On Wednesday, Goldman Sachs (NYSE:GS) reinstated coverage on 4D Molecular Therapeutics (NASDAQ:FDMT), assigning a Buy rating and a price target of $81.00. This move marks a shift from their previous stance of not rating the company, which is common for early-stage biotech firms that have not yet cleared Phase 2 trials.
The upgrade is based on the positive Phase 2 results of the intravitreal gene therapy 4D-150 for the treatment of wet age-related macular degeneration (wAMD). The therapy met efficacy benchmarks in severe cases and demonstrated both durability and favorable tolerability, addressing the historical challenges associated with retinal gene therapies. Despite the stock's significant rise following the news, Goldman Sachs believes that the current market value primarily reflects the potential of the wAMD treatment on a risk-adjusted basis.
The investment firm points to the large market opportunity, estimating peak sales of $2.4 billion, assuming approximately 16% cumulative penetration. The analyst also highlighted that the market might be underappreciating the broader implications of 4D Molecular Therapeutics' directed evolution-based platform, which spans across ophthalmology, pulmonology, and cardiology.
Goldman Sachs anticipates that the stock will continue to gain on the back of several catalysts expected in 2024. These include the initial 24-week data for 4D-150 in standard-need wAMD and diabetic macular edema in the second half of the year, feedback from the FDA regarding aerosol 4D-710 for cystic fibrosis in the first quarter, and data submissions in the second quarter to address the clinical hold on 4D-310 for Fabry disease.
The firm's long-term outlook for 4D Molecular Therapeutics is optimistic, with a projection of approximately $7.5 billion in peak sales across six programs by 2032. The potential success of 4D-175 in geographic atrophy is seen as an additional upside to this forecast.
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