4D Molecular Therapeutics, Inc. ($FDMT)

Okay. Well, thank you, everyone, for joining us. We are here with FDMT. Kristian Humer, CFO; and Chris Simms, CCO and CBO.

Maybe you could start with an overview of your directed evolution gene therapy platform, your pipeline progress and your 12-month catalyst path.

Yes. It's great to be here. Thanks for the opportunity. I'm happy to start with that, and Kristian can fill the details on our catalysts that are coming up over the next 12 months. So first of all, 4DMT, we're a next-generation gene therapy company, platform company. We have a number of programs in development, but the program that's taken the majority of our focus right now is a program, we call it 4D-150, and that's a gene therapy that we're studying for the treatment of wet AMD. So our wet AMD 4FRONT-1 and 4FRONT-2 Phase III trials are underway right now. So that's our leading program. We hope to start our trial for DME, so diabetic macular edema, the second largest indication in retinal disease later this year with 4D-150 as well. And we have other programs in cystic fibrosis, but that the 4D-150 is the primary focus for us right now, considering where we are with Phase III. And with that, Kristian, do you want to speak more to the catalysts that are coming up?

In terms of catalysts, the big catalysts are next year, kind of first half of next year, there'll be Phase III, 4FRONT-1 data. And second half of next year will be 4FRONT-2 data. This year, we'll have kind of by the middle of the year, we'll have a 2-year duration update for our PRISM trial, kind of our Phase I/II trial in wet AMD and 2-year duration data for our DME Phase II sometime second half of this year. And we endeavor to provide an update on our cystic fibrosis program, 710 by the end of the year.

Okay. So multiple leadership changes at the FDA. You guys as a gene therapy company go through [indiscernible]. How are you thinking of your positioning in this current environment?

Yes. So no doubt, there's been a lot of change. I'll tell you that our interactions with the FDA have been pretty standard. We've been very productive. So nothing that's come up in any of those interactions that would cause us to have any view that's different than what we've been operating with. We also think the fact that our Phase III program, our Phase III trial designs are fairly standard in their design. If you look at how we've designed 4FRONT-1 and 4FRONT-2, it's very a similar design to how other new agents in this space have been studied and approved. So the Vabysmo design, the EYLEA HD design and even other pivotal programs going back many years ago, we follow a very similar type of trial design as that. And we think that design is conducive to a very productive regulatory path forward with the FDA and the European regulators as well.

Yes. So starting with wet AMD, you enrolled faster than expected and upsized your North American Phase III trial. Maybe speak to the expectations for enrollment for your global trial and whether this could be upsized as well. And overall, what this says about the physician enthusiasm for gene therapy in the eye?

Yes. I love that question for a couple of reasons, actually. So first of all, yes, to your point, we started out just over a year ago with initiating our first Phase III trial, so 4FRONT-1. And at that time, we estimated that it would take about 18 months to enroll at the time a n-size of 400. What happened instead is we actually ended up rolling over 500 patients and enrollment finished in 4FRONT-1 in just under 12 months. So we finished enrollment in March of this year. So faster enrollment and as well as with an increased n-size. And we've already said publicly 4FRONT-2, we think is enrolling at a similar pace as 4FRONT-1. And the difference is that it's a global trial. And the n-size, we also will increase that as well. So we expect that to -- the official n-size is 480, and we're likely to overenroll that similar to what we did with 4FRONT-1. As the commercial guy who's launched a couple of drugs in the space, when you get -- you're trying to prepare for commercialization and you hear all the feedback and you do the modeling and what the opportunity is, and we think it's certainly very significant. One of the things that can be a good proxy, we believe, is pace and enthusiasm for a Phase III program. So for me to see that level of physician and patient enthusiasm that helped drive that 4FRONT-1 enrollment time period, it's very encouraging. We think it points to -- it's a good proxy for what we think the unmet need is and how we can possibly solve for it.

Yes, that makes sense. So you have a noninferiority margin that you have to hit at these studies. But based off of your discussions with physicians, what do you really need to show in this data set for this to become practice-changing as a foundational therapy?

Yes. So I mean, first things first, right? You have to hit your primary endpoint. So for us, that's non-inferiority on vision at week 52. And you also have to have a profile that's safe, which makes perfect sense when you consider that this therapy area has lots of efficacious and fairly safe agents available today. So you need to show safety and efficacy in that regard. From a paradigm-shifting perspective, what we think we can deliver is what we've seen through our Phase II program, which is treatment-free rates in the 50% range depending upon the population of patients at week 52 and overall treatment burden reduction rates, 80-plus percent. And we think that's highly meaningful for a couple of reasons. So first of all, when you look at how this entire anti-VEGF space has evolved over the last 20 years, we started out with Lucentis back in 2006 and EYLEA launched and Lucentis was a on-label 4-week drug. EYLEA was approved for use every 8 weeks. And advances since then have come in incremental advances in durability measured by a week or 2. So Vabysmo is a 16-week medicine, but not all patients are at 16 weeks. So you get a sense that these incremental advances in duration have yielded significant commercial value at both medicines like Vabysmo are worth over $4 billion, I think, in the current year. But the benefit from a treatment burden reduction standpoint was a week or 2. We think we can affect that by orders of magnitude in the 50% of patients being treatment-free or over 80% of treatment burden reduction that patients will benefit from. So that treatment effect is definitely a paradigm shift versus what everything that's been done before. So that's what we aspire to. We think with a backbone for retina approach, which is how we coin it, we are uniquely positioned in the space that's highly competitive, but also has still a very high unmet need in terms of reducing treatment burden.

Yes. And when you think about executing on the operational aspects of the trial, especially around managing sorts of confounding factors such as cataracts or the potential for investigators' discretion on supplemental injections. How are you making sure that you have kind of those aspects in check?

Yes. So on the cataract question first, first of all, you would expect that any incidence of cataracts would be observed in both arms, assuming both treatment arms are balanced. And just as a reminder for your audience, our trial design has half of patients being randomized to 4D-150 and the other half of patients being randomized to on-label EYLEA. And both arms will get a prophylactic steroid regimen. So if a patient develops a cataract, we would -- we have a protocol that allows for that cataract to get removed and then the patient should stay in the trial. As far as supplemental treatments are concerned, we have very well defined and we think very reasonable criteria that would trigger a supplemental treatment. Those criteria were developed with world experts in retina. And there is no physician discretion. So if there is a flag for a supplemental injection, that would get elevated to a -- we have a committee that would look at that and verify that it meets the criteria, but there is no option for a physician to exercise their own discretion. It has to meet the criteria and go through that process.

In terms of commercial positioning, there are also TKI programs that have reported data and are emerging in this space. How would you characterize the positioning of those agents versus the gene therapy? And what do you expect their durability will be in real-world practice?

Yes. So like I mentioned earlier, the entire space has evolved by incremental advances in durability. And that's meaningful, which that's actually been a good thing for patients. And you can understand it, right? If you tell a patient that you're getting 6 or 7 needles in the eye on a given year and you can reduce that by 1 or 2, most patients would be very attracted to that. We think of TKIs and other bolus type of therapies in development as trying to advance an incremental benefit in that regard. So there's interesting science beyond the TKIs that are in development, but all of them are trying to squeeze out another increment of durability. That's not our positioning. We're not trying to advance incrementally. We're trying to set a whole new treatment paradigm, which is why we call it a backbone for retina. We actually think of a treatment paradigm where we think the majority of patients could be considered to have an onboard 4D-150 that's constantly managing and controlling the disease for the rest of that patient's life. And for some patients, because it is a very dynamic disease that may need occasional supplementation, there is a wide number of different options that a doctor can choose from and TKIs and other things in development could fill that need for supplementation when and if needed. But our positioning, we think, is very clear. It's a backbone type of approach. We're not a bolus therapy like those other agents. And we think that has very significant clinical meaning, both for our practice and certainly for patients.

Yes. And noting that TKI did recently report data from a superiority trial, maybe could you remind us of the rationale and why you chose noninferiority and how that reads through to payer dynamics if launched?

Well, we chose the -- our approach because we think the data that would get generated from our approach is most meaningful to physicians and their patients. It's how drugs have been developed in the space. It's how the data that comes out of these programs, physicians use to translate to how they would incorporate it into their clinic and some other designs, I think are interesting, certainly from a headline perspective, but may not be as applicable to the clinical setting. So that's what drove our design. We wanted to make sure that we generate a data set that one, obviously allowed us to have a shot at approval, show that the medicine worked in a meaningful way and solve an unmet need and show that the data that would come from our pivotal program could be translated by a physician to their clinic for application to their patients. And in addition to that, as you just referenced, we will need to show that we can generate value for payers, right? There's multiple stakeholders in this space. And it's a complicated set of variables, but you have to think through all the stakeholders that are ultimately going to be important for the success of your medicine. So payers are a big part of that, both U.S. payers and ex U.S. payers, which is one of the other reasons why our 4FRONT-1 and 2 program is we think of it as a global program. 4FRONT-2 is being run around the world. We have sites in the U.S., in Europe, and South America and Asia because we think the unmet need that we're solving for or trying to solve for around significant reduction in treatment burden, it's a global issue. In fact, if you look at other countries around the world where access to retinal care may not be as accessible as it might be in the U.S. or in the Western world, what we could solve for with an always-on constant gene therapy could actually be more significant in countries where that access to care is more limited. So our design was done with keeping all of those variables in mind. The last thing I'll mention, which I think could be really interesting in terms of what we can show in a future state is the ability to preserve vision. So it's really interesting in this space. These therapies, these bolus therapies that exist today, are highly efficacious, right? You get diagnosed, and it's very common. You see this in data that patients within the first couple of treatments will gain 5 to 10 letters of vision. And for that patient, that's incredibly actually life-changing in many respects. Unfortunately, if you look at a lot of data in the real world, despite gaining that vision initially, a lot of those patients, if not the majority, over time, will lose that vision even if they're staying on therapy. And one of the big reasons for that is for a variety of factors, patients tend to get undertreated in the real world. So that vision gain happens, they hold on to it for a while and then you get out a year or maybe beyond that for some patients and a lot of those patients have lost that vision. In fact, a lot of those patients, their vision will eventually go below where they started. But there's also really good data that shows that if you have constant VEGF suppression, you see this in the data set from Susvimo, the port delivery system from Genentech or even other studies where like Lucentis was dosed monthly regardless of disease activity, you actually see that vision gain be maintained for years. We think based on our modality, we have the potential to show that as well, which is very exciting. So you can imagine telling the patient that, hey, you have the potential that this might be the last injection you'll ever need. And in addition to that, there's a potential that vision that you care the most about, not only can you -- we give some of that vision back to you, but there's a high likelihood that you can hold on to that for years to come. We think the combination of those 2 elements is incredibly compelling for all stakeholders, payers and physicians. And back to the first part of your question, we designed our trial. Hope to show that.

So at launch, do you expect a dynamic where you'll have advanced patients as the early adopters and then shift over time to earlier stage? And maybe can you characterize what the treatment goals are for each of these populations?

Yes. It's a great question. Wet AMD patients, DME patients are highly variable, right? You get a distribution curve like you do in many diseases. So you get some patients that may only need 2 or 3 injections per year to manage their disease. You get some that almost need monthly injections. And then you get the standard distribution curve in the middle where the average is 6 or 7 or so per year. But your point is spot on. Upon launch of new medicines in this space, I saw this when I launched a drug called Beovu at Novartis several years ago, and I think we said this with new launches from Vabysmo and EYLEA HD that the patients that are treated first are the patients with the highest need, which makes sense. Those are the patients that are most interested and motivated by trying something new. So you get tested on patients that are often getting 9, 10-plus injections per year, almost on a monthly cadence. We feel really good about that challenge that we anticipate getting in the commercial setting because we've generated pretty robust data on patients that look just like that. In fact, if you look at our severe patient population from our Phase II PRISM trial, which is data that we've shared now out to 2 years, you will see that those patients were historically getting on average 10.2 injections in the year prior to going on to 4D-150. And after 2 years, we've shown a treatment burden reduction where they were on pace to get just over 20 if you take that 10 and assume 2 years of treatment. And on 4D-150, the average number of supplemental injections was 4. So over -- about an 80% treatment burden reduction after 2 years on a patient population that was getting injected almost monthly. So if that's the type of patients that we get tested on in the commercial setting, we think we can show a very significant treatment burden impact on patients that are arguably the hardest to treat. That's a test that we think all new agents launched in this space are going to get tested with, regardless of whether you're a TKI or other bolus therapy that's in development, that's the patients that doctors are going to be most motivated to try your new drug on out of the gate. And I think how you do with that patient population is going to be pretty informative as to how the rest of your commercial launch goes.

Yes. On pricing, a high price naturally is attractive for buy-and-bill purposes, but also may have some payer dynamics to watch. How are you thinking of balancing between those 2 aspects?

Yes, it's kind of like Goldilocks, right? Not too hot, not too cold. There are a lot of variables you have to think about. So very familiar with all the dynamics that go into pricing. There's a practice economics piece, which you alluded to based on the price of the drug that physicians make profit. There's also the consideration of there's a societal consideration, there's a payer consideration. There's a patient out-of-pocket consideration. So there's lots of things that go into the mix. And I mean, as we sit today, we have no idea what the pricing will be. We'll make those decisions when we're further along in our development program. But what I will tell you is that philosophically, because part of pricing as well, it's a math exercise, but it's also a bit of a philosophy exercise as to what you think you're trying to do. We truly believe that 4D-150 can be a backbone therapy for retina disease -- patients with retinal disease. It's hard to have the aspiration and vision there and then price it in a way where you limit access to the 10% or 12% of patients that can truly afford it. So that's going to be important to us when we make those decisions. Practice economics will certainly be important to us as well. And we'll make those decisions when we have Phase III data and we have a better view of the landscape. The good thing that I'm excited about is that we don't -- despite being a gene therapy, sometimes that comes with the assumption or the connotation that your pricing must be well in the 6 figures, your cost of goods must be exorbitantly high, which is often the case for other gene therapies and sometimes in more systemic settings. Our cost of goods is less than $1,000. So when we have to make that pricing decision, we have a lot of pricing flexibility. And at the end of the day, I think we'll price it in a way where we consider all of those variables and make the best decision that hopefully satisfies the needs of all the stakeholders and patients to physicians and payers and of course, for investors and owners of the company.

And in this population, we have Medicare Part B fee-for-service and Medicare Advantage. Maybe if you can discuss the split between those 2 and how coverage and out-of-pocket differs.

Yes. It's -- so absolutely right. wet AMD, we think 90% to 95% of patients are covered on some sort of a Medicare arrangement and then 5% or so are still on the commercial plan. In the Medicare population for rough estimates, it's kind of half fee-for-service, half Medicare Advantage. Medicare Advantage portion could have a variety of different constructs and designs. The patient out-of-pocket can vary. Sometimes it's more driven by having a deductible upfront that they have to kind of burn through before their out-of-pocket goes down, but it can often depend upon how that individual Medicare Advantage plan has constructed the design for that particular patient. And what you typically find in the Med Advantage space is you have -- as opposed to being on or off formulary, that's not really how it works. It's more of you have a step through or other types of things that you have to get over -- get through in order to get access to sometimes more expensive medicine that exists today. I would expect some version of that to exist for us as well. All of that's manageable. All of those are things that you would normally expect to see. Medicare fee-for-service is very different. It's direct reimbursement from CMS through one of their MACs. And typically, the design of the plan there is the drug is covered by -- 80% of the cost of the medicine is covered. And most patients have supplemental insurance for that out-of-pocket 20%. So their out-of-pocket would be very minimal. So that's usually a fairly more accessible payer segment for a patient to be in. For patients that don't have the supplemental insurance for that 20% out-of-pocket, it can be more limited in terms of what they can afford. It varies by patient, of course. But I think you hear even evidence of that today, if a patient wants to go on a branded anti-VEGF drug and they don't have supplemental insurance for that 20%. 20% of a $2,000 anti-VEGF today is about $400. So for some patients, that's tolerable for some, it's not. So that's something that we'll certainly have to consider.

And do you factor dosing the second eye into your projections?

We certainly do. Yes. We estimate about 40% of patients with wet AMD have bilateral disease. So our development program, we have a planned contralateral eye study that we'll run to provide hopefully a label that supports dosing in the fellow eye.

So turning to DME. You have alignment on a single Phase III trial. Any experience that you can leverage from your wet AMD trials here?

Yes, a lot. So we're very excited about starting our DME trial. We hope to initiate that in the back half of this year. I actually think DME is the second largest indication, as you know, in this space today after wet AMD. But it's largely underpenetrated in terms of the market potential for a bunch of reasons, younger patients, patients aren't necessarily as adherent to therapy as you would see with the wet AMD population. So I actually think that a gene therapy like 4D-150 that solves the adherence challenge by design, right? Once it's there, it's always there and helping to treat the disease, could actually unlock the diabetic macular edema market in a way that is even more significant than it exists today. So we're thrilled about the opportunity in DME. As you mentioned, we have regulatory alignment from both the FDA and EMA for a single global trial. We're planning to start that trial in the back half of this year in partnership with our -- with Otsuka, which we have an Asia-Pac relationship with. And yes, I think a super, super exciting opportunity and exciting follow-on development for us after wet AMD. And we've learned a lot to your question about how we could execute against that. In fact, the fact that we have pretty wide awareness right now within the retina community at the 4D-150 profile. We have a really strong network of clinical trial sites. I think all those things that we can do fairly quickly. And hopefully, we would see enrollment that's similar to what we've seen with AMD. We think the physician enthusiasm certainly is as high there as it is in AMD.

How much of an issue really is capacity constraints within these clinics? And does this come up as a reason for prescribing gene therapy versus other reasons such as economics?

It's -- I love that question. So it does. Listen, the reality is there's more demand for the services of retina specialists today than there's often retina specialists available to meet that demand. That can vary by geography. Some geographical areas that's more pronounced than others. But it's also projected that divergence of supply versus demand is projected to increase over time. We have a continuing aging patient population and the number of new retina specialists that are being trained and put into practice is not keeping up with that. So we think the timing of 4D-150 could really be interesting in that regard, where you could significantly not just alleviate treatment burden for the patient, but you can help create capacity room for the clinic as well. And listen, the clinics are becoming more competitive and more complex, right? I was on Lucentis years ago when it was Lucentis, EYLEA and off-label Avastin. That's largely the drugs that physicians had to choose from. And today, you have biosimilars, you have new agents, you have GA drugs that launch IZERVAY. So there's lots of other things that have created complexity in these retina clinics. So anything that can offer a simplifying solution the way we think 4D-150 can, can help solve, we think, be a big part of the solution around capacity. And most doctors recognize that. And for doctors that don't seem to recognize that because they may not be paying attention or measuring that, I would encourage your audience to talk to a practice manager in that clinic because those are the folks that are often managing the back office [indiscernible] so on, and they would tell you pretty quickly that there's definitely [indiscernible] looking for real innovation to help solve for that. An incremental durability of a week or 2 from a bolus new therapy doesn't really solve for that unmet need. We think we can.

And are there any other indications that you're interested in pursuing with 4D-150? And in that context, how are you thinking of phasing spend as you go into these large market opportunities?

Yes. I mean there's -- we've talked about whether it makes sense to consider diabetic retinopathy after diabetic macular edema. We haven't made a final decision on that, but I think there's lots of physician feedback that would suggest that, that's something we should consider. And as far as thinking about prioritizing the phasing spend, maybe, Kristian, do you want to speak to that?

Look, I think there, it's very clear. We're laser-focused on the execution of wet AMD and DME. That's kind of the Phase III trials that are ongoing. But we're acutely aware kind of the potential value of our platform. I think at these current share prices, probably investment in our platform is going to be moderate. But over the medium to long term, we believe there's significant value there in our platform.

Touching on cystic fibrosis, you plan to provide an update in the second half of this year? What could that contain? And how are you thinking of a forward path to accelerated approval versus Phase III?

Look, we reported in last December kind of what we believe is super interesting kind of early signal of our vector in cystic fibrosis with our 710 program. What we want to do kind of with the next update is really provide the kind of 12 patients' worth of data with 9 to 12 months of duration. I think that's what we'll guide to in the update that's coming kind of second half of this year.

Maybe in our last few minutes, you can touch on the cash runway, assumptions factored into that. And on partnership strategy, clearly, your platform has broad utility. How are you thinking about out-licensing on the forward?

Absolutely. So from a cash perspective, as of the end of Q1, we had $458 million in cash and cash equivalents and they're guiding to a cash runway into the second half of 2028. What that doesn't include is the ramp-up in commercial spend that would happen post 4FRONT-1 data. That's something that we can commit to kind of once we have that data. In terms of partnership, look, I think, as Chris mentioned, here, I mean, we require kind of an 80 to 100-person sales force to execute commercially here in the U.S. on any of our retina programs. We think we can do that by ourselves. We want to make sure we maximize value for our shareholders. In terms of ex U.S. I think those rights for us are strategically and economically important. I think we're going to be really careful kind of how we approach that from a partnership perspective. And if need be, we can go it alive for sure.

Okay. And just in our last minute, you touched on this a bit with COGS and pricing of gene therapy, but is there anything else that you would want investors to understand about your story and your strategy?

Look, I think we covered a lot. To summarize, again, I think this is a -- we're doing something that's never been done with a gene therapy before. We're going after a very large market with wet AMD and DME that we can execute on by ourselves. And I think if touch on wood, if we're right in what we want to do, it has the potential to really change the treatment paradigm of these patients and how these patients are being treated today.

Okay. Well, with that, thank you very much for joining us, and we look forward to seeing all the progress.

Thank you so much. Thank you for having us.

Thank you.