Q2 2022 X4 Pharmaceuticals Inc Earnings Call

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Operator: Greetings and welcome to X4 Pharmaceuticals' second quarter financial and operating results conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Dan Ferry, from Lifside Advisors. Please go ahead.

Daniel Ferry: Thank you, operator. And good morning, everyone.

Daniel Ferry: Presenting on today's call will be X-For's chief executive officer, Dr. Paul Reagan, and the company's chief financial officer at Mustafa. Following prepared remarks by each, we will open up the call to your questions, and will be joined by Chief Scientific Officer Art Tavares. Chief Medical Officer Tigo Kadavid. Chief Operating Officer Mary DBI.B. 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.

Daniel Ferry: These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasts. Description of these risks can be found in X4's most recent filings with the SEC, including this quarter's 10Q, which is expected to be filed after the market closes today. I'd now like to turn the call over to X-Forz president and CEO, Dr. Paula Reagan.

Paula Ragan: Thanks, Dan, and thank you everyone for joining us on the call this morning. As you have seen from our latest announcements, the past few months have validated and enabled our focus here at X4, and as a result, we believe we are well positioned to deliver significant future value both to patients and to our shareholders as we approach key milestones over the next six to 12 months. Most importantly, we completed a pipe financing in late June in a highly challenging market condition, raising gross proceeds of approximately $56 million with support from both new and existing top-tier life science investors.

Paula Ragan: At the same time, we entered into an amendment to our debt agreement with Hercules Capital, who also invested in the pipeline, to extend the interest-only period of our loan facility by up to 12 months, pushing it out into 2024. The amendment is subject to achieving certain financial and business milestones. We estimate this amended loan structure could result in a cash savings of up to $20 million over the interest-only period.

Paula Ragan: More recently, we announced our decision to focus our efforts and resources towards advancing our lead clinical candidate, Maverick Sipur, for the treatment of chronic neutropenic disorders, including WIM syndrome, our lead clinical indication. And while the data from our cancer programs continue to show promise, we'll be presenting an update on data from our Phase 1B trial in Waldenstrom's in just a minute. We are now pivoting our efforts towards unlocking the full value of our oncology portfolio only through potential strategic partnerships, enabling us to focus on making the largest possible impact on chronic uterpenia patients in the near term.

Paula Ragan: We continue to believe that commercializing Mavericks for and providing a new therapeutic option to individuals with life-threatening CN disorders has the potential to revolutionize the treatment landscape, which is currently only served by injectable therapies that have been associated with a high burden of treatment, dose-dependent side effects like severe bone pain, and increased cancer risk in some patients. We are therefore very excited about our upcoming expected milestones, which include the following. In late September, we plan to hold an investor event to present data from our now fully enrolled proof-of-concept Phase 1B clinical trial in patients with chronic neutropenic disorders.

Paula Ragan: As a reminder, our lead compound Maverick's IVA4 is a CXR4 antagonist being dosed in clinical trials as a once daily oral therapy. By inhibiting the CXR4 receptor, we have demonstrated across multiple clinical trials and multiple therapeutic indications that Mavericks 4 can help regulate white blood cells, increasing the mobilization of neutrophils, lymphocytes, and monocytes into the bloodstream. And these effects have been achieved across all patient populations studied, regardless of their CXR for mutation status.

Paula Ragan: Mavericks 4 has also demonstrated an excellent tolerability profile across hundreds of patients, some of whom have been receiving Mavericks for more than two years. Our Phase 1D clinical trial in chronic eutropenia is now fully enrolled at 25 patients. Enrollment is near final, with a small number of additional patients expected. The trial examines Nutrophil and other white blood cell responses to Mavericks for treatment. Patients in the study have a range of neutropenic conditions, including severe congenital neutropenia, idiopathic neutropenia, and cyclic neutropenia.

Paula Ragan: Some patients receive a standard of care called Granulocyte Colony Stimulating Factor or GCSF, and some have not. We look forward to presenting this trial's initial full data sets and patients with diverse sets of CN disorders at our event in September. We expect these results will help inform the regulatory path forward for Mavericksa4 and chronic utopinic disorders, and we look forward to sharing more of what that pathway might look like once we've gained clarity following the presentation of the data to regulatory authorities.

Paula Ragan: Our next notable and certainly potentially transformative milestone will be the unveiling of our data from our pivotal phase three WIM trial, which is still on track for the fourth quarter. As you know, these results are expected to support our first regulatory filing in the U.S., which is now expected early in the second half of 2023. We've been very encouraged to see a high percentage of patients coming off the study choosing to continue in the open label extension phase of the trial. As you may know, WIMP syndrome is a rare genetic immunodeficiency disorder caused by gain of function mutations in the CXCR4 receptor.

Paula Ragan: WIM is characterized by HPV Associated Awards, hypogamyloblobulinemia, multiple types of infections, and myelocethexis, which causes leukemia and neutropenia in many patients, reducing the body's ability to mount a healthy immune response. X-4's 4-WIM Global Phase 3 trial is the first placebo-controlled trial in WIM syndrome, to help put the upcoming CIS3 results into context On our third quarter earnings call, we plan to discuss what success might look like from this trial, reviewing both the primary and secondary endpoints that we've previously aligned on with the FDA and some additional information about our early commercial efforts, Patient Finding Initiative, and the continued expanding landscape of the disease profiles and diagnosis of WIM syndrome.

Paula Ragan: Before I passed it over to Adam to discuss the quarter's financial results, we did want to provide a brief overview of our new response data from the Phase 1B, Mavericks for a trial, and patients with Waldstrom's macroglobular anemia, a rare B-cell infoma. As mentioned, we aim to unlock the full value of our oncology portfolio only through potential strategic partnerships.

Paula Ragan: We believe the favorable data from this trial will meaningfully support that potential option. Please note that we will be uploading a summary of the deck to our website with these results shortly. As detailed in today's press release, 16 patients were enrolled in the clinical trial, which is a Phase 1B, open-label, multi-censor, single-arm study evaluating the safety and efficacy of Maverick Sport in combination with the BTK inhibitor Brutinib in adults diagnosed with Walzenstrom and confirmed to have M.YD-88 and CXR for mutations, a double mutation status that has been associated Specifically, the presence of CXCR4 mutations has also been shown to negatively impact patients' responses to abrutinib as manifested by delayed responses, inferior depth of response, and shorter progression-free survival.

Paula Ragan: In the study, all patients received oral once-daily doses of 420 milligrams of abrutinib and escalating doses of 200 milligrams, 400 milligrams, and 600 milligrams of oral mavericks before, also once daily. As of June 2022, 10 of the 12 evaluable patients, or 83%, had achieved a major response to therapy, which is defined as Nine of the 12 evaluable patients had disease relapse or were refractory to prior treatments when entering the study. Of these relapse-refractory patients, eight of the 90 valuable patients, or 89%, achieved a major response.

Paula Ragan: In treatment naive patients, major responses were seen in all patients escalated to greater than the starting 200 milligram dose of Mavericks of 4. Looking at the data over time, adding Mavericksabor to imbrutinib was associated with a higher major response rate at 912 and 24 months as compared to previously reported major response rates achieved with abutinib monotherapy, which historically achieved a maximum of 57% major response rate at 24 months in a similar patient population.

Paula Ragan: To date, treated patients have all achieved elevations in absolute neutrophil counts or ANC with no neutropenic events reported. This is meaningful as more than 40% of patients typically experience some decreased neutrophil counts with Brutinibmonopheraphyp. Interestingly, patients also experience fewer infections over time with chronic combination dosing. Assessment of infection risk is a labeled warning and precaution while on abrutinib monotherapy. No major safety signals due to Maverick support have been identified in the trials as of the data cutoff.

Paula Ragan: Maverick's before in combination with Brutinib showed a safety profile similar to Brutinib monotherapy across the 16 patients, which included eight patients escalated to the highest dose of 600 milligrams of Maverick's before. Additionally, we did want to highlight that in June, Maverick Sifora was granted orphan drug designation by the U.S. Food and Drug Administration for the treatment of patients with Waldstrom As presented at EHA earlier this year, Maverick Sapporo demonstrated in vitro the ability to disrupt bone marrow cross-talk and increase Waldstrom cancer cell sensitivity to treatment, regardless of CXR4 mutation status, supporting the potential that Maverick-Savora will have utility across a broad range of lymphomas.

Paula Ragan: The Phase 1B clinical trial is expected to be completed in the fourth quarter of 2022 when the last patient is dosed, and with the support of our investigators, we aim to provide full and final results in a future journal publication. And finally, as we also mentioned earlier, with our new sharpened focus on chronic neutropinic disorders, further clinical studies in Walden's rums will now be subject to completing a strategic partnership. We believe these promising data, which will be uploaded to our website, support these future potential opportunities.

Paula Ragan: In our July announcement, we also mentioned that further work on our pre-clinical oncology candidate XORP-O-O2 is concluding IND-enabling toxicology studies, and that an I&D filing will now be subject to completing a strategic partnership. As a reminder, OO2 is a novel, small molecule, CXR4 antagonist that has been shown to cross the blood-brain barrier with potential applicability In total, we believe that the Mavericks for Oncology data to date plus the promise of our OO2 candidate present a partnerable package of great potential, and we will report on our potential success in a continued advancement of these valuable assets at the time when this potential partnership is secured. With that, I'll now turn it over to Adam to discuss our results for the quarter before we open up the call for questions.

Adam S. Mostafa: Thanks, 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 second quarter ended June 30th, 2022. At the end of the second quarter, we had $48.7 million in cash, cash equivalence, and restricted cash. On June 30th, as Paul mentioned, we announced a pipeline financing of approximately $56 million in gross proceeds. The financing closed on July 6th, and proceeds from the deal are not reflected in the June 30th cash number.

Operator: However, including the pipe funds, we recently announced cost-cutting measures that we estimate will result in approximately $25 million in savings at the end of 2023, and the recent amendment to our loan agreement with Hercules. As a result, we have extended our cash runway guidance into the third quarter of 2023. Research and development expenses in the quarter were $13.8 million, which compares to $13.2 million for the comparable period in 2021. SGNA expenses were $6.7 million for the second quarter as compared to $5.8 million for the comparable period in 2021.

Operator: Finally, X4 reported a net loss of $21.2 million for the second quarter of 2022, which includes approximately $1.5 million in non-cash expenses. As compared to a net loss of $19.6 million in the comparable period in 2021. We'll now open up the call to your questions. Operator.

Operator: Thank you. We will now begin the question and answer session. To join the question Q, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you were using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press a star, then to The first question comes from Stephen Willie with Stiefel. Please go ahead.

Stephen Douglas Willey: Yeah, good morning. Thanks for taking the questions. Maybe just a couple.

Paula Ragan: So on the chronic neutropenia side, are you able to say how many patients enrolled into phase 1B are on background GCSF? And then I know there's been some discussion around wanting to target those patients who experience some kind of given number of baseline severe infection events. And just curious if you can also kind of speak to how many patients you've enrolled meet that infection event criteria as well.

Paula Ragan: Sure, so I'll start very high level, and then I'll ask Diego to give some more detail. But just at a very high level, Steve, we will be having a pretty good blend of patients that are neutropenic with or without GCSF. So actually, that's the most important question. So there'll be a pretty nice data set to show what Mavericks is doing in neutropenic patients because, ultimately, that's what we're trying to achieve. And then amongst that whole bucket, there's actually a nice kind of 50-50 blend between those who are on or off GCSF.

Diego Kadavid: So, you know, the question is, how is the drug going to help patients? And I think we're going to have a nice data set to show that target population that we, you know, aim to kind of, declare some initial positivity around. And then the second question was around the infection sort of baseline. We've collected some of that information, but ultimately, this is really a response study, so to speak. So, you know, Diego, let me invite you in to give some more calls around that.

Diego Kadavid: Yeah, hello, Steven. Yeah, this current study was enrolled around looking at increasing neutrophil counts, and we got, as Paula said, a pretty good number on GCSF or not on GCSF, and we look forward to presenting that data at the September event because this is a short-term treatment. We're not focused on infections, but you're right. We're looking carefully, as we plan for the next study, as to what the right population is. And ultimately, we know that severe infections are a really important clinical outcome, so we're looking at it carefully.

Stephen Douglas Willey: Okay, that's awful. On the Waldenstrom's side, and forgive me if I missed it, but are you able to say what the median time to major response rate was? I know that there's been some interest in the notion of Mavericks for not only improving the rates of major response but also improving the kinetics of response.

Paula Ragan: I'll start and then, Diego. I think the challenge for us on time to major response was the dose escalation design of a study, given we were starting at a low dose, and then folks had to get held there, et cetera, et cetera. So I don't think, I mean, we can certainly calculate it. But I think it's a bit less useful because we were trying to conserve patient exposure and dose escalation as we designed this trial. So I hear you, but I don't think we'll be sharing that data because I think it's confounded by the study design.

Stephen Douglas Willey: Got it. And then, just lastly for Adam, I guess I just want to confirm that the updated cash runway guidance doesn't assume any exercise of warrants.

Adam S. Mostafa: That's correct, Steve, yeah, no assumption of any warrants or any additional proceeds of any kind on that new runway.

Stephen Douglas Willey: Excellent. Thanks for taking the question.

Operator: The next question comes from Eva Privatara with Cohen. Please, go ahead. Hi. Hi, good morning. Congratulations on the Waldenstrom data.

Eva Xia Privitera: and thank you for taking our questions. Can you maybe tease out the major responses for Waldenstrom's? What were the VGPR rates specifically in the overall population as well as the relapse and refractory?

Paula Ragan: Yes, so we have not published that. Certainly, historically, I think we had one DGPR that we published on previously. We haven't completed this study, so that'll come in Q4, early Q4, and then we'll be publishing those full sets of results, including all the subtypes of responses, so we look forward to sharing that data with you in the future. Okay, great, thanks. And my second question pertains to phase 1B in severe congenital neutropenias. How long of a follow-up do you anticipate there will be in the September data presentation? So you go; why don't you take that one?

Diego Kadavid: Yeah, Iva, thank you for the question. Also, as Paula mentioned earlier, we expect this study to be fully enrolled. Most of the patients were treated with a single dose, and then there is a 30-day post-dosing safety assessment. I believe we will have full or close to full data available to us to discuss in September.

Eva Xia Privitera: Perfect, that's helpful. So for that 30-day time point,

Diego Kadavid: At the 30-day time point, what would you consider to be meaningful data, taking into account, you know, GCSF being available to these patients?

Diego Kadavid: Yes, because they were those with Mawarica, most of them for single doses. The 30-day meaningful data is mostly around the absence of any safety signals post-dose, and that we have never seen, but we're checking anyway. It is not an efficacy test without the 30-day is around safe.

Eva Xia Privitera: Okay, great, and helpful. Thank you. The next question comes from Myukam-Mammie with B. Riley Securities. Please go ahead.

Operator: Good morning, team. Thanks for doing my question and congrats on a productive quarter. So maybe just a follow-up to prior questions. You are looking at, you know, three subtypes of chronic neutropenia, their congenital, idiopathic, and cyclic. Can you help us understand how utilization of GPSF looks in the real world across those? And what sort of, at a high level, you're looking to, you know, learn in this phase 1B study that at least has a framework in place if you do decide to, you know, engage the regulators for, you know, a study focusing on one or two or all forms of these things.

Diego Kadavid: Go ahead, Diego. Yeah, I cannot, Paul. I said, I could answer that question. So in general, most of the GCSFUs are for a short time to prevent sequela of neutropinia in the context of chemotherapy for people with cancer. There is also use of GCSF for chronic And it is used broadly across these three types, severe congenital, cyclic, as well as idiopathic. But many, many patients are not on chronic therapy at all, or, in fact, they're using it only intermittently.

Diego Kadavid: So this speaks to the high-end of the market, with Mavorexapol being an oral and so far well-tolerated therapy. We are thinking forward that Mawarix-A-4 could indeed become the standard of care for chronic neutropenia. And we will be investigating to what extent you may or may not need some GCSF. And that's something that may be the case for patients that have very severe bone marrow, but we believe the majority of patients could be treated with Mawirik-Safo, and we plan to study that over the next few months and years.

Unknown Attendee: And then just quickly on WIMS syndrome, page three, you know, detail; look forward to that at the third quarter earnings call, you know, in mid-November. Could we then assume that, in your top line press release, you would look to put out a very comprehensive data set of, you know, primaries and secondary endpoints, including infections, ward burden, things like that?

Paula Ragan: Yeah, I'll take that. Thank Mike.

Paula Ragan: We, in our press release, we'll certainly be focusing on, you know, the data set that tells the story, right? The drug, we believe, is disease-modifying. Obviously, we have a study design, of course, the primary and the secondary endpoints. But really, what we're looking forward to is presenting a data set that helps tell the story and the impact of the drug across the various clinical aspects of the disease. So we will certainly look forward to sharing that story with you, as it is most important of all.

Unknown Attendee: Okay, great. And just my final question on Warren Strom, just clarify for us, you know, just clearly from a data generation standpoint, what's the expectation to be able to, you know, effectively engage with the strategic? Like, could you do this starting tomorrow or is that something you may think could make more sense once you have the fuller data set that, you know, you guys discussed earlier?

Paula Ragan: Yeah, I'll start, and then Adam can always chime in, but I think, you know, we, you know, whenever there's exciting data, I think that's an opportunity for gaining interest from the external world. We always already have some existing relationships and conversations, certainly with Abbie, given they've given free drugs to support the trial. So, you know, these are just sort of natural continuations of conversations that certainly are more aligned with the data, right? That's always the spark to initiate conversations, Maya. he posted as things, you know, evolve and where we're able to communicate. Adam, do you want to chime in on anything else?

Adam S. Mostafa: Yeah, I think, as Paul said, we're pleased with the clinical profile of the data. We think that there's a strong future and potential there. For us, we're dedicating resources and allocations toward our exciting chronicotropinia and WIM programs, but we look forward to continued progress and we'll come back and update the market as we see how things plan out with a potential partner in pursuing our oncology efforts.

Unknown Attendee: Thanks for making such a question.

Operator: Once again, if you have a question, please press a star, then one. The next question comes from Arthur He with H.C. Wainwright.

Operator: And good morning, Pauline, and this writing for RK. I just want to have a quick follow-up on the World.

Unknown Attendee: Strong Beta.

Unknown Attendee: Could you just remind us from this tour of the evaluable patients?

Unknown Attendee: Why these are not all?

Unknown Attendee: These do not all escalate to the 600-millimeter dose level.

Diego Kadavid: Sure, do you want to go, do you want to take this?

Diego Kadavid: Yes, I can speak to that. There are different reasons. Some patients were enrolled and dropped off rapidly for different reasons. One was having difficulty swallowing, of course. That patient was risen only at 200 and never escalated. There were patients who were doing really well at 400, and they were offered escalation, but they were doing already so well that they opted not to. So there is a reason for each one.

Diego Kadavid: But overall, most of them did escalate and remain at 600, and as you have seen from the data, they got very good clinical responses. So we believe 600 milligrams is really well tolerated, and that data will be available to any potentially interested partners as those that can be advanced into a further study.

Unknown Attendee: Thanks for the additional kind of information. Thank you for taking my question.

Operator: As there are no more questions from the phone lines, this concludes the question-answer session. I would like to turn the conference back over to Paula Reagan for any closing remarks. Well, thank you again for joining us today. As always, we appreciate your continued support of Act 4, as we look forward to important near-term milestones that we believe will bring us one large step closer to improving the lives of our patients with chronic uterpenic disorders. Thank you again, and have a great day. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Paula Ragan: Thank you, so much, you know, and why. Thank you.