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

Greetings, and welcome to X4 Pharmaceuticals Second 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. 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 Chief Scientific Officer, 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 forthcoming Form 10-Q. I'd now like to turn the call over to our CEO, Paula Ragan.

Thanks, Candice, and thank you, everyone, for joining us on the call this morning. We hope you are all continuing to stay safe and healthy. We are pleased to report today that despite the challenges posed by the ongoing COVID-19 pandemic, we were able to achieve important progress during the second quarter. We benefited from what we believe to be 2 value-adding and derisking events related to the development of our lead candidate, mavorixafor, for the treatment of WHIM syndrome, a rare inherited primary immunodeficiency disease caused by mutations in the chemokine receptor, CXCR4, a receptor that plays a key role in enabling the healthy trafficking of immune cells and effective immunosurveillance. As a reminder, mavorixafor is our first-in-class, small molecule antagonist of the CXCR4 receptor and the first potential disease-modifying treatment for WHIM patients. We are currently conducting a pivotal Phase III trial in patients with WHIM syndrome. The first of these important events was our Virtual Analyst Day that we hosted in early April. At this event, we presented an overview of WHIM syndrome and increased our estimate related to the prevalence of this disease in the U.S., based on an in-depth primary market research that we conducted in 2019 and earlier this year. As we discussed at that time, our updated research now indicates the range of diagnosed and undiagnosed WHIM patients in the United States to be greater than 3,500, a significant increase from the prior estimate of approximate 1,000 genetically diagnosed patients. Our research also indicated a concentrated target physician population, primarily consisting of immunologists, hematologists and infectious disease specialists that we believe we could cover with a small targeted sales force. This positive market snapshot was followed by a second key event related to the mavorixafor WHIM indication, a presentation of additional Phase II data at the European Hematology Association, or EHA, Annual Congress in June. I won't go into many specifics here as we reviewed the data in a detailed call on our June EHA call, but I do want to highlight several key takeaways as they serve to strengthen our confidence in mavorixafor's potential to be successful in our ongoing Phase III trial and deliver a disease-modifying therapy in patients with WHIM syndrome. The data presented were from the open-label extension of our Phase II clinical trial evaluating the long-term safety and efficacy of mavorixafor in patients with WHIM syndrome. Most importantly, the data support the Phase III selection of the dose of 400 milligrams once daily, which demonstrated a greater than 4.5-fold increase in the metrics of time above threshold for absolute neutrophil count, or TAT ANC as we abbreviate it, over the low doses explored in the study. The metric TAT ANC is the Phase III study's defined primary endpoint agreed upon by the U.S. and European regulators. Additionally, the Phase II data showed sustained, dose-dependent increases in white blood cells, absolute neutrophil counts and absolute lymphocyte counts, at the median follow-up time of 16.5 months. Also important to note, these hematologic improvements correlated with a direct clinical benefit, with patients treated for at least 6 months experiencing a 54% decrease in annualized infection rates versus the infection rates in the 12 months prior to treatment. Additionally, patients experienced a 75% reduction in cutaneous warts versus baseline, suggesting a favorable impact on the HPV-related disease risk of WHIM syndrome. Rate of infection and wart burden are 2 important secondary endpoints of our Phase III trial. Enrollment in our Phase III trial is ongoing and making progress as certain countries and sites have reopened in the context of COVID. We remain on track to report top line Phase III results in WHIM in 2022. Our second ongoing mavorixafor clinical program is a Phase Ib trial in patients with severe congenital neutropenia, or SCN. It's a 14-day proof-of-concept trial designed to assess the safety and tolerability of daily oral mavorixafor and up to 45 patients with SCN and other selected congenital neutropenia disorders. And we continue to expect initial data in 2021. We intend to provide further clarity around these time lines for both WHIM and SCN at a future point. While our public-facing presentations during the first half of 2020 were focused primarily on WHIM syndrome, we've also continued to make progress in our ongoing Phase Ib study of mavorixafor in patients with Waldenström's macroglobulinemia, a rare form of non-Hodgkin's lymphoma. This trial is expected to enroll between 12 and 18 patients with Waldenström's and is a multicenter, open-label dose escalation trial assessing the safety and tolerability of mavorixafor, in combination with the standard of care treatment, ibrutinib, a tyrosine kinase inhibitor. The trial is being conducted as part of a collaboration with The Leukemia & Lymphoma Society to accelerate the development of mavorixafor for the treatment of Waldenström's. Enrollment is continuing in this trial as well, and we continue to anticipate announcing initial Phase Ib clinical results towards the end of this year. These results will contain both safety data and important efficacy signals. We expect these data to inform future FDA discussions we plan to hold regarding a registration trial in Waldenström's. Lastly, we wanted to acknowledge here the promotion of Dr. Renato Skerlj to the position of Chief Scientific Officer of X4. Renato was one of the scientific founders of X4 and a co-inventor of mavorixafor and has more than 25 years of experience leading the discovery and development of disease-modifying small molecule drugs to treat genetically defined rare diseases. In this expanded role, he is leading all research and nonclinical development functions at the company, overseeing our operations in Vienna, Austria, as well as our efforts to advance and expand our pipeline targeting additional genetic rare disease indications. 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 second quarter of 2020. As of June 30, 2020, X4 had $105.6 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 the $25 million in potential proceeds from our amended Hercules debt facility or any cash exercise proceeds from investors holding our outstanding warrants. Research and development expenses were $9.3 million for the second quarter of 2020 as compared to $8.9 million for the comparable period in 2019. General and administrative expenses were $5.3 million for the second quarter of 2020 as compared to $4.6 million for the comparable period in 2019. And our net loss was $15.1 million for the second quarter of 2020 compared to a net loss of $13.4 million for the comparable period in 2019. With that, why don't we open it up to questions? Operator?

[Operator Instructions] I show our first question comes from the line of Stephen Willey from Stifel.

This is Ellen Sands on for Steve. So my first question is, is there any scenario whereby you decided to dose escalate beyond 600 milligrams in the Waldenström's trial?

Thanks, Ellen. This is Paula. Just to answer your question, I think that's insightful. I think at this point, we think that the 600-milligram exposure certainly gets us well above the IC90 at the trough level, but we can consider doing that given the safety profile of the drug. So I think there will be some flexibility there in terms of safety, but likely not given what we're already dosing the patients with.

Okay. Makes sense. And then maybe just 2 more for me. So can you remind us if you've predefined a given number of representative genotypes that you want to specifically enroll into the Phase Ib for SCN? Or is it all-comers? I know you're looking at a genetic panel for the patients.

There's sort of 2 buckets. There's patients that don't have an existing genetic profile, but do qualify from the inclusion price criteria. So we'll be screening those to better understand their genetic profile. There will be some that are already defined with certain genetic phenotype or genetic profiles, such as GATA2 or G6PC3, but we will still actually genetically panel those as well in case there's additional genetic alterations that we need to understand. So I think there's just flexibility there. Everyone will get genotypes, but some have a bit of a better understanding entering the study.

Okay. Great. And then last one, are there any updates around potential collaborative partners for mavorixafor in solid tumors?

Adam, do you want to take that?

Sure. It's a good question. So we have our partnership with Abbisko, which is progressing nicely. They recently announced a fundraising, and that's for China rights. Outside of China, we don't currently have any updates on that strategic front. We continue to focus on rare oncology with our Waldenström's trial, with data expected later this year.

Our next question comes from Arlinda Lee from Canaccord.

It's Ben Shim for Arlinda. Paula, just a couple general ones. Can you give us an idea of what the scope of the Phase Ib Waldenström's data will be? What will be provided? And maybe nail down a little bit more specific timing for that.

Sure. Thanks, Ben. So the Phase Ib is a dose-escalating trial, and think about it almost in 2 parts. Every patient will initiate at 200 milligrams. And assuming safe -- safety supports that they'll be dose escalated to the next level, so 400 and then 600 after 28 days of safety. And that's again, 12 to 18 patients. So that's kind of the part 1. Part 2 will be for any given patient reaching their maximum tolerated dose. So they'll continue on in the study for at least 3 more months and then roll into an open-label extension. So the way we think about the data are in those 2 parts. The first part enables us to better understand safety, PK/PD profiles. And additionally, we'll be looking at IgM level drops. IgM level changes certainly have been shown to occur in the first 2 to 3 months of dosing with ibrutinib in the single-mutant population. That's much more difficult in the double-mutant population. So we're hopeful that seeing meaningful drops in IgM would be indicative of clinical activity of mavorixafor in that double-mutant patient population.

Okay. Great. Just a second clinic general question. As we get closer to getting hopefully a COVID-19 vaccine as early as this fourth quarter, yes, my question to you is, how directly relevant do you think this vaccine will be to your patient populations in each of the 3 indications you're studying, directly or indirectly, in? Is this recalibrating maybe your expectations for enrollment and potential data readouts?

So it's a great question. I think anything related to COVID-19 data in WHIM patients is challenging because certainly, we're not aware of any data yet that kind of elucidates what their risk profile is. I actually have been following COVID in a broader sense of immunocompromised patients, and they do have some -- that the most recent nature of publications suggest they do have some modest risk, of course, but not the extremes that we've seen in various key populations. So again, with that backdrop, I think as -- what we can control is just keeping focused on the trial and making sure our patients are safe. We have a daily -- an independent safety monitoring board that, of course, assesses their infections. So I think in the context -- and then to get -- just get back to the context of vaccines, every vaccine is different and different patient populations respond differently. So we would obviously need to better study that. And I think it's just too much uncertainty and too much unknowns at this point to really conjecture.

Our next question comes from Leland Gershell from Oppenheimer.

Actually, I wanted to ask on the earlier pipeline behind mav and 002, 003. Just wanted to check in if we'll be hearing any news flow on those compound programs for those later this year or perhaps in '21.

Sure. Renato, do you want to take that?

Yes. So -- yes. Thanks. I'll take that question. So yes, we're scheduled to basically move one of those compounds into development later in the year. We're currently just looking at some properties of these molecules to make a decision in terms of which molecule we would move forward. So we're on track to basically move one of the molecules in development and potentially another molecule next year.

The indications that you have listed, right? I think it was GBM 402?

Correct. So that's a molecule that crosses the blood-brain barrier.

Our next question comes from the line of Joel Beatty from Citi.

For the Waldenström's data coming out later this year, could you describe what would be next for the program if the data is successful?

Sure. Thanks, Joel. Yes, we're -- we know so much about our molecule already, and then certainly seeing signs of clinical activity in the Phase Ib with support directly moving into what we would view as a Phase II/III trial, that would likely be a controlled trial, combination versus likely standard of care or single treatment with ibrutinib, but we still need to have conversations with the FDA on that. But we're in great shape, I think, in terms of we know so much about our drug from other trials that we would feel quite comfortable seeing strong signals to move forward with a registration trial subsequent to the Phase Ib.

Great. That's helpful. And then would the Phase II be -- Phase II/III trial be in the current cash runway guidance?

No, it would not. I'll let Adam expand on that.