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

Good afternoon, everyone. Thanks for joining us. I'm Salveen Richter, biotechnology analyst at Goldman Sachs, and really pleased to have the 4D Molecular Therapeutics team with us. So maybe to start here, David. I'd have you just introduce the company kind of the situation that's played out through IPO until now with regard to the directed evolution platform, the disease verticals and where we've seen the progress play out across the programs to date.

Perfect. Well, thanks for having us here today. We're pleased to be here. I'm Dave Kirn, Co-Founder and CEO and this is [Julian Pay] , our Head of Investor Relations. So we're thrilled to be here. So 4D Molecular Therapeutics is a next-generation gene therapy company that's built on the power of the directed evolution platform to invent customized AV delivery vectors for any tissue in the body essentially. And so what this allows us to do is have best-in-class products, best-in-class vectors, which translates into best-in-class products. It's an extremely versatile platform so we can use directed evolution to invent customized vectors for essentially any tissue in the body by any route of administration. So what we do for every therapeutic area is we start with what's called the target vector profile, which is basically what features do we want the [sector] to have to be best-in-class and serve the unmet needs with the existing vectors. So that's everything from route of administration, the cells we want to transduce the dose levels we want to be in, immunogenicity and ramping that down and so where we are today is we have 3 vectors that we've invented that have now entered the clinic across 5 different products. So we're in ophthalmology, lung and cardiology. We're really excited to say that over the last 9 months, we started releasing clinical data that shows that we're validating these vectors, validating these products in the clinic, showing not only the promise of each of these products, but also of the platform. And so we've released data on our product 4D-150 for wet AMD. This is a unique and, we believe, best-in-class gene therapy in the sense of being intravitreal an outstanding safety profile with no evidence of inflammation across 3 different dose levels. And the transgenes that we're expressing are secreted aflibercept, so vectorize aflibercept which hit 3 different molecular targets. And then we've also inserted into the same transgene payload a second transgene that knocks out VEGF-C and that's in a large randomized study at Opthea they've shown that, that's an attractive target to knock out as well. So we believe we're the only product out there that has inhibitors of 4 different VEGF family members, it's expressed directly right in the macular right where it's needed right on top of the choroid and it's obviously expressed 24 hours a day, 7 days a week. So we think we really have an opportunity not just to replace aflibercept, but to actually be superior there. We've also recently announced data on the first 3 patients with cystic fibrosis treated by our aerosol-delivered 4710 product. And there, we're excited to say we had an outstanding safety profile, no related AEs after completion of the routine aerosol delivery, using a commercially approved aerosol device. We also showed on the order of 92% to 99% of the cells in the lung, where we're expressing the CFTR, which is just a remarkable finding and the intensity of staining and the percent of cell staining were significantly above levels in normal lung controls. So I think this is probably the first time this has ever happened in gene therapy. We actually got super physiologic delivering expression. And that translated into a really nice improvements in quality of life with a well-validated instrument called the CFR -- sorry, CFQR instruments showing improvements of 6, 11 and 22 points, the MCID on that is about 4 points. So well above that. And we also saw -- in the 1 patient who started with low FEV1, they showed a significant improvement of 7 points. So small data set, we're now enrolling in the second dose level, but certainly very compelling expression levels and efficacy. The third vector that we've taken into the clinic is an IV vector for the heart. And there, we showed in the first 3 patients with 4310 for Fabry disease, significant benefit in terms of everything from Echo contractility, cardiopulmonary exercise testing and quality of life as well and approximately 50% of cardiomyocytes staining positively for transduction at a very low dose of K. So we feel like across these 3 therapeutic areas, we've validated the vector, which we think has significant read through to other products in those areas as well as to the platform.

Maybe jumping into the portfolio at this point. Starting with the ophthalmology vertical, what do you think might be overlooked by the investors with regard to your recently provided data in wet age-related macular degeneration? And perhaps you could also just talk about the physician feedback that you received post presentation.

Yes. So at the ARVO meeting in April, we released the data with 6 to 9 months follow-up on all 3 dose cohorts in the Phase I. I think what's really remarkable is the 4 patients at the high dose level who would be eligible essentially for Phase II or Phase III. We're all injection-free at 9 months. So a really stellar effect there. no evidence of inflammation and very robust gene expression is determined by [acres humor tabs]. I think what may have been underappreciated with that data set is the fact that these lower doses are also very active. So we really have -- we have a dose response, which we were trying to show and FDA wants us to show. But those lower doses maintain the outstanding safety and they're still highly active with about a 75% reduction in need for supplemental injections. And about 70% of patients either had 0 or only 1 injection over the 6 months time frame of follow-up. So I think that's really exciting data. I think that was maybe underappreciated is that activity at lower dose levels.

Can you speak to the cataract that was seen in patient 1? And what may have caused it and how you're thinking about the risk of cataract due to steroid use, which is generally required here for gene therapy?

So just to take a step back and ask a question about steroids. So we felt that when we were developing this product, we thought, look, because of this efficiency of this vector, and the intravitreal nature, we should get -- be able to get by with very low doses. In contrast to other programs of gene therapy which have had doses anywhere from 10 to 100-fold higher and have had significant inflammation. And so we thought we would have very little [indiscernible] inflammation, but we thought to be safe. Let's start with a steroid eye drop regimen over about 20 weeks of tapering down. and we saw outstanding safety there. One patient, first patient ever treated with the agent, the physician elected to keep -- continue those steroid drops and did probably induce a cataract in that patient, which can happen when you're on steroids for 40-plus weeks. Our standard is 20 weeks. So we think the risk of cataract formation with the 20-week regimen is probably pretty minor -- not 0, but it's minor. In that patient, once the cataract develop, the cataract was removed and the patient's visual acuity went right back to baseline, which was great to see, which is a huge win out that far after with no supplemental injections. So going forward, we need to decide, do we -- are we comfortable with the risk of cataract? Or do we want to shorten that steroid regimen since we've had no inflammation and/or do we want to potentially -- some groups have actually enrolled only patients who've already had their cataract and their lens removed into Phase III. That's another option. But I think for us, probably the most reasonable thing is just to shorten that steroid course before Phase III.

And then there was a patient who had a low BCVA and lost about 18 [litres].. How variable, I guess, is BCVA in severe patients? And how can you be sure that it wasn't due to drug?

Yes. So it definitely was not due to the drug, and it was definitely due to the cataract, which formed right in the center of the visual field. Now that patient already had a preexisting cataract and that progressed very quickly. So we think it was an extension of that original cataract, which basically is right in the middle of the visual field. which pushed the BCVA down. But to your point, BCVA is a variable endpoint, especially in these patients with very low starting BCVA. And this patient had essentially been legally blind in the preceding year and certainly, we would all agree, I think that patient should not have been enrolled. This does happen in Phase I. I mean it's part of Phase I.And so we say, okay, that patient would never enroll into a Phase II or Phase III and they're certainly valuable for safety. There is 0 evidence of toxicity to the retina, no evidence of inflammation. So it's definitely not a toxic event. It's explainable by this central cataract. But nevertheless, those kind of patients would be excluded in Phase II and Phase III.

So when you then look at the remaining 3 patients, what gives you confidence for the dose expansion portion? And I guess how would that differ from what you did in the Phase I in terms of inclusion.

Yes. So with the Phase II, we brought up the baseline BCVA required to get on the study. So the first patient would have been excluded. And then if patients stick to the -- if physicians stick to the 20-week regimen, which I think they will, given the lack of information, then cataract development really shouldn't be a significant risk there. So we're confident we're going to be able to replicate the efficacy and safety we saw in the first -- in the Phase I.

You mentioned that you could have an in-line profile to[indiscernible] or potentially a superior profile to [indiscernible]. And what is it about this data set that you saw that leads you to believe that could play out?

Yes, it's a great question. So first of all, these patients were heavily pretreated. So these patients have all been diagnosed on average about 3 years earlier and had been receiving on average 10 to 11 injections in the preceding 12 months. Some of them had 13 injections, so more than 1 a month. With drugs approved agents like aflibercept and Lucentis. So the fact that we could treat them once and see that they were injection-free for a total of 9 months. I think is very strong evidence that, okay, this could bear out. I think there are certainly patients out there, not the ones on this study, but there are patients out there who do respond quite well to the [indiscernible] might be fine with every 8 weeks or might be maybe every 16 weeks with high-dose area. But there will definitely be patients as well who just are relatively resistant to that and need frequent dosing where we, I think, could be superior in that population.

So I think that the question that comes up a lot just given the history of this field is the safety profile and how to get comfort with it and when you would get comfort with it. So when you look at this the study, how long does it typically take for inflammation and other adverse events or serious events such as blindness to occur? And then have you passed this threshold and with how many patients? And when would there be enough to say, okay, we get it. We understand this profile. We've got a relatively safe asset.

I think with gene therapy in the eye, a number of groups have run into trouble with inflammation. And again, they're starting at much higher doses, typically, whether it's subretinal or intravitreal with 7 or 8 with [indiscernible] or suprachoroidal with the AbbVie REGENX program. And we have not seen that inflammation. Now when they see it, they typically see it pretty early as early as a couple of months. And then that can last in some cases, a few months or in the case of [indiscernible] beyond a year. So we believe with our data, if we get to 20 weeks and patients are 4 or 5 months out, and they're off of steroids, the likelihood that inflammation pops up later is exceedingly unlikely and has never been reported. The late hypotony that the Adverum program had in terms of low pressures in the eye, leading to serious complications and blindness. That didn't occur until 9 to 10 months, but it was preceded by a tremendous amount of inflammation, especially in front of the eye inflammation with pigment release and pigmentary changes in the front of the eye. which eventually the theory is that, that knocked out the ciliary body and then dropped production of the fluid, and that's what led to it. So while that eventual hypotony took 9 months to be diagnosed, the precursors to that were very evident, very early on. And we're just not seeing anything like that. So again, the likelihood that we would suddenly get a significant adverse event out beyond 6 months is very, very low.

And how well understood is the chance for an idiosyncratic event to play out in this population?

That's just unknown until we get more data. There's nothing we can do about that. We just have to treat more patients and get more followed.

You had a program in chorioderemia and XLRP and how translatable is the profile that played out there to wet AMD with regard to pigment dispersion and -- you [guide us].

Yes. So those 2 rare inherited retinal disease programs, we're excited about those programs. Each of those enrolled on the order of 14 to 16 patients. and we've reported on that showing early evidence of activity in the subset of patients who are valuable. The XLRP program with 4,125 patients received up to 1 in 12 VG per eye. So anywhere from 30 to 100 fold higher than what we use in wet AMD. So wet AMD, we're a much, much lower dose. And that's, again, because aflibercept secreted and therefore, we don't need to get in every cell the way we might want to in XLRP. So we know that the capsid itself is very well tolerated up to J. So I think that's a direct read-through to say, wetMD,that caps it itself is safe and well-tolerated doses hundredfold higher. And so we're in great shape. The choroideremia patients, that's a very unique patient population with a unique immune system because of the mutation. It's a very pleiotropic transgene that turns on all sorts of different pathways. And with that product, we did see a rep 1 transgene associated pigment release syndrome from the Iris, but we have not seen that in the XRP program, and we're confident we won't see that at these doses and with the transgenes and wet MD.

Can you speak to when we might see the first data in diabetic macular edema and the translatability of the data that you've seen here in wet AMD over to that population?

Yes. We're really excited about that program as well. There is some competition with gene therapy and wet AMD. But as far as we know, we believe we're the only company in DME now with AAV gene therapy. It's a very large market, and it's growing rapidly with the increase in diabetes in this country. Historically, all the agents that have worked in wet AMD have translated and worked just as well or even better in DME and frequently at even lower doses. So I think the odds that we see a translation of the efficacy over to DME is very high. historically -- based on historical data. And so we've given guidance that the IND is open there. We expect to treat our first patient with DME in Q3. So we would -- by early next year, we have initial data sets available to discuss safety and efficacy there.

And you're also going to move forward in geographic atrophy. So what gives you confidence on the translation, I guess, over to complement factor H and the ability to have read-through in that population.

I'll have Julian speak to the complement factor H itself, but I would say we're starting from a position where we have a validated vector. And what we have found is that the modularity of these vectors makes the drug development and building up a portfolio in a therapeutic area, very efficient, right? So when we go in with that GA asset, we use the same exact manufacturing process is 4,150 for wet AMD we'll use 90%, 95% of the release tests will be the same, the dose ranging in nonhuman primates will be the same. So it's a very efficient way to develop products and then we can leverage all the experience we have with safety and efficacy of this and wet AMD clinically. And then we do like to go after either genetically or therapeutically validated targets to decrease the -- increase the probability of technical success with our products. and maybe Julian can speak to the advantage of the complement factor H that we acquired.

Yes, absolutely. And regarding the complement factor H, I think the genetic validation, as David mentioned, is really important. We see that in 40% of cases of [indiscernible] atrophy mutations that reduce the function of that naturally human occuring factor that [indiscernible] regulates the complement pathway. So I think that's a very clear sign that there's a mechanistic validation there. So we think when we go into clinical development, we would likely enrich for that population, which should also increase the chance of success. specifically on this construct, who was invented by the University of Pennsylvania, a professor there that was licensed to a company called Avitas, which we licensed the know-how and rights to and those studies, preclinical models we looked at, it has very high biological activity in various complement-mediated animal models. So we think the potency of that construct as well as combining with our R100 vector has a very good chance of affecting disease here. And I think also in [geographic] atrophy is not quite just 1 targeted approach to complement pathway is extremely complicated. We have C3 and C5 now essentially commercial products. So the validation there leads us to also consider other constructs, and we think GA is disease space where we will be pursuing multiple approaches.

Julian, can you remind us what data sets we're going to get from this vertical over the next 12 months just from your 3 programs here?

Sure. So we mentioned kind of DME will be dosed, and that's going to be first half next year. But regarding wet AMD, we will have a completion of enrollment of the Phase II 50 patients on the randomized Phase II expansion. That data will read out initially interim data in the first half of next year, you can expect anywhere between 6 to 12 months of follow-up. We'll kind of look at that data [indiscernible] analysis and what's available there. In terms of GA, we would expect to provide a program update in the Q4 and file an IND in 2024. Yes, that's ophthalmology.

Great. And remind us on the partnership aspect, how you're thinking about this vertical because you did have a partner with the rare diseases with Roche, but now you have an unpartnered portfolio.

We're really excited about the potential to build very significant value in large market ophthalmology. Now that we have a validated vector that we can just swap in and [indiscernible] different transgene payloads, we can build significant value. And we think that we could build the U.S. sales force and commercialize ourselves in the U.S. So I think the base case for 4150 for wet MD and DME would be for us to complete the Phase II, build more value in the asset, get initial DME data. And then look at partnership opportunities in 2024. We would love to -- our goal would be to retain the U.S. market and partner ex U.S. In parallel with that, we found that once we validate these vectors in humans, the value that others perceive in the vector goes up significantly, as you might imagine. So we are open to partnering in ophthalmology outside of large market. So if other companies want to do rare disease, targets and leverage the R100 vector we're open to those kind of partnerships.

So moving to pulmonology. You recently presented new data at -- on cystic fibrosis with your aerosol gene therapy, 4D-710. Can you just outline the key takeaways here and what next steps are with this program?

Sure. I can kick it off, and you can add some color. So 4D-710 is our cystic fibrosis product candidate. It's based on a vector called the A-101 that we invented at 4D using the directed evolution technology. The profile there is we wanted something that we could deliver by routine commercially approved device, nebulization device for aerosol delivery. We want something that could penetrate through the thick and mucus in cystic fibrosis. And we wanted the vector to be highly resistant to antibodies in the human population because those antibodies can be present in the mucus barrier which could lead to inhibition. And then finally, we wanted to make sure we transduce all cell types because, again, its belief for CF and many other diseases hitting as many different cell types in the airway that you can, the better. So that's what we had going in. And the CFTR transgene that we deliver is an optimized version of that, that fits an AV. So, We reported out the first 3 patients' results with 9 to 12 months follow-up. These were patients who are not amenable to the VERTEX modulator. So they either have 10% of all patients CF will have a mutation that's not amenable to a much later usually because it's a null mutation, there is no protein. So these patients have very aggressive disease, very rapidly proliferating -- progressive disease. And we also can enroll patients who are -- have severe toxicities to the modulators, so say, hypersensitivity reaction, for example. So that's the patient population. We follow for safety and what we saw as the delivery over the course of several hours with the device was well tolerated. One patient had mild dry throat and fatigue. That was it. And after completion of the administration, we had no related adverse events, really remarkable safety profile, especially given the fact that these patients have sick lungs and we're putting all this vector in there. So again, validation of the platform that our vectors are generally very well tolerated. So safety was excellent. We then looked at gene expression on biopsies throughout the lung and [brushings] throughout the lung at week 4 to 8 in that dose in that time frame and we saw a widespread gene expression in all samples. When we look by the protein immunohistochemistry anywhere from 92% to 99% of the cells were positive for CFTR. Really remarkable. I don't think that's ever been shown in gene therapy. And we actually had expression levels in terms of the intensity that was significantly higher than in the normal control samples. And all this data is analyzed by something called the Visiopharm machine learning-assisted software. So this is not a human doing this. This is -- it's confirmed by humans, but it's actually derived from this device and application. So remarkable levels of gene expression throughout the lung, and we saw expression in all 3 major cell types, including the basal cells, which are very long-lived cells in the lung, which you really want to target. So that was all very exciting. And then the 2 clinical activity endpoints that most people look at are either FEV1, which is how fast someone can blow out over a course of a second. So it's kind of an airway resistance measure. And the other is the CFQR quality of life instrument and all 3 patients had very significant improvements in quality of life, again, anywhere from 6% to 11% to 22% versus 4 being the threshold for activity. And then FEV1, we had 1 patient who started at a significantly lower level where we could show that improvement of 7 points. It was durable out through 9 months. So early data, small data set, but each of these different endpoints is telling us the same thing, which is exciting.

So if you look -- I mean it was a small n. So if you look, there was variability with those 2 measures. There was 1 patient that kind of bounced around an FEV1 and it's an open label design, right? So I guess, when you look at the effect that you saw, how comfortable can you be on that -- on the quality of life or FEV1? And how does that kind of correlate then with the gene expression aspect?

Yes. Well, I can kind of kick this off and then turn it over to Julian for additional color. I think, first of all, when I look at small data sets, what's important to look at is different orthogonal endpoints. Are they telling you the same thing or not? So here, we're looking at very, very different things of biopsy looking at protein, a biopsy looking at RNA, safety, a quality of life instrument and then FEV1, which is a function of how quickly you can blow out on spirometry. And they're all telling you there's clearly clinical activity here, which I think is really important with small data sets. And Julian can maybe speak to the CFQR and our interpretation of single-arm data on that.

Yes. I think really importantly, this measure is used in all VERTEX modulator studies, control arms do not seem to have a placebo effect. -- generally speaking, the decreases anywhere from 2 to 4 points on placebo, even [indiscernible] studies and [indiscernible] showed a 20-point delta on that measure in their approval study. So when we show a 22 employment improvement in the 1 patient that most resembles the average patient on the [indiscernible] trial, we think that's almost ambiguous way to see that there is an effect, at least in the type of patients that we may see in the Phase III.

Great. And with regard to the higher dose, do you think there's an ability to add more benefit given you were almost at 100% expression?

It's -- we'll see, but it's really hard to imagine that you could. It looks like we've already saturated expression levels. So we'll see. There's going to be variability based on different mutation status and the severity of the patient's disease when they come in. But I think when you're talking about 99% cells expressing and the intensity being above normal. I think you probably maxed it out. So I think if nothing else at higher dose can give us greater confidence in the safety window -- and then we'll just have to see if it translates into the higher clinical benefit than we've already seen.

And remind us, as you think about going into the other 85% of patients, are you looking at a combination with [indiscernible] approach? And do you have a sense of just the regulatory path for both of these subsets?

Yes. So starting with the population that we're in state we have no modulator therapy. There, we think there's a real opportunity working closely with the Cystic Fibrosis Foundation and the FDA to think about accelerated approval or fast-to-market options. So there, we could imagine some sort of blended endpoint looking at quality of life, stabilization or improvement in FEV1 and supportive data from biomarkers. There is precedent for that in these smaller rare disease populations. And here, we're talking about 10% to 15% of CF, so CF is pretty big, but we're talking about 10% to 15%. So we're looking forward to having those conversations with FDA, and we think there's a new fast-to-market opportunity there for that population, which would be just amazing for our company because, again, that's something with all the support and relationship we have with all these sites and the therapeutic development network of the Cystic Fibrosis Foundation, we think we can commercialize that ourselves. The combination with modulators is very exciting. Not only is it a bigger population of patients, but we really have an opportunity to see synergy there. And the reason we believe that could be the case is the modulators should really thin out the mucus, they should improve variation of all parts of the lung. The modulators combined and positively increase the function of wild-type CFTR and so we think there's a real opportunity for potential synergy there. That's a route that would definitely require a randomized trial, we could envision someone being on stable doses of a modulator for 3 to 6 months. stable FEV1, stable quality of life and then you just randomize and half the patients will get 710 on top of that. And then we could look at changes in all those endpoints over the following 6 to 12 months.

Maybe jumping to the cardiology vertical. So you've actually had some pretty good data in Fabry disease, but it does seem like with factors, particularly AAV9 like vectors, there is an inflammatory response that needs to be dealt with, and you're working with the FDA on a steroid regimen. Maybe help us understand how that's progressing, how the FDA is thinking about this and what that could mean for the future of this program.

Yes. So we are excited about developing a cardiology vector. We think there's a lot of interest in the field for that, and there are a number of great indications. We selected Fabry disease as our first indication. It's a lysosomal storage disease, where there's a monogenic recessive mutation and then enzyme that breaks down single lipids in the cells in the body. So we thought that was a great first target. It's a secreted product. It's highly active. We know that high levels of that are safe as an enzyme replacement therapy. And we also know that the enzyme replacement therapy or ERT does not affect the heart. So we thought there's leading cause of death in these patients. There's nothing for it. It's a great target. So we evolved the vector for low-dose IV delivery to the cardiomyocytes and in fact, in the clinical trial, we've shown the first 3 patients, significant benefit on multiple endpoints. And in 1 cardiac biopsy that we have to date shows on the order of 50% of heart cells transduced. The vector overall has been -- had a very favorable safety profile and no evidence of generic systemic inflammation. What we have seen is what's been seen with other AAV vectors is you can have a rapid increase in the IGM antibody. And that binds the capsid and that can activate, complement and cause what's called AHUS. So it's a very specific -- it's not really like information the way we think about it. It's really just antibody and complement. And so some really clever investigators at University of Florida came up with a regimen that uses rituximab, which is great at suppressing B-cell activation, an antibody generation and then sirolimus and that combination has been outstanding at blocking that AHUS effect. And so we were already moving in the direction of moving to that new immune regimen, which I think is going to be standard for DME, AAV vectors. And FDA supports that strongly. And so those are the discussions we're having now is moving in that direction. And then in the next quarter or so, we'll have a year of follow-up on all 6 patients, and we'll be able to look at that program and make some decisions.

Great. We have time for maybe 1 question from the audience.

As you think about patient enrollment in the wet AMD and DME trials, how do you think about balancing the exclusion of the severe patients in order to achieve higher probability of success versus showing a benefit in the unmet [need] population.

So we -- in the current study, we started with the most difficult to treat. So we think these patients are maybe like 15% highest users of anti-VEGF and so as we want to make sure when we get to the market and on Phase III that we have a broad range of patients. So we want to start moving into that earlier stage population and get safety and activity there. We will exclude patients who are so far advanced at BCVA really can't be rescued and I think that will give us a stronger signal in Phase III, but we'll still be treating 95% of the population with those criteria.

Great. Well, with that, David and Julian, thank you so much. We appreciate it.

Thanks for having us. Thank you.