X4 Pharmaceuticals, Inc. (NASDAQ:XFOR) Q4 2022 Earnings Call Transcript

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X4 Pharmaceuticals, Inc. (NASDAQ:XFOR) Q4 2022 Earnings Call Transcript March 21, 2023

Operator: Thank you for standing by. This is the conference operator. Welcome to X4 Pharmaceuticals Fourth Quarter and Full Year 2022 Earnings Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation there’ll be an opportunity to ask questions . It’s now my pleasure to introduce your host, Dan Ferry from LifeSci Advisors. Please go ahead.

Dan Ferry: Thank you, operator. And good morning, everyone. Presenting on today’s call will be X4’s Chief Executive Officer Dr. Paula Ragan and Chief Financial Officer, Adam Mostafa. Following prepared remarks, we will open the call to your questions and will be joined by, Interim Chief Medical Officer, Dr. Murray Stewart, Chief Commercial Officer, Mark Baldry, Chief Scientific Officer, Dr. Art Taveras, and Chief Operating Officer, Dr. Mary DiBiase. As a reminder on today’s call, the company will be making forward-looking statements regarding regulatory and product development plans as well as research activities. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted.

A description of these risks can be found in X4’s filings with the SEC from time to time, including this Company’s latest 10-Q filling on November 3 2022 and in the 10-K for 2022, which is expected to be filed after market close today. I’d now like to turn the call over to X4’s President and CEO Dr. Paula Ragan. Paula?

Paula Ragan: Thanks, Dan. And thank you everyone for joining us on the call. As we mentioned in the press release this morning, we could not be more pleased with the progress we made in 2022, advancing our lead candidate, mavorixafor towards commercialization, and most importantly, towards helping patients in need. We believe our clinical trial data continue to speak volumes, unequivocally demonstrating mavorixafor’s ability to chronically raise circulating levels of neutrophils, lymphocytes and monocytes. As you may be aware, following our strategic announcement last July, when we tightened our focus to advance mavorixafor in chronic neutropenic disorders, we achieved two significant development milestones, announcing positive clinical results from both our Pivotal Phase 3 trial of mavorixafor in WHIM syndrome and our Phase 1b clinical trial of mavorixafor in certain chronic neutropenic disorders.

Most importantly, in late November, we announced the success of our Pivotal Phase 3 clinical trial, evaluating oral mavorixafor in people with WHIM syndrome with the study meeting its primary endpoint and first key secondary endpoint, achieving statistically significant and clinically relevant longer times above threshold for both absolute neutrophil count and absolute lymphocyte counts versus placebo. Mavorixafor also demonstrated good tolerability in its robust 52-week, randomized, placebo controlled, double blinded trial. Note that mavorixafor is the first and only oral therapy to demonstrate durable improvements in severe chronic neutropenia and lymphopenia, the hallmarks of WHIM syndrome, which is a rare combined immuno deficiency, for which there is no approved treatments.

Since the November data announcement, we have continued to analyze the clinical results from the Phase 3 WHIM trial, and expect to be able to present additional data from the trial at one or more medical conferences in the second quarter of 2023. We plan to host an investor call around the time of the first presentation, and we’ll update you as we have more information on the exact schedule. Importantly, these results are expected to include additional secondary and some exploratory endpoints, including assessments of infection rates, severity, duration, and types of infections, as well as the effect on patients wart burden and certain vaccine titer data. We now have scheduled a pre NDA meeting with the U.S. Regulatory authorities in Q2 to discuss next steps in advancing mavorixafor towards an NDA submission.

Pending input from the FDA, we continue to anticipate submitting the NDA early in the second half of this year, which we hope will lead us to our first product approval in the first half of 2024. Also last year back in September, we presented positive data, from our Phase 1b clinical trial in chronic neutropenic disorders. The study demonstrated the ability of a single oral dose of mavorixafor, to normalize absolute neutrophil counts or ANC, in those with the most severe forms of neutropenia, and across all chronic neutropenic disorders studied, which included idiopathic, cyclic and congenital neutropenia. Normalization of ANC was demonstrated with mavorixafor as a monotherapy and in combination with the only approved treatment for severe neutropenia, injectable granulocyte colony-stimulating factor, or GCSF.

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Impressively, 100% of patients responded, we could have not hoped for more in this initial study. This early trial has now been expanded into a Phase 2 clinical trial to assess the long term durability, safety and tolerability of oral mavorixafor more broadly in those diagnosed with idiopathic cyclic or congenital chronic neutropenia. Participants are currently being enrolled in the Phase 2 CN trial, and we expect to be able to report clinical data from the study in Q2 or Q3 of this year. The timing of this will obviously be dependent on the rate of enrollment. And we do plan to present a robust data set when we announce the first results from this trial. These proof of concept data we are generating in our Phase 1, 2 trials, aimed to unlock an even broader potential of mavorixafor, one, where we could potentially offer a differentiated oral and well tolerated treatment option to upwards of 50,000 people diagnosed with CN disorders in the U.S. We also expect to be able to provide clarity on both the scope and the possible timing of our plan Phase 3 clinical program for mavorixafor in chronic neutropenic disorders in the second or third quarter of this year.

At this time, we expect the Phase 3 trial will likely be a randomized, placebo controlled trial studying the safety and efficacy of mavorixafor on top of standard of care, with likely a primary endpoint measuring changes in neutrophil count and secondary endpoints related to reduction in infections. But we expect to know a lot more following a meeting with the FDA to specifically discuss the path forward of mavorixafor for these certain chronic neutropenic disorders. Throughout 2022, through both our clinical and scientific research programs, we were able to gain much greater insight into mavorixafor’s ability to address the unmet need in chronic neutropenic disorders, including WHIM syndrome. We are particularly pleased that almost all of our submitted abstracts were accepted for either oral or poster presentations at prominent medical conferences during the year, including the AAAAI meeting early in the year, the CIS annual meeting in spring, EHA, the NICER Symposium and ESID over the summer, and the National Organization for Rare Disease summit in the fall.

We also had quite a large presentation at the annual meeting of the American Society of Hematology or ASH in December, and garnered strong interest both at our presentations and our X4 booth. Throughout the year, our presentations not only highlighted new insights into the breadth of genotype and phenotype of people with WHIM syndrome, helping to identify both additional patients and helping to educate treating physicians, but also demonstrated new understanding into mavorixafor’s mechanism of action, principally its ability to induce maturation and mobilization of white blood cells from the bone marrow into blood circulation and enabling immune surveillance and response. Our research also deepened our understanding of the diverse and significant needs of the patient community through interviews and survey engagements, and helped us define what is turning out to be a larger than expected U.S. population of patients living with chronic neutropenic disorders.

These milestones throughout the year, along with the continued support of our investors and analysts also successfully complete two large financing, raising gross proceeds of more than $120 million despite continued challenging biotech market conditions. Currently, we have a strong balance sheet to help us propel our pre commercial efforts for mavorixafor and WHIM and further advance our mission to deliver mavorixafor to help those across a range of chronic neutropenic disorders. I’ll turn it over to our CFO, Adam Mostafa, to review the fourth quarter and full year 2022 financials. Adam?

Adam Mostafa: Thanks, Paula. And thanks to all of you for being on the call with us today. As Paula mentioned, we were able to strengthen our balance sheet significantly in 2022. And particularly in December, when we completed a public offering that yielded gross proceeds of approximately $65 million. That left us with $123 million in cash, cash equivalents and restricted cash as of December 31. We expect that our cash will fund our operations into the second quarter of 2024. In addition, as a result of the positive top line results from the 4WHIM clinical trial, the covenant under our loan agreement with Hercules Capital, requiring that the company maintain minimum cash of $30 million was lowered to $20 million. On January 6 of this year, we also entered into an agreement with Hercules, that amended and restated all prior loan and security agreements, and that included an extension of the interest only payment period through the third quarter of 2024.

And to further extend the interest only period to the first quarter of 2026, if certain milestones are achieved. R&D expenses were $19 million $61.1 million for the fourth quarter and full year ended December 31 2022, respectively, as compared to $12.2 million and $50.6 million for the comparable periods in 2021. And note that R&D expenses included $0.5 and $2.5 million of certain non-cash expenses for the fourth quarter and full year ended December 31, respectively. SG&A expenses were $6.6 million and $27 million for the fourth quarter and full year of 2022 respectively, as compared to $7.1 million and $24.7 million for the comparable periods in 2021. And note here, SG&A expenses included $0.6 million and $2.7 million of certain non-cash expenses for the fourth quarter and full year ended December 31, respectively.

Finally, we reported a net loss of $25.8 million and $90.5 million for the fourth quarter and full year ended December 31 as compared to $30.2 million, and $88.7 million for the comparable periods in 2021. Net losses include $1.1 million and $5.2 million of non-cash expenses for the fourth quarter and full year respectively. And with that, why don’t we open up the call for your questions? Operator?

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Q&A Session

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Operator: Our first question comes from Stephen Willey of Stifel. Please go ahead.

Unidentified Analyst : Hi guys, this is Julie on for Steve, can you guys hear me okay?

Dan Ferry: Yes, thanks.

Unidentified Analyst : Okay, great. So I have just the two very brief questions on my end. So very first one is related to timing of chronic neutropenia data. Can you give us a little bit more color on shift in the timing? What are you actually planning to disclose when you disclose these data? So that’s my first question. And second question would be related to the partnering front, can you give us more color on like, the progress you’ve made so far on the partnership front? And lastly maybe like R&D costs, if I think if I’m not correct, there is an increase — there’s an uptick in R&D costs. So maybe if you could provide a little bit more color on that, that would be great as well. Thank you.

Paula Ragan: Sure, so I’ll take the question on the CN, Q2, Q3 deliverable, and then I’ll turn it over to Adam for partnering and R&D costs. So thanks for the question. So we’ve been continuously communicating that we have intended to — it’s an open label Phase 2 study in chronic neutropenia, where we’ll be presenting anywhere from a handful of patients or more on at least a few months of chronic dosing, we want to see durability as we have consistently seen across all the patient populations tested with chronic mavorixafor. So we’re certainly on track to do that, obviously, more data is better. So we’re giving ourselves some flexibility. We saw a very positive response last year, (ph) 25 patients worth of CN data. So we’re pushing ourselves as hard as we can to deliver the most robust data set for the investor community and of course, for the patients and physicians who support us.

And that additional flexibility in the Q2, Q3 timeframe enable that to happen. So I hope that helps. And I will turn that over to Adam now around the partnering and the R&D costs.

Adam Mostafa: Thank you. So with respect to partnering, we continue to explore discussions, we don’t have any significant update for today and don’t obviously want to speak on behalf of any potential partners. But it is an area that we are considering in terms of moving our drug forward and capital raising activities in the future. With respect to R&D, we did notice an increase year-over-year likely that relates to clinical operations costs in the chronic neutropenia trial, which in part led to the data that we revealed back in September that Paula mentioned, also relates to additional clinical operations and CMC costs that support both chronic neutropenia and the WHIM trial, leading up to our top line data late last year. So that’s a little color on background for the R&D.

Unidentified Analyst : Thank you.

Operator: Our next question comes from Divya Rao of TD Cowen. Please go ahead.

Divya Rao: Hello, thanks for taking my question. This is Divya on for Marc. I guess, on the trial in CN, do you guys expect to run the Pivotal in all chronic neutropenia, or do you expect to run separate trials for those? And I have one other question.

Paula Ragan: Sure, Murray, would like to take that?

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