcript & Summary

Okay, everybody. Good morning. Welcome to our continuing session for the Bank of America Healthcare Conference. Our next presenting company is 4D Molecular Therapeutics. Presenting for 4D this morning is CEO, David Kirn. David, good morning. Welcome to Bank of America's Conference.

Good morning. Thanks for having us.

So maybe we can start with an overview of the company, kind of what your differentiating points are? And then we can go into some more detailed questions if that works.

Yes, absolutely. So great to see everybody. I'm David Kirn, Cofounder and CEO of 4D Molecular Therapeutics. So we're a next-generation AAV gene therapy company. We leverage the power of directed evolution to create highly targeted and optimized products for a variety of both rare and large market indications. What really differentiates ourselves is the fact that we can optimize and target our vectors through this Nobel Prize-winning technology directed evolution. And that allows us to come up with products that can be used by routine routes of administration clinically, much lower doses, which means lower cost of goods, better safety profile. We can also evolve for reduced immunogenicity and sensitivity to preexisting antibodies in the population, which means better commercialization. So that's what we're all about. We have 5 products in clinical development today in 3 different therapeutic areas. All of our products leverage internally invented vectors that we developed in-house. So we're excited. We're in ophthalmology, cardiology and pulmonology. And we've released data last year and then early this year on 3 of our programs showing early evidence of safety and biological activity in both inherited retinal disorders as well as with 4D-310 in Fabry disease. So we're excited. We also have an internal manufacturing platform, which is scalable and also phase appropriate. So we've built that up over time as we've gotten additional clinical data. We've built that out to the point where now we've got 2 separate manufacturing facilities for commercial scale manufacturing internally.

Okay. So there's a lot that you've said there. So there's a lot of topics to discuss in more detail. So let's start with the indications, the areas that you've chosen to focus in. You talked about ophthalmology, cardiology, pulmonology. Why did those make particular sense for gene therapies?

Well, I think there are great disease targets in each of those areas, both rare diseases where we like to start in rare monogenic diseases, but then move quickly to large market indications. And we felt that all 3 of those therapeutic areas had a nice blend of rare disease targets, but also large market diseases, which we think we can uniquely address with our optimized evolve vectors invented in-house. So that was really the concept. We also wanted a nice, diversified portfolio where we had 3 different vector platforms that we were evaluating clinically and then 3 different routes of administration. So with ophthalmology, it's intravitreal administration. With pulmonology, it's aerosol delivery and for cardiology it's IV. And we thought that that would be a nice robust, highly diversified initial product portfolio.

Right. So maybe let's talk about some of your specific indications. So let's talk about 310 for Fabry. What do you think is the under-met need there? Because there's already ERT available for patients. And based on our coverage of another company, it seems like, for the most part, docs feel like those patients are manageable. What do you think is the added benefit of devoting your company's platform to studying this particular indication?

Yes. So Fabry disease is a monogenic recessive lysosomal storage disorder where patients lack AGA enzyme activity, which leads to significant systemic disease, including heart, kidney and blood vessels to name a few. Enzyme replacement therapy with AGA requires IV infusions every 2 weeks. So it's a huge impact on patients' quality of life. And you can imagine having to go to the hospital or the clinic every 2 weeks for the rest of your life, first of all. Second, while ERT has a nice effect on the kidney, it does not have an impact on -- a measurable impact on the heart and the heart is actually the leading cause of death in these patients. So there's a very high unmet medical need, there's also a lifestyle quality of life component that really remains despite ERT. So we've seen that physicians and patients are very excited about a product like 4D-310, where we think we have a unique dual mechanism of action, where we can get high systemic levels of AGA secreted into the blood to get that nice system across correction in a more consistent fashion than occurs with ERT. And also get expressed directly within the heart itself, which, again, would address the biggest unmet need in the population. So we think that our -- not only is that unique for -- compared to ERT, but also compared to other gene therapy approaches where we're uniquely developing a product which can give AGA expression directly in cardiomyocytes to solve that problem.

Okay. So for the Fabry study that you're enrolling, how is that enrollment going? And then how do you kind of take into account the fact that there is a treatment available versus an indication where there's nothing available in how you're trying to predict the time it's going to take for you to be fully enrolled?

Yes. I think we're excited about the program. Physicians are excited. We've seen a lot of excitement from patients. We have studies that are open in the U.S. as well as a Pacific Rim study in Taiwan and Australia, where we're also studying 4D-310 in patients who have unique mutation in AGA which leads to severe cardiac disease where we think we can uniquely treat those patients. So -- and we did report out early clinical data on the first 3 patients at World in February this year where we reported out levels of AGA activity in the bloodstream that correlated with preexisting AGA antibodies. So those are the kind of the hardest patients to treat who've received prior ERT. And despite that, we had levels up to 10 to 15x normal in the blood in those patients. We also reported early evidence of clinical activity in the heart using MRI and echo and quality-of-life instruments. So we're excited. We expect to give further data and program updates in the first half of next year. We don't give incremental enrollment updates in the meantime, but we're excited and expect to have some really exciting data in the first half of next year.

And what would be in your mind good data when you do read it out?

Well, so there's a lot of data on correlating levels of AGA in the blood with kidney outcome at the very least. And it's clear that if you can achieve 20% of normal levels or above, that should be highly therapeutically relevant. Now we're approximately 50-fold higher than that now. So we have a huge therapeutic index there. So I think as long as we're above that 20%, which were again up 10 to 15-fold, we're going to be very pleased with that level. And then we'd like to see evidence that our dual mechanism of action's benefiting the heart and they are -- we're looking at echo longitudinal strain, which is essentially ejection fraction, looking at the function of the heart, quality-of-life instrument, MRI and then eventually, we'll look at CPET as well. So we'd like to see both of those high systemic AGA levels of activity above the 20% level and then cardiac effects.

Okay. And then how do you think about durability? Because this is not a question just for AGA program but for all gene therapies, really. What amount of observation is sufficient to convince you and the company and as well as physicians that this as a durable treatment?

Yes. So when we think about durability, we think of it as durability above a threshold that is likely to predict for clinical benefit. So if 20% is the threshold, we feel like as long as we're above 20%, we should still be benefiting that patient. It's highly likely they will no longer need enzyme replacement therapy, none of our patients after treatment have required for their ERT. And so we'd love to see that last for at least a year or more. That could be a huge benefit to patients. And again, in terms of durability, we just want to make sure we're above that 20% in the blood. We're now about 50-fold higher than that. So we have a long way to go. And we do know that heart and kidney, the particular target organs in this disease have very slow to negligible turnover. So we should get long-term expression. And then within liver, obviously, it's varied from program to program in hemophilia. But for the most part, we see especially out beyond 5 years.

And so when you think about the market opportunity for this drug of several years out, of course, but how do you propose the uptake would be? Is it going to be patients just simply switching over from ERT over time? Or could there be room for both gene therapy and concurrent ERT?

That's an interesting question. I think there's -- we expect excellent market uptake, assuming a single dose for -- with protection for over a year or multiple years compared to every 2 weeks. That should be a big driver of uptake. And then again, that cardiac benefit, if we can prove that out, that's an additional benefit to patients, which I think would make a big difference in a way of an uptake. And again, to our knowledge, we're unique in the field of Fabry disease in having a cardiac targeting capability.

And so what your view on redosing? So if you say you can go a year or several years, what if a patient might need to be redosed at a certain point in time?

Yes. We have several ideas around that. First of all, there are nice immunomodulatory regimens, which we believe could blunt any sort of antibody response. And if we wanted to come back in and redose it 3, 4, 5 years later, we think we should be able to do that. We are going to explore in this current study, dosing of patients with preexisting antibodies, and there is evidence from other programs that, that should be feasible. And then in addition, in the long run, we do have the capability with our platform to come up with a life cycle management approach where we could actually come in with a new product that does not cross rack the first if we ever wanted to do that. But we don't think that's going to be necessary anytime soon.

Okay. And then just on CMC. So gene therapy companies, nowadays, are smart enough to address that pretty early on. So can you walk us through where you are in the steps that you feel you would need to take in order to be ready with the correct amount of commercial supply when your first approval comes? And how much interaction do you need to have with the agency to get them on board with what you're doing?

These are great questions. I think -- so first of all, it starts with the team, and we have Fred Kamal as our CTO and COO, and Fred has been in the industry for close to 30 years, producing all sorts of biologics most recently. Prior to 4D, he was the main guy for Zolgensma and that application in the U.S. and EMA. So he's really a world leader in AAV manufacturing and quality. So we're thrilled to have him leading that program. We've got a team of about 35, 40 people, about 10,000 square feet between 2 different facilities, manufacturing, clinical grade and commercial scale material internally. So we made early investments there and have continued in a phase appropriate way to increase that capability over time. Again, we didn't -- we wanted to invest in it early, but we wanted to be good stewards of capital and not overbuild some sort of facility of 100,000 square feet when we're still preclinical. And that's the other end of the spectrum. So we think we've done a nice job of that. We now again are at a scale where we can supply all of our programs internally, both intravitreal, aerosol and IV at commercial scale. And we think that's a huge win for the company. We're in very close communication with the FDA throughout the development of these programs. We have a great relationship with them. We have fast track status on a couple of our programs. And we'll continue to build on that. So we get early and frequent interactions with the FDA. But I would say there's nothing we're doing that they're concerned about. We're kind of using very tried and true methods scalable methods for production and purification. So I think we're in great shape. In terms of commercial readiness, we are at commercial scale, but for actual commercial sales, we need another facility. So we haven't invested in a commercial facility as yet.

And would you have -- I guess, in terms of your cash runway, do you have enough to keep investing in your commercial development as well as moving forward with your pipeline?

Yes, absolutely. I mean we're thrilled to be in a very strong cash position. We have cash out into the second half -- well into the second half of 2024, which gives us plenty of time to build clinical data sets that we can use to drive the next financing rounds. We have completed the manufacturing build-out that we said we would with the IPO proceeds. So there's no further infrastructure spend that we need to make. That's done and now it's all about producing material for these trials.

Okay. So we talked about Fabrys. So maybe let's talk about ophthalmology. So ophthalmology has become pretty popular with companies pursuing various indications, especially in gene therapy. So with a number of different approaches being pursued with tweaks here and there, how is the way that 4D is approaching diseases of the eye different from how everyone else might be even within gene therapy.

Right. So I think, look, ophthalmology is a great area to be in for gene therapy. It requires relatively small doses. There are a large number of both rare and large market diseases with high unmet medical need, and it's a -- they require transduce. So once you transduce, you should have very long-term effects. So it's a great place to be. Conventional AAV vectors, as you probably know, are unable to be used by the standard way of treating eye disease. The intravitreal injection with the conventional AAV vector, these vectors get caught up on something called the inner limiting membrane, which lies over the retina and prevents effective treatment of these diseases with AAV. So what other companies have had to do is use subretinal surgery, which is an inpatient procedure, it induces up the lab within the retina that covers about 1% to 5% of the retinal surface. So the vast majority of the retina is left untreated, and there are also high risk for retinal tears and other complications. In marked contrast, we use directed evolution in primates to evolve R100 a vector that could be used by a simple intravitreal injection procedure, routine outpatient procedure, just like intravascular, and treat all regions of the retina, including cornea, macula and periphery and all layers of the retina. So it's a real game changer. And we're unique in terms of having a primate evolve vector that can do that. Now what's really exciting is there are not only rare monogenic recessive disorders like XLRP and choroideremia that we're pursuing, but also large market diseases like Wet AMD with 4D-150, where, again, we reported in January treatment of the first patient on that study. And that product is highly unique and differentiated in the sense that we expressed the protein sequence for aflibercept, which is secreted, which targets 3 different molecular drivers of angiogenesis. And then we also express an anti-VEGF C, which has been shown to be complementary to aflibercept in Wet AMD. And we think we're the first program to have a product that can address all 4 of those molecular targets with AMD.

So let's talk a little bit about XLRP and choroideremia. And we'll come back to Wet AMD. So I guess choroideremia has had another company recently, fairly recently, didn't have the greatest data. So is there something that can be learned from what happened with other company attempts to look at the same indication and have an effect on how you either design your study or how you think about whether it's even worth pursuing that indication?

Right. So choroideremia is a monogenic recessive disorder with mutation, the REP1 gene, and it's a slowly progressive disorder that starts in late childhood and progresses in 20s and 30s until patients are blind. Now subretinal approaches there we're highly unlikely to work in the first place because if you think about it, this disease affects the entire retina, and it starts most severely in the periphery and then the disease progresses centrally until patients eventually go blind. With the subretinal injection, you're only protecting that central 1% to 5% of the retina. So unfortunately, for patients, that means the vast majority of the retina is untreated and will progress and die. That drove investigators to come up with a clinical endpoints that took that into account. And so they had to look at what can we do in that central 1% to 5% of the retina. So BCVA was the endpoint that was chosen because that was sort of the only thing they could feasibly look at. Now with an intravitreal injection where we can protect the whole retina now, it's all about retinal preservation, can we slow the loss of retina. And so there, we can look at highly reproducible endpoints, anatomical endpoints that are FDA is much more comfortable with than BCVA, which can be quite variable. And there, we can look at fundus autofluorescence and the progression of that in choroideremia and XLRP, which we'll get to in a minute, we can look at the ellipsoid zone area, which is a photoreceptor area on OCT. And these are much more reproducible endpoints that really get at the core issue, which is preservation of retina. And FDA has even given white paper guidance saying that they would view that a slowing of that progression as clinical benefit and fully approvable endpoint.

So when should we expect to see the next data in that indication?

Well, as we reported out in October, we've seen some promising safety and early clinical activity on these endpoints of fundus autofluorescence area in choroideremia and then microperimetry benefits as well as ellipsoid zone area slowing a loss of ellipsoid zone area and fundus autofluorescence and XLRP. We reported that out in October. We're now -- we've announced that we're moving into earlier stage patients, which is we think we can have an even bigger effect there, and that would be important prior to any late-stage clinical studies. So we're moving into these patients, again, being early stage. We need longer readouts. So we think at least 12 months follow-up for these patients or more would be needed to show that impact on progression rates. So we expect to give program updates in the first half of next year.

Okay. How big is XLRP patient number-wise and how big is choroideremia?

Yes. The estimate is for U.S. and EU5 is on the order of 25,000 patients for XLRP and about 13,000 for choroideremia.

And do you think that they are both underdiagnosed?

I think any time you have a severe rare disease where there is no therapy available. There's really not a huge impetus to give a precise diagnosis so historically, what we've seen is when these diseases suddenly have a viable therapy, typically, the numbers of patients who are diagnosed does increase, that's entirely possible.

Right. Okay. Now Wet AMD, which is definitely not a rare disease. Right now it does seem that the market is dominated by the chronically delivered injections. Avastin is still there, Eylea, Lucentis. There are other companies who from time to time try to develop therapies that are less frequent injections, but it's basically a frequency of injection market now. Where is your confidence coming from that gene therapy is the next thing to focus on in terms of approaches for Wet AMD? And what do you think the barriers to entry would be for a gene therapy and as base kind of entrenched certainly for the last 15 plus years with the injectables?

No. Well, we're excited. I think if you think about a product profile that we have where it's a simple intravitreal injection, so it's leveraging what physicians are used to anyway. But imagine if you had a product that you can inject once some patients could go years without further need for injections or a significant reduction in the frequency of injections. That could be the real game changer in terms of quality of life. In terms of efficacy, I think gene therapy is unique with delivering vector in the sense that we can deliver multiple payloads in the same product that will target 4 different molecular drivers of angiogenesis. Sure I know there's no other therapy that can do that. So we think in terms of convenience, single dose with potentially years of protection and reduction in the need for injections, the ability to go after 4 different molecular targets in angiogenesis that this could be a real game changer. Now it's such a massive market, we don't have to get every single patient out there. But we think there will be patients who either need this because they're no longer responding to current therapies or because they lifecycle -- lifestyle impact would have to come in. so frequently to the clinic. They want to have more freedom to live their life and not have to come in for injections. So we think there's a real potential market there that we can uniquely address.

Do you think the agency would ask for you to show head-to-head data versus Lucentis or Eylea in the pivotal study meeting just to be able to gauge comparison of efficacy of your product versus the chronically delivered products?

Yes, absolutely. I think we'd be looking at potentially a non-inferiority study. It's one way to go. It's certainly possible in certain patient populations who are sub-optimally responding to the current therapies, which you actually see a superiority. But I think the baseline assumption is that if you show non-inferiority, but you dramatically reduce the number of injections patients need. So let's say, overall, if patients need 50% fewer injections overall, and there's a subset who maybe only need a couple or even one each year, that would be a very -- a profile that I think would get a lot of people excited.

Yes. Well I guess what market data do you have to indicate what proportion of patients are not best served by the injectable VEGFs right now?

Well, I think we have a great team. We have a number of very experienced ophthalmologists in our company. And we also have a great Advisory Board of very senior ophthalmologists. I think their feeling is that there is a significant proportion. I don't know if I can put a percent on it, but that are underserved with the current therapies. And then there are patients who are well served with the current therapies but still would benefit from a quality of life standpoint of not having to come in every 4 to 8 weeks to get their injections.

Would you have a look at something like geographic atrophy?

That's something we're very interested in looking at. Again, this vector to date R100, our intravitreal vector has shown great safety in the inherited retinal disorders. And in our preclinical data and Wet AMD, we're seeing efficacy at very low doses compared to the competition. So we think there's a real potential given the safety profile and this efficacy at low doses that we could move into other large market diseases. We haven't formally given guidance on that yet, but there's some very interesting now well-validated targets in the complement pathway for dry MD that we could go after.

Right. Do you want to see what happens with Apellis and IVERIC and NGM and Exxon before you decide whether or not you would make an investment in gene?

Well, again, we're not giving guidance on exactly when we're going to go into that.

Will those be a factor?

Yes. Well, I think there are -- there's strong data there already in multiple randomized trials and they're now 3 randomized Phase III trials, showing that complement inhibition C3 or C5 kind of has a significant benefit in this disease and really slow that progression. So we think we uniquely could be in a position to leverage those targets with a one-and-done gene therapy using a vector that we've now shown has great safety in multiple indications.

Okay. Let me jump back to Wet AMD for a second because I forgot to ask when is the next data readout for that expected?

Yes. We're excited that it's a Phase I/II trial we treat -- we announced treatment of the first patient early this year, early January. So we expect to give data update somewhere around the middle of next year.

And do you have a sense of how many patients worth of data that would be?

Not yet. I think it's a standard 3 dose level Phase I study then followed by a Phase II expansion where we explore different doses versus a control in a randomized fashion. So we're not giving guidance yet on exactly how far down that road were going to be. But there's a lot of excitement. We have a number of great sites open. There's enthusiasm with the TIs and I think it's going to enroll well.

Okay. And maybe we just had a minute left. So in that time, can you just quickly talk about the CF indication?

Yes, absolutely. So cystic fibrosis, the largest monogenic recessive disorder in the Caucasian population. Despite Vertex therapies, there's still significant unmet need. First of all, 10% to 15% of patients are not amenable to Vertex modulators, so there's essentially nothing for those patients. And then for the remaining patients, they get partial correction with the modulators, but it's still very frequent daily dosing and incomplete correction. So we think there's a huge unmet need there. So we evolved a vector for aerosol delivery to deliver a CFTR transgene, payload. And again, announced treatment of the patient is earlier this year on that Phase I/II study, and we're working closely with the Cystic Fibrosis Foundation. So this will be truly disease-modifying therapy, really correcting the underlying defect. We'll start in the patients who have no therapies initially, that 10% to 15%, and then we'll move quickly following proof-of-concept into the larger patient population potentially either as a single agent or in combination with Vertex modulators.

Great. With that, I think we're out of time. So thank you very much to everybody for joining, and thanks, David, for presenting.

All right. Thank you.