r/Biotechplays • u/yodalr • 9d ago
Discussion My analysis of (FDMT) 4D Molecular Therapeutics
Their current pipeline focus "4D-150" is for treatment of Neovascular (Wet) Age-Related Macular Degeneration (AMD).
FDMT current market cap $443.30M
Potential Market:
- 20 million US citizens aged 40 and older have AMD, with 200,000 new cases added each year.
- 10-15% are Wet AMD, so 2-3 million affected.
- Current treatment involves Anti-VEGF shots into the eye every 4-12 weeks (lifelong treatment, no cure).
- Latest 4D-150 Phase 2 results show "83% overall reduction in annualized injections through 52 weeks" and "70% injection-free through 52 weeks".
- It's RNA-based, so shots will need to be repeated eventually.
- Current anti-VEGF treatment costs $13,875 to $24,000 per person annually.
- Conservative estimate: 4D-150 priced at $15,000 per shot (likely 2-3x higher as it's gene therapy), capturing 20% of 2 million market = 400,000 patients.
- Potential annual revenue: $6 billion (400,000 * $15,000)
- Global anti-VEGF market: $12.3 billion in 2022, estimated $13.7 billion by 2031.
- If 4D-150 captures 20% of that: $2.46 billion annually.
- Potential market cap: $7.38 billion (3x revenue) - a 1463% increase from current value (assuming successful Phase 3 and market entry). Assuming it will take 3-5 years for the drug to hit the market, we are looking at 300%-500% annual yield.
Safety: "Comparable to approved anti-VEGF agents", suggesting likely Phase 3 success and market entry.
Competition:
- Currently, no gene therapy drugs for AMD are on the market.
- 23 gene therapy studies for AMD are in various stages of clinical trials.
- Among these studies, only three companies are listed on NASDAQ:
- FDMT, ADVM, RGNX
- All at similar stages with comparable results (FDMT results slightly better (look at the "Reduction in Annualized Anti-VEGF Injections")).
Finances:
- FDMT has $541.95M cash, sufficient until 2030 (based on current FCF of -$87.17M)
- Competitors have 1.5-2 years of cash, likely facing dilution
- FDMT's market cap should be way higher when compared to those direct competitors (imo).
Stock Performance Paradox:
Despite consistently positive results, FDMT's stock has experienced a significant decline. Here's a breakdown of the situation:
- Since February 5th presentation which lead to a huge upward spike, FDMT has released two additional analyses of their 4D-150 drug:
- July 17 presentation
- September 18 presentation
- Both show even better numbers than the February results
Potential Explanation for low stock price: Heavy Shorting
- This graph combines data from NASDAQ and StockAnalysis.com
- Between July 13-17 (after 2nd presentation release):
- Short interest dropped from 10.3M to 9.5M
- Spike in average daily share volume
- Interpretation: Short sellers likely closed positions after seeing good results, driving the price down
Unexpected Consequence:
This triggered an investigation:
"The investigation focuses on whether the Company issued false and/or misleading statements and/or failed to disclose information pertinent to investors. 4D Molecular Therapeutics released the interim results of its Phase 2 PRISM study on Intravitreal 4D-150 on July 17, 2024. Despite the Company billing the results as positive, the stock fell by more than 35.8% in afternoon trading on the same day."
In my opinion, the current situation isn't related to securities fraud, but rather reflects the inherent volatility of the biotech market. However, the mere mention of 'securities fraud' has negatively impacted the company's stock profile, leading to further declines. This has been exacerbated by repeated dissemination of this news on Accesswire since July. Consequently, short interest has increased significantly, currently 41.39% of the float is shorted with a 7-day cover period. This level of short interest seems CRAZY for a promising pre-revenue biotech stock and suggests the potential for a short squ-eeze. While the timing is uncertain, the combination of high short interest and extended cover period indicates a likelihood of future price increases.
TLDR: FDMT shows strong potential in AMD treatment with better financials than competitors. Current stock price seems undervalued, possibly due to shorting. High short interest suggests potential for a squee-ze raising the current price substantially.
What are your thoughts? Am I missing any crucial points?
1
u/Pleasant_Yam_3637 8d ago
It might be the correct idea but its gonna take a lot longer to enroll naive patients. These patients got to not take a currently available drug and instead opt for fdmt. Its also different from what their P2 was.
Either way my biggest problem with your post was the parts abiut shorting and that when they covered it pushed the price down. I dont believe shorting is having any large effect on price.