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

Good morning, everyone. My name is Gena Wang. I'm a SMID cap biotech analyst at Barclays. Welcome to Barclays 27th Global Healthcare Conference. It is my great pleasure to introduce our next presenting company, 4D Molecular Therapeutics. With me on stage, we have Dave Kirn, Co-Founder and Chief Executive Officer; Chris Sims, Chief Commercial Officer; and Uneek Mehra, Chief Financial and Business Officer. So Dave, I will hand over to you.

All right. Thank you, Gena. It's great to be here. Thanks for having us. I'm Dave Kirn, Co-Founder and CEO of 4D Molecular Therapeutics. It's not working... Okay. Next slide, please. there's no presentation. Okay. I will make some introductory comments then. So we, at 4D are a next-generation AAV gene therapy company. Our lead product is 4D-150 for wet AMD and DME. This is now a Phase III asset. We're excited to be in Phase III now, just having entered 4FRONT 1. We expect to start our second Phase III study in Q3. That's 4FRONT 2. And these are wet AMD studies that are designed for BCVA noninferiority, and are powered at 90% for the U.S. FDA noninferiority margin. These are all patients who have been diagnosed within the last 6 months or less and have demonstrated on study responsiveness to aflibercept. We're very excited about our portfolio and our opportunity with 4D-150. We think it's going to be -- first of all, it's addressing a very, very large market, $17 billion annually and growing. So massive market opportunity for us. We believe we have a highly differentiated product that's going to act as a backbone or foundational therapy to knock down the VEGF levels across the board in patients. Some will be functionally cured and never have another injection. Others may need an occasional top-up as their disease flares up. But overall, we expect to see a very significant treatment burden reduction of 80% to 90% plus in these patients, and that would translate into a massive improvement in quality of life for patients. Treatment burden reduction is really the #1 need that patients have and physicians have in these diseases. To date, our efficacy has been very strong. We've hit anywhere from 84% to 94% injection burden reduction depending on the population we look at. Seen excellent safety comparable to the aflibercept protein that our product makes in the eye. And we believe that the product, given that it's a simple intravitreal injection that this should fit seamlessly into clinical practice. With no special handling or storage or distribution issues, very routine, and it should also work very well with the physicians' economic models in these clinics where they do a buy and bill a reimbursement model, and this should actually improve their cash flow. So as I said, we're in Phase III, and we expect to have Phase III readouts in the second half of 2027. And our cash currently is at about $500 million, and that will last us into 2028, so well beyond the 52-week primary readout for these Phase IIIs. We also have a cystic fibrosis program, where we expect to give data and regulatory updates in the second half of this year and hope to be discussing pivotal trial designs for that program with the FDA. That's an inhaled product that delivers CFTR to the lungs of cystic fibrosis patients. And we've seen outstanding safety and gene expression throughout the lungs and early evidence of biological activity that we expect to update. So stay tuned on that, another exciting opportunity for a Phase III trial of 4D. So with that, maybe we'll just take your questions, Gena.

Sounds good. Sorry about technical issues...

No worries. Keep me on my toes.

Okay. So maybe I think usually, we ask about the wet AMD program, but some change because you will have a CF data coming in near term, and that will be a pretty important update for the company. So maybe share with us what we saw in the past, that we know that you did have a high protein expression, but FEV1, we did not see too much improvement. Now you will have more severe patients. So maybe walk us through why we think in this next update, like should we expect to see the functional FEV1 or the other lung clearance index, should we see the improvement there and why we should see that?

Yes. Great. So 4D-710 is our product for cystic fibrosis lung disease. This is an inhaled next-generation invented a vector for highly efficient delivery and transduction through the mucus barriers for high-level expression. And we express the CFTR transgene, which is the gene that's mutant in the disease. So we're targeting the disease right at the at its source. Therapies from Vertex that have been really transformative for a number of patient genetic mutation subtypes. But for many patients, they're either not amenable to those modulators or they're intolerant of those modulators or they have suboptimal responses, so that could be anywhere from 20% to 30% of the population. So that's where we are starting where that need is -- the unmet medical need is highest. So we're starting that population. Over time, we expect to treat all patients, including in combination with the modulator therapies. So what we've shown to date is in the first -- we've reported out that we've treated 13 patients at 4 different dose levels. And we've seen outstanding gene expression, as you say, over 95% of cells staining positively by either RNA or protein, very high-level protein expression. So that's really a landmark for the field. No one's achieved that before. And what we've seen is excellent safety, and this is all with a very routine nebulized device that -- using a nebulization device that essentially inhales this mist into the lungs and results in transduction. So very routine, very safe, high-level expression. What we're now starting to see is evidence of biological activity in FEV1 of lung function of 80% or less. For example, we've already shown 2 of 3 patients in that subgroup showing very meaningful improvements in FEV1 of 5% and 6%, which if we saw that in a Phase III, that would absolutely be approvable. We've also started to explore other more sensitive assays such as lung clearance index. We expect to report that out. And we also explore some very high quality of life instruments that are specific for CF lung disease, and we've shown anecdotal improvements in those. So it's a robust data package. We expect to also in the second half of the year, have anywhere from 6 to 2 years follow-up on patients. And we would also expect to have regulatory guidance on a potential accelerated approval pivotal trial design similar to what's been seen in other rare diseases with AAV.

So maybe how many patients should we expect to see? And then in terms of the baseline FEV1, I don't know if you can share that yet.

Sure. Yes. So we reported out, we -- as of our last update, had treated 13 patients. We expect to treat up to 3 more. So at the time of data release will be approximately 16 patients, including a number at a lower dose that we think would be our Phase III dose now. FDA does like us to use the lowest effective dose. So we're seeing that the lower doses, we believe, are highly active. So that will be the update, and we're excited to proceed with discussions with FDA.

Okay. And the FEV1, you did mention you saw anecdotally 5%, 6% improvement. Would that be the bar we should be looking for when you have the data update?

Yes. I think historically, FDA has said that if you hit 5% or more, that definitely would be perceived as meaningful and approvable. In this population, the bar may be even lower in these patients who have no available therapies. We've had cystic fibrosis experts tell us if you could just stabilize their FEV1 and cannot prevent that decrease every year, that would be meaningful. So that's something we'll look at, is patients' trajectory of the FEV1 decline before, and then after treatment and hope to show -- stopping -- hope to show a reduction in decrease and actually show an improvement. And so, that change in slope would be very important endpoint, I think. So that's the bar. But again, there's approvals for ORKAMBI and other modulators in mutation subtypes where 2% to 3% could be approvable. So, it's somewhere in that range between stabilization up to 5-plus percent would be sufficient, we believe.

What about the lung clearance index? What could be the benchmark there?

Yes, this is an exciting new technique that's used. It started in children who were unable to reproducibly do the FEV1 test. And so it's a very sensitive reproducible test that is not 1% to 1.5% improvement there would be felt to be meaningful. And so we'd be looking to hit at least that bar or better over time.

Okay. And I think for the nonsense mutation, I think Vertex and Moderna are also doing the RNA therapy. They likely will also share data later this year. So what do you think like -- of course, it's all moving targets, right? So like how do you think from the gene therapy perspective, do you -- the efficacy bar, do you think it will still be similar? You need to be competitive with the RNA therapy?

Yes. I think the big difference between a gene therapy with DNA versus an RNA-based therapy is gene therapy is very durable. So we'd expect multiyear durability here in the lung. We do expect eventually to redose, which is great from a patient standpoint and commercial standpoint, but it would be on the order of anywhere from 1.5 years to 3 years out. RNA therapies, RNA, as you know, is a very short-lived molecule. So we're talking about weekly or even daily administration, which is a very much higher burden on the patient. So we wish them the best. We hope it works, but DNA would have a clear advantage there.

Okay. How would you share the data? It would be a press release and the conference call, and we'll walk through the data or would be a medical conference?

I think all of the above. We haven't committed yet to whether we give some sort of corporate summary of the data first, followed by a medical meeting or do it simultaneously, and we'll look at both.

Okay. Good. Now switching gear to your 150, and you do have two different indications, wet AMD and DME shared the data on both indications. And I -- so maybe the some pushback from the investors, I would say, like enough data -- overall looks pretty good, but you do have an investor pushback the durability. And I think that was the key question that may be hurting the stock when certain data update, the stock react differently when -- maybe when we look at it. So maybe help us understand, say, from the durability question and also what endpoint will be the most important based on your interaction with the doctors.

Sure. So I'll kick it off, and then I'll turn it over to Chris, who's had several hundred interactions with retinal specialists. Just at 4D and it's been in the field for well over 10 years and a number of agents, including Lucentis and Beovu and IZERVAY. Look, when we look at this massive market of $17 billion annually, what patients most want is treatment burden reduction. They don't want to be getting poked in the eye. Every time they do it, it's -- it could be half a day to a day out of their life, their caregivers' life. They got to go in, they got to wait. They got this anxiety around getting the needle in their eye, et cetera. So that's the #1 unmet need full stop. That's clear. And we also see that these retinal specialists, if you ask them what technology are you most excited about -- what's the evidence that treatment burden reduction could lead to a blockbuster product? Well, if we look at Vabysmo, they reduced treatment burden by about 30% versus aflibercept, the standard of care. That 30% has translated into blockbuster status in record time, and it's growing rapidly, and Chris can speak to that. So that's 30% reduction. What we've shown in our studies is anywhere from 84% to 94% treatment burden reduction with the same simple routine intravitreal injection. How could that not be a blockbuster? We also know that AAV is extremely durable. So we know from [indiscernible], that AAV gene therapy in the retina was effective out to 10 years. We know from REGENXBIO subretinal 4.5 years in counting, a high degree of efficacy and expression, same with Adverum with their intravitreal injection out 4.5 years. So we know that AAV is highly durable in the retina. The retina is a post-mitotic tissue. It doesn't turn over. So that's going to happen. We've shown durability. We have patients out to 3 years who have gotten no injections, whereas previously, they were receiving 10 injections in the prior year. So people always want to see that durability, but we've now got the data to show that. We'll continue to update that. But more importantly, we know from many other programs, AAV as a therapeutic class is extremely durable in the retina. I'll turn it over to Chris to speak to what doctors are looking for and what he's hearing.

Yes, happy to. So... I don't think there's any debate in the space around the unmet need that continues around treatment burden reduction. I think we've seen that with new launches and how they've been successful in record time with incremental improvements. That's still real. I would tell you that the treatment burden reduction is important in two aspects. One is from a patient perspective, obviously, fewer needles in your eye without sacrificing safety or efficacy is critical. But also from a retina clinic point of view, regardless of where the retina clinic is, be it in the U.S. or ex U.S. and international markets, the vast majority of retina clinics have a challenge with capacity. They have more demand for their services, and they have time and doctors to fulfill those services. And that projected gap is -- or that gap is projected to increase over the coming years. So a backbone therapy like 4D-150 not only can relieve treatment burden from a patient and caregiver point of view, but also could relieve some of the capacity constraints that many retina clinics find are pretty problematic in their real world today. So physician feedback, as we've taken our Phase II data out and shared it with them has been overwhelmingly positive, again, reaffirm the unmet need. But Gene, I think one of the things that first doctors go to is the safety profile. And I think there's evidence in the past that a lot of new agents, the physicians understandably so want to see real-world safety before they kind of move to more of a mass adoption. I'm familiar with that. I launched Beovu at Novartis and then recently launched IZERVAY with IVERIC. So that real-world safety demonstration is critical... Phase II data. So the safety is very compelling. And our Phase III program. And hopefully, as we start to see enrollment in the next couple of months, we'll get evidence of one, the unmet need...

And then maybe I know from the investor community, we're focusing on injection-free rate and then in addition to the, say, burden reduction, right? So maybe based on your doctor feedback, which one they care or the patient perspective, which one they care more. And also there is a caveat is what in the practice versus clinical trial setting, the criteria of a retreatment is very different, right? So usually, in the clinical trial setting, it's much loose. While in the reality, real world, maybe every doctor has their own threshold when they wanted to do the injection. So you have a large variability there. So how do you -- more thinking fast forward, and given the Phase III trial design, I think you have a very good chance to show positive study. But fast forward, when you go to the doctors and the patient, how do you send in the message, like what do they care most when you're presenting the data profile?

So injection-free versus treatment burden reduction is highly interrelated, of course. They're not separate from each other. They care primarily around treatment burden reduction, first and foremost. If a patient can be injection-free over months or years, then obviously, that's great for them and for the patient as well. But the appeal of the profile, again, foundational, you have to have safety and then strong demonstration of meaningful treatment burden reduction over a long period of time is ultimately, I think, what drives their enthusiasm. And you're right, in the real world, every physician may have a different tolerance for fluid and when they choose to reinject. We think our retreatment criteria, one is, I think, fairly consistent with what many other pivotal trials have done recently. But we've also pressure tested our criteria through a number of advisory boards and physician feedback, and they think it's reasonable and fair relative to how they treat in the real world. There will always be exceptions to that, sometimes more stringent, sometimes less, but we think it will be reflective of, again, how real-world treatment would be conducted.

You also mentioned that you already start enroll Phase III trial. And what is your -- I know it's a little bit difficult question like, but what is, say, your assumption building for the enrollment completion, the time that would take?

Yes. I think we said publicly that the target would be approximately 15 months, and that's why we get readouts for both 4FRONT 1 and 4FRONT 2 in the second half of '27. Now we have a very, very experienced team, a very energetic team, a team with great relationships with the retina physicians. So we hope to beat that. And we do think that if we can hit that enrollment rate or even better that, that would be clear evidence that this target product profile is exactly what physicians want. It's exactly what patients want, if they're voting with their feet and essentially enrolling in the study. So we we think it's important for advancing the product, but also demonstrating the commercial potential of this potential blockbuster therapy.

And then regarding, say, the physician or patients, the threshold, the treatment burden reduction, what is the number there? Like -- so I talked to also lots of doctors, some like your investigators. So there are like a wide range of numbers, but let's say, for the treatment -- the injection-free rate, usually the threshold is about 50%. So the burden reduction will be a little bit higher. So I would love to hear your thoughts like based on your interaction.

I'll give you my background comments and then Chris is the expert here. So I think let's just put this in context. Vabysmo blockbuster, fastest launch ever, decreases burden reduction by 30% -- the number of patients who are injection-free is zero, zero, and it's a blockbuster. So why are we being held to a different standard? Well, it's because of the history of gene therapy. First-generation gene therapies cause toxicity, some required subretinal injection. If you look at rare diseases like hemophilia, they were priced at millions of dollars. That's not what we're talking about here. This is next-generation large market gene therapy where our cost of goods is less than $1,000. So we have huge pricing flexibility. We've seen a clean safety profile that looks like aflibercept roughly. And we have a routine simple intravitreal injection that fits seamlessly in clinical practice. So this is just -- it's just a very, very different form of gene therapy. We're the first ones to do this. And I think it's a matter of educating people over time that this is a very different value proposition. Chris, over to you.

I don't sure I have much more to add. I think the answer to what's a meaningful level of treatment reduction is somewhat arbitrary. It's multifactorial in the real world. We've seen, to David's point, a benefit of a couple of weeks result in massive success for the most recent launch. And I think, when the real world hits, certainly, there's no patient that I think would desire more needles in their eyes, right? Everyone would desire some relief from a treatment burden standpoint. in their eyes, right? Everyone would desire some relief from a treatment burden standpoint. The doctors are looking for that as well. So it's hard to give a percentage per se because it's ultimately, it is going to be multifactorial. It's not just based upon the clinical benefit, it's based upon factors that can be incredibly meaningful. And incremental benefit. Like our ultimate benefit is measured in months, if not years. So it truly is a paradigm shift. So I don't know the actual percentage. I think, wherever it lands in our Phase III data, assuming that it replicates or even it better than Phase II, it has the potential to, one, establish a backbone therapy approach and be paradigm shifting.

And I'll just make one final comment. I know we're short on time. We hit 94% treatment burden reduction in the Phase III population in Phase IIb, 94% reduction versus 30% for Vabysmo. And that was in a patient population that's not as enriched as we're going in Phase II Phase III we're going to enrich even more to date. But I think anything over 70% would be huge for patients.

Okay. And we are out of time, but I do want to quickly one question each for you, too. For Chris is our conversation with the payer is for gene therapy. Actually, a very simple formula. Standard of care times 5 or times 3 to 5, that's the price they are willing to pay for gene therapy. Is that aligned with your thinking and quickly for unique cash and the runway assumption?

Yes. Chris, do you want to go first?

So I think that's where you start for sure. I think the added piece to that needs to be considered. We have the potential to hold on to vision gains for a longer period of time. Many bolus therapies, a lot of that vision is lost. So I think that's important. We know that's important to payers. I think that's a good place to start, and I think it will evolve from there. The last thing I'll say is regardless of where we ultimately land, we have flexibility based upon a very low cost of goods, so we can be adaptable based upon what the market looks like at that point.

Okay. And Gena, we have a strong balance sheet, $500 million of cash, projecting runway into cash runway into 2028, beyond the top line readouts of 4FRONT1 and 4FRONT2.

Okay. Great. Well, thank you very much, and we look forward to first the CF update and then the other part update as well. Thank you. Thank you.