4D Molecular Therapeutics, Inc. ($FDMT)

Hi. Good morning, everyone. I'm Ellie Merle, one of the biotech analysts here at Barclays. Thank you for joining us here in Sunny Miami. Very happy to have 4D Molecular Therapeutics here with us today for a fireside or I should say, beachside chat. Joining us from 4D is Kristian Humer, Chief Financial Officer; and Chris Simms, Chief Commercial and Business Officer. Thank you both so much for making the time and joining us today. To start, could you just give us a high-level overview of the company, your platform and programs?

Yes. Thanks, Ellie. I can take that. So good morning, and great to be here, and thank you for the opportunity. So 4D Molecular Therapeutics, it's a next-generation gene therapy company. We were founded about 12 years ago. We differentiate ourselves. We believe our platform directed evolution allows us to develop vectors and capsids that are more tissue-specific and thereby allows us to deliver, I think, doses that are at a safer level and ultimately allows us to go into therapeutic areas and diseases that are more large market versus more rare disease like markets like many gene therapies are targeting. Our lead program is an asset called 4D-150, currently making great progress through Phase III, which we can speak more about in a little while. It's for retinal disease, lead indications for wet age-related macular degeneration and hoping to start a Phase III as well for diabetic macular edema later this year. So making great progress there with 4D-150, we also have a program in cystic fibrosis as well. So that's a high-level overview of 4DMT. We're pretty excited about the momentum we have and the potential to impact patients in large markets.

Great. Yes, maybe starting with 4D-150, there's a lot of programs approved and in development in the wet AMD space. Where do you think 150 sits within all of that?

Yes, great question. And you're so right. The retina field has become very interesting, especially as of late. Interesting, someone reminded me this week that it's been, I think, 20 years since the introduction of LUCENTIS this year. It was launched in 2006. And the introduction of anti-VEGF many years ago truly revolutionized the space, and it has been incredibly impactful on the overall rates of blindness. Unfortunately, patients with wet AMD and some of these diseases would have gone blind years ago. So anti-VEGF therapy has been transformational from that regard. However, tied to that, as the space has grown, I think we project the overall anti-VEGF market to be worth about $20 billion in our launch window. So very much a large market has been growing steadily, but that's attracted a lot of interest. And the goal of pretty much all new innovation in this space has been to increase durability. And I think if you look -- thinking about that from a patient's perspective, you can understand why that's important. The current therapies are administered as a needle or an injection in the eye on some level of frequency, it's every month or every 6 or 8 weeks depending upon the need of the patient. So if you can reduce that treatment burden, clearly, that's impactful for the patient. It's impactful for their lifestyle, but also is really important for a clinic. These clinics are really busy. So the goal of all new innovation seems to have been around how do you increase the durability without sacrificing the patient's vision. And that's where we come in. So 4D-150 being a genetic medicine approach, we express aflibercept known as EYLEA, I think from a branded context. So a very safe, highly effective standard of care medicine, but we do it in a continuous manner. So our goal is not to increase durability by a week or 2 or a month. We actually think we can affect durability as measured in years. And for some patients, it may be the last injection they need for the rest of their lives. So that's how we differentiate. We're not a bolus therapy. We're not looking for an incremental benefit. We actually think we have the opportunity to be a backbone therapy that's always there, providing constant disease control, constant coverage for patients. And our data would show that we believe we have the potential to reduce treatment burden by 80%, 90% versus an incremental benefit. And in addition to that, we think we have the opportunity to allow patients to hold on to their initial vision gains potentially for the rest of their lives. So we think that's transformational. And that's how we differentiate versus the -- many of the other activities that are in the space that are going for incremental benefit.

And in terms of gene therapy specifically, there are some other gene therapies that have been in development and that are in development for wet AMD. Can you talk about your construct and sort of what you view as differentiating from 150?

Yes, absolutely. So yes, you're right. There's a number of other -- there's a couple of other companies that are looking at the same modality that we are. We -- and it's a great market. It's a big market. So we think there's room for lots of players. However, when you think about this from a patient and a physician or a retina clinic perspective, these clinics are busy. Obviously, 60, 70, 80 patients per physician in some days. So they need a modality that fits seamlessly into the practice. So other modalities, for example, require a subretinal surgery. So that's not convenient for the patient. It's not convenient for the practice. 4D-150 is a simple intravitreal injection, the same mode of delivery that EYLEA or any other anti-VEGF would have. So our approach is it's seamless integration. It's easy delivery to the patient. It's a single injection, which is what physicians are very used to doing. In addition to that, the challenge with gene therapy in the past has been -- for some programs has been safety, particularly the intravitreal approach. And we think we've solved that through our science. So the fact that we took the time through our directed evolution platform to find the right vector that was developed using a nonhuman primate model. We think we have a vector that allows us to, again, target the right tissue in the retina for expression of aflibercept. And because we can do that, we can deliver a lower dose. So our dose for our Phase III program is 310. So we think that approach allows us to maintain efficacy, which we see in our data, while at the same time, having a stronger safety profile.

Great. And yes, speaking about the efficacy and safety profile, can you walk us through the data that you've seen in Phase II?

Yes. So we've -- our 2 Phase II data sets is a program called PRISM for wet AMD and SPECTRA for DME. I'll speak to PRISM first. So PRISM is a fascinating data set. When the team developed this well before my time at 4DMT, we actually started PRISM looking at the most hardest to treat patients. So if you look at our Phase I/II PRISM data, it's actually that patient cohort of about 30 patients are patients that were prior to 4D-150 we're getting on average 10 injections in the prior year. And some of those patients were on therapy for, I think, over 4 years. And despite that intensive level of prior treatment, their average CST levels were still above 400, which in the retina field, that's pretty high. That's largely uncontrolled. So after 4D-150, what we've seen in that patient population, and we now have shown data, by the way, on that sub cohort of PRISM patients after 2 years is we see a treatment burden reduction over that 2-year period of about 80%, which is life changing if you think about that from a patient's perspective. They were on pace to get about 20 injections in the 2-year period. And after 4D-150, the average number of supplemental injections that, that patient cohort received was about 4. And with that, their CST and vision was maintained. So we think that's transformational, and that's in a very hard-to-treat patient population. We also looked at the patients in PRISM that were more recently diagnosed. And the reason we looked at that patient population is that, that's the patient characteristics that most resemble our Phase III program. So our Phase III program is in treatment-naive patients. So we looked at patients that were recently diagnosed within the prior 6 months, and our treatment burden effect that we saw within that patient population, and we've seen this out to 18 months is in the 90% range, where about 73% of those patients are actually injection-free at 18 months as well. So it gives you a perspective that we have a significant effect on treatment burden reduction for these patients, which is why patients and physicians care the most about. We see that now out to 18 or 24 months and the consistency of that has been really, really strong through our PRISM program. And importantly, nothing in this space matters in terms of new development if you don't have a safety profile that's at least consistent with what current standard of care is. And our safety profile is right in line with that. We see an intraocular inflammation rate of less than 3%.

And as we move from Phase II to Phase III, what are your expectations for how this will translate from Phase II to Phase III? And what would you say is kind of the threshold for what would be clinically meaningful in the context of the broader wet AMD landscape for you to see in Phase III?

Yes. So there's a couple of things, right? So we view that from that angle of, as you just mentioned, going from Phase II to Phase III. We also think about it from going from Phase III to commercialization and how does it translate from the clinical trial setting to the commercial setting. So once we designed our Phase III program, and we saw that efficacy impacted the more recently diagnosed patient population, we designed our Phase III program to be largely on a treatment-naive population. So we would hope and expect that the treatment effect that we saw out of PRISM from Phase II that I just referenced that 70% of patients that were injection-free over 90% treatment burden reduction. That is the guide that we have going into Phase III. And then again, because we -- in Phase III, we have selected for a treatment-naive population. For the most part, our second Phase III trial actually combines treatment naive and some patients that were previously treated. So we would expect to see a similar type of result as you go through Phase III. I'll tell you, though, that's informed by our Phase II experience. If you talk to a physician and you ask them what's meaningful for them and their patients in terms of treatment burden reduction, their numbers are nowhere in that range. And what we've seen in this space most recently, like the VABYSMO or EYLEA HD that has launched, so bolus therapies, highly efficacious and their benefit has been a couple of more weeks of durability. If you average that couple of weeks, you get like a 20%, maybe 25% incremental treatment burden reduction based on their profile. And with that incremental benefit, those therapies have become multi-blockbuster commercial successes. So again, it just points to the fact that any benefit in terms of reducing the treatment burden, increasing durability without sacrificing efficacy is highly meaningful to both physicians and patients. So we're not playing for that incremental benefit. We think we have a shot at being much higher than that. And we think our Phase III program is set up to help us deliver that.

Great. And from a safety perspective, obviously, safety of gene therapy, even ocular has been a major focus. You obviously haven't seen major safety events so far. But can you talk about what gives you confidence in the safety profile here, particularly when we're in a market where there are drugs that have been available for 20 years, biosimilars with strong safety profiles?

Yes. And that's exactly right. I mean that context is really important because this is why safety matters as much as it does is because physicians and patients have alternate therapies with really good safety profiles. So you have a choice that you can make. So we believe our safety profile that we've seen consistently, by the way, through our DME and our AMD patient population is, first and foremost, informed by the fact that our science is different. And it goes back to the point I made earlier. Our R100 capsid has been developed in-house. It was developed through a nonhuman primate model. It allows us to be more specific in terms of the retinal cells that we target and therefore, transduce. We don't transduce cells that are not in the retina and the anterior segment, for example. And we think that's at the foundation as to why our safety is differentiated. And that also allows us to deliver a dose because the dose of the drug actually gets to where it needs to work and doesn't go elsewhere, we can deliver a lower dose in 3E10. So we think that is the primary reason why we're seeing the differentiating safety profile that we are. In addition to that, as a safety net, and this is common in gene therapy, we'll have -- we have in our clinical trial program a prophylactic steroid regimen. So patients take steroids up to 20 weeks, Durezol, and that tapers over that 20-week period. So that provides an additional safety net, if you will. And that really covers the time period where the capsid is wearing off and then allows further get you to the period where the cells are just expressing aflibercept. So we believe our -- the safety data we've seen so far has driven primarily by the science, but by that overall approach to it. And as you mentioned, that's critically important in this space, largely because of the fact that you have really good efficacious and safe alternatives, so safety has to be strong.

Great. And how is enrollment going in the Phase III? And kind of any more granularity you can give us in terms of the time lines for when we'll get data?

Yes, do you want to take that one, Kristian?

Sure. From an enrollment perspective, things have been going great. We just announced a couple of weeks ago that we're fully enrolled in 4FRONT-1. The readout is expected sometime first half of 2027. Enrollment for 4FRONT-2 is on track. We're guiding to enrollment completion sometime second half of this year with data readout second half of 2027.

Major 2027 for you?

Major 2027. I'll just add some color on enrollment. So I started at 4DMT right when the team was deciding on the Phase III design, and we had this conversation around do we go into a treatment-naive population? Or do you do a blended population? And historically, all of these pivotal programs, the EYLEA and the advisers of the world, their Phase III programs were all done in treatment-naive populations for a bunch of reasons. One is that regulators need to show a vision benefit and the patient was previously treated, there's a ceiling on the potential vision benefit you could see. So we follow tradition. Our Phase III program is pretty traditionally up the middle in terms of the design. There's nothing out of the ordinary, there's no superiority type of designs that we're going for. It's a very standard design, which is aligned with what the precedent has been. However, it was a real debate internally is like this is a gene therapy. The frontline approach to patients with a gene therapy has never been done before. And it raised the question is like what will enrollment be like because there's not a lot of precedent that you can look to. We set out with an 18-month target of enrollment, and we thought that was pretty ambitious. Our 4FRONT-1 program, we've pretty much finished enrollment in about 11 months. We point to that. I get excited about that personally as the person responsible for our commercial strategy, I think that's a good proxy for demand. I think it's a good proxy for just the interest that physicians and patients have. So we think it's quite remarkable that we've been able to enroll a frontline gene therapy program in 11 months. And by the way, we upsized that. Initially, the target end was 400. We think when enrollment is wrapped up here on the first trial will be north of 500. And so we were able to do all of that within 11 months, which we think is remarkable and points to the unmet need and the demand.

Great. And how should we think about your strategy in DME with 150?

Yes, I love that question. So as I'm sure you know and many of the audience members knows, in this space, wet AMD is the largest market, if you will, it's the largest indication as measured by commercial potential. DME is second behind that at rough -- last time I checked around 60% of the overall value. However, the unmet need in DME is actually, in many ways, greater. So there's more patients and these patients are often more under treated. So they don't stay on therapy for as long as many physicians would like them to. There's a number of reasons for that. Some of it relates to lifestyle. It's a younger patient population and so on. So we think a safe efficacy is always there backbone therapy like 4D-150 actually is the ideal profile for a DME patient in particular, because of the reasons I just mentioned. So we're super excited to start our DME program. We have alignment with the FDA and EMA on a single DME trial. We hope to start the Phase III program in Q3 of this year. We're going to run it as a global program. We have a partnership with Otsuka for 4D-150. They have Asia Pacific rights. So because we're starting this program with a partnership with them, we'll do it with them and include Asia Pac in our global program. But we're really excited to get this DME program going. We think it's a huge unmet need. And commercially, I think there's a scenario because of the unmet need in DME being more pronounced that with time, should all things go well in the commercial setting, DME actually may be a bigger commercial opportunity than even AMD.

Interesting. Pivoting to your cystic fibrosis program, you have an update expected in the second half. Can you walk us through sort of what we can expect to learn at that update and what you're looking to see?

Yes. So we haven't given full guidance on our update in the second half, but we are looking at that program. We have a great partnership with the CF Foundation, and they're largely funding that program as well. So we're looking to design the Phase II in collaboration with the regulatory authority to make sure that we are following their guidelines. So we'll provide more updates on just exactly what we can disclose on the CF program later this year. But suffice it to say, we're excited about the program. We think it has significant potential. We have a great partnership with the CF Foundation. And I forget the exact number we're looking to enroll, but we want to get a Phase II up and running in our CF program and then hopefully get momentum on that as we go into...

Yes. The goal there is really we want to be in a position at the end to show kind of the investors 12 patients' worth of data with 12 months of follow-up. So we really have data that informs us kind of where the program is and what we can do with the program.

Okay. Makes sense. From a cash runway perspective, these are large markets, expensive to commercialize. You also have gene therapy manufacturing. Remind us of your cash runway and how you're thinking about the potential commercialization if Phase III studies are successful?

Absolutely. Maybe I'll start with the cash runway. Our cash as of the end of last year was $514 million. We're guiding to cash runway into the second half of 2028. That funds us well us for 4FRONT-1 as well as 4FRONT-2. What it doesn't fund is the commercial ramp-up that we would look to fund post-4FRONT-1. From a commercial perspective and kind of where you mentioned -- kind of the key thing I want to stress, and Chris, I'm sure, is going to go into this is the COGS of 4D-150, just to stress, they're below $1,000 per injection. That gives us a lot of flexibility in terms of where we would like to price therapy. And two, also, it's the key reason why we think we can scale up and really compete with the incumbent therapies in wet AMD.

Yes. And the thing I would add is, so I've commercialized new medicines in the retina therapy area a couple of times now, IZERVAY, IVERIC and Novartis before that. So this therapy area, it's fascinating in many ways. One of them is you have large market opportunities, right? You have these massive commercial successes. However, the commercial footprint you need for that is actually quite scalable. So small companies like us can actually commercialize ourselves and certainly in the U.S. and in Europe as well if we need to do that. So the overall commercial, for example, footprint you need in terms of employee numbers is 120, 130. That's about 60 people in the field and so on. So you can do that as a small company, you don't need to be a large pharma to successfully scale and commercialize in this therapeutic area. So to Kristian's point, when the timing is right, well, our plans are to do that certainly in the U.S. and possibly Europe as well. We think we can go it alone and looking forward to that point in time.

How are you thinking about pricing? I mean you have the entry of biosimilars. You also have retina specialists that make money from doing injections and now you're giving them a proposition of you need to do a lot less of that if this is successful. So how does that work from an economics perspective?

Yes. It's a really important question, absolutely. So the way we think about pricing is, first and foremost, it starts with what value are you delivering for the payer and the patient and the physician. So we think with our profile, that value equation will be very different than anything else in development. I think it would be highly compelling. And we'll be flexible in terms of our pricing approach and adapt to whatever we think the right price is to maximize patient access. We don't think of 4D-150 is a niche product. We actually truly believe we have the opportunity to be a backbone therapy, which means, in my view, the majority of patients should have availability and access to it. And with the cost of goods profile that Kristian referenced of less than $1,000, we don't need to price it in the hundreds of millions of dollars that sometimes people think of when they think of gene therapy. So we'll be adaptable and flexible and ultimately follow a price strategy that allows the most patients to get access to the therapy. And on the practice economics point, which is really important, if you understand today how practices make money with these bolus therapies, it's based upon the price of the medicine and the percentage of that price that they receive in increments based upon the bolus administration. The big benefit with the 4D-150 is that certainly our price will not be the same as a single injection of bolus therapy. Our value is much higher than that. So you get the benefit of upfront reimbursement on a higher price point. We also can help with things, for example, 40% of patients today are off of bolus therapies within the first year or 18 months. That -- when you think about it from an economic standpoint, that's also value that's lost to the practice. If you're capturing that patient on a 4D-150, not only do you get the clinical benefit of the potential of preserving vision for years, you also get the economic benefit. So the economic story to a clinic in a buy-and-bill model, we think with our profile is actually better than the current approach. It's just you have to think about it a little bit differently.

That's helpful context. Well, I really appreciate both of you joining us today. Certainly an exciting year ahead for 4D. So thank you for making the time.

Thank you.

Thank you so much, Ellie.

Thank you.