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

Thanks very much. I'm Josh Schimmer from the Cantor Biotech Equity Research team. I'm very pleased to introduce from 4D Molecular Therapeutics. We have Kristian Humer, Chief Financial Officer; and Chris Simms, Chief Commercial Officer.

Kristian, why don't we get things started? Give us a quick snapshot of where 4D is today and where the company is headed.

Perfect. First of all, thank you, Josh, for having us. Really, really appreciate it. So 4D in terms of pipeline, we have our lead program, 4D-150 is in Phase III for Wet AMD. Our two Phase III trials are fully enrolled. We're guiding to the first Phase III trial to read out in Q2 of next year and the second Phase III trial to read out in the second half of next year. We will announce towards the end of the month, the initiation of a Phase III trial in DME, the next indication for 4D-150. We have a kind of lung program in 4D-710, where we'll provide an operational update towards the end of the year. That's a program in CF. From a cash perspective, we've got around $458 million in cash as of 6/30 this year with cash runway into the second half of 2028.

Okay. Excellent. So as we gear up for the 4FRONT clinical trial readouts, maybe not the ideal individuals, finance and commercial to ask a clinical data question.

We'll give it a shot.

We'll do our best.

We'll give it a shot.

It feels like Wet AMD clinical trials of late have been full of surprises between the AXPAXLI data for Ocular Therapeutix and the DURAVYU data for EyePoint. As you kind of look at those readouts, any lessons or takeaways as we think about 4D-150 and the 4FRONT trials?

I can start with that. I think the first, maybe overstating the obvious that I would point to is 4D-150 in our program scientifically couldn't be more different than I think the programs you referenced -- where gene therapy that expresses aflibercept. I think a key takeaway again, stating the obvious most likely is that EYLEA is a really good drug. It performs well. The efficacy has been proven. It's the standard of care for over a decade now. And I think the bar for success when you have a comparator of EYLEA's is pretty high. We feel good about our chances. I mean, in essence, we express aflibercept. So that is EYLEA. It's the reason why we chose that as a protein to express with 4D-150. And we believe the data we've shown so far has shown strong progress certainly as it relates to treatment burden reduction versus on-label EYLEA and the ability to preserve vision long term. So that may not be a total surprise, but I think it's becoming evident as you see the data come through from some of these other programs that the bar for efficacy and safety is high and as it should be.

Okay. As we think about interpreting the forward results, I guess the goal -- primary goal is to show non-inferiority versus Q2 months EYLEA on BCVA. And I think based on the data we've seen from other programs, that seems like an achievable hurdle unless there's something weird that happens. And then as we move to the key secondary endpoint of reduction of EYLEA supplement injections. So I guess on that metric, first, given some of the design changes from Phase II to Phase III, do you have kind of a general sense of what you'd like to see in terms of that reduction? And at what point does it become clinically meaningful for specialists?

Yes, great question. So our Phase III program is 4FRONT-1 and 4FRONT-2, right? 4FRONT-1 is the first trial that is North America, so U.S. primarily with some sites in Canada as well. And before I get to, I think, the core of your question, maybe take a little bit of a step back and just remind the audience a little bit around just the history of this space and what's driven kind of the evolution of the space. As many of you likely know, treating Wet AMD has been done through bolus needles in the eye or intravitreal injections. Years ago, that started with Lucentis being a 4-week drug, at least per label and then EYLEA comes out and says it's an 8-week drug and extends that durability a little bit further. And what we've seen since then is largely an attempt to increase that durability and increments. You saw VABYSMO, which we think extended durability maybe by a couple of weeks, reduce maybe an average of an injection per year and similar with EYLEA HD. So what we endeavor to do is to not extend that durability or reduce that treatment burden by an increment of 15%, 20% is to do more of a paradigm change through a modality like an always-on continuous backbone therapy like 4D-150. So as you referenced, Josh, what we've shown in our PRISM data, at least in Wet AMD so far is we've shown across a broad range of patients, so patients that historically were getting over 10 injections per year. So a pretty severe largely patient population to patients that were more recently diagnosed that we've shown treatment burden reduction rates in that 80-plus or so percent range. A little bit of variability in that depending on the patient population, but generally, that's what we've demonstrated with the ability to preserve vision in concert with that significant reduction in treatment burden. So we certainly believe that if we show that in our Phase III program, we have a huge opportunity to change the treatment paradigm, and we think that translates to commercial success. To your question about how we've adapted the Phase III program, so we've looked at some of the results from the Phase II program. And what we saw as patients were more recently diagnosed, the patients diagnosed in the last 6 months, that treatment burden effect that I referenced was more pronounced with those patients. So patients that were on therapy 4 or 5 years, we showed up to 2 years a treatment burden reduction rate in like the mid-70s or so range. But when you look at patients that were diagnosed within the prior 6 months, and then they went on to 4D-150, we've now shown data up to 2 years in that patient population. And you see treatment burden reduction rates as measured by what you would have gotten on label EYLEA, full disclosure, in the mid-80s range. So a more pronounced effect. So when we went into our Phase III program, we said how do we enhance for a patient population that's likely to have a higher level of response. And we think more recently, our newly diagnosed patient population is likely to do that for us. So our 4FRONT-1 trial is entirely treatment naive. 4FRONT-2 has a blend of treatment naive in some patients that were previously treated, and that satisfies a European regulatory requirement. So that's an important change. Important, though, to recognize all of the Phase III pivotal programs for retina disease, AMD, primarily, you look at any of the approved medicines, they've all been studied in a naive patient population. So we're not breaking precedent with our design. While there are some nuanced changes to retreatment criteria and enrollment criteria that I can certainly go into. Largely, we think our design for our 4FRONT program resembles the traditional design that you've seen of trials in this space, the control arm versus standard of care being EYLEA, which is being treated on label with the possibility of supplementation and importantly, the primary endpoint being non-inferiority in vision at week 52. So largely consistent with history with a couple of adaptations that I just referenced.

I guess in the real-world practice, is there a standard approach for those patients who are being watched for PRN EYLEA? Is there a standard reinjection criteria? Is there an array of practice? And how does that align with the criteria that you've selected in 4Front?

Yes, that's a great question. For those that know retina, it's probably not a lot that's standard, right? What is standard is, I think most physicians when it comes to treating patients in the real world with bolus therapies that exist today use a treat-and-extend approach. So they start out and say, "Hey, I'm going to start treating you probably on label probably every month for the first couple of injections. And then their approach is to say, I'm going to try and extend you to the maximum interval possible without undertreating you with preserving vision and controlling anatomy. What a doctor will use to determine how long that interval is or how soon they will retreat can be highly varied. Some doctors say any retinal fluid whatsoever, regardless of what's going on with vision is going to get a reinjection. Others will say, "Hey, there's some fluid. If it's been stable, it hasn't been a change in fluid for a while and your vision has been stable. I'm okay with the contingency let you go without a retreatment. So there is some variability. There's an art and a science to that. So how do we approach that from a clinical trial because you can't just leave it out there and say, you decide physicians, especially in a Phase III program. So you want to control that. So we basically designed criteria in consultation with thought leaders and KOLs in the space that says, hey, we're going to need something to guide when a patient gets a supplemental treatment that's on 4D-150, what should that be? So we talk to the physicians. We have an expert panel that guides us on that. We look at what other programs in the space have done, and we try and come up with things that certainly help us ensure that we have maximum chances of success in our Phase III program. But at the same time, we've got to balance whether those criteria are relevant in the real world. So we think our criteria that we designed for our Phase III retreatment or supplemental criteria accomplishes that.

So I mean, in the real world, naturally, the PRN criteria will require fewer injections than Q2 month EYLEA. So as you think about the hurdle rate for 4FRONT and what you need to show, not just have a positive trial, but to convince the specialists that you really are reducing injection burden not against Q2 month EYLEA, but what they're currently practicing. How do you think about the type of data you need to be generating to make that case?

Yes. So I think a couple of things. So -- and I'll push back a little bit on the statement that in the real world, you actually get dosed less than Q2 week EYLEA. That's true for some patients. It's not true for all patients. In fact, what the data shows is that half of patients on EYLEA, and we actually just ran this data recently, we have an Investor Day planned that largely focused on commercial topics on the 21st of October. Quick plug, everyone should -- we'll go into this in more detail. But what that data would show as we looked at it is that half the patients actually get treated more frequently than the Q8 EYLEA. So there's a good portion of patients that are on a Q4, Q6. And by the way, the reduction in that as newer agents like VABYSMO, Eylea HD have come out has been incremental. It hasn't been massive. In fact, our data would suggest that at most, those newer agents have reduced the average number of bolus injections a year by about one. So the aggregate is like 6 or 7 over the course of the year if you're on standard therapy, if you're in the maintenance phase. Half of those patients are getting more frequent than Q8 and then a portion are certainly getting less than Q8. So they are patients that have less severe disease, they're likely at Q10, Q12, some patients get up to Q16. But the general belief that, hey, patients don't need Q8 is actually not true in the real world, and it largely is driven by -- there's a high degree of variability in patient types. We even see this in our data. Like we see patients that were getting 10 injections in the prior year in our PRISM data that up to 9, 10 months were supplement free and all of a sudden, they needed a couple of injections, and then they go back on a period of time when they're supplement free again. And we think that speaks to the high variability of the disease. And again, I think -- so if we can, over a longer period of time, reduce that regardless of what interval you're on by orders of magnitude, 70%, 80%, 90%, which we think we have a chance of doing, that's highly significant regardless of whether you're a patient that was on Q8 exactly or getting it every 6 weeks or getting every 12 weeks.

And you pointed out that VABYSMO was an incremental improvement over EYLEA. So you kind of rerun the math from the VABYSMO lens, is it kind of roughly similar? Do you feel like the burden of evidence is a little higher because the duration of activity of VABYSMO is also a little higher?

Yes, a touch, but again, on the margins. So it's like what we've seen so far in our data that we've run is there's still, I think, north of 40% of patients on VABYSMO that are not getting a Q8 frequency in terms of the retreatment criteria. And admittedly, I think in aggregate, there's a lot of patients that are getting Q12 or Q16, which is amazing for those patients. I think it's also important to know because sometimes we get this question saying, and I get this a lot from a commercial lens, which is, hey, Chris, what patients would a doctor not consider 4D-150 for? And my knee-jerk is, I don't think anyone should not be considered for 4D-150 if you can preserve vision for the life of the patient. But I think practically, what some doctors may look at is if you have some patients that do fine on 1, 2, 3 bolus injections a year, which is relatively a lower treatment burden for those patients, they may be least considered for a long-acting therapy like ours. However, the data that we've seen in the category would suggest that probably less than 20% of the patients and maybe even less than 15% fall into that category where 2 or 3 injections per year seems to be adequate for their ongoing maintenance of disease.

Since 4FRONT is being studied with a lead-in EYLEA, how would it be used in the real world? Would specialists -- would you expect them to have flexibility to use VABYSMO or EYLEA for high dose.

Yes, exactly. We don't -- we think -- listen, if a patient responds to Anti-VEGF therapy, I think the biggest thing for before you get introduced to a gene therapy that's lifelong is that you are responsive to Anti-VEGF therapy. And I think what the science would suggest, and we think regulators would agree is that if you respond to EYLEA, you're likely to respond to VABYSMO and vice versa as well. So we don't anticipate a criteria where because we use EYLEA in our clinical trial setting that, that's the drug that you have to show response to. We think there's flexibility there, and we think that's reflected in what happens in the real world today. There's still like a fair amount of switching as well that occurs in this space today. Patients often stay on the maintenance therapy, but there is evidence that patients will get switched from one brand to another for a variety of reasons.

Wet AMD practice is primarily a Part B buy-and-bill type landscape. So that obviously introduces a number of commercial considerations, both from the payer perspective, and they're willing to pay for 4D-150 depending on how you think about pricing it, which maybe we can talk about and then also, obviously, practice economics themselves. So maybe you can kind of address those two angles around access and reimbursement.

Yes, absolutely. So let me first start with -- before we get too deep into the reimbursement mechanics, I think it's important for the audience to be reminded that at least for Wet AMD, over 90% of patients are Medicare, right? An older patient population presents in the elderly. So no surprise, the vast majority of patients are -- their insurance is via Medicare. Of that 90%, 92% that's on Medicare, for simple modeling, half of them are on a Medicare Advantage plan of some sort and the other half fall on a Medicare fee -- direct reimbursement from CMS or the Medicare fee-for-service. And the importance of understanding that payer mix, if you will, is because of what you just suggested. It's a buy-and-bill model, which means that physicians acquire the medicine, they take on the responsibility for getting reimbursed for the medicine, and they administer it in their office, right? So Medicare Part B buy-and-bill. So the thing that helps us as 4D-150 is that we think we tuck into that process pretty seamlessly. The method we think of distribution for 4D-150 would be the same as Anti-VEGF therapy today. The storage requirements would be the same. The injection itself in terms of doctors can use whatever gauge needle, the volume of the medicine, all of that would resemble what they would be use to today for any of Anti-VEGFs use. And that -- it's in the weeds a little bit, but it's really important because in these busy retina clinics, of course, they're seeing sometimes 60, 70, 80 patients a day. So if you can minimally disrupt your practice flow, that's important. So operationally, we think we fit in really well there. From a reimbursement standpoint, there's two big pieces that are important to reimbursement that you just touched on. One is how are payers going to look at it, right? And as important in a buy-and-bill model is how do physicians get reimbursed and how does it affect their practice economics. Because retina clinics today, they make a profit, they make a margin on the drugs, the drugs that they inject. And if you have a therapy that says we can reduce your treatment amount by 80%, the knee-jerk reaction is what's that going to do to my practice economics. So we think we have a good story on both of those elements. First of all, what we've heard from payers as we've done research is that payers recognize a few things that are really important. And the caveat, Medicare Advantage payers. We don't go talk to CMS at this point in time, but Medicare Advantage payers who manage Medicare lives on behalf of CMS. Those payers will tell us a few things. 80% in recent research suggests that the importance of long-term vision preservation is -- 80% would say that's really, really important. 100% said there's a need for new advanced therapies to treat Wet AMD. 93% in our most recent survey suggested that there's a -- they have a concern about patients losing vision over time because of persistence to therapy. Which is things we also see in our real-world data. So we think the payer enthusiasm for a therapy like 4D-150 that could potentially reduce treatment burden by 80-plus percent and preserve vision long term is really high. Of course, how favorable they will be will also be a function of what we'll be priced at, and that's to be determined. We think we have massive pricing flexibility. We don't think this is a $1 million therapy. We don't even think it's a $100,000 therapy at this point in time. But exactly where pricing will fall will be determined at a different point in time. So we think we're in a good position to provide value from a payer perspective, notably the Med Advantage plans. And then from a physician standpoint, how it affects their practice economics is a really important dynamic as well. And a couple of things that we highlight that is important. First of all, today, when you make money on these current bolus injections, it's a function of the price, right? So you get reimbursed as a percentage of the list price. So just for illustration, if your reimbursement is 5% of a $2,000 drug, your net gross margin is $100. While we don't know our price, it certainly won't be equivalent to bolus injection, right? So it will be a higher price point. So the value of getting reimbursed upfront, not having to wait for increments over time, plus the value of reimbursement on a higher price point is favorable, we think, for a physician from an economics perspective. What it exactly looks like will ultimately be determined by what the price point is. So that's one. The other point is we think at this point that we'll have the ability to price to capture multi years of value. Again, this gene therapy is always on board. We think it's going to be helping preserve vision for years to come. So again, for your audience, just to illustrate this, if the pricing ultimately reflects, again, just for illustration, 5 years of value, it's important to recognize today, patients getting bolus treatment are not on therapy for 5 years. In fact, 40% fall off therapy for a host of reasons by the time they get to 18 months and it continues to drop off over that continued -- those years. So if you have a therapy that economically, you can capture the value of a patient that otherwise would have had to stay on therapy for 5 years, it's easy to recognize the incremental value to a practice of a therapy that can deliver that. So those are a couple of things that we point to when we talk to doctors around how this could certainly affect their practice from an economics and an operational standpoint, but we think it could affect it in a positive way.