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

Greetings, and welcome to X4 Pharmaceuticals First Quarter 2022 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, Dr. Glenn Schulman, Head of Investor Relations. Please begin.

Thank you, operator, and good morning, everyone. Presenting on today's call will be X4's Chief Executive Officer, Dr. Paula Ragan; and the company's Chief Financial Officer, Adam Mostafa. Following prepared remarks by each of them, we will open up the call to your questions, during which we'll be joined by our Chief Scientific Officer, Art Taveras; Chief Medical Officer, Diego Cadavid and our Chief Operating Officer, Mary DiBiase. As a reminder, on today's call, X4 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 materially from those forecasted. A description of these risks can be found in X4's most recent filings with the SEC. With that, I'd now like to turn the call over to X4's President and CEO, Dr. Paula Ragan. Paula?

Thanks, Glenn, and thank you, everyone, for joining us on this call this morning. On this morning's call, I will provide a brief update on recent accomplishments, highlight a few of our important upcoming catalysts including the readout from our Phase III 4WHIM trial, and of course, open up the call to any questions you may have for the team. As a reminder, our lead candidate, mavorixafor, a CXCR4 antagonist is being evaluated as an oral once-daily treatment for people with rare disorders of the immune system, including people diagnosed with WHIM syndrome and chronic neutropenia and also for those diagnosed with certain lymphomas. WHIM syndrome is a rare immunodeficiency disorder caused by genetic mutations to the CXCR4 receptor. The disease is characterized by HPV-associated warts, hypogammaglobulinemia, multiple types of infections and myelokathexis, a pathologic bone marrow finding associated with the reducibility of white blood cells to move from the bone marrow to the periphery. We believe that the results from the open-label extension of our Phase II clinical trial with mavorixafor in WHIM patients continue to support the significant potential of our lead drug candidate in this indication with data showing durable TATs or Time Above Threshold for blood levels of neutrophils, lymphocytes and monocytes, decreased frequency of infections and robust and sustained improvement in warts. Patient quality of life, including reductions in doctor or hospital visits was meaningfully improved based on our Phase II patient narrative. Importantly, these include the primary and secondary endpoints of our ongoing Phase III WHIM trial. And just as importantly, mavorixafor continues to be well tolerated over a median treatment duration of now more than 160 weeks. We continue to anticipate that top line results from our global placebo-controlled, double-blinded 4WHIM Phase III trial, which enrolled a total of 31 adolescent and adult patients will be available in the fourth quarter of this year. We intend to report on the primary endpoint, which consists of Time Above Threshold for absolute neutrophil count and which was powered based on our findings in the Phase II trial, along with available secondary endpoints. The trial design and primary endpoint have been agreed upon with the FDA. Additionally, secondary endpoints evaluating inspections and work burden among others, have been also discussed extensively with the FDA and their guidance has been diligently followed. We look forward to preparing and submitting the new drug application or NDA for submission to the agency in the second half of next year. We also continue to conduct and publish research on the underlying genetics of WHIM as we work to further characterize and expand the definition of the disease. We have built strong in-house research programs that leverage world-class collaborators to advance bench to bedside research. By continuing to establish correlations between clinical presentation and novel genetic variants associated with WHIM, we can enhance our ability to identify undiagnosed patients including those who may potentially benefit from mavorixafor treatments. At the upcoming European Hematology Association or EHA meeting this June, we plan to present more of this novel research. We will have a press release with more details this afternoon after the abstract embargo lift, and we hope to see you at the Congress in Vienna. As I mentioned earlier, we believe there are additional disease areas, harboring patients in need who could also potentially benefit from treatment with mavorixafor. With WHIM as our beachhead indication well on its way, we are also assessing the potential of mavorixafor as a therapy for other causes of chronic neutropenia given the drug candidate's potential for meaningful advantages over the only existing therapy. Chronic neutropenia or CN includes a number of subtypes such as congenital, idiopathic and cyclic neutropenia all of which we believe could benefit from treatment with mavorixafor. In our ongoing Phase Ib study, we are actively enrolling patients diagnosed with these types of CN to establish biologic activity and support future regulatory discussions. We look forward to providing both updated clinical data along with regulatory feedback during the third quarter of this year. We also announced this morning that we have completed enrollment in our ongoing Phase Ib clinical trial studying patients diagnosed with Waldenstrom's macroglobulinemia, a rare B-cell lymphoma. This Phase Ib trial is designed to demonstrate safety, dose and elucidate proof-of-concept of mavorixafor in combination with the BTK inhibitor, ibrutinib in patients with Waldenstrom's resulting from mutations in both their MYD88 and CXCR4 genes. This patient population continues to have reduced treatment responses due to their cancers harboring these 2 mutations. Dose of 200, 400 and 600 milligrams per day were evaluated and once cleared, eligible patients were dose escalated to receive 600 milligrams once daily. Data that we presented last December at ASH showed a 100% overall response rate or ORR and sustained decreases in serum IgM, a blood marker that corresponds with cancer burden in 10 evaluable patients whose cancers had confirmed MYD88 and CXCR4 mutation. Further to that, we also presented additional preclinical results in a poster presentation at the 2022 American Association of Cancer Research or AACR Annual Meeting. This poster reported that combination of mavorixafor with a broad array of BTK inhibitors, overcame bone marrow induced treatment resistance and enhanced cancer cell death in vitro assays of Waldenstrom's. We expect to report results from the Phase Ib clinical study, which we anticipate would include at least 6 months of treatment data for patients on the 600-milligram dose during the second half of this year. With 3 readouts on the horizon, including data and chronic neutropenia from our Phase Ib study next quarter, results from Waldenström’'s Phase Ib study in the second half, and our 4WHIM Phase III results in the fourth quarter we are extremely excited for what's to come. With that brief update, I'll now turn it over to Adam to discuss our financial results for the quarter before we open up the call for questions. Adam?

Thanks, Paula. And thanks to all of you on the call today. As presented in our press release this morning, I'll summarize our financial activities and results for the first quarter ended March 31, 2022. As of the end of the quarter, X4 had $67.7 million in cash, cash equivalents and restricted cash. We continue to expect that our cash and cash equivalents will fund our operations into the fourth quarter of 2022. Research and development expenses were $14.1 million for the first quarter ended March 31, 2022, as compared to $12.1 million for the comparable period in 2021. Selling, general and administrative expenses were $7.7 million for the first quarter ended March 31, 2022, as compared to $5.8 million for the comparable period to 2021. Finally, X4 reported a net loss of $22 million for the first quarter of 2022, which includes approximately $1.5 million in non-cash expenses, as compared to a net loss of $18.7 million for the comparable period in 2021. We'll now open up the call for your questions. Operator?

[Operator Instructions] Our first question will come from the line of Marc Frahm from Cowen.

Can you just start with the SCN update? And Paula, you laid out that there are a couple of different subtypes. Can you maybe describe the types of patients you've been able to enroll so far and therefore, kind of across those different subtypes, which ones might you be able to update us on in Q3, both from a clinical perspective, but then at least as importantly, from a regulatory perspective?

I'll start and then I'll invite Diego to chime in. But what we're aiming to do is to show the breadth of mavorixafor's potential benefit in patients with chronic neutropenia, those buckets, as you mentioned, are the idiopathic, cyclic and then congenital. And I think at this point, what we can share is we're certainly feeling confident that we'll be able to share data across each of those 3 buckets in Q3. Again, the patient flow of the numbers is always a bit ad hoc because some of these patients are sick with neutropenia, for example, it's a bit challenging just to catch the right window to explore the drug in those patients. But we're really encouraged about what we're already seeing, and maybe I'll turn it over to Diego to add.

Yes. I would just add that we are reassured by the strong interest at all the sites, the number of potential patients, the number of patients who have consented as well as patients dosed. And the change in the conditions of the pandemic is making this study a move forward. So we look forward to being able to present data in Q3, as Paula said, that will give us a good sense about the potential across all these diverse indications within chronic neutropenia.

Okay. That's helpful. And then maybe for Adam, I appreciate the cash guidance lasting in Q4. Can you remind us of the kind of size of the covenants on your debt and just kind of where that is?

Sure. Thanks, Marc. So we have a minimum cash covenant. That test kicks in on September 1. And we have a recent amendment where if we raise at this point, another $27 million by June 30 that minimum cash number will be fixed at $30 million until we get to WHIM data where with positive WHIM data it will be $20 million. If we do not raise that capital before June 30 in that test, that will simply be a 6-month cash burn debt. So there'll be our prior 1-month burn time 6 that we would need to keep in terms of cash on the balance sheet at that point in time to cover the test. So that's a little bit around the covenant.

And our next question is from the line of Mayank Mamtani from B. Riley Securities.

This is William Wood on for Mayank Mamtani. And congratulations on all the advancements that you've made. A couple of questions from us. I was wondering if you could first -- could you talk to how you view the WM landscape in light of the experience of our targeted therapies, and where you may think that the third quarter readout has an opportunity to improve perception and as it relates to both safety and efficacy?

Sure. I'll start. And again, I think it was Waldenstrom's that you're asking about just to confirm.

Yes, correct.

Yes. So guidance is that we'll be sharing data second half of this year. And in terms of the competitive landscape, of course, there's a lot of -- a number of BTK inhibitors given the validation of the target that are moving forward in the pipeline. Certainly, there's 2 approved -- 2 or 3 approved. I think, again, we continue to see the importance of adding a CXCR4 antagonist across any of those BTK inhibitors with respect to patients with the CXCR4 mutation initially and certainly, we see broader applicability beyond that. We just presented some really exciting data at AACR which shows the breadth of activity of our drug, not only in double mutants but of course, the single -- the non-mutant Waldenström’'s cells as well. And then in terms of safety, our drug has got a very positive or benign safety profile, which makes it more amenable to partner with some of these tougher treatments. So the overall therapeutic window in combination seems to say reasonably wide when we add drugs in combination, again, favoring our approach versus what we're seeing with other combinations. But Diego, would you like to chime in and then Art as well?

Yes, I would add also that we believe mavorixafor is quite differentiated from some of the other drugs we combined in the sense that, for example, Venetoclax has a lot of neutropenia, zanubrutinib also showed a lot of neutropenia. You see it with ibrutinib. We actually have a drug that treats neutropenia. So in the context of having risk of infection in these combination treatments ultimately the safety of the combination will become very important for a chronic treatment on indolent lymphomas. So we are quite excited about the potential of mavorixafor to be a competitive candidate in that space.

And maybe I can add a little bit starting from the neutropenia side. There's reports already in the literature that talks about ibrutinib, zanubrutinib, and acalabrutinib actually showing neutropenia and lymphocytopenia and then the corresponding increase in infections, it's grade 3 through 5 SAEs and AEs. And so we certainly -- our drug -- and we measured mavorixafor in combination with ibrutinib in our Waldenstrom's Phase Ib trial across the patients. And we can actually see increases in all of these leukocytes. So we actually do believe that this is going to be a benefit with respect to safety and particularly the infection safety related to neutropenia and lymphocytopenia. And then second is related to the data that we presented at AACR. And as Paula mentioned, there, what we were working with, with a single mutant wild type of CXCR4 and these are MYD88 L265P mutation cells. And there, what we found is that all of the agents that we looked at, these are the BTK antagonists that are out there. So ibrutinib and zanubrutinib two commercial ones and then LOXO-305 from Lilly and the Merck ArQule 531. And what we found is that these agents, while they work on their own and once you start to involve bone marrow, which is really where CXCR4 double mutation really starts to play. Then you see that they become a bit resistant to the therapy -- the tumor cells become resistant to the therapy. And mavorixafor was able to overcome that. So a lot of opportunities here that broaden obviously the combinations that could be used. So it's not just ibrutinib with mavorixafor, but it could be any of these other agents, whether they're commercial currently or potentially the ones that are in clinical development. It broadens the opportunity across single mutants, which now have up regulated CXCR4. So it's not just about the double mutants, and then the work that we're doing right now is broadening out even further to other lymphomas. So I think we have some good breadth of opportunities with mavorixafor and the combinations actually could be quite a few, not just with ibrutinib.

I really appreciate the extra information there. And also -- I mean, as you presented, you've got a number of clinical trials providing data in the second half. I was just curious where we might be able to expect to see those data coming out throughout the year?

Yes. I think we'll provide greater clarity on the different venues that we'll be sharing data certainly with the 3 different milestones. So the chronic neutropenia milestone and then the WHIM Phase III as well as the Waldenstrom's. We have sort of a nice drumbeat of information and that we'll try to optimize to make sure the community is kind of educated and understanding the data when they roll out. So stay tuned, we'll be able to provide some more clarity in the coming months.

Our next question will come from the line of Swayampakula Ramakanth from H.C. Wainwright.

This is Arce from H.C. Wainwright. So talking about the 3 buckets of patients under chronic neutropenia. Is the biology the same or similar among the 3 buckets, and you stated that you would have data among the 3 buckets. So assuming that the data is similar, is there a preference to go after 1 of them? Or what is the decision point there?

Yes. So I think our rationale is -- certainly, there's other -- G-CSF is the only approved treatment. It has been shown to offer some benefit to those patients with significant tolerability issues. And then CXCR4 the antagonist -- CXCR4 antagonism is a broad mechanism as well. We've seen it to elevate white blood cell counts in any subject or patient population. So it has a tremendously broad opportunity to increase neutrophils in any form of neutropenia. You saw that in our ASH data with our idiopathic patients. Those folks have unknown cause of neutropenia, we found very robust effects. So we've kind of already checked 1 of the 3 boxes, and we look forward to sharing more data. But I think maybe I'll invite Art in a little bit more to talk about the mechanistic rationale for mavorixafor for across these different buckets.

Yes. So maybe I'll just talk a little bit about the overall chronic neutropenia landscape, if you will. So we've been -- and maybe start from WHIM and then also the connection back to Waldenström’'s. So there, we were focused really on mutated CXCR4, but the work that we have done in Waldenström’'s in particular showed us that actually, it's more than just mutated. It's even wild-type CXCR4 and how that gets upregulated under various scenarios. And then certainly across and this is work that Diego presented at ASH in December, that across all the different clinical programs that we've been doing, we see leukocyte mobilization when in patients treated with mavorixafor, and we see baseline elevations of these leukocytes across the board, right? So this is actually pretty promising because it actually says it's more than just mutated CXCR4, and it's more than just the specific 2 diseases that we've been talking about. So now it's the broader market expansion and opportunity across other patients now with chronic neutropenia. And what we're focused on is the potential of mavorixafor to raise the neutrophil levels in those patients. And the simplest way is just take the patient to get their mavorixafor and see if they respond or us in vitro to be able to assess pathogenic measures. And so from the data that Diego presented in December at ASH, we're seeing that these patients do respond. So clearly, there's a CXCR4 component. And what we've always talked about is that CXCR4 and its natural ligand CXCL12 at the heart, they're master regulator in terms of granulopoiesis and hematopoiesis in general. So that's a nice connection and it's really all about CXCR4 for us.

Fantastic. And then on the WHIM syndrome, with the data coming out in the fourth quarter, so at the same time, you folks were identifying new mutations within the CXCR4. So when you present the data or when you start to analyze the data from fourth quarter onwards, are you going to go back and look at individual -- individually, you're going to be looking at the mutations, just to understand how broad mavorixafor can be working on. Do you think there would be any mutations where mavorixafor will not be able to interact with or not able to get the benefit in some of these patients? I'm just trying to understand how broad you can use mavorixafor in the WHIM's syndrome?

Arce, that's a great question. And maybe I could just share the work that we've been doing in what we call the [ VUSs ], which are really a number of CXCR4 mutations. So at this point, we've analyzed probably close to about 70 mutations, and they really cover -- span the different parts of the CXCR4 receptor. And what we find is that most of them are pathogenic, and then we know that mavorixafor binds to all of the CXCR4 mutants that we've tested so far. And so -- or at least blocks the binding of CXCL12 that we tested so far. So we believe that it's going to be effective in any one of the CXCR4 mutations, and that should be irrespective of the mutation.

Yes. And I would simply add that we already tested in the context of the Phase II trial, different mutations and they all respond. So we're very confident between the in vitro data and our own in vivo data. And in fact, we have enrolled a breadth of mutations in the Phase III trial. The bottom line is we believe it will work across all mutations. And in fact, because of our chronic neutropenia, we know that it also works on the wild-type. So it's a big promise to have for the first time an oral, well-tolerated therapy to 3 people who are at risk of serious infections from chronic neutropenia.

Fantastic. That's great. So one last question on the Waldenstrom's indication. When data comes out in the second half, what are the next steps in the sense would... [Technical Difficulty]

Can you repeat that, Arce? I'm not sure what that...

On the Waldenström’'s indication, what's the next step in the sense once the data is presented in the second half, would you be able to go straight into a registrational study? Or do you need to do an additional study before you're going to registrational one?

So obviously, we're waiting for the data to mature and then have regulatory discussions. There's really only been 2 drugs approved in Waldenstrom's historically. So I think the answer is stay tuned. Obviously, data plus regulatory input then would enable us to plan for the future. And so we'll be able to, that's our milestone for the second half to provide that guidance. So looking forward to sharing more, Arce.

[Operator Instructions] Trevor Allred from Oppenheimer.

I just want to ask if you had any conversations with Lilly or Merck about combination potential? And do you have any expectations for how you might advance that combo? I also wanted to ask if you see any potential role for mav in activated PI3K Delta syndrome?

So Adam will take the BD question.

Yes. Thanks for the question. I won't comment on specific names of folks who we've been talking to. But certainly, we're exploring different alternatives and discussions as it relates to getting the most value from our pursuits and strengthening our balance sheet in both in oncology and in general, but we'll circle back when appropriate with any specifics in the future.

Yes. And then with respect to PI3K delta, certainly, the pathway -- signaling pathway overlaps with CXCR4, so there's a mechanistic rationale to support the use of mavorixafor, in those patients as well. We've not yet tested specifically in any patients, but it's something that we're considering for future studies.

Our next question come from the line of Zegbeh Jallah from ROTH Capital.

I just have 3 quick ones here. The first is about the Waldenström’'s data. I know at that time of the last update, you had really strong responses in the relapsed/refractory patients but a little less in the frontline setting. So was just wondering with enrollment now complete, would you expect more patients or more relapsed/refractory patients versus frontline patients? And then also regarding the 600-milligram dose that had started to be used? How should we think about the potential for that dose to kind of change the efficacy profile that we've seen for the program? And then I have a couple of follow-ups.

Yes, thank you for the question. We believe the potential for mavorixafor in combination with the BTK inhibitors, it's broad. We chose to focus first on CX -- on double mutants because they have the highest unmet need. We believe that the drug can actually be a really good add-on for either frontline or relapsed/refractory and we have enrolled both in our trial, and we will report on that later in the year. I mean, as Art mentioned earlier, in vitro, we are really happy with the cellular models that show efficacy even in wild-type CXCR4 in the context of modeling a bone marrow niche. So this speaks to the broad potential of CXCR4 inhibition across tumors that are based in the bone marrow. So what will come next. Paula already mentioned, we'll focus on Waldenström’'s double mutants, but we believe the potential is much broader.

And then the follow-up here is just about the WHIM program. You're on track to have your NDA submitted, which is a big deal. So looking at the way the stock is performing, wondering if you could just kind of again highlight the commercial potential, talk about some of the steps that you've taken? I know you have someone had in commercial. So just kind of wondering if you can just kind of speak to that a little bit. And then I have the last one here as well?

Sure. So in terms of the potential for mavorixafor in WHIM, we continue to guide that there's at least about 1,000 genetically confirmed or confirmed WHIM patients in the U.S. and possibly much more than that in terms of the under diagnosed or undiagnosed. And we're making exceptional progress towards building that patient-based education awareness and getting ready for supporting a positive launch to the mavorixafor be approved. Our new VP of U.S. Commercial is exceptionally strong and experienced in this area. We've got a great team on the ground already. And I think we're really revving up for a successful and ideal launch post our Phase III milestone this year. So stay tuned on more details, but we're excited about already the breadth of diversity of patients, as Art mentioned, over 70 genetic mutants. And then also the diversity of the product potentially even in chronic neutropenia beyond WHIM.

And I don't know if you can say much about this, but this kind of segues based on what you just ended with regarding the broad commercial potential, I think, you guys have highlighted about 60,000 patients across the different diseases that you're looking at. You're also going to have pretty much strong proof-of-concept data across all 3 indications by the end of the year, and you're seeing you kind of pushing to even broaden this out some more. So clearly, I think, that there should be some partnership interest. And so is that something that you guys are exploring? Perhaps not just for one indication, but across the board as it relates to mavorixafor. Then you can maybe comment on how you're thinking about maybe reaching ex-U.S. opportunities?

Sure. So I mean the world is a big place. We obviously have a home field advantage in the U.S., and we have a drug that appears to work in WHIM and has got some amazing sort of momentum behind it with these other indications. So there's a lot of opportunity for patients and for sort of commercial investment and return on that investment. So we haven't -- we won't be able to share more of how we're thinking, but we're certainly believing that in the U.S., we can handle the commercial setting given the build that we're already investing in and the fruits of that build. But ex-U.S. is still a part of our strategy that's evolving, and certainly, there are a lot of companies that create the right structure to support the most patients globally and also benefit the overall investment and return on that, that's needed.

[Operator Instructions] And I'm not showing any further questions in the queue. I'd like to turn the call back over to Dr. Paula Ragan for any closing remarks.

Well, we'd just like to say thank you for everyone for participating in our investor call today, and thanks for the excellent questions. If you have any further follow-ups, please reach out to Glenn and we'd be happy to dialogue offline. Thank you again, and have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.