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

Great. Good morning, everybody. Thanks for joining us for Day 3. I'm Matthew Harrison with investment banking here at Morgan Stanley. Pleased to have X4 with us for the first fireside today. Just quickly before we get started, I have to read a disclosure statement. Please note that all important disclosures can be found at morganstanley.com/researchdisclosures.

So Paula and Adam, thanks for being here. I appreciate it. I thought maybe why don't we just start out a little bit with -- obviously, you're developing an asset for a variety of neutropenic conditions. Maybe you could just talk a little bit about where the drug came from, what's the mechanism and sort of how you've decided on the indications you're going after?

Yes. Thank you, Matthew. Thanks so much for having us here at the conference. We're really excited about X4, the company's focused on really doing something quite innovative for patients with immunodeficiencies, specifically neutropenia, as you mentioned. Unfortunately, today, everything is injectable and there's very little to treat these patients. So our oral once daily mavorixafor really differentiates itself, both obviously on sort of the safety profile and the convenience of delivery. But its mechanism, as you mentioned, is quite unique. It's something they take once a day and it actually mobilizes neutrophils and moves the white blood cells out of the bone marrow and it allows them to circulate more. So for patients who have low white blood cell counts, this is really revolutionary. Normally, they're either taking an injectable drug called G-CSF. Some of them get injectable immunoglobulins, which are all quite challenging and life altering to change. So it became a very obvious choice for us, first focusing in a niche indication called WHIM syndrome because there's a very tight mechanism correlation with the disease and our drug. And then the broader population, chronic neutropenia, of which there's about 15,000 as our first addressable market, is just waiting for something that's oral versus their injectable.

Okay. Perfect. And just for people who aren't familiar, so how does that CXC4 -- CXCR4, sorry, work in terms of the mechanism. And I think people, when they hear novel small molecule mobilizes cells, maybe they think there are safety risks that they should be worried about. So just talk about the mechanism there.

Yes, it's a great question. So CXCR4 as a receptor held on a variety of white blood cells and it's typically part of the normal developmental stage of a bone -- white blood cells being produced by your stem cells and then evolving along the way. So the good news is, we know a lot about safety because there's actually one approved. CXCR4 antagonist that's injectable only. It's been on the market and in thousands of patients now. So we certainly have a window into safety from that molecule and then our oral once daily is almost a descendant of that molecule used for chronic, hopefully lifelong treatment to help patients. And to date, we've really just seen it do exactly what the mechanism is known to do physiologically, which has really help advance the maturation of white blood cells and move them into the bloodstream.

Okay. Super, super. So you obviously indicated your first indication is WHIM. Obviously, rare disease, maybe people don't know so much about WHIM. So maybe just tell us a little bit about what is WHIM and what's that market size?

Yes. So WHIM syndrome, it's a rare disease of the immune system. It's caused by sort of over signaling of CXCR4 receptor, either directly through mutations or sometimes through alternate pathways. And that's where our drug plays extremely well. Our drug actually antagonizes their blood cells over signaling. The disease itself, I always try to anchor people, it's a little bit like the bubble boy syndrome, not quite as severe because those folks really need to be almost isolated from an immunocompromised state. But our patients walk around with lifelong, high risk of very serious infections. They get repeated infections and then they lose function. They lose lung function. They lose hearing function. They get acute cellulitis. So imagine living like COVID days, except every day of your life. So it's a very tough road for them to go down. There is no treatment specifically for WHIM syndrome. And we're really excited about our data that we just showed. Our Phase III data was tremendously positive and we're really giving some hope to these patients. Talking about how many patients there are. We believe there's about 1,000 at least confirmed in the U.S. today. So again, a niche market. But it's just such a great correlation between the mechanism of the drug and the cause of the disease, that I feel, that's how our industry is, our great opportunity is, we can actually get at the root cause.

Great. Yes. And so you talked about Phase III data. So maybe just remind people what the data was, what the -- what kind of regulatory end points you needed to meet here. Because I'm sure there's some uniqueness given the size of the population.

Yes. No. Thanks. So we had a great partnership with the FDA for many years. In fact, they granted us breakthrough therapy status based on our Phase II data that really is reserved for diseases of high unmet need with basically essentially little or no treatment. So we -- we're pleased and privileged to be granted that. And as a result, we have lots of close dialogue with them. So our Phase III was very tightly aligned with their requirements and guidance. It was a randomized placebo-controlled, double-blinded trial. So very robust. Our primary endpoint was something called time above threshold for neutrophil counts. It's really a measurement of how many hours a day are they back into sort of less risky ranges and we hit that out of the park with a P0001 in terms of statistical significance. And then the secondary endpoints were around other metrics, most importantly, around clinical benefits. And that's -- in May of this year, we showed that our drug meaningfully and statistically improved a number of those metrics, including reduction in frequency, severity and duration of infections. It really -- I think even the investigators are blown away with what we showed.

And so in terms of next steps there, I know you recently filed in the U.S. So how should people think about the time line and the path to market in the U.S.

Yes. The clock is on. So we filed our NDA towards the end of August. So it's about a 60-day review cycle, so end of October, early November. And then from there, that's when they accept the NDA. Once its accepted and assuming they gave us priority review, which we would expect in this kind of situation, it's about a 6-month to approval or PDUFA date. So we're planning kind of a mid-Q2 launch next year for mavorixafor in Germany and the U.S.

And in terms of commercialization, you plan to commercialize this yourself. What sort of preparations are you doing? And...

Yes, yes, we are. So our Chief Commercial Officer is very busy at this moment. So he's building out the infrastructure to support launch. We certainly -- and actually in Q4 of this year, we'll prepare a launch readiness update for the market so they know what we're doing. But really, it's always about supporting education awareness and patient diagnosis right now and then building kind of that readied sales force, obviously, for when there's approval to reengage with some of the physicians and patients in patient groups that we've been building these relationships over the years with. Let them know that the drug is available if appropriate.

And did you run a natural history study? Or are there any things you've done to sort of prepare the market or sort of build a bolus of patients at launch that you might consider to be appropriate targets?

Yes. So that -- I would say we've been developing kind of our network, so I would say, of known patients and physicians. So I would say there's some groundswell there. Since the drug has demonstrated the Phase III data, actually I think that's where the ramp is going to nicely take off. You're always trying to balance that expectation with patients and that sort of go out too hard in terms of overhoping or overhyping the drug. But now that the Phase III results are out and our PDUFA date in sight, I think we have a very nice kind of increased cadence of drumbeating to develop those relationships and hopefully hit launch off on a strong note.

Okay. Okay. Good. Outside the U.S., maybe just remind us what the plans are for WHIM outside the U.S.

Yes. So we are still considering how to work outside the U.S. So I'd say there's almost like 3 buckets that we're considering. For sure, we'll be finding some regional partners where we just won't go. There are some countries even Genzyme’s was a part of my background. We use regional folks who really do know rare disease in some of these, I would say, more diverse areas of the world. And then Europe is kind of the one that we're still playing with, where do we retain some of our own infrastructure build over the time frame in preparation for our next indication. But we will be seeking some support either regional partners or strategic partners and disclose a little bit more detail as we head into next year.

And from a regulatory standpoint, are you waiting to sort of decide on that before you file in Europe? Or what's the filing plan and how much regulatory dialogue have you had in Europe?

Yes. So, no, we are going to be filing for MAA approval about 1 year from now with our current filing package. And the goal there is to just be ready, whether we want to do it ourselves or if we bring in other collaborative partners, the regulatory path. I mean we know the drug so well. It's a rare disease and we did have prior dialogue through scientific advice with the European regulators. So I do feel like we're in the best position to ensure that the filing continues to be prosecuted. Of course, if someone wants to help us in that partnership process, we'll be open to that as well.

Okay. Okay. Great. So you obviously highlighted, the larger indication is chronic neutropenia. Maybe just describe for people, I think they hear that and they say, well, what does that patient population look like? How do you define the chronic neutropenic population? So maybe just talk a little bit about those patients, what sort of underlying conditions they have that makes up that population.

Yes. It's not a very well-known or treated population because I think the world often thinks of chemotherapy-induced or secondary neutropenia as they have other disease or other drug on board that causes the neutrophils to get compromised. In fact, in a lot of the oncology presentations, I'm sure part of that safety profile, unfortunately, is neutropenia. Those are not the patients that we're treating, actually. There are patients who either are born with or develop and they think it's for autoimmune disease causes but not 100% sure. It's idiopathic, is that they develop chronic lifelong neutropenia. They walk around with neutrophil counts very low and, therefore, are at very high risk of infection. So very similar to our WHIM patients in terms of their infection risk profile, that severity. And then again, no treatments or -- with chronic neutropenia, there's 1 treatment and it's an injectable either once or twice daily. So we think that with an oral once-daily that can really stabilize chronically and provide that better safety profile, we think we can really offer something very innovative to these patients.

And just from a mechanism standpoint, because you said these patients are idiopathic. Like do you think their underlying disease is sort of independent of mechanism or how should people think about the biology of the disease of those patients?

It's a great question. So I would look at patients in terms of where they are almost in their own life cycle. So neutrophils have an 8-hour half-life. I don't -- that was something I have learned along the way. So I mean it's a very short half-life. So if your bone marrow is deficient and can't produce neutrophils, unfortunately, you will likely die within your first few years of your life. So the patients that we're treating have an intact bone marrow enough to get by but have a very hard life. So we believe that as long as there's an intact bone marrow, there's a reserve of neutrophils that just need to be moved from the bone marrow into the blood stream to help fight infections. And that's actually how G-CSF acts along those lines. It does help boost production but it's a pretty big mobilizer as well. So G-CSF is a nice validation biologically of what we're doing. It does have some safety risks for patients long term. It's obviously quite painful to take on a daily basis. So I think from a biological mechanism, existing drugs help validate what we're doing. Our drug, we believe, is really going to, for some patients, be possibly monotherapy if they have enough reserve, maybe G-CSF might be added on top to some.

Okay. Okay. Great. So I guess then building on that, you have a couple of pieces of evidence, right, to support what you're doing in the chronic neutropenic population. Obviously, [ data in ] WHIM, they're not exactly the same. I mean you have some Phase I data and you recently released some Phase II data. So maybe talk to everybody about what you see is the body of evidence that sort of supports what you're doing in this population.

Yes. So I think the interesting point that you highlighted was the diversity of cause. So in our Phase Ib study, we kind of had all comers, like will the drug mobilize, will it increase neutrophil counts. Even some of our investigators were guiding us to this population and not that. So what we did was we just studied it. We had a diverse population of neutropenic patients in Phase Ib and we looked to see if mavorixafor would increase neutrophil counts and if so, by how much. How much is an important metric. So for every human being, if you shift your neutrophil counts up by 500 cells, like starting from 0, you decrease your risk until you get to normal and there's about 4 different ranges. In all of our patients, 100% of them, the single dose shifted neutrophil counts by at least 1,000, in some we were getting 3,000, 4,000, 5,000, 10,000. So it was a profound response that I think even blew away our investigators' views and it did that in everybody. So we're extremely pleased with the broad utility of the drug after a single dose in that Phase Ib. Now in the Phase II, which we've just disclosed a little bit of data on, now it's, can that be repeated on a daily basis in a safe way. So we learned in our first 3 patients, again, that were getting profound responses. In fact, they overshot the normal range and we had to titrate off G-CSF, the physicians decided to do that to get them back to within range. So it's a really exciting situation for our patients. They see a world for those that are on G-CSF of coming -- either dramatically reducing that G-CSF dose or possibly coming off of it.

Okay. Okay. And maybe we just spend a couple of moments on the handful of patients that you've disclosed already. So I guess the first question is, I think you said we're going to get more data, maybe at ASH this year. So maybe just describe for people what to expect in terms of additional follow-up from those patients.

Yes. So we've been getting this question a lot. So that we disclosed 3 patients, of course, we'll have those patients on with additional data. And then as we mentioned, actually, in August, we did have some recruitment sort of delays but it's kicked back up now that the summer has passed, some of our student or -- patient populations are younger and like that some are off. So we will have our 3 patients, of course, that are on study. And then beyond that, we're waiting to see how recruitment goes.

Okay. But I mean, is there an expectation that we'll see more patients or it's still a little bit TBD?

I would say we just want to -- we don't want to overpromise and under deliver, so we'll just get there when we get there. Again, the recruitment is picking up nicely and whether it will be December or shortly thereafter. But I feel really good about where we're headed right now. It's always -- trial recruitment is the bane of many companies because it's so hard. So we look forward to sharing more of that data when we have it.

Okay. Perfect. And so then, I guess, the second question is, how to think about durability because obviously, that's an important component for these patients. I think I can't remember exactly how much follow-up, you had different amounts of follow-up for each of those patients you disclosed. So from your point of view, how much durability do you think you need to feel good about the long-term prospects? And then secondarily, what do you think the regulators want to see in terms of durability?

Yes. So I'll take those 2. So our WHIM -- WHIM data, which is actually very nicely reflective of how to think about chronic neutropenia, you can see durability after 1 to 3 months of dosing because that's almost the bone marrow gets into a new steady state. And then in our Phase III study, where we had robust measurements, what you saw after 3 months was the same as what you saw at 12 months. So I think what you see in that 1- to 3-month window is very indicative of what you see long term, especially with neutrophils because if you think about they last 8 hours, so you're already, how many half-lives out when you're at 1 to 3 months. So we feel really good about that window to assess durability and then the data that we just presented had 3 patients with at least 3 months of data and it was looking great. I mean I am so impressed with mavorixafor's profile in terms of -- you can see almost immediately when the drug is responsive within 1 day or 2 days. And then in that ensuing months, it actually creates a new, we call it the new low tide mark, neutrophils can go out and back into the bone marrow but after many cycles actually create sort of a new lower threshold of neutrophil count and that's really what's helping patients. So we're happy to see that.

Okay. And then I think one other area that probably caused some debate among investors around the data was, obviously, when you titrate off G-CSF, neutrophil levels came back down a little bit. And so I think people were trying to figure out where do they stabilize? So just how do you think about that and what's your level of confidence that you are able to stabilize people above an appropriate level?

Yes, absolutely. So I mean, I think -- we have always said that some patients may be able to go on monotherapy and some patients may need to have some frequency of G-CSF. But I'm amazed. So these patients are all -- even with G-CSF, the patient that we showed with G-CSF was neutropenic. So with standard of care, they were still at high risk of infection. And we more than increased that neutrophil count by an order of magnitude with mav. Of course, when you start to pull off G, you do expect the neutrophil counts to go down. So we do have to wait for that patient to get out to longer-term studies but I expect, like minimally the last data we have was this patient was on about 1/8 of their baseline dose of G-CSF plus daily mavorixafor. That alone is a huge and positive shift to that patient. That's where they wind up staying at. If they could get to 0, that will end in a steady state way that will be also extremely meaningful. So in either regard, the data that we're seeing is, we keep referring to this as a significant reduction or withdrawal of G-CSF. Anything in that realm is going to be something that will be better for patients, ideally 0 but if it's 1 or 2 injections a week, I still think will be quite meaningful.

Okay. Great. Regulatory. So obviously, you've got some pretty interesting data. How do you get it approved in CN. What does the pivotal program look like?

Yes. So we disclosed it already that it's going to be very similar to WHIM. So the good news is we've been there, done that quite successfully in WHIM. A lot of them are the same investigators across the world, so we're developing good relationships. So from a regulatory perspective, it's a randomized placebo-controlled, double-blinded trial that the agency has agreed to. So it's not head-to-head against G-CSF, actually. It's on top of what our standards of care they are at. Just because G-CSF is so variably used, some patients can't use it, some patients won't use it. And some physicians really almost use the minimum effective dose. So regardless of what they're on at baseline, they'll be randomized. We'll add G-CSF -- we'll add mavorixafor a placebo in a balanced way. And then the primary endpoint is the co-primary end point. And thus far, we've mentioned that it's going to be minimally some sort of neutrophil metric plus something clinical benefit oriented. We're still hammering out that last final bucket with the agency. But it will likely be something that we were successful in the Phase III WHIM trial on, something related to infection, severity, duration and we'll have that final answer by the end of this year.

Okay. Okay. And in terms of the neutrophil endpoint, I mean, is that like a certain amount of time above a certain amount? Or how should people just think about what that will look like?

Yes. So we're -- again, we're waiting for this final round of interactions with the agency. But for example, with the G-CSF label, they did a responder analysis. So did you either achieve normalized levels or for some patients, they add something called a partial response because they were extremely low. So for -- so that's the type of -- I think there will be some form of responder analysis but we still have to hammer that out.

Got it. Got it. All right. Super helpful. So maybe you could talk a little bit about the market rate. You mentioned, I think, 15,000 patients. How much work have you done on that figure? What's the range of that figure? And how do you think about getting ready for commercialization?

Yes. So we originally tried to learn what's the total scope of the market. We originally came up with about 50,000 patients across the 3 different subtypes of chronic neutropenia. And weed out everyone was sort of -- is that, do all of them need therapy, today they're all on therapy. So of course, with all rare diseases, there's a bell curve of unmet need. So what I would say the 15,000 represents is that true, highest unmet need that our trial is actually being designed to treat. So these patients are still neutropenic. They've been treated with some form of G-CSF or not but regardless they are neutropenic. They're still getting infections at least 2 a year. And then that's the target population that we want to address, right? We want to be giving treatments to those who need it. So we feel really good about the way we're designing the study, it's cross walking into that initial addressable market. And actually, it's 12 and above, that 15,000 is also aligned with the requirements of our trial, which is ages 12 and above. So yes, we can go and hopefully in the future into younger patients. It's a hard line with at least 2 infections a year. But if you had 1 serious one that certainly might merit therapy as we've heard from our patients. So we think there's a larger market beyond that, how we step into that from a clinical trial perspective is still to be determined.

Okay. Okay. And then commercialization, again, it sounds like WHIM obviously gives you a foothold in the U.S. and so you -- presumably, you'd expand that to launch in chronic neutropenia, is that the current plan?

Absolutely. We -- WHIM patients are sort of split between the immunology and nonmalignant hematology specialists, so we'll be developing relationships with all of those health care providers and it really does create a nice way, even today, to speak about our trial in neutropenia. And then hopefully, as we launch in the U.S. in neutropenia, it will be a lot of synergies of what we've already built with WHIM.

And then as you think -- you obviously discussed the potential for licensing or partnering outside the U.S. I mean, is that a package where you'd look at WHIM and chronic neutropenia together or are they separate? Or just how do you think about commercialization outside of U.S.?

It's a great question. So right now, I think we're focusing primarily on WHIM. Chronic neutropenia has a lot of value to it. So I think the partnerships that we're currently looking at and again, it's dependent on the partner. But I would say we're so excited about chronic neutropenia, we don't want to make -- we don't want to lead with giving up too much value to begin with. So WHIM, I think there's certainly nice ways of leveraging other rare disease distributors or specialty groups across the world. CN, we're still thinking about.

Okay. Okay, super. We got a handful of minutes left. So maybe just talk about other areas you might think potential label expansion.

Yes. So we're still even learning today about the impact of the drugs through the Phase III, the one amazing thing about running a placebo-controlled trial is you can really understand what your drug is specifically doing. So certainly, the nice correlation between neutrophils and infection rates was robustly demonstrated in our Phase III. And now we're trying to pick apart that next layer. We also have a huge impact on other cell types, B cells, T cells, so there are some immunodeficiencies that may translate into benefiting from that type of response as well. So we're looking across the immunodeficiency space. Then, of course, there are a number of secondary neutropenias. People have asked us about -- actually investigators have asked us to explore their drug. But they're yet to be determined, we'll see then how deep and broad we can go, given this mechanism is quite applicable in many places.

Okay. Super. And then, Adam, maybe can you just talk about financial position, obviously, biotech companies need money all the time. So how are you finances right now? And where does that take you in terms of run rate?

Yes, sure. So as of June 30, we announced about $165 million of cash and that includes $22.5 million that we just took down recently from our debt refinancing. So that takes us into 2025. The debt financing as well gives us some additional capital over time. So some optionality around that time line. That period excludes the potential proceeds from our priority review voucher. So we anticipate receiving that in the first half of next year aligned with potential approval in WHIM and we would look to monetize that. Those are typically in the $100 million to $110 million range or so. So in our case, would extend our runway further by about 1 year. So strong balance sheet, well positioned to hit a lot of the milestones that Paula mentioned without the need to raise and we have some optionality around the debt, I mentioned.

Okay, great. Well, Paula, Adam, thanks for being here. I appreciate the time.

Thank you. Appreciate it.

Thank you very much. Appreciate it.