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

Good morning, everyone, and thank you for joining us for day 3 of the Goldman Sachs Healthcare Conference. We're really pleased to have 4D Molecular Therapeutics. And with us, we have David Kirn, Co-Founder and President and CEO of the company.

With that, David, to start here, the company has demonstrated early proof of concept for multiple assets, including a drug for Fabry disease and one in an eye disease XLRP. Can you share your outlook for the near term and highlight your key events investors should be focused on next?

Well, first of all, thanks for having us, Salveen. And just by way of background for the AAV of genetic medicines company, we have 5 products in the clinic across 3 therapeutic areas, all of which leverage vectors that we invented internally through directed evolution, an intravitreal vector for the eye, aerosol vector for the lung and an IV vector for [indiscernible] delivery to the heart. So we really have a robust diverse pipeline in the [ U.S. ] market. Okay. Okay. How is this? Should we start over then? Yes, okay.

Okay.

[indiscernible] the archive.

Okay. So just let me know when we can get started.

You're good.

We're good? Okay. So once again, thank you for having us, Salveen. Just to step back a little bit, 4D Molecular Therapeutics is the next-generation AAV genetics medicines company. We have a robust pipeline of 5 products in the clinic currently in 3 therapeutic areas, including for large market patient populations. Each of these product candidates leverage is a vector that we invented internally through directed evolution, which allows us to create customized vectors for every disease we want to treat. We also have a very robust integrated gene therapy engine that allows us to do everything from early-stage directed evolution technology on the vectors all the way to commercial scale manufacturing internally at 4D. As you said, we're excited about the progress this year. We've initiated and treated the first patient on our wet AMD program. Announced that in January, announced -- April, treatment of the first patient on our cystic fibrosis program. And then in February, we gave our second update on our Fabry 4D-310 program, where we showed initial data on biological activity in the heart in addition to high systemic HA levels. In terms of forward-looking catalysts, we're excited to continue to enroll all 5 of these programs. We expect to give initial clinical data updates on our wet AMD program by middle of next year. 4D-310, our Fabry program, we expect to give updates on that program in the first half of next year. And then we'll also give program updates on our inherited retinal degeneration programs in the first half of next year.

Great. Just following up on the directed evolution side. Could you talk about your therapeutic vector evolution program? And how is your approach differentiated from competitors in terms of these targeted vectors?

Yes. So first of all, directed evolution is a Nobel Prize-winning technology that allows humans to generate novel biology that doesn't exist in nature and allows us to create biology that has specific features that we want. And one of the beauties of this approach is that you don't have to rationally design the biologic, whether it's an antibody or a phage display or if it's an AAV capsid. You simply use the power of evolution to find that needle in the haystack that has the best fit for what you want out of -- in our case, out of 1 billion vectors. So I would say what differentiates us there is that we've been doing it for 9 years at the company, and my co-founder, Dave Shaffer at Berkeley, has been doing it for 20 years, so I think we have a long track record. We have over 30 individual internal libraries of AAV vectors with different mechanisms to induce diversity. We have on the order of 1 billion unique capsid sequences in our library, which we think is likely the largest out there. And I think we have a track record of delivery. We have 5 products in the clinic, as I said, all of which use a directed evolution vector that we invented in primates and that we took forward in the clinic for again, low-dose IV delivery, low-dose intravitreal delivery and aerosol delivery. So I think the track record of inventing those vectors, getting them through the FDA, open INDs into the clinic really speaks for itself.

The FDA has been clearly trying to categorize and review their stance around vectors and the overall profile, and we've seen a lot of emphasis on AAV9. So I guess I'm just trying to understand what this means for the rest of the vectors in development, yours and others that have yet to be fully, I guess, the profiles they had to fully elucidate through trials.

Yes. Well, I think, if you look at the history of AAV gene therapy, there have been fits and starts. And the reason is these current conventional vectors essentially picked out of nature, have certain limitations that make delivery inefficient, which forces groups to use very high doses, which can lead to toxicities, information, et cetera. Sensitivity to neutralizing antibodies in the population can be issue, transaction can be inefficient. And this really isn't surprising because these capsids were pulled out of nature. They're not biologically engineered or optimized products the way we do with antibodies in every other therapeutic area. So I think our thesis is that we should treat AAV gene therapy just like monoclonal antibodies. We need to optimize it for the target that you want to go after, and directed evolution allows us to do that. The FDA, from what we've seen, is very receptive to this approach because what they don't want to see is companies going in with something like AAV9, which sort of goes everywhere. It's highly inflammatory. It can cause cardiac and liver issues, so -- particularly at high doses. So I think the FDA is very open to seeing, hey, can the industry come up with more targeted vectors that go where you want, bring those doses down, bring the safety profile up. And that's precisely what we're doing.

And as you talked about, you optimize these vectors for various factors like administration, dose range, tissue type, resistance to antibodies and inflammation. What is the hardest dimension to optimize here?

Yes, it's an interesting question. I think we've been successful in all 4 of those areas. We have evidence of vectors that we've evolved for a high degree of antibody resistance, for example, through passaging the library through pooled IVIG, which is antibodies from thousands of individuals. We have low-dose IV delivery to heart, for example. We have aerosol delivery where the vector penetrates through the mucus barrier, intravitreal delivery where the vector penetrates through the inner limiting membrane barrier, which blocks retinal transduction for conventional AAV. So we've been successful in all those areas. We are excited in the future to explore other combinations of tissue targeting and multiple tissues, and maybe detargeting some other tissues could be some of the future directions that we take on.

And recognizing it's a tough time on the biotech tape right now, but where do you see when you talk to investors on just the fundamental aspect of the story? Where do you see the biggest debates or questions?

It's an interesting question. I think the greatest focus is certainly on, I'd say, our 4D-150 for wet AMD. Again, that's a highly differentiated product where we have an intravitreal vector evolved in primates for very low dose, low inflammatory delivery. And the product itself addresses 4 different targets in angiogenesis, which we think is pretty unique. So there's a lot of focus there. There's a lot of focus on our 4D-310 product. Dual mechanism of action, both expression directly within the heart and kidney tissues in addition to high systemic levels of AGA. And that's, again, a highly differentiated mechanism of action. So we get a lot of interest in that. I think we have a strong balance sheet. We have cash well into the second half of 2024, which is important in this environment. We have a lot of interest on that. I think that the real questions, I think, then will kind of boil down to 4D-310. You have an active agent, you're seeing biological activity systemically as well as in the heart. What's the route for approval? We get that question a lot. How are you going to get it approved? And we can talk about that later. And then differentiation in wet AMD, it's a crowded space, a lot of competition, how are you differentiated? And I think we have a really good story there in terms of intravitreal injection which is, by far and away, the best method to address retinal disease, and we think we can uniquely do that with a primate-evolved vector very low doses. So those are the areas where it's sort of more forward looking, how are you going to get these approved in a crowded space.

So let's start with your cardiology platform here. And if you could just review the recent highlights from your Phase I/II data for 310 and what the next steps are? What you really need to understand prior to going to a registration study?

Right. Okay. So first of all, 4D-310 is, we believe, is a highly differentiated product and could be transformative for Fabry disease. And the reason we say that it's been designed, and the vector was evolved for relatively low IV doses with the ability to get past the liver and get to the heart, cardiomyocytes, specifically glomeruli in the kidney. And the reason that's so important is that ERT currently used every 2 weeks, so real burden on patients. It doesn't get into the heart. It's never been evidence that there's any benefit to the heart whatsoever. And even glomeruli in the kidney, the functional unit, the kidney is essentially left untreated by ERT. So ERT is pretty good at clearing the endothelial cells around the body, and that gives some benefit, but really, the core of the disease, we believe we can uniquely address with our dual mechanism of action. We've done 2 data releases on 4D-310, one in the fall and then one in February at the oral session at World. And there, we reported out tolerability, AGA levels that are many multiples above normal levels, which is exciting. And then really exciting was initial clinical data on cardiac endpoints, and these we think are going to take roughly 6 to 12 months to really materialize. And we look at a range of endpoints, including cardiac MRI that follow substrate. We saw substrate reduction based on the MRI at 6 months in our first patient. We look at Echo for cardiac function with GLS, and we saw improvement there at 6 months. Quality of life, saw some improvements there. So I think we're encouraged by what we're seeing. It's early, we need to keep enrolling and get more follow-up, but certainly encouraged by what we're seeing today.

And on the AG activity which you saw through 6 months, how are you thinking about durability here? And what are your potential outcomes for dosing?

Yes. So again, I think, what differentiates us is that expression of AGA in the tissues and cells that are affected directly. In addition, we do get high AGA levels in the blood. And the way we think about that is if you look at the genetics of the disease, most KOLs will tell you that 20% or higher levels of normals, 20% of normal or higher should be highly therapeutic. So we were coming into this, we were looking for at least 20% of normal. And the primates at the starting dose level, we were getting about 400% or 4x normal. And then in the clinic, the initial data, we went beyond that. But again, we would hope to be above that 20% for a very long time. Certainly, we'd love to be at or above normal levels for a very long time.

And how -- you talked about the cardiac data, but how significant is that in your mind?

Well, I think, for this product, if we did nothing but get patients off ERT every 2 weeks, and we benefited the kidney, including glomerulus, we think we'd have a very valuable important product. So the heart disease is certainly important upside. The data that we presented is very rigorous. These are very precise measurements, independent patient efforts, they're all reviewed by a central reading center at Duke, which is really a world-class cardiology reading center. And the level of change, the level of benefit on the MRI and the GLS, on the Echo and QOL was felt to be beyond what you could anticipate with statistical variability. So it's encouraging. Obviously, very early, need more patients, more follow-up.

And you've talked about the possible paths to registration, the 2 paths being the dual mechanism of action where you look at heart and kidney. And then also maybe just help us understand, well, I guess, it would be separate mechanisms. But what are the possible outcomes here? And when do you expect to discuss this with the FDA? Just given Peter Mark's recent comments on figuring things out early.

Yes. Well, it's always -- yes, it's always important in drug development to start with the end in mind and ask the question where are we going, and make sure that your Phase I/II gives you the data necessary to design your Phase III for sure. We haven't given formal guidance on approval path. Certainly, we have to talk to FDA first. The way we think about it is others have clearly demonstrated that just non-inferiority based on kidney endpoints, such as the kidney biopsy at 12 months, is absolutely approvable and FDA signal would be a full approval. So that's certainly on the table. And then cardiac endpoints, we have to have a conversation with FDA that would be upside. We'd love to get in the label, but we think the tried and true way to the market in Fabry is non-inferiority to ERT based on kidney endpoints, including the biopsy in 12 months.

Where does the competitive landscape stand at this point for the next-generation approaches in gene therapy?

For Fabry or generally?

Fabry.

Fabry? Yes. It's -- there are other groups out there, for example, Avrobio had a cell-based program that they've now stopped. Freeline has a low-dose IV program that I think is perhaps on hold. Sangamo is actively enrolling here. I think the big point of differentiation is what Sangamo has described is their approach is really turning the liver into a bioreactor through this AGA. They have a liver-specific promoter, a liver-targeted vector, and so that's their approach. I think what differentiates us is we certainly get that. We get high AGA levels. We use the liver as a bioreactor as well. But I think, in addition, we get that production of the AGA directly in the cells that need it, and so we don't need to rely on that inefficient cross correction from the blood. And so I think that direct heart effect, that direct kidney glomerulus effect makes us unique. To our knowledge, I don't know whether companies are able to address those issues now.

So moving to the ophthalmology platform, which obviously has a huge addressable market here. Can you review the XLRP data that we've seen to date, and what we should be looking for in that longer-term data next year?

Sure. So 4D-125 is our product for XLRP. It again leverages our internally-invented intravitreal vector. This is evolved from primates for low-dose intravitreal delivery throughout the retinal surface. The reason that's important in retinal degenerations like XLRP, it allows you to treat the entire retinal, not just a central bleb. And that means we can look at endpoints that are more robust and important for patients, which is preservation of those photoreceptors, not just trying to boost the function of some small percent of photoreceptors in the center of the retina. So it means, more importantly for patients, we can slow the progression of the disease, we can come in much earlier, and then we can use endpoints such as ellipsoid zone area which is a measure of photoreceptor functional but it's not a functional endpoint, but it's -- imaging suggests that they're still functional. And FDA has signaled that, that endpoint would be a demonstration of clinical benefit, which we interpret and mean that could be an approval endpoint. So the data we've reported to date last fall was on our first 8 patients in that Phase I. So we completed the Phase I dose escalation, now expanding at [ 1812 ], highest dose level, which was safe and well tolerated. And really, the biological activity we showed there was evidence of slowing of the progression of that ellipsoid zone area in addition to some benefits on microperimetry. The goal now is to move into earlier stage patients, certainly in Phase I, as you know, they're very advanced patients. So moving into earlier-stage patients where we believe we have the opportunity to show an even larger effect and getting into pediatrics now that we have evidence of safety and some activity.

How comfortable are you on the safety profile? And I ask this in the context of how hard it's been for gene therapy to work in eye diseases. But how do you feel about -- I mean, recognize what you're doing on the efficacy side in safety?

Well, that's something we've been really focused on. So with the 4D-R100, we evolved it specifically in primates to try to get something that was a safe and efficient as possible low doses. That's in contrast, for example, the 7 or 8 vector was evolved in mice. That's the use in the [indiscernible] program. So we thought that taking the time and the effort to evolve in primates was important for safety. We also thought it was important to start in inherited retinal diseases where there's no available therapies and prove out the safety and tolerability of the capsid vector at very high doses before we went into wet AMD. And so we've been very methodical. We treated over 100 primate eyes for this vector safely without any evidence of retinal damage. So we've tried to be very cautious and methodical. When it comes to wet AMD, because we're using a secreted factor, aflibercept, we've been able to start at much lower doses than were shown safe with the same vector in XLRP. So XLRP, we want to get into every photo receptor, so we're pushing the dose up to [ 1812 ]. That's been well tolerated. In wet AMD, we're starting at just 3% of that dose down at 310. And in that study, because it's a dose exploration study, we have the flexibility of either going up or even going down to try to find a minimal effective dose.

And you've talked about going into the earlier-stage patients. And it would seem like there is an impact on progression of disease as you go there. So maybe help us understand what you're seeing with those patients so far?

Well, we haven't announced data yet on the earlier-stage patients. But the history of biologics is that almost always, the earlier stage you go, the bigger biological effect you can see. There's just more retina to save. There's less issues about kind of irreversible cell death that's already been programmed to those cells. So we're certainly hoping that when we move into earlier stage disease, we can see an even bigger effect status.

Great. And maybe you could pivot for us just to what's happening with your wet AMD and DME program as well as your CHM program.

Yes. So CHM, briefly, inherited rare disease. We were supported and had a great collaboration, still do with the Choroideremia Research Foundation. So that's a slowly progressive disease. It takes a while to read out. But again, early evidence of biological activity in those patients looking at the RPE cell layer, which is the target cell layer in that disease. So again, a highly reproducible, precise endpoint that we can measure over time. So we're excited about that, and we continue to enroll in that study. So 4D-150 is leveraging the same exact vector. So we're taking advantage of all that clinical safety data, all the manufacturing history, all the analytical history of that vector. So our ability to develop 4D-150, it probably took half the time and half the cost of our first intravitreal product. Which really, I think, shows the modularity and the benefits of the modularity in generic therapies like this. The product itself is expressing aflibercept, which targets 3 different drivers of angiogenesis. And then we also engineered into the product a second transgene cassette that is an RNAi that knocks out VEGF-C, and others have shown in randomized studies that knocking out VEGF-C can be beneficial on top of aflibercept therapy. So we think it's a pretty unique product, where in a single product, we can go after 4 molecular targets at once. We also think the fact that our vector has been evolved for low-dose IV delivery in primates is also a competitive advantage. So we're excited. The study design is a standard Phase I dose exploration design followed by a randomized Phase II in 50 patients looking at 2 different dose levels plus aflibercept control arm. So it's a seamless design where we can go right from Phase I, pick our doses for Phase II and then go straight into Phase II. The Phase I, as is the case with all of our studies, FDA likes to see you come in at an effective dose level and then titrate up or down depending on what you see. So if we see great efficacy at the first dose level, we have the opportunity to drop the dose and look for a minimum effective dose. If we want to, we can go up. So it gives us a lot of flexibility in exploring different dose ranges, and then we just need to pick 2 of those to go into Phase II.

Great. And then you also have a pulmonology platform, there's a lot going on here. Can you review the trial design and talk about how you're thinking of where to position this versus Vertex's portfolio?

Sure.

Maybe a second question here. Competitively, when you think of mRNAs coming to treat a certain population as well as gene editing, where do you think you'll fit in?

Yes, yes. Cystic fibrosis, the Vertex modulators have, obviously, been a game changer and benefited a huge number of patients. There's still a high unmet medical need. About 15% of patients either are not amenable to those or don't tolerate them, and that's the population we'll start in, for obvious reasons, and then we can branch into the other population later. We've had a long-standing partnership with Cystic Fibrosis Foundation. They've given us hundreds of hours of scientific collaboration and over $15 million dedicated to these programs. So we're really excited to be in the clinic with that. We leverage, in that product, 4D-710, we leverage a vector that we evolved for aerosol delivery in the primate lung. And we also built into that vector a high degree of resistance to antibodies in the human population, because those antibodies can be present in the mucus of the lung and can lead to a block of AAV uptake. So we're excited about the vector. The transgene is a slightly truncated form of CFTR, but it essentially is full activity. We've shown that together with the CF Foundation. So it's really disease-modifying. We're doing aerosol delivery at 2 different dose levels. And endpoints will be safety and, really, pulmonary function tests, including percent predicted FEV1. In the initial population, this will be a single agent. Obviously, there's a large number of patients who are on Vertex modulators doing well. There's still plenty of headroom to improve those patients. It's not a cure by any stretch. It's a step forward, but there's still plenty of headroom for additional benefits. So they're -- we may elect to explore combinations in the future. That's not something we've decided definitively, but we may explore that. And then I think in terms of RNA therapies, that would certainly require repeat dosing, whether it's every couple of weeks or so. We think genetic medicine that you need to give once every few years would have distinct advantages there.

And cash runway here. Where do you stand there? And how are you thinking about capital allocation across your portfolio?

Yes. Well, I think, everybody needs to be very cautious and wise with their cash spend today for obvious reasons. I think we're in a very strong position. We have cash into the second half of 2024. We did an IPO back in December of 2020 and then another raise in October, so the timing was pretty good for us. So we have the financial backing and support to drive these programs in the clinic full speed ahead and still have plenty of cash runway. In terms of next sources of capital in the future, we'll be opportunistic in the financial markets when they turn around, which they will. And then also pharmaceutical partnerships. There's still tremendous interest on the pharmaceutical side for novel vectors, novel products. We have a robust integrated genetic medicine engine, which we think will be of interest to potential partners as well.

Okay. Any questions from the audience?

Yes. Could you talk a little bit more about how you think about partnerships, and just kind of like what are the give and takes there? And then separately, on durability, does -- you've seen good durability in Fabry so far. Is there expectations for different levels of durability when you target different tissues in terms of turnover and stuff, given AAV is not integrated?

Yes. Sure. So I think in terms of partnerships, we think about -- first of all, we have such a broad platform. There's essentially no tissue we can't target with this approach, so we can't do everything. Certainly, our goal is to become a fully integrated biopharmaceutical company, and our goal is to be the leader in genetic medicines. And part of that means eventually having a commercial efforts in the U.S. at a minimum, and then hopefully beyond that. But that having been said, partnerships make a ton of sense for us because we can't do everything. We think of a couple of different structures. One is early-stage partnerships on the platform and the engine where we can say to a partner, tell us what genetic medicine you want, we'll invent the vector for you. We'll design the transgene [indiscernible]. We'll pick the right promoter, we can optimize promoter. If you want to go after multiple targets in a single cassette, we can do that. We can do all the manufacturing from earlier-stage discovery of a vector all the way through commercial scale manufacturing, all with the same team internally at our 4D site. We filed and opened 7 INDs now, 5 in the U.S. So we have a track record that I think partners would be very interested in and say, hey, we'll make you a customized product. We can take it as far as you want. So we think there's going to be a lot of interest in that. For 4D-310, at the right time, we'll look at partnerships, and we'll look at doing it alone. And that will just really be dependent on the capital markets. We fund it ourself or do we want to partner. There's certainly going to be interest there. 4D-150, those are large -- multiple large global Phase III studies, so it's likely we're going to want a partner for those. And so at the right time, we'll have those conversations. So we think there's a lot of flexibility in ways we can raise money when the capital markets aren't a place to go. You had a second question about durability. So I think what we've seen in gene therapy and genetic medicines is tissues like the retina seem to have very stable long-term expression, right? So we've seen with LCA-2 patients out beyond 10 years with stable benefit. We've seen [indiscernible] just reported their data, I think, at 3 years, saying stable aflibercept level. So it looks like in the retina, you get it in there and it's going to express for a long time. Liver, it seems like some vectors give stable, long-term expression and others have waned over time. So I think the question there is just how long can you stay above the level that you want to be at for therapeutic benefit in that disease. We think heart and kidney, for example, for our Fabry product, those are very stable tissues, and we would expect that if we got transduction, we should get very long-term expression there.

Great. Well, with that, David, thank you so much. This was great.

All right. Thanks, Salveen.