BMO says this stock taking gene therapy to the 'next level' can more than double

Published Mon, Jan 30 202310:01 AM ESTUpdated Mon, Jan 30 202310:47 AM EST

Shares of 4D Molecular Therapeutics could more than double as the biotechnology company revolutionizes gene therapy treatment, according to BMO Capital Markets. Analyst Kostas Biliouris initiated coverage of the stock with an outperform rating, saying in a Monday note to clients that 4DMT's utilization of a protein engineering method known as directed evolution can help take "gene therapy to the next level." "4DMT has built a powerful gene therapy platform that has been validated in clinic and is generating transformative therapies leading to potential multibillion dollar commercial opportunities," he said. Biliouris slapped a $50 price target on shares, representing potential upside of more than 135% from Friday's close. The stock gained briefly gained as much as 6.5% in early trading Monday. Shares are little changed this year after rising more than 1% in 2022. BMO specifically forecasts a huge sales opportunity within 4DMT's program to treat advanced neovascular age-related macular degeneration (AMD), a form of eye disease that can cloud vision. Treatments for this type of AMD exist, but therapies often require consistent injections, making it difficult for many patients to successfully follow through on instructions, Biliouris explained. Other longer-term treatments are often administered through riskier means, such as subretinal injection. "4DMT's gene therapy for wet AMD addresses the above key challenges, while its early clinical data point to a potential best-in-class profile that can drive > $5B in (risk-unadjusted) peak sales," Biliouris wrote. FDMT 1Y mountain 4DMT in past 12 months Elsewhere, 4DMT's cystic fibrosis treatment that could benefit 10% of patients without therapy options could also drive upside for the stock, he said. While BMO awaits more data in the second quarter, it projects a more than $3 billion CF sales opportunity. Biliouris also highlighted 4DMT's streamlined operations as another reason to get into the stock. With a solid cash runway and just 140 employees working on five gene therapy programs, 4DMT's operating efficiencies differentiate it from competitors, he added. "We note that gene editing companies with such operational costs and number of employees typically have only one clinical asset, while gene editing companies with many clinical programs typically have > 3x employees/OpEx compared to 4DMT," Biliouris wrote. — CNBC's Michael Bloom contributed reporting