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

Greetings, and welcome to X4 Pharmaceuticals Third 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 today. 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 Technical Operations and Quality, Dr. Mary DiBiase. As a reminder, on today's call, we'll 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. The description of these risks can be found in our most recent Form 10-K on file with the SEC and 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 while the operating environment remains challenging due to the ongoing COVID-19 pandemic, we continue to advance our mavorixafor clinical development programs. Let me begin with a review of our most recent accomplishments. We are pleased to announce the publication of our positive Phase II safety and efficacy data for mavorixafor in the WHIM syndrome in the prestigious journal, Blood, which, we believe, further recognizes the significant potential of our lead candidate in this patient population. As a reminder, WHIM syndrome is 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. Mavorixafor is our first-in-class small molecule antagonist of the chemokine receptor, CXCR4, and is being developed as a once-daily oral therapy. While the comprehensive data published in Blood expands on previously presented data, there were new results presented, including patient-level data regarding the specific effects on neutrophils, lymphocytes and monocytes as well as the effect of increasing doses of mavorixafor on total white blood cell counts. In addition, the manuscript provided the most up-to-date long-term safety and pharmacokinetic data and presented a detailed analysis of the clinical benefit of the extended mavorixafor therapy on infection rates and work burden. This important publication in the official journal of the American Society of Hematology provides key third-party validation of the data supporting our clinical strategy, including the selection of the dose, primary biomarker endpoint and secondary clinical endpoints for our ongoing pivotal Phase III clinical trial. The published results continue to reinforce our belief that by downregulating the CXCR4, CXCL12 signaling pathway, mavorixafor has the potential to be the first disease-modifying therapy for the more than 3,500 estimated diagnosed and undiagnosed WHIM patients in the U.S. We are also thrilled to be granted Fast Track Designation by the FDA for mavorixafor and WHIM syndrome. Through the Fast Track program, X4 is eligible for more frequent meetings with the FDA to discuss the drug's development plan, protocols and clinical data that would support mavorixafor's potential approval for WHIM. This key regulatory achievement further recognizes the significant unmet need of WHIM syndrome and mavorixafor's potential to treat this challenging disease. As a reminder, mavorixafor was previously granted Breakthrough Therapy Designation by the FDA as well as Orphan Drug status by the FDA and the European Commission for the treatment of WHIM syndrome. Let me now provide an update on our ongoing clinical development programs for mavorixafor. Importantly, despite continued uncertainties surrounding COVID-19, we remain focused on advancing our clinical development programs. We continue to enroll patients in our Phase III WHIM syndrome trial and made good progress across the various regulatory and clinical aspects of the trial. We are diversified across numerous sites and countries around the world, each of which has its own regional and site level COVID-19 considerations. We are working with the sites to maintain enrollment momentum in the trial and including additional services such as in-home patient visits to mitigate the impact of COVID-19. We continue to anticipate top line Phase III data in WHIM syndrome in 2022 and intend to provide further clarity on the time line as soon as we are able to do so. Our Phase Ib trial in severe congenital neutropenia also continues to make progress, and we anticipate initial data from this 14-day proof-of-concept study in 2021. Similar to the Phase III WHIM syndrome trial, we intend to provide further clarity around our SCN trial time line as soon as we are able to do so. In Waldenström’s macroglobulinemia or WM, a rare form of lymphoma, we are continuing to enroll patients, although COVID-19-related delays have had some impact as we recently disclosed. We expect the availability of the initial Phase Ib clinical results in the first half of next year, a slight delay from our previous guidance of the second half of this year. In order to mitigate COVID-19-related patient travel concerns in the study, we are focused on implementing home health visits. We are in regular dialogue with our investigators and through our patient advocacy team with patients to understand their needs given the extended challenges of the COVID pandemic. We are confident that we have an effective plan in place to appropriately address the impact of COVID-19 on our WM study. As a reminder, this Phase Ib clinical trial is expected to enroll between 12 and 18 patients with WM and is a multicenter open-label dose escalation clinical trial assessing the safety and tolerability of mavorixafor in combination with ibrutinib. 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. The results of the study will share safety and dose escalation data and important efficacy signals, and we expect that these data will inform future FDA discussions regarding the potential registration trial in WM. Lastly, I would like to welcome 2 new additions to the X4 leadership team. Dr. Art Taveras started earlier this week as our new Chief Scientific Officer. Art is an experienced CSO, who is joining us from CoMET Therapeutics, a privately held company focused on CoEnzyme A science and intermediate metabolism, where he also served as CSO. Prior to his role at CoMET, he founded and was Chief Scientific Officer of Transform Therapeutics, where he led the discovery of a novel next-generation CXCR2 antagonist for the treatment of cancer. In addition, Art held key leadership roles and drug discovery at Biogen and at Schering-Plough earlier in his career. With his significant expertise in chemokine-related chemistries, decades of drug discovery experience and inspiring leadership, Art is an ideal fit to lead our R&D initiatives and further foster our evolution towards becoming a global rare disease company. In addition, we recently expanded our Board of Directors with the appointment of Alison Lawton, an industry veteran, who strengthens our Board's expertise across many strategic fronts. Ms. Lawton most recently served as CEO of Kaleido Biosciences and having previously served as a consulting Chief Operating Officer to the company and as a member of X4's Corporate Advisory Board. Alison brings a unique understanding of X4's core scientific and corporate goals. I look forward to working closely with her again. With that, I'll now turn the call 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 third quarter of 2020. As of September 30, 2020, X4 had $90.7 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 this guidance does not include the $25 million in potential and contingent proceeds from our Hercules debt facility or any cash exercise proceeds from investors holding our outstanding warrants. Research and development expenses were $11.4 million for the third quarter of 2020 as compared to $8.6 million for the comparable period in 2019. R&D expenses included $1 million of certain noncash expenses for the quarter ended September 30, 2020. General and administrative expenses were $5.6 million for the third quarter of 2020 as compared to $4.4 million for the comparable period in 2019. G&A expenses included $1.4 million of certain noncash expenses for the quarter ended September 30, 2020. Finally, our net loss was $17.4 million for the third quarter of 2020 as compared to a net loss of $17.7 million for the comparable period in 2019. Net loss included $2.5 million of certain noncash expenses for the quarter ended September 30, 2020. With that, let's open up the call for questions. Operator?

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

This is Ellen on for Steve. Just 2 quick questions from me. So first, you mentioned that you're focused on implementing home health visits for patients enrolled in the Waldenström’s trial in order to mitigate some of those effects from COVID. Is that same strategy being applied to the WHIM and SCN trials as well? And if so, how is that going?

Sure. Thanks, Ellen, for the question. So yes, the home health is being implemented for our studies where it makes sense for the chronic dosing, which is both WHIM and Waldenström’s. Obviously, patients are coming in over many months. For SCN, it makes less sense given the actual period of the study is only 2 weeks of treatment. So the home health is focused solely on WHIM and Waldenström’s.

Okay. That makes sense. And then can you provide any updates regarding X4P-003 or X4P-002? Are either of these assets an IND-enabling studies at this point? And then also, can you just remind us how those assets are differentiated from each other? I know 002 is engineered to cross the blood-brain barrier. But I was just wondering if you could give a little more color on 003.

Great. No, thank you. We're happy to talk about our preclinical programs that are going really well. So 003 is the most advanced of the two. It is approaching IND-enabling studies. And then typically, after that, it's about a year to get into the clinic. So we're extremely excited with the profile that we've been seeing come together with this particular molecule. The differentiation between 003 and mavorixafor is that it does engineer out to the minor, but meaningful profile of mavorixafor. So for example, 003 does not have a food effect likely. Of course, we have to kind of prove that out, but so far, everything is looking very good. And we've also engineered out some of the drug-drug interaction profiles. Again, although minor, it certainly makes an important step forward for patients and clinicians to not have to worry about that. So that's moving forward very nicely. 002 is behind 003 and late lead optimization. And again, it's making good progress in terms of finding that right profile between brand exposure and plasma exposure, and we're really excited to continue to advance that to support further development for some of those serious brain cancers that we hope to address.

Our next question comes from Arlinda Lee with Canaccord.

I was hoping that you could provide an update on the enrollment for the WHIM syndrome? And then I also was curious on the preclinical programs, might we be expecting any data presentations on those any time in the near future?

Great. So just with respect to enrollment on WHIM as consistent with the past, we're not providing any specifics other than to say that we're on track with our top line data in 2022. And we are seeing patients to continue to enroll in the trial even despite the global pandemic. So we're really happy to see the patient's commitment and the site's commitment to continue to advance the trial. With respect to the preclinical program data, that's a great question, and it kind of segues very nicely to X4's recent announcement this week of hiring our Chief Scientific Officer, Art Taveras. We're very pleased to have someone with his tremendous experience in drug development and drug discovery. But I think while we don't have any specifics on rolling data around our preclinical program, stay tuned because I think we'll have some updates coming into next year.

Our next question comes from Joel Beatty with Citi.

This is Shawn on for Joel. Two for me today. First on Waldenström’s and peer data in first half next year. Maybe just talk about how you plan to roll out that data? And then kind of getting into the weeds on maybe what the results could be. Aside from seeing any complete responses, are there any biomarkers that would give you confidence that any efficacy signals we see are due to your drug and not the combo? And then a follow-up on WHIM. And maybe could you talk about patient identification, where you're kind of at right there? And how many patients are on your EAP program right now?

Sure. So thanks, Shawn. Nice to hear from you. So I'll try to kind of walk through your questions. So in terms of the Waldenström’s data, the format of presenting the data, it's an open-label trial. We're making nice advances and our goal is to present a robust data set that people can interpret. And certainly, I want to do that in conjunction with our support of the key opinion leaders that are working with on our trial. So we're not yet sure of the format. But at the end of the day, we'll -- all of us will be aligned to make sure we can communicate and put the data in context of the overall treatment landscape. So stay tuned for sort of more specifics as they unfold. With respect to the results, though, it is important to help the world appreciate. So with ibrutinib alone, there's actually a very well-defined profile of responses in the first 3 to 6 months on single-agent treatment in these patients with the CXCR4 mutation. In fact, only about 1/3 of them get something called a major response, which means IgM drops greater than 50% of their baseline. So it's a pretty -- unfortunately, sad part for these patients, not many of them are getting those profound and deep IgM responses. So we will be showing data from patients on the first 3 to 6 months of dosing, and certainly we hope to beat that number of 30% with the data that we present the first half of next year, but stay tuned on the results as they unfold. And then finally, I think you mentioned WHIM patient ID. So we are continuing -- so with respect to the trial, again, I think we feel very confident that patients are there and waiting. There's obviously been some issues with having sites being open and able to enroll due to COVID, but we're -- with respect to the trial, we're incredibly confident. With respect to just the overall market, obviously, this is a long-term commitment for the company between our education and awareness through our medical science liaison teams, both in the U.S. and starting in Europe. We actually feel like we've been making great progress in getting the broader community to engage. We had some virtual booth at various conferences, where patients have come to visit us. So we feel like the word is getting out, and we're beginning to get a nice groundswell of people, thinking more broadly about women and their own patient populations in their clinics and also reaching the patient community directly. So we continue to make progress. We're excited about the long-term trajectory of the company in support of the hopeful commercial approval of mavorixafor for these patients.

Our next question comes from Mayank Mamtani with B. Riley Securities.

This is Sahil on for Mayank. Congrats on all the progress. Just a few questions from us this morning. First off, as it relates to the Waldenström’s program and now expecting the data first half of next year. Is this more sort of enrollment related more than anything else in terms of monitoring responses? And should we still expect data on that 12 to 18 patient range?

Yes. So if I understood your question in the beginning, is a little bit of what's the shift or did I get that right -- sorry...

No, that's exactly right.

Yes. So there's definitely just enrollment issues due to -- again, the U.S. -- the site is primarily U.S. with 2 ex U.S. sites. As you can appreciate with COVID, there are ebbing and flowing travel restrictions for patients depending on where they're located and also on their own comfort level, which is why the in-home health has been a good direction to alleviate that and why we feel confident about and are now enabling enrolling to be a little bit more consistent. In terms of the data, again, we just have to wait and see. It's an open-label trial. It's 12 to 18 patients, partly, it will be dependent upon dose and safety. And then as we see efficacy signals around the IgM level drops, we look forward to sharing that in the first half of next year.