X4 Pharmaceuticals, Inc. (XFOR) Q3 2020 Earnings Report, Transcript and 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 Investment 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, we have our Chief Executive Officer, Dr. Paula Ragan, and our Chief Financial Officer, Adam Mostafa. Following prepared remarks by each, we'll open the call to your questions. And they'll 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 subjected to risks and uncertainties that may cause actual results to differ from those forecasted. The descriptions of these risks can be found in our most recent Form 10-K and filed with the SEC in our forthcoming Form 10-Q. I'd now like to turn the call over to our CEO, Paula Ragan.

Thanks Candace. And thank you everyone for joining us on the call this morning. We hope you're all continued 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 Program. Let me begin with a review of our most recent accomplishments. We are pleased to announce the publication of our positive Phase 2 safety and efficacy data for mavorixafor in the WHIM syndrome, in the procedures 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 a chemokine receptor CXCR4 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 benefits of the extended mavorixafor therapy on infection rates and work burdens. 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 endpoints, and secondary clinic area endpoints for our ongoing pivotal Phase 3 clinical trial. The published results continue to reinforce our beliefs that by down regulating the CXCR4, CXCL 12 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're 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 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 the 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 Program for mavorixafor. Importantly despite continued uncertainties surrounding COVID-19 we remain focused on advancing our Clinical Development Program. We continue to enroll patients in our Phase 3 WHIM syndrome Trial and make 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-XIX 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 impacts of COVID-19. We continue to anticipate top-line Phase 3 data in WHIM syndrome in 2022 and intend to provide further clarity on the timeline as soon we are able to do so. Our Phase 1B 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 3 WHIM syndrome Trial, we intend to provide further clarity around our SCN Trial timeline as soon as we are able to do so. In Waldenstrom'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 1B 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 perfectly address the impact of COVID-19 on our WM study. As a reminder this Phase 1B Clinical Trial is expected to enroll between 12 and 18 patients with WM and as a multi-center open-label dose-escalation clinical trial assessing the safety and tolerability of mavorixafor in combination with ibrutinib. The trial is being conducted as a part of a collaboration with the Leukemia and Lymphoma Society to accelerate the development of mavorixafor for the treatment of Waldenstrom's. The results of this study will share safety and [indiscernible] data and important [indiscernible] signals, and we expect that these data will inform future FDA's discussions regarding the potential registration trial in WM. Lastly I would like to welcome two new additions to the X4 leadership team, Dr. Art Taveras, started earlier this week as of our new chief scientific officer. Art is an experienced CSO who is joining us from Comet Therapeutics, a Privately Held Company focus on CoEnzyme A science and NME 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 the key leadership roles in a 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 aspiring leadership, Art is an ideal fit to lead our R&D initiative and further foster our evolution towards becoming a global rare-disease company. In addition we recently extended 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 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 30th, 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 non-cash expenses for the quarter ended September 30th, 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 non-cash expenses for the quarter ended September 30th, 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 for certain non-cash expenses for the quarter ended September 30th, 2020. With that, let's open up the call for questions. Operator?

Thank you. [Operator Instructions] Please stand by while we compile the Q&A roster. Our first question comes from Stephen Willey, with Stifel. Your line is now open.

Hi all. This is [Helen] on for Steve. Just two quick questions from me. So first you mentioned that you're focused on implementing home-health visits for patients enrolled in the Waldenstrom's Trial, you're going to mitigate some of the effects from COVID. Is that same strategy being applied to the WHIM and SCN trials as well and if so how is that going? Thanks.

Sure. Thanks [Helen] 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 Waldenstrom's. Obviously patients are coming in over many months. For SCN it makes less sense given the actual period of the study's only two weeks of treatments so the home health us focused solely on WHIM and Waldenstrom's.

Okay. That make sense. And then can you provide any updates regarding X4P-003, X4P-002. Are either of these assets in IND -- enabling studies at this point? And then also can you just remind us how those two assets are being differentiated from each other? I know 002 is engineered across the blood-brain barrier but I was just wondering if you could give a little more color on 00 -- 003? Thank you.

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 clinics. We are 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 some of the minor but meaningful, yes, profiles 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 entered -- 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 in late-lead optimization and again it's making good progress in terms of finding that right profile between brain 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.

Thank you. Our next question comes from Arlinda Lee with Canaccord. Your line is now open.

Hi guys. I was hoping that you could provide an update on the enrollment for the WHIM syndrome? And then I also feel curious on preclinical programs. Might we be expecting any data presentations on this anytime in the near future? Thank you.

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 who continue to enroll in the trial even despite the global pandemic so we are really happy to see the patients' commitments 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 segue very nicely to X4's recent announcement this week of hiring our chief scientific officer, Art to various -- were very pleased to have someone with a -- his tremendous experience in drug development and drug discovery. So, I think while we don't have any specific on rolling data around our preclinical programs, stay tuned because I think we'll have some updates coming into next year.

Thank you. Our next question comes from Joel Beatty with Citi. Your line is now open.

Hi guys. This is Shawn on for Joel. Thank you for taking my questions. Two from me today. First on Waldenstrom's [indiscernible] data in the first-half next year, maybe just talk about how you plan to roll out that data? And then kind of getting into the reason may be 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 WHIMS, and maybe if you could 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 Waldenstrom's data the format of presenting the data, it's an open-label trial for making nice advances in our goal to present a robust data set that people can interpret. And certainly want to do that in conjunction with our support of the key opinion leaders that we are working with on our trials so we're not yet sure of the format but at the end of the day we'll -- all this will be aligned to make sure we can communicate and put the date and context of the overall treatment landscape, so stay tuned for 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 three to six months on single-agents treatments in these patients with the CXCR4 permutations -- in fact only about a third of them gets 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'll be showing data from patients on the first three to six months of dosing, and certainly hope to beat that number of 30% with the data that we present the first half of next year but stay tuned for the results as they unfold. And then finally I think you mentioned WHIM patients 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, I'm sure medical science-liaison teams, on both the U.S., excuse me 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 booths at various conferences where patients have come to visit us so we feel like the word is getting out and we're beginning to you know, get a nice groundswell of people thinking more broadly about WHIM in their own patient populations and 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 you know, hopeful commercial approval of mavorixafor for these patients.

Great. Thank you so much Paula.

Okay.

Thank you. Our next question comes from Mayank Mamtani with B. Riley Securities. Your line is now open.

Hi. Good morning team. This is [Sato] on for Mayank. Congrats on all the progress. Just a few questions from us this morning. First off as it relates to the Waldenstrom's program and now expecting the data first-half next year, is this more a sort of enrollment related more than anything else in terms of you know, monitoring responses and should we still expect date on that you know, 12-to-18 patient range?

Yes. So if I understood your question at the beginning, is [indiscernible] what's -- what's the shift or did I get that right? So I'm sorry.

No, no. That's exactly right. Yes.

Yes. So that's definitely just enrollment issues due to -- again the U.S. -- the site is primarily U.S., the two ex-U.S. Sites. As you can appreciate with COVID, there are eminent flowing travel restrictions for patients depending on where they are located and also on their own comfort level which is why the in home-health has been you know, a good direction to alleviate that and why we're so confident about -- and now enabling enrolling to deal with that 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 their health 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.

Great. That's helpful. And maybe just a brief follow-up as it relates to the SCN program. Can you just remind us, is this still a single-site in Washington I believe, on ClinicalTrials.gov? And then you know, given the - I mean the compromised nature of the patients how do you plan to sort of manage enrollment concerns you know, acknowledging that 14 days is that short treatment window and maybe at-home visits don't meet because much sense here?

Yes. And so I think I've been very consistent since the start of COVID, the SCN's trial has always been our trickiest because it is a translational research study so from the patient-lens perspective it's something that they need to weigh the risk benefits along with their clinicians on whether or not really that make sense. The University of Washington is a state that's open. We do have other sites that are open as well and I think there's always a delay on ClinicalTrials.gov in terms of that update. But at the end of the day, this is probably our trickiest study to try to balance respect and appreciation for the potential risk for these patients due to -- or added risk due to COVID along with the investigator's enthusiasm for exploring this mechanism and to use patients with this type of need. So again stay tuned. It's a 2021 story and we'll -- look forward to just sort of sharpening that as we learn more.

Great. That's really helpful. Thanks for taking our questions. And congrats for the progress.

Thank you.

Thank you. Our next question comes from [Arthur Yu He] with H.C. Wainwright. Your line is now open.

Hey, good morning everyone. This is Arthur for RK. So I just have a quick question or the follow-up on the WM strategy. So could you guys remind us, the dose level across the patient and what can we read through from the WHIM syndrome study in terms of the optimal dose level for...

Great.

... the WM? Thank you. Yes.

Sure. Great question. So let's just start with the current Phase 3 dose in WHIM which is 400 milligrams once per day, and that drug is obviously treated as a single-agent therapy for WHIM, how we've [crossed back] into Waldenstrom's, is we're starting at 200 milligrams per day. The rationale behind that is that we do need to consider that the potential, even though it's low drug-drug interactions between mavorixafor and ibrutinib to make sure that the exposure of those two drugs are not impacted in any direction by co-administering them. So hence we started at a 200 milligrams, once-per-day dose level. And we're confident that that's already a highly active level based on what we saw in WHIM at 200 milligrams per day in healthy volunteers. You see a very nice robust bump in white blood-cell mobilization, and also the trough levels from known PK are certainly in the highly active range. So we feel good about where we're starting it in terms of being able to see clinical activity. After that starting dose, we just want to keep pushing the dose and until you get to the classic kind of maximum dose per patient, so the dose escalation levels are then 400 and 600 after each patient clears the 200 milligrams dose.

Thank you. Our next question comes from Laura Christianson with Cowen. Your line is now open.

Hi. Good morning guys. Thanks for taking my question. On Waldenstrom's, I was wondering if you could just talk a little bit more about how we expect mavorixafor might fit into the treatment paradigm if it's approved, just what's the potential for mavorixafor for it to be used first line in combination with ibrutinib and CXCR4-positive [indiscernible] patients?

Sure. So, our current study is exploring patients with any -- that are either treatment naive and up to three pair of lines of treatment so we will start to -- we'll start with a small handful of patients see what this drug potentially could do, as [indiscernible] combination, I should say as a front-line approach. So based on that data, I do think that they will begin to kind of gather the evidence of where this drug makes more sense in terms of line of treatments, certainly in the U.S. and primarily in Europe, ibrutinib is more typically used in the second line although it is approved for other lines of treatment so there's a little bit of what does the current market and clinicians, how are they utilizing ibrutinib versus what will our data deliver. Certainly the most robust data sets that's achieved with the combination will open clinicians' minds about how to use that combination so I think there's opportunity and then obviously data will then drive how clinicians will consider using the treatment for their patients.

Perfect. And then just a quick one for Adam. I'm wondering how the -- that purchase agreement that you recently put in place, how that might impact your expected cash runway?

Yes. Thanks Laura. So, right now I think our primary objective is to continue to track towards key milestones like Waldenstrom's in the first half, and think about opportunistic ways to extend the runway based on that progress. The stock purchase agreement I think is a helpful tool in our financial tool bag to potentially utilize as we -- as we progress the business but I think it represents a little bit more in the way of downside protection or insurance policy, if you will, given the external environment. So that's how that sort of stack up in terms of our financial strategy.

Thank you. [Operator instructions] Our next question comes from Zegbeh Jallah with ROTH Capital. Your line is now open.

Good morning guys. Thanks for the update. I think I'm probably just going to ask one again about the preclinical pipeline with Art on board, as you mentioned. I just want to know, how you expect to kind of leverage his broad expertise, do you plan to broaden out the pipeline or pursue additional indications with some of your earlier line preclinical programs?

Sure. So, thanks so much. And yes, we feel incredibly fortunate to have Art joined given his strong drug discovery experience and biology overlap in the Chemo kind world. So, I think when we think about not only mavorixafor but also our two pre-clinicals programs - and of course we really need to - intend to operate and hit our near term milestones. For example I do think of the drug mavorixafor shows activity in Waldenstrom's there's a tremendous amount of support for CXCR4 more broadly and certain leukemias and lymphomas, I think, between Art's experience in the biology and then complementing what we're learning in a clinic that will really help us enable to prioritize how we can either develop mavorixafor and - or possibly 003 to expand the total market that we could potentially explore and hopefully benefit patients with our drug.

Thanks Paula. And then just a follow-up here. I'm not even sure if you can you can answer this one but I think on the last call we had, you noticed that we weren't capping patients that were pre-treated or not pre-treated for the Waldenstrom's study, which is going to try roll into what you said. But can you provide any comments on if you're enrolling more pre-treated patients or are you enrolling more non-patients?

Oh no, we - there's no - there's no profile yet that we're really able to disclose. We'll certainly do that when we share the data. I do like to point back to the literature, with respect to the double mutant patients regardless of what line of therapy their sort of address what they have that's remaining unmet need. So I do think the consistency or the impact that having a CXCR4 mutation is important, I think that kind of creates a nice homogenic patient population for us to study and we'll look forward to sharing that data in the first half of next year.

Thank you.

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Paula Ragan for closing remarks.

Thank you so much. Well thank you again today for joining us. We sincerely appreciate your interests in X4 and look forward to continuing to provide updates on our progress as we approach multiple key catalysts in our business. If you have any further questions, please don't hesitate to reach out. Thank you again, and enjoy the rest of your day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.