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

Greetings, and welcome to X4 Pharmaceuticals First Quarter 2023 Earnings Conference Call. [Operator Instructions]. As a reminder, the conference call is being recorded. It is now my pleasure to introduce your host, Dan Ferry, from LifeSci Advisors. Please begin.

Thank you, operator, and good morning, everyone. Presenting on today's call will be X4's President and Chief Executive Officer, Dr. Paula Ragan; and Chief Financial Officer, Adam Mostafa. Following prepared remarks, we will open the call to your questions and we'll 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. Description of these risks can be found in X4's filings with the SEC, including the company's latest 10-K for the year 2022, and this quarter's Form 10-Q, which is expected to be filed today. I'd now like to turn the call over to Dr. Paula Ragan. Paula?

Thanks, Dan, and thank you, everyone, for joining us on the call this morning. We hope to make this an efficient call today and focus on what we hope will be value-building milestones throughout the rest of 2023. This is truly an exciting time at X4 as we continue to advance our lead investigational candidate, mavorixafor, towards commercialization in the first potential chronic neutropenic disorder, WHIM syndrome. As you know, in late 2022, we announced that our Phase III clinical trial evaluating once-daily oral mavorixafor in people with WHIM syndrome had met its primary endpoint and first key secondary endpoint with mavorixafor achieving statistically significant and clinically relevant longer times above threshold levels for both absolute neutrophil and absolute lymphocyte counts versus placebo and demonstrating good tolerability in the trial. Subsequently, we announced that our late-breaker abstract reporting additional data from the Phase III WHIM trial was accepted for oral presentation at this year's meeting of the Clinical Immunology Society, taking place from May 18 through 21 in St. Louis. Dr. Raffaele Badolato, who is Professor of Pediatrics at the University of Brescia in Italy, and an investigator in the 4WHIM clinical trial will present at 11:30 a.m. Central Time on Sunday, May 21. Although this session will only be accessible live to the conference attendees, we will be posting the slides on our website concurrent with the presentation. Following the publication of conference abstracts by CIS on the morning of May 16, we will be hosting an investor event later that day at 4:00 p.m. to present data on additional secondary endpoints from the trial, including results on infection burden among other outcome metrics. You can register for that event on our website or through the link provided in this morning's earnings press release. Joining us for the event to comment on the Phase III results and the unmet medical needs of people with WHIM and chronic neutropenia will be a diverse panel of immunologists, hematologists and rheumatologists, all of whom have expertise in treating immunodeficiencies and several of whom were investigators in the 4WHIM Phase III trial. During the May 16 event, we will be hearing commentary from Dr. Charlotte Cunningham-Rundles, a professor and immunologist at the Icahn School of Medicine at Mount Sinai; Dr. Jean Donadieu, a pediatrician in the hemato-oncology Department of Trousseau Hospital in Paris, and importantly, coordinator of the French registry for chronic neutropenia; Dr. Peter Newburger, Professor of Pediatrics and Molecular Cell and Cancer Biology at UMass Chan Medical School; Dr. Akiko Shimamura, Professor of Pediatrics at Harvard Medical School and Director of the bone marrow failure and myelodysplastic syndrome program at Boston Children's Hospital; and Dr. Teresa K. Tarrant, Associate Professor and Director of the Clinical Immunology Laboratory at Duke University School of Medicine and Vice Chief of Translational Research for Rheumatology and Immunology. We will also be hearing unique perspective from 3 individuals who have been diagnosed with WHIM and have been experiencing WHIM syndrome symptoms since birth. Finally, we are expecting Dr. Shimamura and Tarrant to join us live for Q&A following the formal presentation. During the event, we expect to be providing an update on our U.S. regulatory activities for mavorixafor for the treatment of WHIM syndrome as we continue to be on track to file a U.S. new drug application early in the second half of 2023, and prepare for a potential launch in the U.S. in the first half of 2024. Concurrent with all of this, we continue to enroll participants in our ongoing Phase II trial, evaluating the safety and efficacy of mavorixafor for the treatment of idiopathic, cyclic and congenital chronic neutropenia, and we believe are on track to announce clinical data and provide clarity on the scope and timing of the expected CN Phase III clinical program in the Q2, Q3 time frame. In our release this morning, we also announced that we will be presenting a poster at CIS, highlighting the results of what we believe is the first research study to assess the correlation between the incidence of serious infection events or SIEs and the severity of chronic neutropenia. This abstract will also be published on May 16. Concurrent with the poster presentation, which is on Saturday, May 20, at 1:30 p.m. Central Time, we will be adding the poster to our website. As a result of our development efforts and our published data to date, we continue to believe that due to its demonstrated ability to elevate levels of white blood cells, mavorixafor has the potential to be a breakthrough for those with WHIM syndrome and other chronic neutropenic disorders. We look forward to updating you on our progress throughout the year as we advance our mission to bring innovation to these patient populations in need. I'll now turn it over to our CFO, Adam Mostafa, to review the first quarter financials. Adam?

Thanks, Paula, and thanks to all of you for being on the call with us today. At the end of the first quarter ended March 31, 2023, X4 had $94.4 million in cash, cash equivalents and restricted cash. We believe that these funds are sufficient to support company operations into the second quarter of 2024. Our research and development expenses were $22.1 million for the first quarter, which compares to $14.1 million for the comparable period in 2022. R&D expenses for the first quarter included $0.8 million of certain noncash expenses and a $5 million accrual for an in-licensing milestone payment that the company deems probable of occurring. Our selling, general and administrative expenses were $7.2 million for the first quarter as compared to $7.7 million for the comparable period in 2022. SG&A expenses included $0.8 million of certain noncash expenses for the quarter. And lastly, we reported a net loss of $24 million for the first quarter ended March 31, 2023, as compared to $22 million for the comparable period in 2022. Net loss included $1.6 million of stock-based compensation expense and a $5.4 million gain for the change in fair value of our Class C warrant liability for the first quarter. And with that, why don't we open up the call for your questions. Operator?

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

This is [ Julia ] on for Steve. I just have 2 quick questions on my end. So the first one is, would it be possible, Adam, like would it be possible to give a little bit more detailed color on increased R&D expense? And secondly, can you guys also provide -- or like has there still been ongoing discussion with potential partnership, and when do you think we'll actually hear more updates on like partnering front? I think that's it on my end.

So the increase in the R&D line this quarter is related mostly to a $5 million accrual payment, and that's for an in-licensing or regulatory related milestone that would be probable of occurring. So that's the change that you'll see there, which is, of course, noncash. On the partnership front, we continue to look at beneficial ways to finance the company and that could include, for example, geographic rights types of partnerships. And when we have something material to report an update, we'll certainly do that.

And the next question comes from Mayank Mamtani with B. Riley Securities.

This is William on for Mayank today. Congratulations on your continued success. Two questions from us or one and then a follow-up. So just curious, as far as the infection data and the infection rates that you'll be presenting at both the CIS and as well as your KOL, if you could provide any extra information or color on what we might see at these 2 presentations? And then are these going to be largely overlapping in new data, or should we be expecting different data cuts from each of these presentations? And then one follow-up.

Thanks for the question. As we highlighted in our press release, we're looking forward to sharing more data around the burden of infection, which can relate to frequency, severity, and duration, among other metrics. Those are all relevant and important to clinicians, and you'll actually get to hear their perspectives directly from the ones that we've outlined on today's call. And then in terms of -- and I apologize, I lost the train on your second part of that question. Oh, the different data -- thanks, Mark. The different data and different venues. So the data sets will be primarily the same. Obviously, one is more sort of oriented to the clinical communities and then one is for a broader audience with the investor communities, but effectively, the data sets are going to be quite similar.

That's very helpful. And then in terms of your upcoming Phase III as well as, I guess, Phase II study execution, maybe if you could provide any insights that you've gained during your FDA discussions and what you're thinking about following Phase II data related to how your plan is going forward?

So for clarity, this is around the chronic neutropenia studies?

Yes. Sorry about that.

Yes. No, no worries. Thank you. So for chronic neutropenia, we continue to guide that we'll provide additional data in Q2 or Q3 as well as we'll have completed interactions with the agency, so that we can have clarity on a Phase III registration program. So those are in progress right now. We're looking forward to sharing that, both the additional data, which will primarily be focused on durability of neutrophil counts. At the crosswalk in all of these neutropenic patients, including WHIM, is looking for durable elevations in white blood cell counts, including neutrophils, and then the correlation with infection. We saw that very nice data with chronic neutropenia in the Phase IB after single dose, giving that resoundingly positive results. Now we're looking forward to sharing future data that will hopefully be consistent with WHIM, which is nicely durable and elevated from months on end. And then, of course, the registration trial will be more of the venue that will look for infection changes and benefit and is similar likely to that you'll have seen with WHIM.

Congratulations again.

The next question comes from Eva Privitera with TD Cowen.