X4 Pharmaceuticals, Inc Q1 FY2021 Earnings Call

Greetings and welcome to X4 Pharmaceuticals First 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 of LifeSci Advisors. Please begin.

Thank you, Operator. And good morning everyone. Thanks for joining us. 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, we'll open up the call to your questions. And we'll be joined by Dr. Diego Cadavid, Chief Medical Officer, Art Taveras, Chief Scientific Officer and Mary DiBiase, Senior Vice-President, technical operations and quality. 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 subjected to risks and uncertainties that may cause actual results to differ from those forecasted. The descriptions of these risks can be found in X4's most recent filing with the SEC. I'd now like to turn the call over to Paula Ragan. Paula?

Thanks Dan, and thank you everyone for joining us on the call this morning. Let me start by saying that we could not be more pleased with our accomplishments so far this year. We've achieved significant progress in our mavorixafor clinical programs and successfully completed a $55 million at-the-market PIPE financing, which included participation from leading biotech investors, both new to X4 as well as from existing investors. We believe this demonstrates a strong level of investor conviction in the clinical and commercial potential of mavorixafor, while also extending our expected cash runway into late 2022 and supporting our additional pipeline programs. As mentioned on our last call, the pace of enrollment in our key clinical programs has ramped up significantly since last year. Specifically, we now expect to announce an important enrollment update in our Phase 3 trial in WHIM syndrome in mid-2021. As a reminder, WHIM is a rare inherited primary immunodeficiency disease caused by gain of function CXCR4 mutations that prevent healthy immune cell trafficking and effective immuno surveillance. Most patients with WHIM disease have life-threatening neutropenia and lymphopenia, which can result in a variety of serious chronic infections across multiple organ systems, HPV associated lesions, and increased cancer risk and other serious life-impacting morbidities. Mavorixafor is our first-in-class small molecule antagonist of the CXCR4 receptor that we believe has the potential to be the first disease-modifying therapy for more than 3,500 potential diagnosed and undiagnosed WHIM patients in the U.S. The 4WHIM Phase 3 trial is a global randomized, placebo-controlled double-blinded, multicenter study designed to evaluate the safety and efficacy of mavorixafor over a course of 52 weeks, enrolling approximately 18 to 28 genetically confirmed WHIM patients. The Phase 3 primary efficacy endpoint, called time above threshold for absolute neutrophil count, or TATANC, compares the level of circulating neutrophils relative to a clinically meaningful threshold in response to mavorixafor treatment versus placebo. As you may recall from our Phase 2 study published in the journal Blood in 2020, mavorixafor demonstrated more than a 600% increase in time above threshold for neutrophil counts at our selected Phase 3 dose compared to the lower doses treated for WHIM patients, which gives us confidence in the potential success of our Phase 3 study. Secondary endpoints include infection rates, work burden, and assessment of immune system function and quality of life among others. At our current rate of enrollment, we continue to expect top-line data from this Phase 3 trial in 2022. We also expect to report new data from the open-label extension of our Phase 2 clinical trial in WHIM later this year. We anticipate these data will continue to provide us insights regarding the long-term safety and durability of chronic mavorixafor treatments. Additionally, we look forward to sharing new information regarding our additional WHIM prevalence research later this year. In addition to our WHIM program, we continue to make good progress in our Phase 1b trial for the treatment of Waldenstrom's macroglobulinemia, a rare form of Non-Hodgkin's Lymphoma. As a reminder, this Phase 1b study is a multicenter open-label dose escalation clinical trial that is expected to enroll approximately 12 to 18 patients. We are excited to have recently received notice of acceptance of our Phase 1b trial abstracts for a poster presentation at this year's annual Congress of the European Hematology Association or EHA that will take place virtually from June 9 to June 17. The abstract and poster will focus on initial clinical data from the ongoing Phase 1b trial of mavorixafor at the study low and mid doses in combination with ibrutinib in the subset of Waldenstrom's macroglobulinemia patients harboring both the MYD88 and CXCR4 mutations. In addition to safety pharmacokinetics and pharmacodynamic markers, the initial data set will evaluate changes in Serum immunoglobulin M or IgM and blood hemoglobin levels. It is well established that reductions in IgM levels and increases in hemoglobin levels correlate favorably with clinical responses for the treatment in Waldenstrom's patients. Later this year, we expect the study will mature further, such that we should be able to present data sets regarding the determination of the final dose selection for further study and assessment of major response rates, as well as ongoing safety across a range of doses. So as you can see, 2021 has been quite productive for us to date, and we're looking forward to a steady flow of value-adding data presentations and business milestones throughout the rest of the year. With that update, I will now turn the call over to Adam to discuss our results for the quarter and our recent financing announcements. Adam?

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 results for the first quarter ended March 31, 2021. As of March 31, 2021, X4 had $116.7 million in cash, cash equivalents, and restricted cash. This figure includes proceeds from the PIPE financing that we completed in mid-March. Through this at-the-market deal, we raised a gross amount of $55 million with the financing including participation from a number of new and existing leading healthcare investors. After the close of this transaction, we expect our cash and cash equivalents will fund company operations into the fourth quarter of 2022. Our research and development expenses were $12.1 million for the first quarter of 2021 compared to $8.9 million for the comparable period in 2020. General and administrative expenses were $5.8 million for the first quarter of 2021 compared to $4.7 million for the comparable period in 2020. We reported a net loss of $18.7 million for the first quarter of 2021 compared to a net loss of $11.1 million for the first quarter of 2020. Note that net loss included $1.3 million of certain non-cash expenses for the first quarter of 2021. Let's now open up the call to your questions.

Our first question comes from Stephen Willey with Stifel. You may proceed with your question.

Good morning. Thanks for taking the questions. Paula, I was wondering if you could frame up expectations a little bit with respect to, I guess, what kind of data we might see in the abstract when that gets released. I think it's next week. And I guess how that may differ from what we could see at EHA. It sounds like you said specifically that we'll be seeing data from the low and mid doses; have you dose escalated patients up to that 600 milligram dose yet for the escalation protocol?

Yes, so I'll try to break that all down for you, Stephen. Thank you so much for the question. So the way to think about Waldenstrom's macroglobulinemia disease is obviously the heavy burden of IgM levels being excessively high, causing a lot of risk for serious complications like hyperviscosity syndrome. And then that massive disease burden from the cancer itself causing hemoglobin impact. So, for a patient, you want to see IgM dropping and hemoglobin rising as a function of being treated. So that's really the focus of our EHA data in terms of demonstrating changes in IgM levels and hemoglobin levels indicating that the combination is performing better than ibrutinib alone. There are other Phase 1b studies that sort of use this paradigm as well. So I think we're consistent with giving people the data set that can indicate our dual combination activity. When we think about the end of the year with ASH, it's really about response rates, and those take time to mature. Typically, it takes about six months on treatment before patients undergo CT scans and bone marrow assessments to complete the definition of response rate that is required in these patient populations. That's why we need a longer time on study to be able to support a robust number of assessments across all our patients. And then finally, you asked about the 600 milligram dose. The study is continuing to dose escalate. As you know, it's an open-label study, and we haven't completed all the cohorts yet. That's why we'll be focusing on the low to mid doses, but we will certainly share as much data as we're able to.

Okay, and I guess, have you internally made the decision as to whether or not you're going to increase the enrollment up to 18? Or do you think that you're going to get a sufficient amount of data in these first 12 to kind of understand what your recommended Phase 2 dose needs to be?

The trial itself incorporates maximum tolerated dose requirements. So the 12 to 18 builds in flexibility in the event that we have dose-limiting toxicities. That's where the flexibility comes in, Steve; it's not like we'll continue to try to escalate so long as the safety profile enables us to do so. The first two cohorts will reach through 600. The last cohort is rounding out the total number of patients. So just stay tuned on that.

Understood. And then lastly, just curious as to where things stand on severe congenital neutropenia, which I don't think was part of your prepared commentary, or if it was, I may have missed it?

Yes, thank you. So the SCN trial is open and enrolling. In the context of COVID, especially last year and early this year, it was the most challenging study to enroll given the short dosing timeframe. These patients are immune compromised, the study is two weeks. We have always tried to prioritize patient safety and their need to come into hospitals for assessments. We do expect to have some initial data by the end of this year. But just in terms of patient numbers, what we've guided to is a smaller number of patients than obviously the total trial design, but we'll look forward to sharing what we're able to towards the end of the year.

Understood. Thanks for taking the questions and congrats on the progress.

Thank you so much.

Thank you. Our next question comes from Marc Frahm with Cowen. You may proceed with your question.

Thanks for taking my questions and congrats on all the progress across the multiple programs. Paula, can you just remind us of the different doses in the Waldenstrom trial, just the relative levels of CXCR4 inhibition that you're expecting based on all the prior work you've done with the molecule?

Sure, actually, I would invite Art to share that. He is certainly one of our experts in exposure and inhibition. So Art?

Yes. Hi. And thank you for the question. The exposures that we're going after are very consistent with what we've seen from our WHIM Phase 2 trial. The doses there, of course, are the 200, 400, and then ultimately, 600. The exposures seem to be adequate to cause leukocyte mobilization, which is one of the key components for us to achieve efficacy. We understand the potency of our molecule; we've measured that in many settings. We also know that we're able to achieve those exposures to inhibit CXCR4 to give us the hoped-for efficacy.

I guess you're kind of on traditional metrics of like IC50 IC90; what type of levels are we at?

Yes. So the IC50 for mavorixafor is 4 nanomolar and the IC90 is about 12 nanomolar.

And so just across like, certainly the 400 milligrams per day gets us to the IC50, and then the IC90, we're close to that with the 600. But of course, it's about maximum tolerated dose, so that's where the window is; the drug is nonlinear in terms of its exposure, Marc.

Okay, that's helpful. Thanks. Maybe on WHIM, Paula, give an update on where you are more generally on patient identification efforts, where registries are at these days?

Yes, so excellent question. On patient identification, we continue to partner with existing foundations that have their own registries, as well as we have our internal patient advocacy group that has been connecting with various subgroups formed within the WHIM community. We're continuing to work with them, partner with them, and work with existing registries, and we certainly have been formulating our own registry to support the long-term growth of mavorixafor to support these patients. There's a bit of a stay tuned on X4's specific registry plans, but they are in the works, and we're wanting to appropriately dovetail into the communities that exist today and support them via our own efforts. Later this year, we will be focusing on some WHIM prevalence work, which will integrate with some of the broader patient identification initiatives that we have ongoing. I think it will be a robust overview of some of those approaches towards the second half of this year.

Okay, great. That's very helpful. Thanks.

Thank you, Marc.

Thank you. Our next question comes from RK Ramakanth with H.C. Wainwright. You may proceed with your question.

Thank you. Good morning, Paula. A quick question on mavorixafor. Most of my questions on the current expectations on the EHA, I got them. But, beyond what's going on right now, in the Phase 1b study? Do you have a general outline as to how you would be going forward with this into the Phase 2 study? And also could you give us a rough timeline as to when that could happen?

Yes, so thanks, RK. I think I'll start and then I'll invite you to add anything. For clinical drug development, we want to determine the activity and potential benefit of the drug in this Phase 1b study. Once we have a robust data set in hand, it's always best to partner with the FDA and other agencies early in the process. That would be our intent. Once we have the FDA input in our data set, we'll then be able to project off of where the study will launch. Our view would be straight into a study that would hopefully support registration. We really need to generate the data set, of course, to have a mutually agreeable path forward, both for the company and for regulators. Diego, would you like to add anything?

Yes. Thank you, Paula. We are actively working with leading investigators who are really interested in this population of double mutant Waldenstrom to look at the data that emerges and put together the best study design to present to regulators. We have benchmarks of how ibrutinib was approved, and that is certainly one area we're carefully addressing, but also other potential scenarios. We will be sharing more with you and others as the world continues.

Thank you. The second question is on the 4WHIM trial. We understand you're going to give us a little bit of an update regarding enrollment in the mid-year. However, considering this population and your experience so far in the trial. Again, similar question as to when we could see the completion of this study? Or would we get that update also during the mid-year enrollment update as to how we should think about completing the study, and your conversations with regulators?

Yes, as a reminder, we have shared that with the existing study design, which is randomized, placebo-controlled, and double-blinded. It's a 12-month dosing period that has been heavily vetted by the FDA and EMA with support for the design and statistical power. We feel extremely confident with the current study design that would enable NDA and EMA filings from this one data set, and that continues to hold. The excitement for us is that when we provide guidance on enrollments, that can trigger projections of when the top-line data will be available. This continues to align with our guidance for top-line data in 2022. I look forward to being more specific in mid-2021.

Thank you.

Thank you.

Thank you. Our next question comes from Mayank Mamtani with B. Riley. You may proceed with your question.

Hi, good morning team. This is Sahil Kazmi on for Mayank. Thanks for taking our questions, and congratulations on all the progress. Maybe a brief one on the WHIM patient enrollment and how that tracking has been influenced by your efforts in patient identification? Also, how those identification efforts may have synergies on the SCN side, and how you might think that influencing later stage trials as well.

Thank you very much for the great question. I'd like you to consider three parallel streams of work that have less leverage with each other. When we started the 4WHIM trial, the design and planning set a timeframe of at least two years ago. In rare disease, you're working with Centers of Excellence and KOLs with known patients who have a chronic unmet need, creating pent-up demand for innovative studies. This has been the history around us and how we've enrolled and opened sites with investigators. In parallel, we’re playing the long game. WHIM is a rare genetic disease, under-educated and underdiagnosed in the broad clinical communities and among patient communities. As we built education and awareness efforts through our MSL team and patient advocacy, we've uncovered new or known WHIM patients directed to clinicians who can learn about our trial. We’re naturally broadening the connectivity between patients across the community. These patient identification efforts build the potential addressable populations if and when mavorixafor is approved. The third question is on SCN, there’s been a great opportunity for us. One of the outputs of the NBTA efforts has been a panel for genetic testing for patients with immune deficiencies, which spans congenital neutropenia as one of those. We've also had a nice synergy regarding education and awareness in our SCN trial. I hope that addressed your question.

Yes, absolutely. That's really helpful. And then just maybe one more quick one on WHIM — could you provide to the extent you're able to disclose a bit more color on what we might learn from incremental data from this Phase 2 open label extension that you plan to share at the end of the year?

I think you summarized it with safety and durability; obviously our intent is supporting WHIM patients with lifelong treatment with mavorixafor. Any data we generate under close surveillance around safety and durability will continue to support the totality of data that would enable physicians and patients to be comfortable with the data. Of course, the regulators as well. It's just a bit of stay tuned, and we look forward to sharing that as it emerges.

Great. Really appreciate the time. Thanks for taking our questions.

Thank you.

Thank you. Our next question comes from Arlinda Lee with Canaccord. You may proceed with your question.

Hi, guys, thanks for taking my questions. You alluded to mirroring mavorixafor toxicities. Could you talk a little bit about what you would expect these might be? And then can you comment on whether you expect dosing to be the same across the various disease indications? Thank you.

Sure, thanks. Diego, would you like to take that?

Yes, sure. In terms of mavorixafor, the data we have when it is used as monotherapy has been very well tolerated. We don't really expect any dose-limiting toxicities directly from mavorixafor alone. However, when you use it in combination with ibrutinib, as you know, there are several safety issues with chronic treatment, which are clearly stated in their label. We have to monitor those carefully to see if adding mavorixafor has any effects. Whether we expect the same or different doses will depend on the data. We're confident for WHIM syndrome we have the right dose, that's the 400 milligrams per day. For Waldenstrom, we are dose escalating up to 600. Based on tolerability as well as the efficacy segment, we will choose the dose that gives the best benefit-risk profile. I hope that answers your question.

Thank you.

Thank you. Our next question comes from Zegbeh Jallah with ROTH Capital Partners. You may proceed with your question. Zegbeh, if your line is on mute, please unmute. I'm not showing any further questions at this time. I would now like to turn the call back over to Paula Ragan for any further remarks.

We'd like to say thank you very much for joining the call today. If you have any further questions, please don't hesitate to reach out. We hope you enjoy the rest of your day. Thank you so much again.

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