4D Molecular Therapeutics, Inc. ($FDMT)

Analyst is here at BofA. Our next presenting company is 4D Molecular Therapeutics. I have some members from the management team here. So welcome, guys, thank you for joining us. Maybe we can start with a couple of introductions from your side. And then you can give us a high-level overview of the company. And I know you have some catalysts coming up, and especially 2027 is going to be the year for the company. So maybe you can start with that. So David, maybe if you want to start?

Yes. Thanks, Daniel, for having us. I'm Dave Kirn, Co-Founder, President and CEO.

Thanks, Daniel. Chris Sims, Chief Commercial and Business Officer.

Kristian HUmer, CFO. So I can give a high-level overview of the company. So 4D Molecular Therapeutics is really a leader in next-generation AAV gene therapy. We're a platform and product company with a lead asset, 4,150 and Phase II for wet AMD and soon to be in Phase III for dyadic macular edema as well. We believe we really have the opportunity to be a best-in-class, highly durable backbone therapy for these neovascular diseases of the retina. So thrilled to be in Phase III. The enrollment has been extremely rapid, probably double what we expected going into it, showing a lot of enthusiasm from patients and physicians. There have been a number of surveys that have come out that show that physicians in this field are most excited about 4,150 and gene therapy, it large. So I think we have a real opportunity here. Catalyst this year are -- we have a 2-year follow-up on a broad population of what AB patients with 4150 Phase II. That's midyear and then second half of the year will be a DME 2-year update and then next year, the first half of next year will be the first Phase III readout and the second Phase III readout will be in the second half.

Great. So maybe let's just start with a high-level question. The wet AMD market is becoming increasingly competitive. There's a lot of new products coming out, a lot of innovation there. You mentioned some of the surveys. What are you hearing from physicians in terms of what the unmet need is right now for the treatment of wet AMD? And how do you think 4150 could be differentiated in that market?

Yes, I'll kick it off and then hand it over to Chris, our Chief Commercial Officer, who's done a lot of work in this area, and I think it's very promising for us. But I think at a high level, the way we view this is there's a lot of noise and a lot of competition for incremental improvements in bolus anti-VEGF therapies. And that's great. But we're fundamentally in a completely different category. What we're looking at with the way AAV gene therapy works in the retina, it's likely lifelong therapy, continuous expression every day or the rest of the patient's life, which we think really will translate into markedly improved quality of life, major reductions in treatment burden. Some patients may never get another treatment. And it could also translate into better visual outcomes over time. And Chris can really speak to, I think, what's driving patients and physicians' interest.

Yes, happy to. So you take a little bit of a step back. I guess really with the category, it's a large space, I think valued at roughly $17 billion globally today with existing bolus into VEGF therapies, and we expect that to continue to grow, largely driven by an aging patient population. And these existing therapies are actually pretty efficacious. They do a good job of improving the patient's vision. The challenge is getting in and staying on therapy at a frequency that allows the patient to maintain that vision and, of course, the process of administering the medicine being a needle an injection in the eye and some frequencies burdensome 1 the other factors of getting to the clinic and so on. So the unmet need to your question has been the same unmet need for years. You go back and look at surveys 10, 15 years ago, you asked doctors, hey, what's the biggest one. It's always been we need agents that are more durable, more durable means that we can reduce the treatment burden for patients. We can reduce the complexities of delivering these treatments in our office and not only having said that, we've seen innovation prove that to be real. So you look at the latest bolus therapy launches for BISMO -EYLEA HD. All of those assets have extended durability by a week or two. So meaningful, certainly for a patient, maybe takes an injection per year out of their normal routine, but incremental. But despite that incrementality, those agents have become multi-blockbuster within a couple of years. I mean the Visma is the greatest example of that. So I think with our approach, we asked the question, if an incremental benefit like that can be of commercial value measured in the $4-plus billion into top line revenue globally, what could be the commercial value be of an agent like 4150 that we're not looking to extend durability by a week or two. We think for a lot of patients, it would be the last injection to ever need. And for others, we're looking at improvements that are measured in months or years. So it's a completely different paradigm. So we think we are uniquely positioned to like really address this durability question in a way that hasn't been done before. In addition to that, we think we could actually help patients maintain their vision over the rest of their lives. And that's pretty significant when you think about -- you go onto these therapies for the benefit of keeping your vision. A lot of these therapies don't allow you to keep your vision because you get undertreated just because, again, of the challenges of administration, so if you can not only reduce treatment burden by 80-plus percent, but also say to a patient, you've got a good chance of holding on to your vision for the rest of your life. That's a completely different ball game and a completely different treatment paradigm.

Great. There's a few competitors in the gene therapy space for wet AMD. How do you view your product compared to those? And where do you think is your edge? In this market?

We think we're the best, which shouldn't be surprising. But actually, we think there's actually very good data behind that statement. First of all, I don't think there's any doubt that an intravitreal product has massive commercial advantages over a subretinal product. So subretinal surgery is just -- it's great for proof of concept, but for commercialization is really a nonstarter. So we have major advantages over the AbbVie REGENX product. since we're intravitreal. And then I think our safety profile has really shined and differentiated us from the Adverum Lilly product. to the point where they're not even in DME, they can't go in because of the blinding events they had. DME is a major opportunity for us in addition to what AMD and are.

For rest worth, are doctor checks also indicate physicians I think your product has the best profile so far. So you mentioned you have a tier update coming up for the broad patient population. Can you maybe remind us what you've shown so far, I think the last update was 18 months. What should we expect to see in 2 years? And you've also shown data for different patient populations. Maybe you can talk about kind of like the evolution of the patients you've treated and what you've seen in terms of efficacy there?

Sure. So in wet AMD, our team has done a phenomenal job of really having a very robust Phase I and Phase II program to really set us up for success in Phase III. So we started in the hardest-to-treat patient population on the hardest to treat population ever studied and that was sort of on average 8 to 10 injections a year, still failing therapy. And that population out to 2 years, we showed nearly an 80% treatment burden reduction compared to what they've been getting using patients as their own control. So that's huge. And then when we moved into a broad population, we showed about, again, an 80% reduction out through 1.5 years and when we look at the patients that most closely mirror our Phase III population, we had a 90% treatment burden reduction through 1.5 years with over 70% of patients injection-free through 1.5 years. Most importantly though, given this is a large market and there are effective therapies is our safety has been extremely favorable. So there -- we look very, very closely every several weeks, for any evidence of inflammation in the eye, the most we can find is about 3% of patients might have a single time point where they have a few trace cells that we can see in the eye, but nothing clinically significant. So it's been really phenomenal, not just during the first few months after treatment. After 6 months, we just don't see anything. So the safety has been really phenomenal. So that's sort of what we've shown today. So we would expect the 2-year update for the broad population and recently diagnosed population would be more of the same, more safety and just more stability of the treatment burden reduction over time.

Great. What do you think the profile that physicians are looking for, for this type of product? You've reported data for injection freedom over time, but you've also shown significant treatment burden reduction where do you think physicians will be comfortable using a gene therapy product? Is it just significant treatment burden reduction? Is it injection freedom that they're looking for?

Well, I think Chris has probably interviewed more physicians on this than anybody in the world. So I'll leave it to him.

Yes, it's a great question. So first of all, safety has to be established, right? And I think to David's point, we think we really differentiate on our profile as it relates to safety, no doubt. But that's -- in a category where you have effective and safe medicines available, I launched a drug called Beovu at Novartis several years ago, highly efficacious, highly potent, maybe even more so than it should have been in hindsight, but it had a safety issue, which caused it to be a challenge from a commercial perspective. So you got to have safety. And we think our profile would support that. As far as the the treatment burden injection-free numbers. It's -- doctors don't say it has to x percent, there's no binary cutoff point. It has to be meaningful. It's got to be for a gene therapy a significant step change from the incrementality that they're getting with high-dose products or TKIs, but there's no magical number. What I'll tell you is that when we take them through the profile that we've seen through the PRISM data, which David just alluded to, so you see base like in the broad population injection free rate at about 70% at 1.5 years overall treatment burden reduction rates in the 80%, 90% range across a broader population, they're blown away by that. We don't believe commercially, it has to be at that level to be a strong commercial success. But if our Phase III data and profile comes out in that range, then that would be a significant change, leap change forward for physicians and patients, for sure.

Okay. Great. You mentioned there's potential for this being a onetime treatment. But realistically, that might not be the case for everyone. What sort of durability do you think physicians would like to see? And maybe how are you thinking about potential redosing over time?

So for redosing, we don't think it's going to be necessary. The retina is a very, very stable tissue. So other AV gene therapies have shown stability out through 10 years or more. And an elderly population. So it's probably lifelong. So we don't think they're going to need injections say my A big opportunity for us commercially and to help patients is about 40% will get wet AMD in the other eye. And so I expect that they have great success in this side. They're going to want at the other eye almost by definition. So that's another 40% on top of the initial population. So I think it's a huge opportunity. And then maybe, Chris, you could speak to the other part of the question?

Yes. So -- there's no -- physicians don't say it has to last x amount of time. I think they just look at what is the treatment burden reduction that we're showing. I think practically, we're going to have to show long-term data over time to continue to prove that 1 continues to be efficacious in years out. And there's no biological reason that we think would prevent that from being the case. So I think that will come, I think, long-term safety is going to be important as well. But for the purpose of modeling, and I'll throw out numbers that we use just to model what the market opportunity, and ultimately, we'll probably have to use that for figuring out things like pricing. We look at a 3- to 5-year window for AMD from a modeling perspective. But again, that's not to say that's how long we think the drug last, but that's often the window that patients are on therapy in the real world today in that range on the outside of their durability of treatment, so much driven by the fact that in AMD, you have an older patient population. So that's just some of the variables that we use when we think about length of treatment durability.

Okay. Great. Maybe we can talk about the Phase III program. So you have 2 trials ongoing. You recently announced, you completed randomization in forefront on the North America trial. What do you think drove kind of the accelerated enrollment in the trial and do you think that's going to boost enrollment in front as well? I know that you -- you've completed this trial?

Yes. The second question, yes, absolutely, and we're seeing the same level of excitement and enrollment momentum. I think what drove the enrollment in the first study for front 1 bodes very, very well for commercialization and that is a high unmet need in the opinion of the patients. So they really, really want something that's much more durable, if not lifelong benefit. And then physicians, it's the data. They look at our data and say, wow, it's intravitreal, it fits seamlessly into my practice, and they're getting safety profile. It's not unlike aflibercept and the treatment burden reduction is remarkable. And so I think it's really a combination of unmet need and our data. And again, Chris has had a lot of those conversations and probably add some color to that.

Yes, not a whole lot. I mean we did something that I think is pretty obvious in hindsight, but we went out to all the clinical trial sites with a pretty robust Phase II data set. And so hey, before you start up in Phase III, let us just make you aware of what we've seen so far as we've taken this asset through development in Phase I to Phase II. And we shared with them what the results were. We shared with them what we saw in terms of safety, and I mean that's just, I think, putting a little bit more evidence around -- we've got a really good drug and it is unique and it is different than what you've been, I think, used to before. And I think that created enthusiasm for them to talk to their patients about it. And then what's really, I think, amazing and encouraging for us is we're starting now to get a better sense as to what patients think and some of that we get through the physician conversation and they parlay how patients react when they present them with a gene therapy and a clinical trial option in a world where you have a lot of other therapies that choose from. And by the way, you're presenting that to naive patients. And the patient enthusiasm has been off the charts. So I think that combined with a highly engaged -- a great drug, a highly engaged physician out it's a great team to kind of roll it out. and really strong patient enthusiasm for a profile like this is, I think, the 4 reasons why we saw the pace of enrollment awaited.

Okay. Great. And Daniel, let me just expand on that for just a minute. I think it's remarkable to think where we came from with gene therapy initially was people thought this is a dangerous therapy. It's going to be $1 million a dose. Boy, it's got to be curative, you can only go into rare diseases where it's fatal. We flipped that on its head, and we said, no, if you actually innovate and we used a novel prize-winning technology to innovate and create a new vector that had the features we want to put that on his head and take this in a large market, high incident rate diseases. No one thought that was possible. And yet here after 5 short years in the clinic, we're enrolling at record speed not only a large market indication in patients where they're 70s and 80s for the most part. It's in patients who are treatment naive like front-line therapy. So nobody thought that was possible. It's really remarkable, I think, what the team and the product is accomplished.

Great. Safety, like you mentioned, has been a big point of focus for these programs. Can you maybe remind us what you have seen so far? Has anything changed, like, I guess, on a blinded basis in the Phase III trials. And I know you have a steroid regimen as part of the trial. How do you think that will play out in the real world, when patients are not part of the clinical trial?

Yes, a great question. So just starting from fundamentals again, because we came in and we said we're going to innovate and invent and optimize capsids as features we want, our dose levels are lower, our inflammation is much lower, if any, and it set us up for success. So the fact that we're seeing no significant inflammation or toxicity is not by chance. It's not luck. It was by design and we took years to innovate where others just kind of took existing vectors through it in the clinic and hope for the best. So we take great pride in that, that we're seeing exactly what we expected to see. In terms of the safety, we've now reported treatment of over 400 patients with 4150, which is, again, a remarkable accomplishment, and we haven't reported any serious adverse events or significant toxicity. We've had, again, less than 3% kind of trace to 1-plus cells that could be detected maybe at one time point and that are gone by the next time point. So not clinically meaningful whatsoever. Again, a remarkable outcome. So that's the safety profile. And while we're not giving formal safety updates, we do watch the safety of every single patient in our Phase III in a masked fashion. But we're -- we certainly haven't seen anything that changes our thesis that this is going to be very safe and effective. And we do have a DSMC that also reviews the data every 6 months who, again, would tell us if there was a problem. The steroid regimen is probably overkill, to be honest, it's about 20 weeks of topical steroid drops -- each month, you reduce the number of drops until you're basically on de minimis drops by the end. Compliance seems to be very good. But even if it's not, it's probably over kill. So patients probably can miss some doses. But we haven't I don't think we've heard of a single patient from the sites who said, "I'm not going on this because of eye drops" because what their trading is a job in the eye -- and then blurry vision and pain for 3 days versus some drops, they'll do that trade-off all day every day.

Great. We have the first readout coming on in the first half of next year. What do you think would be good data there. What do you think is needed for commercial success?

Chris, do you want to speak to that?

I would go back, I think, to the comment I made earlier, where, again, this is not an absolute binary kind of pivot point. So clearly, you got to meet your primary endpoint. You've got to demonstrate safety that we think needs to be kind of in the range of where standard of care is currently we feel good about both of those based upon how the trials have been designed and the performance of the drug as we've seen it through development thus far. And then when it comes to the treatment burden effect, the injection free. Honestly, I -- if it's in the range of what we've seen through Prism, I think we have a home a massive home run, we'll see where the data falls. We actually think there's reasons why based upon, again, the design and the patient selection for Phase III that it may actually could be better than that. Because again, if you look at our efficacies and results that we've shown through PRISM, you look at patients that were more recently diagnosed, you do see a proportional treatment burden reduction to those patients. And it makes sense, biologically, you have healthier retinas, you're transducing retinal cells. So therefore, it would make sense that you'd probably get more expression and more of a treatment effect. And then in our Phase III, we have a completely -- at least in PFI a naive patient population. So there's a scenario where you actually see, I think, a potential improvement versus what the treatment burden and injection free rates were from Phase II but even if that's not the case, if we're in that range of Phase II, where we're in a really good spot for commercial success, I believe.

Great. There's been a lot of talk, especially in ophthalmology about the potential for approvals based on a single trial. Have you had those conversations with the FDA? Do you think there's a path forward there to apply with just 4.

So we've not specifically had that conversation around what AMD we have for DME, diabetic macular edema, and we have alignment with both the U.S. FDA and EMA in Europe to do a single filing or DME. So that's definitely our plan. I think for William be, there's probably a path, but the reality is also is because we were doing good drug development and derisking things, we have 2 studies that are pretty close to each other in a readout for front 1 is going to be first half next year or from second half. So how much do we really gain versus the benefit of having filing on both in Europe, U.S. and in Europe and Japan. So we're still looking at that, but I think we're really well positioned, but we're just filing off 2 studies right now as our base case.

How are you thinking about the commercial strategy now that you're getting closer to pivotal data? And -- how do you think this type of product would fit into the buy-and-bill model of retinal practices, would it be any different from like any of the other currently approved therapies?

The ways that it's different is better. So -- but most of it is -- I mean, so is buy-and-bill the distribution model, we think it's the same as currently exists. It's getting supported by the fact that it's an intravitreal delivery, and that's really important. When we -- I recently had the opportunity to share our product profile and our development plans with a group of practice managers, which run in some of the largest retina clinics in the country. They love -- they were blown away by the profile. They're like this is really IBT, it can store it at the same temperature as our current, I guess. I think that's massive. So I think commercially, that bodes well for us. Buy-and-bill model, we think we'll fit within that because it's largely a Medicare Part B and office administration product. And I actually think the economics, this comes up a lot when it comes to retina clinics. People are aware that physicians make profit on these medicines because of the buy-and-bill model. And the retinal community I think has largely perfected that business model with bolus therapies and how they create economics through that. But the dynamics of our medicine being -- is going to be priced higher, of course, because the value that we reflect over long-term treatment burden reduction, the value of getting reimbursed upfront is of significance to them. The value of capturing patients on a therapy that would have -- that accounts for what likely multiple years of treatment versus a lot of patients fall off current therapies within a year, 1.5 years. So that's incremental value. So we think there's an economic story that actually improves the buy-and-bill economics for retinopinic with our profile. So yes, so I'm pretty excited about that. And I think there's a great, I think, overlap of value for physicians and their clinics, clearly value for patients and the treatment burden reduction and the potential to hold on to their vision. And I also think there's a value story that will be interesting for payers as well, notably when you can show the reduction of treatment burden and the value and the preservation of vision for years. So we think we've got some unique elements that position us really strongly there commercially.

Great. You recently announced -- or I guess last year, you announced the partnership with Otsuka for commercialization in Asia Pacific. How are you thinking about rest of the world -- are you going to do it yourselves? Do you think it would make sense to find another partner for Europe or other regions.

Chris, You want speak to.

Yes, happy to. So I think we're keeping all options on the bible, honestly. So we have said consistently and continue to believe that 4150 creates value for all patients globally. And when it comes to Europe and basically ex U.S., excluding Asia Pac, which Otsuka has, we're going to keep options on the table. So if we'll look at a partnership opportunity if the terms and the details of that are right, if the factors there are not available to us or the terms aren't what we think is the right set of terms, then will we reserve the option to commercialize ourselves. And by the way, that's one of the unique things about retina. You can do that. You don't need to be a large top 10 pharma to commercialize in this space. I've done it twice. I did it at Novartis and I did it at IVERIC with the launch of a GA drug, same customer base. And the amount of commercial investment prelaunch, the size of the team was the same in both dynamics, small biotech, large top 5 pharma, so we can take on that commercialization challenge ourselves if that's what we think is strategically the best option for us.

And just to clarify that it wasn't said but is definitely our plan is we will commercialize ourselves in the U.S. And Chris is the right guy to do that is tenant, I think, 2 or 3 different times in different companies, including Novartis, Genentech and Iveric. So we're in good hands.

Are you thinking about manufacturing? I think that's a place where recent gene therapy filings of phased roadblocks. So what's your strategy there?

Yes. So with complex biologics, it's a real issue, right? And it's probably one of the most common causes of a failed and because of that, we invested in CMC very, very early on in the company's evolution. One of the first things we did was build a manufacturing pilot plant when we went into the clinic, we said, okay, let's see if we can't manufacture ourselves GMP, we were highly successful. We took 6 different products into the clinic, all internally manufactured, didn't have a single failed lot never had a trial delay because of a quality issue with manufacturing. So it's a phenomenal team all the way up into Phase III. And then, of course, you need to do a technology transfer to a commercial facility, which we've achieved already. And then again, ideally, you'd have at least 50% of the material in one of your Phase IIIs come from the commercial facility, which we are now in the middle of achieving. And then we need to do our qualification batches, which we're in the middle of doing. So I think everything is on schedule. We have a great CDMO, who's been the real leader in this space. And so I think between our innovation CMC team, plus this commercial CDMO we're really in a great position.

Great. Maybe in the last couple of minutes, we can talk about DME as well. How are you thinking about that opportunity? And I think you're expecting to initiate your Phase III trial soon. what are the gating factors before you can start the trial?

Yes, I can speak to the practicality. So Q3 is our guidance for starting that study, and we're on track for that. We're really excited. I think there's going to be phenomenal excitement there and excellent enrollment mirroring, I think what we saw in wet AMD. As Chris will tell you in a minute, probably the unmet need in DME maybe even higher. So we're really excited. I think midyear this year, we'll give an update on the final study design after final regulatory interactions. But what we've guided to is a BCVA non-inferiority, 5 loading doses, which is standard in DME and then final sample size is somewhere in the range of [indiscernible] is where we're currently guiding. And we'll update that soon. And then I think Chris can speak to the real opportunity in DME, which is huge.

Yes. I mean as you like DME is the second largest indication in this bolus anti-VEGF space today. But it's undertreated, and it's underpenetrated in terms of the market value. There's more patients. And the challenge with staying on therapy is greater in DME than even in AMD, so when you listen to physicians and they talk about treating to patients, they think about whether a patient is going to stay on therapy, and they worry about whether that patient is going to get lost to follow up. So the benefit of significant treatment burden reduction for a patient that often has a lot of other stuff going on or younger, the burden of getting into the office can be greater. So that benefit is of high significance in the fact that, listen, we, by design, solve one of the biggest challenges in health care medicine, which is a dense of therapy. Because once you get 4150, it's there, it's constant. It's always present. So solving that in a DME patient population is really, really meaningful. So I actually think there's a scenario where in a commercial setting after a couple of years, you actually could see DME be a larger indication because of those factors than even A&D. So we're pretty excited about that opportunity.

Great. Maybe last question. What's your current cash runway and what's included in that? I didn't want to leave you up.

No, absolutely. Appreciate it appreciate it. So as of the end of Q1, we had $458 million in cash and cash equivalents cash runway we're guiding to sometime second half of 2028. Look, it doesn't include the commercial ramp up yet. That's something that we anticipate to finance post for front.

Great. I think with Doug, we're out of time. So thanks again for joining us, guys.

Thanks for having us. to be here.

Thank you.