X4 Pharmaceuticals, Inc. (XFOR) Earnings Call Transcript & Summary

Greetings, and welcome to the X4 Pharmaceuticals First Quarter Financial and Operating Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Candice Ellis, Director of Corporate Communications and Investor Relations at X4. You may begin.

[ Thank you ], operator, and good morning, everyone. Thanks so much for joining us as we provide a recap of our first quarter and recent activities, present our financial results and discuss the impact of the COVID-19 pandemic on our business. Presenting on today's call will be our Chief Executive Officer, Dr. Paula Ragan; and our Chief Financial Officer, Adam Mostafa. Following prepared remarks by each, we will open the call to your questions, and they will be joined by our Senior Vice President of Research and Development, Renato Skerlj; and our Senior Vice President of Technical Operations and Quality, Mary DiBiase. As a reminder, on today's call, we will be making forward-looking statements regarding our regulatory and product development plans as well as our 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 our most recent Form 10-K on file with the SEC and in our Form 10-Q that we expect to be filed later today. I'd now like to turn the call over to our Chief Executive Officer, Paula Ragan.

Thanks, Candice, and thank you, everyone, for joining us on the call this morning, particularly during these challenging times. We hope you are all healthy and safe. We'd like to start today's call by talking about the COVID-19 pandemic and our response here at X4. As with most Massachusetts-based companies, in mid-March, we made the decision to enact a mandatory work-from-home policy for employees with nonlaboratory-based work, which includes a vast majority of our personnel in both the U.S. and Austria. We maintained a very small number of lab-based employees compliantly working in shifts in our Vienna, Austria research facility to maintain certain laboratory activities. Our primary goals in taking these actions were to maintain the health and safety of the X4 team and mitigate the risk of spreading the virus among staff as well as to protect those in the clinical setting where we have ongoing trials and the broader patient communities at risk. We are pleased to report that everyone at X4 is well and that the pandemic has had minimal impact on our internal business operations to date. Throughout the pandemic, we've been able to successfully leverage technology and communications tools to continue to execute our strategy while working remotely and in virtual settings. Importantly, we've been able to virtually meet with our clinical trial investigators and with regulatory authorities. We have stayed in close touch and continued to work effectively with our partners and collaborators. And we've had positive and productive interactions with our investors and analysts both through our well-attended Analyst Day in early April and more recently via virtual investor conferences and nondeal road show activities. We have also been regularly assessing the impacts of COVID-19 on our current clinical development activities and time lines while working to minimize the impact on our programs. Following input from certain of our clinical trial sites and patient groups and our associated review of this input, we are providing updates to our clinical trial time lines today. As you know, we are currently conducting 3 clinical trials with our lead candidate mavorixafor, our first-in-class small molecule antagonist of the chemokine receptor CXCR4, a receptor that plays a key role in enabling the healthy trafficking of immune cells and effective immunosurveillance. We are conducting a pivotal Phase III trial in patients with WHIM syndrome, a rare, inherited primary immunodeficiency disease; and 2 Phase Ib trials, both proof-of-concept trials of mavorixafor, one in patients with severe congenital neutropenia, or SCN, which is a group of rare blood disorders characterized by abnormally low levels of certain types of white blood cells; and the other in combination with the tyrosine kinase inhibitor ibrutinib in patients with Waldenström's macroglobulinemia, which is a rare form of non-Hodgkin's lymphoma. First, let's discuss our WHIM trial. As a reminder, the 4WHIM study is a global, 52-week, randomized, double-blinded, placebo-controlled clinical trial of mavorixafor for the treatment of WHIM being carried out at numerous sites across multiple countries globally. Given the best information we have at this time from participating sites in the Phase III study, we are now estimating that due to the impacts of the COVID-19 pandemic, the timing of our top line data from the trial will be delayed into 2022, having previously guided to the second half of 2021. We would like to note that we believe the global nature of the trial diversifies our overall risk. And in addition, we are considering impact mitigation measures, such as remote patient visits and virtual monitoring, where possible. Despite this anticipated delay, we are more optimistic than ever regarding the market opportunity in WHIM. In April, we conducted a very well-attended virtual analyst day. During the event, we were joined by Dr. David Dale, a world expert in the translational research and clinical care of patients with WHIM syndrome, who presented a clinician's view of WHIM and also participated in a fireside chat with our Medical Director of Rare Disease, Dr. Sarah Cohen. Dr. Dale highlighted both the challenges that physicians can face in diagnosing and treating WHIM patients and the clear unmet need for disease-modifying therapies for this rare disease patient population. He concluded by detailing the mechanistic and therapeutic rationale and the promising potential for the use of mavorixafor to treat WHIM syndrome. We were also able to hear firsthand from a newly diagnosed WHIM patient, a 37-year-old woman named Kirsty, who walked us through her journey with WHIM. Although at times heart-wrenching, Kirsty gave us an invaluable account of her lifelong struggle with the complications of WHIM, which included frequent bouts of bacterial pneumonia, sepsis, a spinal fracture at the age of 10 from long-term steroid use and weight gain, multiple operations from various diagnosed carcinomas, migraines, COPD and bronchiectasis and countless visits to the hospital. It's our primary goal for this event to put a face on WHIM syndrome for those not familiar with the disease. Being able to hear both the physician and the patient perspective on WHIM allowed us to accomplish this while also educating the external community about the nature of the disease. The other goal of our event was to present the results of our recently completed market research on the prevalence of WHIM in the United States. During 2019 and the early part of 2020, we completed 2 research studies. The first was based on a broad survey of more than 50,000 physicians, which was followed by a large number of confirmatory phone interviews with a subset of physicians who have reported diagnosing WHIM patients. The results of this study provided support for the prevalence estimate of between 1,000 and 1,300 diagnosed WHIM patients in the U.S. today. We also presented results from research using artificial intelligence, interrogating a database of more than 300 million anonymized patient records that span 10 years of insurance claims to help identify patient records that reflect the face of WHIM. This robust algorithm then searched the database, conservatively identifying between 800 and 2,400 additional potential but unconfirmed and undiagnosed WHIM patients. Based on all this research, we were able to provide updated guidance on the estimated range of diagnosed and undiagnosed WHIM patients in the U.S. to be between 1,800 and 3,700 WHIM patients, a significant increase from our prior estimate of approximately 1,000 WHIM patients in the U.S. We believe these numbers may represent just the tip of the iceberg and that the true prevalence of WHIM patients may well exceed these initial estimates due to underdiagnosis, which we believe is likely due to the number of factors that hamper routine genetic testing for CXCR4 mutations. To counter these factors and also capture this additional undiagnosed patient population, we are continuing our efforts to increase WHIM awareness. We've launched our sponsored genetic testing program, PATH4WARD, in collaboration with Invitae. We've deployed our MSLs to engage targeted physicians with potential WHIM patients, and we continue to support multiple advocacy organizations representing key patient groups. In addition, our research also gave us insight into which physicians are diagnosing and seeing WHIM patients most frequently. The results were consistent with what we have seen previously and reinforced our belief that calling on immunologists, hematologists and infectious disease specialists should enable specialty sales efforts to target these physician groups most effectively and efficiently. Another good news related to our WHIM program, we recently received notice that our submitted abstract for the 25th Congress of the European Hematology Association, or EHA, was accepted as a poster presentation. The poster presentation will detail results from our ongoing open-label extension of our Phase II trial of mavorixafor in WHIM patients. The initial data from the Phase II trial supported and informed the design of our ongoing Phase III study. Abstracts are expected to be published online a week from today, May 14. We are looking forward to the EHA meeting, which is being held virtually this year from June 11 to June 14, 2020. Now let's move on to our program in severe congenital neutropenia. This Phase Ib trial is a 14-day, proof-of-concept trial designed to assess the safety and tolerability of daily oral mavorixafor in up to 45 patients with SCN and other selected congenital neutropenia disorders. Based on input from sites and patient surveys similar to what we obtained for our WHIM Phase III trial, we are now expecting a time line of initial data to be delayed into 2021, where we previously expected to report initial data in the second half of this year. Let's now turn to our Waldenström's program. As a reminder, this is a Phase Ib, multicenter, open-label, dose-escalation clinical trial designed to assess the safety and tolerability of mavorixafor in combination with ibrutinib as well as to obtain certain efficacy signals in patients with Waldenström's. Based on trial site feedback and patient surveys, we believe that patient enrollment is expected to be minimally impacted in this cancer setting, and we are pleased to maintain our guidance, continuing to expect initial data from the study in the second half of this year. And some additional good news. We were issued 2 new U.S. patents that further strengthen our robust patent portfolio and are expected to provide exclusivity through 2038 for mavorixafor, our lead therapeutic candidate, with additional protection specific to WHIM syndrome. Despite the current uncertain times, we remain optimistic about the broad opportunity for mavorixafor. And while our priority is always the safety and well-being of our patients, we are working hard to put plans in place to minimize further impacts of COVID-19. And we are committed to providing further updates, including narrowing our guidance on the timing of clinical milestones as we gain greater clarity. I'm now going to turn it over to Adam to discuss our financial results for the quarter. Adam?

Thank you, Paula, and thanks to all of you on the call today. As presented in our press release this morning, I will summarize our financial activities and results for the first quarter of 2020. During the quarter, we amended our credit agreement with Hercules Capital, increasing our potential borrowing capacity to $50 million. We currently have $25 million of potential funds available to us under this debt facility. Also during the quarter, we became eligible to receive a $3 million milestone payment from Abbisko Therapeutics, our solid tumor oncology partner for the Greater China region. This represented the first milestone stemming from our collaboration arrangement and was tied to the closing of a financing by Abbisko. We received this $3 million payment in April. As of March 31, 2020, X4 had $117 million in cash, cash equivalents and restricted cash. We continue to expect that our cash and cash equivalents will fund our operations into early 2022. Note that this guidance does not include any potential proceeds from the amended Hercules debt facility or cash exercise proceeds from investors holding our outstanding warrants. We are continuing to monitor the impact of the COVID-19 pandemic and to manage our cash and working capital accordingly. As mentioned, license revenues of $3 million from Abbisko were recognized in the first quarter of 2020. Note that the receipt of these funds is not reflected in our cash position as the cash was received in April. There were no similar revenues recorded in the comparable period in 2019. Research and development expenses were $8.9 million for the first quarter ended March 31, 2020, as compared to $5.7 million for the comparable period in 2019. General and administrative expenses were $4.7 million for the first quarter of 2020 as compared to $4.8 million for the comparable period in 2019. And our net loss was $11.1 million for the first quarter compared to a net loss of $10.9 million for the comparable period in 2019. With that, why don't we open it up to questions? Operator?

[Operator Instructions] Our first question comes from the line of Stephen Willey with Stifel.

Yes. Hello, can you hear me?

Yes, we can hear you now.

Okay. Sorry about that. Was just wondering what the runway guidance on the balance sheet contemplates just in terms of Waldenström's and SCN clinical development activity for 2021.

Yes. Thanks, Steve. Good question. So that contemplates our continued current trials. The Phase Ib trials did not contemplate clinical trials thereafter, such as registration studies, et cetera.

Okay. And in terms of Waldenström's, can you maybe just provide a little bit of an update with respect to what the initial data disclosure looks like by year-end? Are we still assuming this is just going to be mavorixafor-mediated impacts on patient IgM levels and whether or not you're targeting a medical conference here before the end of this year for data dissemination?

Steve, I'll take that. So we are -- the data disclosure will be around the 12 to 18 patients for the Phase Ib trial safety, tolerability and also IgM levels as you had highlighted. I think in terms of aligning it to a medical conference, we just still yet can't predict the alignment of data with submission of some of the time lines on some of these conferences. So we will aim to share that data. The actual format or sort of process is yet to be confirmed.

Okay. And then maybe just lastly, do you anticipate -- I guess, if some of these delays prove to hold up -- or projected delays prove to hold up, would you anticipate having to perhaps dial down some of the medical affairs activity on the patient identification front in 2021? Or is that something that you think you can sustain despite the trial -- extended time lines on the trials?

Sure. I mean I think we're always monitoring our investments with our runway and data flow. I think we'll be able to continue our current pace around medical affairs. We can always control the ramp of that to ensure that we are optimally balancing continued investment in patient identification with trial enrollment. So I think there's enough flexibility there that allows us to run the business and maintain our guidance at this point.

And our next question comes from the line of Joel Beatty with Citi.

The first one is on the WHIM syndrome delay into 2022. Can you help frame what could help -- what could impact that data coming in early 2022 versus late 2022?

Sure, Joel. So I think at this point, given the dynamics of COVID and how there's just massive global uncertainty in terms of countries reopening hospitals, patients, there's -- that's really the major [ swing ] for everything as you can appreciate. The input that we've had to date is diverse with some favorable input, some more conservative input, so we can't really provide any more details. But certainly, as we gain greater clarity, and I'm sure most of the rest of the world is waiting for greater clarity on how the reopening of countries and particular businesses and hospitals will unfold, so we'll keep you updated.

Got it. Makes sense. And then given that these delays are due to COVID, do you anticipate any flexibility from FDA that could help with -- as these programs develop?

Yes. Both the FDA and EMA have already issued guidance that allows for off-site -- as much off-site examinations as possible. And they're providing supporting mechanisms for all companies to do that, and we're taking advantage of that when patients need it. So we actually feel we do have some clarity and are implementing that based on existing guidance.

And our next question is from the line of RK with H.C. Wainwright.

A couple of quick questions. On these trials which are -- where the top line data is being delayed, can you give us some color as to what percent of these studies have been enrolled? And what -- how do you plan to manage -- because of the time lag, would there be any issues on understanding the data? Or if there is any issues in if somebody misses dosing in between, any of those sorts, how would you manage those when it comes to final analysis?

Yes. So thanks, RK. I think the protocol is a very robustly designed protocol from a power perspective. So we are not really concerned about any anecdotal missing of data. Obviously, we have to continue to monitor that, but I don't think that's going to be an issue certainly for the primary end point. We -- our study is robustly designed. We are appropriately measuring safety assessments as always, even in the context of pre-COVID and post-COVID. So I do think we have a very good handle on our design. And I think the design will withstand kind of the variability of the COVID environment at this point, and we've had input from our clinicians to support that view as well.

Anything on what -- like how much of the study has been enrolled and what needs to -- what percentage needs to get enrolled still?

Yes. No, so pre- or post-COVID, we've never indicated we'd guide on enrollment sort of play-by-play. So we will look forward to sharing when we're fully enrolled at a future point.

Okay. And then a little bit on the relationship with Abbisko. So what is expected next by your partner Abbisko? And where do they want to take this drug next?

Sure. So Abbisko is advancing mavorixafor plus a checkpoint in triple-negative breast cancer as their first indication. They're getting that study off the ground, and they've not -- we do not have yet guidance on when that will enroll and data will be available. I think you conservatively can estimate that's more of a 2022 time frame at this point just due to the long-term nature of initial trials in solid tumor oncology.

And our next question comes from the line of Laura Christianson with Cowen.

I appreciate these are very uncertain times, and some people have already dug into this. But I'm just trying to get a better sense of the current status of the clinical trial sites, how many of them are closed and how many of them do you expect will be reopening more in the near term and whether you're considering adding any additional sites to make up for time.

That's a great question. In terms of the breakdown of open, closed where, with respect to WHIM, it's 25 different countries, 20 to 25 different countries and then the sites are even a higher number than that. So I can't provide a broader landscape of just the variability. I'm sure you can read in the newspapers how different countries and even different regional situations are very different. So what we can say is that we're -- we don't expect to be opening any additional sites based on what we've already currently projected. The patients and clinicians are there and sort of waiting for COVID to work itself through in the case where it's impacting sites. And we feel like once that does work through that we can continue to operate this trial effectively and fully enroll it.

Our next question comes from the line of Trevor Allred with Oppenheimer.

I just have one about SCN and WHIM. I was wondering if you had any feedback from the community on how the patient population is likely affected by the pandemic?

I'm sorry, Trevor, your line is breaking up really bad, and we can't understand you.

How is it now? Can you hear me now?

We can hear you a little bit better.

Okay. I just wanted to know if you had any feedback from the community on how COVID is impacting both SCN and the WHIM populations.

Yes. So thank you. That's a great question. And certainly, we're very concerned about our patients, and I actually have been interacting with them via our patient advocacy groups and surveys. And what I can say is certainly, as you would expect, patients with immunodeficiencies have a heightened sensitivity to the pandemic, which is certainly appropriate given the newness and intensity of all the stories, unfortunately, in the news. What I also can say is they're a very [ motivated patient population ] [indiscernible] with their advocacy groups. And so I think that's also an advantage in working with some of these patient groups. So it's appropriately dynamic. And certainly, we will be [ listening ] and certainly speaking as we continue to prosecute our trials.

And our next question comes from the line of Mayank Mamtani with B. Riley FBR.

This is Sahil Kazmi on for Mayank. A couple of quick ones from us. Just wanted to get an idea on the enrollment for the Waldenström's trial. Is this something that patients have started to enroll into just looking at the ClinicalTrials.gov? And then maybe as a follow-up, what are you doing differently to sort of maintain the time lines for the readout this year? Is this something to do with urgency to treat?

Sure. Yes. So the trial is enrolling. There's always a lag between kind of updates on ClinicalTrials.gov and reality, so the trial is enrolling. In terms of the kind of the uniqueness of this patient population and our confirmed guidance, there's a few things that are involved. Obviously, the number of Waldenström's patients that are already mobilized via a very strong patient advocacy group is a favorable situation for the whole population. Our clinicians are world-recognized clinicians who certainly have their patients first and foremost in their minds both in terms of assessment of the risk of COVID but also the assessment of their risk of being [ double meeting ] patients who are at greater risk for disease progression. So we think the combination of the advocacy from the patients, from the clinicians and then our current operations effort to open up sites is in line with what we can expect for data by the end of this year.

Great. And then maybe a quick one on the WHIM and SCN programs. Can you remind us if there are any sort of operational synergies in terms of how you identify these patients? Any overlap in the sites?

In terms of the site overlap, there's very minimal site overlap, and that's intentional because we do want to make sure that the sites can focus on the trials. Oftentimes, if you have multiples of -- it creates a bit of communication confusion. So we've been somewhat intentional in separating those out. And then in terms of the patient identification synergy, certainly, a lot of these patient advocacy groups umbrella multiple types of neutropenia both with SCN and WHIM. So there are some synergies in terms of our patient interactions via advocacy groups. And then our Invitae collaboration, which is free diagnostic testing that we're providing for the patient community and physician community, certainly creates a lot of synergy because it invites then SCN, WHIM and/or other potential causes for these rare congenital immunodeficiencies.

[Operator Instructions] Our next question comes from the line of Arlinda Lee with Canaccord.

I'm wondering whether you guys have made modifications to your collection of data or monitoring of patients during COVID and how -- if this might help ameliorate some of these office visits.

Sure. So Arlinda, I think -- are you asking are we amending the protocol? Is that kind of the question?

Yes.

Sure. Yes. So we are trying to create additional flexibility in the [ protocol that ] will allow us to do more off-site assessments for patients so that for any of those that we feel are at risk for going into the hospital setting that we have that option for them. So we are moving forward with that, and that is consistent with already what the FDA and EMA are providing guidance to support.

Okay. Is it possible to do like send a visiting nurse or something like that to collect the blood?

Yes, it is, and we've actually had experience with that in our Phase II trial as well.

Okay. Great. And then on the enrollment, can you -- I know you guys were talking about a delay in general, but I'm wondering how maybe the cadence of inbound and if you could give us some color on the bolus of patients that may be building up as sites are not currently enrolling.

Sure. I mean the patients are there and motivated. The clinicians are supportive. And then at the end of the day, we need to recognize the challenges that COVID introduces. So that's really the 3-legged stool. Again, 2 of the 3 are strong. And I think consistent pre-COVID, it really is very much about the variability that COVID is introducing, again, site by site, even patient by patient, clinician by clinician. Some of these clinicians at some point were diverted and are returning. So there are a lot of variability originated in COVID, and that's where we'll -- once that, I think, becomes clear, we'll be able to refine our guidance.

And I'm not showing any further questions. So I'll now turn the call back over to Paula Ragan for closing remarks.

Thank you very much, everyone, for joining us today. We hope you continue to stay [ safe ], and we really invite any other further questions, so please don't hesitate to reach out to Candice. Thank you so much again, and have a great day.

Ladies and gentlemen, this does conclude the program. You may now disconnect.