PFE - 4D Molecular Therapeutics: Another Gene Therapy Player With A Differentiated Profile

Summary

• FDMT is an undercovered gene therapy developer.
• It claims certain competitive differences for its vector delivery platform.
• The company has some early data that looks good.

4D Molecular Therapeutics ( FDMT ) is a gene therapy developer that’s remained pretty undercovered on Seeking Alpha. FDMT develops therapies in three disease areas - ophthalmology, cardiology and pulmonology - using its AAV vector platform. Their platform is called Therapeutic Vector Evolution, which “combines the power of directed evolution with our approximately one billion synthetic capsid sequences to invent evolved vectors for use in targeted gene therapy products.” The platform was developed from the work of Dr. David Schaffer, professor at U.C.Berkeley, and certain foundational libraries of these vectors were licensed from Berkeley. More than 30 libraries of these vectors were invented at the company.

FDMT has five product candidates in clinical trials: 4D-125 for the treatment of X-linked retinitis pigmentosa ("XLRP"), 4D-150 for the treatment of wet age-related macular degeneration ("wet AMD"), 4D-110 for the treatment of choroideremia, 4D-310 for the treatment of Fabry disease, and 4D-710 for the treatment of cystic fibrosis lung disease. The pipeline:

The following three vector candidates, R100, C102, and A101, invented by the company, are used across the three respective disease areas (quoted from 10-K):

Ophthalmology - evolved AAV vector, R100, invented for routine intravitreal injection, causes transgene expression across the entire surface area of the retina and in the major cell layers of the retina.

Cardiology - for primary cardiomyopathies, targeted and evolved AAV vector, C102, invented for routine low dose intravenous administration and delivery to the heart, leading to transgene expression in heart muscle cells throughout the organ. For secondary cardiomyopathies like lysosomal storage diseases involving the heart and other organs, including Fabry disease, [the vector is] designed for transgene expression both within the heart and in other targeted tissues.

Pulmonology - targeted and evolved vector, A101, invented for aerosol delivery to all major regions within the lung, including airways and alveoli, and penetration of the mucus barrier for transduction of lung airway cells, overcoming potential barriers such as pre-existing AAV antibodies and other inhibitory proteins within the mucus barrier. A101 was designed to enable efficient airway and alveolar cell transduction and transgene expression.

The following sections discuss target indications and FDMT’s solutions where clinical data is available.

XLRP is a rare inherited genetic disorder leading to progressive vision loss and blindness, with no approved therapies. 70% of XLRP disease is caused by RPGR genetic mutation, with approximately 24,000 US+EU-5 patients.

A number of companies are developing subretinal AAV gene therapies for XLRP. FDMT’s product, comprised of R100 and a codon-optimized RPGR transgene, uses the easier intravitreal delivery mode.

The company lists four competitive differences between its product and traditional ones:

1. Safe and routine intravitreal route of administration.

2. Treatment of the entire retinal surface.

3. Feasibility of treating early stage patients.

4. Commercial opportunity.

A phase 1/2 trial reported early interim data in October 2021. Data showed the following disease activity:

4D-125 was well-tolerated, and there were no discontinuations or dose limiting toxicities.

Data were also presented this last November from 4D-150 in wet AMD and 4D-710 in cystic fibrosis from their phase 1/2 programs. Earlier in the year, data was presented from 4D-310 targeting Fabry Disease. Data was also presented in 2021 from 4D-110 in Choroideremia. Data from six evaluable patients showed:

Data indicates drug activity, but these are small, early stage trials and not adequately powered to determine if the drug activity is statistically significant versus the control arm, which traditionally, in eye diseases, is the untreated eye.

In wet AMD, the company used R100 vector and an aflibercept (Eylea) transgene. This trial can be compared with Regenxbio’s ( RGNX ) wAMD trial which uses Lucentis, and Adverum’s ( ADVM ) failed wet AMD trial which uses eylea transgene. However, RGNX delivery mode, which used to be subretinal, is being changed to SCS, while ADVM’s was IVT.

In FDMT’s wet AMD trial, the following data was generated:

o Safe & well-tolerated: no DLT, no SAE, no significant intraocular inflammation (IOI), no hypotony

o 3 of 3 patients’ aqueous fluid evaluated to date had detectable aflibercept

o Mean annualized anti-VEGF injection rate in 12 months preceding 4D-150 dosing: ~11

o 96.7% overall reduction in annualized anti-VEGF injection rate

o 80% of patients (4 of 5) aflibercept supplemental injection-free (injection-free f/u : 16-40 weeks)

Note that the therapy sharply reduced eylea burden in patients, with 4 out of 5 patients remaining eylea injection free at between 16 and 40 weeks. These patients were taking an average of 11 eylea injections on an early basis.

Data was also presented from the CF trial of 4D-710, which saw widespread transgene delivery and expression, as well as CFTR expression. That means, the company’s aerosolized delivery method was adequate in reaching lung deep tissues to deliver the transgene (the vector worked), and the transgene was able to produce therapeutic protein expression (the drug worked). These were biopsy reported data. All 11 patients reported widespread CFTR expression, which is indicative of therapeutic benefit in CF patients.

These data were presented in November, and resulted in near-tripling of FDMT stock.

Risks

Fabry Disease trial data presented in 2021 in 3 patients saw one serious adverse event. One patient developed atypical haemolytic uremic syndrome (aHUS) and was admitted to a hospital, but was discharged after 4 days without needing complement inhibitors or dialysis. The same patient also saw less than average (for the trial) levels of AGA, however that patient had high anti-AGA antibodies at baseline. According to Evercore ISI analysts , “patients with high anti-AGA titres will be excluded from the trial in future, but this should make little difference to the potential reach of 4D-310 since only around 5% of Fabry patients fall into this category.” Like with other so-called one-off gene therapies, FDMT needs to show that its therapy sustains drug activity over a long period of time.

In choroideremia, half the patients treated with 4D-110 showed eye inflammation. Initially, there was poor payload delivery as well.

The most critical broad spectrum risk is the generally poor outlook of one-time gene therapies that we have seen so far, which, despite their enormous promise, have broadly failed to deliver. The AAV vector space is also notorious for unwanted immune responses.

Financials

FDMT has a market cap of $719mn and a cash reserve of $261mn, which the company expects will fund it through 1H 2025. Research and development expenses were $18.9 million for the quarter ended September 30, 2022, while general and administrative expenses were $8.1 million. At that rate, I calculated a cash runway of up to 9 quarters. This gives them enough time to read through at least one phase 2 trial.

Early investors were Pfizer ( PFE ), Roche ( RHHBY ) and AstraZeneca ( AZN ). Roche terminated its partnership in 4D-110 in patients with advanced choroideremia before early data came out.

Bottomline

FDMT looks like an undercovered gem, except that just a month ago, the stock tripled, and the current valuation is looking exactly right for the company’s current situation. Evaluating emerging companies without marketed products is hardly a science; it is often a matter of opinion. So this is just my opinion, however until we see some phase 2 data, the current valuation, to me, seems adequate. If there’s phase 2 data that’s positive in either wet AMD or CF, I think the stock can go up. They have multiple backup options to defend the stock in case of one failure. I think this represents a risky opportunity, just like you get with emerging biopharma.

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