This is the top biotech stock pick from B Riley Securities

Investing.com -- B. Riley Securities reiterated its Buy rating and $37 price target on 4D Molecular Therapeutics, citing the launch of a Phase 3 trial in diabetic macular edema and encouraging two-year data for its lead gene therapy candidate.

The brokerage also reaffirmed the biotech as one of its year-end top picks.

The brokerage said 4D-150 is emerging as one of the few long-acting intravitreal therapies with data supporting lower injection frequency and a favorable safety profile as it advances into late-stage testing for wet age-related macular degeneration and DME. The company has begun enrolling patients in the 4SIGHT Phase 3 trial in DME, while its two 4FRONT trials are evaluating the therapy in wet AMD.

B. Riley said the recent Phase 3 data from peer Kodiak Sciences' Zenkuda also helped clarify the opportunity for 4D-150. While Zenkuda placed a majority of treatment-naive wet AMD patients on six-month dosing, about 17% remained on four- to eight-week intervals, highlighting the effect of differences in drug clearance between patients.

By contrast, 4D-150 is designed to continuously express an anti-VEGF protein, potentially reducing the need for repeated injections. B. Riley estimates that over five years, patients could require about 34 intravitreal procedures with aflibercept, compared with roughly 18-23 with Eylea HD or Vabysmo, 21 with Zenkuda and 8-12 with 4D-150, based on its modeled treatment schedules.

Two-year SPECTRA data also showed sustained efficacy at the Phase 3 dose, with a 10.8-letter vision gain and an average of 5.2 supplemental injections after three aflibercept loading doses. No intraocular inflammation or ocular serious adverse events were reported across the 22-patient study population.

B. Riley expects the three Phase 3 studies to provide data from roughly 780 4D-150-treated eyes across wet AMD and DME. The brokerage said the results could help determine how the therapy competes with established treatments such as Vabysmo and Eylea HD, as well as Zenkuda if approved.

The brokerage's valuation uses a sum-of-the-parts discounted cash-flow model and assumes risk-adjusted peak global sales of about $1.44 billion for 4D-150, including approximately $599 million from wet AMD and $338 million from DME.