Q1 2024 X4 Pharmaceuticals Inc Earnings Call

Participants

Paula Ragan; President, Chief Executive Officer, Founder, Director; X4 Pharmaceuticals Inc

Adam Mostafa; Chief Financial Officer, Treasurer, Corporate Secretary; X4 Pharmaceuticals Inc

Christophe Arbet-Engels; Chief Medical Officer; X4 Pharmaceuticals Inc

Mark Baldry; Chief Commercial Officer; X4 Pharmaceuticals Inc

Daniel Ferry; Investor Relations; LifeSci Advisors LLC

Stephen Willey; Analyst; Stifel Nicolaus and Company, Inc.

Edward Tenthoff; Analyst; Piper Sandler Companies

Kristen Kluska; Analyst; Cantor Fitzgerald

Swayampakula Ramakanth; Analyst; H.C. Wainwright & Co., LLC

Kalpit Patel; Analyst; B. Riley Securities

David Bautz; Analyst; Zacks Small-Cap Research

Presentation

Operator

Greetings, and welcome to X4 Pharmaceuticals first-quarter 2024 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Mr. Dan Ferry from LifeSci Advisors. Thank you, Mr. Ferry. You may begin.

Daniel Ferry

Thank you, operator, and good morning, everyone. Thank you for joining us today. Presenting on today's call will be Dr. Paula Ragan, X4's President and CEO; and the company's Chief Financial Officer, Adam Mostafa. Following prepared remarks, we will open up the call to your questions, and we'll be joined by Chief Commercial Officer, Mark Baldry; Chief Medical Officer, Dr. Christophe Arbet-Engels; Chief Operating Officer; Mary DiBiase; Chief Scientific Officer, Dr. Art Taveras; and Juves, Head of Corporate and Patient Affairs.
As a reminder, on today's call, the company will be making forward-looking statements regarding regulatory and product development and commercialization plans as well as research activities. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. The description of these risks can be found in X4's most recent filings with the SEC, including this year's Form 10-K which was filed on March 21, 2024, and in the company's Form 10-Q which is expected to be filed later today.
I'll now turn it over to Paula Ragan. Paula?

Paula Ragan

Thanks so much, Dan, and welcome, everyone. Following last week's approval of Zelle, Randy, it's exciting to reiterate today. Why is this critical? Regulatory achievements represents a significant opportunity to improve the lives of WHIM patients and offers a strong platform for the Company's growth. More specifically, I'll touch on our plans for expanding both remedies used in WHIM geographically and for quickly advancing into a potential larger indication, chronic neutropenia.
But let's start with last Monday's transformative announcement. As you know, though, Randy, our Maverick before is now approved by the FDA for use in the US in patients, 12 years of age and older with WHIM syndrome to increase the number of circulating mature neutrophils and lymphocytes. Whim syndrome is an ultra-rare disease caused by dysfunction of the CXCR4 receptor, which helps regulate of movement of white blood cells, including neutrophils and lymphocytes throughout the body, people with WHIM syndrome, characteristically have low blood levels of neutrophils, neutropenia and lymphocytes lymphopenia and experienced serious and are frequent infections that cause significant morbidities in our pivotal Phase three clinical trial that supported our approval, sole remedy and oral selective CXCR4 antagonist, improved absolute neutrophil counts and lymphocyte counts and CNALC. and reduced the rate duration and severity of infections in both treated versus placebo. This was the largest clinical trial to date in WHIM syndrome enrolling 31 patients.
We'd like to note that the full manuscript of these clinical results were recently published online in blood. The Journal of the American Society of Hematology or ASH. And that results from this trial and its open-label extension phase or OE. were just presented last week at the annual meeting of the Clinical Immunology society Four-Cs. Notably, the CIS. poster revealed that long-term treatment with sole remedy was associated with durable improvements in neutrophil and lymphocyte counts, as well as reductions in annualized infection rate and that to date, no new safety signals have been observed during the OLE phase of the trial. As with most ultra rare diseases, it can be challenging to assess the true patient prevalence as awareness is often low and patients are frequently under or misdiagnosed.
And since we didn't cover this in detail last week, we thought it might be useful to remind everyone of the market size estimates that we've shared on the U.S. wind market over the past several years. Since 2019, we've completed several robust market research studies using both qualitative and quantitative analyses to not only support our prevalence estimates, but to also better understand the WHIM diagnostic journey and treatment paradigm across a number of methodologies, including direct market research and claims based research. We continue to validate our current estimates and through our growing number of conversations with physicians in the field and at medical conferences, we remain very confident in our estimate that there are at least 1,000 confirmed diagnosed WHIM patients today in the US and now with a targeted therapy available, we expect that increased physician awareness will bring more and more focus to the WHIM community, enabling earlier recognition and diagnosis potentially expanding the number of those diagnosed with win over time and as our Chief Commercial Officer Mark Baldry.
So as we put it last week, it is well established that earlier and definitive diagnosis leads to better patient outcomes. And that is ultimately our goal for the WHIM community. We believe we are well positioned to not only deliver on the commercial opportunity in WHIM syndrome, but to also advance our global regulatory submissions with the goal of potentially providing new options to patients across the world. Our European submission preparation in WHIM are underway, and we anticipate submitting a Marketing Authorization Application or NDA for potential European approval in late 2024 or early 2025.
Importantly, we'd like to review our development plans and upcoming milestones for Maverick's for beyond two m. and to define what success might look like as we explore the use of Maverick for in the treatment of chronic neutropenia or CN. help understand the benchmark for success.
I'd first like to start with what we've seen in WHIM syndrome as I mentioned, our WHIM Phase three trial data were recently published in the peer-reviewed journal Blood specifically when patients were severely neutropenia at baseline with a mean A. and C. of less than 250 cells per microliter patients on Maverick before achieved increases of about 500 cells per microliter, reaching A. and C. levels of about 800 cells per microliter on average over the 52-week trial. This increase neutrophil count of approximately 5 to 600 cells per microliter corresponded with a 60% reduction in infection frequency versus placebo as well as reduced severity and duration of infection.
Additionally, the benchmark of increasing air and sea by at least 500 cells per microliter aligns well with what our CM physician experts describe as clinically meaningful, an increase of 500 cells per microliter was also the metric for success in our previously published CM Phase Ib study and has been published on by the NIH and others across various neutropenia conditions. I notice here because these results help inform our assessments of success for the ongoing Phase two clinical trial data in CN and our enthusiasm for advancing into the CF Phase three study in the first half of 2024.
As with WHIM patients, chronic neutropenia patients face an increased risk of infection every single day. This risk is greatest when they are severely neutropenia or with an A1c below 500, increasing A. and C. from less than 500 between 501,000 cells per microliter correlates with a meaningful reduction in infection risk from severe to moderate increasing agency to between 2,500 correlates with a risk reduction from moderate to mild and increasing A&C above 1,500. It moves the patient into a normal infection risk category. Additionally, based on our market research, we believe that physicians prescribing injectable granulocyte colony stimulating factor or G-CSF. Currently, the only therapy approved to treat severe chronic neutropenia generally target A1C levels between 2,500, with enrollment now complete in our Phase two trial, we will have studied more than 20 CF patients, approximately 40% of whom have been treated with Maverick for monotherapy and the remainder with a combination of Maverick Sport and G-CSF.
We are currently planning an investor event in late June to present interim results from at least 15. Participants in the study between and participate will include data from those treated with Mavericks for as a monotherapy in those also treated with combination with GCSF, we'll be looking at increases in ANCE. one treatment with Mavericks before as well as the durability of increased A&C with time on treatment in those subjects with stable background therapy. The complete dataset of the CN. Phase two study is expected later this year and we're aiming to present final results, hopefully at a major medical conference at that time. More details on our planned investor event in June will be forthcoming, and we look forward to further defining the potential of Maverick's for the first immune disorder beyond win.
In the meantime, we remain on track to initiate our Phase three CF trial this quarter. This will be a pivotal global Phase three trial to evaluate the efficacy, safety and tolerability of oral once daily Mavericks before with or without G-CSF and people with congenital or acquired primary autoimmune and idiopathic chronic neutropenia, we are experiencing recurrence and or serious infections. We plan to enroll approximately 150 participants in the trial, which will be a 52 week double-blinded placebo-controlled trial with a one to one randomization. Primary endpoints will be a two component endpoint, comprised of both the annualized infection rate and ANSI responder analysis across the study population. Secondary endpoints will include the severity and duration of infections, antibiotic use and quality of life measurements among others. We continue to believe that there is a significant unmet need across the Phase three patient population, a market we estimate to represent approximately 15,000 people in the U.S. alone, who, in many cases are being seen by the same practitioners who are also seeing those diagnosed with WHIM syndrome.
With that, I'll now turn it over to our CFO, Adam Mostafa, to review the first-quarter financials. Adam?

Adam Mostafa

Thanks, Paula, and thanks to all of you for being on the call with us today.
At the end of the first quarter ended March 31st, 2024, Xplore had $81.6 million in cash, cash equivalents, restricted cash and short term marketable securities. We believe that these funds are sufficient to support company operations into 2025 and note that this runway estimate does not include the potential monetization of the priority review voucher we received as a result of the FDA's approval of ZRMD. in the US. Our research and development expenses were 19.9 million for the first quarter, which compares to 22.1 million for the comparable period in 2023. R and D expenses for the first quarter included 0.8 million of certain non-cash expenses.
Our selling, general and administrative expenses for 17.4 million for the first quarter as compared to 7.2 million for the comparable period in 2023. Sg&a expenses included 1 million of certain non-cash expenses for the quarter. We would like to note several factors affecting our expenses this quarter these expenses reflect the hiring of an experienced field force now in place to drive the launches or MD. in the U.S. and launch preparation activities across our commercial and medical organizations.
Lastly, we reported a net loss of 51.8 million for the first quarter of 2024 as compared to 24 million for the comparable period in 2023. Net losses in the current period include a non-cash loss of 13.8 million related to the Company's Class C warrant liability, which is adjusted to fair value each reporting period. Net losses also included 1.7 million of stock-based compensation expense.
And with that, why don't we open up the call for your questions? Operator?

Question and Answer Session

Operator

(Operator Instructions) Stephen Willey, Stifel.

Stephen Willey

Yes, good morning, thanks for taking the questions and looking forward to the update next month.
Maybe just a couple on the Phase three for me. Can you just remind us how you're specifically defining an infection event in the Phase three, and I'm assuming you'll be centrally adjudicating these events during the trial. I'm just wondering if you're also trying to adjudicate those events that are required to be seen in each patient during the 12 months prior to randomization.

Paula Ragan

Hey, Steve, thanks for the questions. I think I heard three three components there and just how are we quantifying infection rates of the central adjudication sort of a subpart. And then the first one was for the inclusion criteria higher. We assess infection. Is that the right orientation?

Stephen Willey

Yeah.

Paula Ragan

Christophe, you want to accept?

Christophe Arbet-Engels

Perfect puts us on ticked up to just so we have a process during the studies. You educate adjudicate still the infections. Patients will be our reporting every every adverse events of infections and the use of antibiotics or hospitalizations related to lead. And ultimately, the the safety committee will be educating, reviewing and educating these infections, and we'll be able to account goes to define the annualized infection rate.
With regard to prior to the start of the study, the history of infection in this population, we have defined some criteria like the use of antibiotics, hospitalization. And our criteria is to make sure that these patients have at least two infection in the past year before they come into the study.

Stephen Willey

Okay. That's helpful. And then I guess just maybe a statistical question. Can you tell us if the if the underlying statistical plan accommodates a reduction of infections that could potentially be seen in the placebo arm during the trial? I only ask the question because I know because these event rates can sometimes fall off in the setting of a trial when the level of care and patient and patient compliance.

Christophe Arbet-Engels

So this study is randomized and we have So patients will be randomized to placebo for treatment with active treatment with an average forward. We have evaluated with the with our experts or consultants at the FDA, PROPHECY, Tom Fleming, we've designed the study to a power is to over 90% for on the infection rates in our population, and we've taken some conservative assumptions with what the effect size will be. As you remember in our win study, we were able to show a decrease for an increase of more than 500 cells per microliter, we were able to see a decrease of 60% in our annualized infection rate. We've taken a more conservative approach in this particular population, which we estimated to be around 40, 45%. And so we feel confident that this is the statistical power and how we've set up the study and the sample size is reasonable to achieve what we're trying to achieve with this registration stage.

Stephen Willey

Okay. So then maybe just one more question, if I may say so I guess in this scenario, we are being used on top of G-CSF, is there consensus alignment around the threshold level of background G-CSF that prescribers want patients to be kept below in order to avoid risk of transformation, AML or MDS?

Christophe Arbet-Engels

Yes.
So there have been some publications related to this. I don't know if they'll full consensus in the entire scientific community around that, but some publications have mentioned eight microgram of G-CSF per kilogram and arm as a threshold for many see. I think we we in our intention clearly, we know that this is a disease that is a risk for this population that is treated chronically. We believe that with MAVERICK so far, we will be able to address their chronic neutropenia and potentially limit the use of G-CSF. So I think that's a better question for the entire scientific community, and we can potentially help with our Phase three studies.

Operator

Edward Tenthoff, Piper Sandler.

Edward Tenthoff

Thank you very much. Can you hear me okay?

Paula Ragan

Thanks, Tim.

Edward Tenthoff

Great, Tom, and excited on all the progress and obviously, congratulations on the on the recent approval. So appreciating we talked about this a little bit and some must weaken. It's still very early. What kind of information, are you guys going to be providing to kind of explain and highlight launch parameters as you continue to build patient stakes?

Paula Ragan

Yes. Thanks, Ed. I'm sorry, I think we're pretty excited with all remedy being approved and our field teams out there.
I'll turn it over to Mark with maybe just some early commentary and then longer term, how we'll think about communicating our progress to the Street constituting.

Mark Baldry

Hi, good morning. And then we had a terrific meeting that CIS. and in Minneapolis last week, we debuted our now approved boost and there was lots of excitement and enthusiasm around there. We were having conversations with physicians. In general. Those conversations were falling into three buckets. There are physicians who already have a win patient identified and that we were walking them through the label and the enrollment form are there. Other physicians who are aware of when those come are not as familiar with the disease. And so we were discussing with them how to recognize the heterogeneous heterogeneous nature of the disease and patients in their practice. And then there are physicians who are not aware of them at all. And so this was this was exciting for them. So I think we'll be making progress engaging with these physicians, educating them and at the same time engaging with payers to ensure access there as we go through the year, we'll share more with you on how we will be tracking our progress with these different groups Great. Thank you and good luck with the launch.

Operator

Kristen Kluska, Cantor Fitzgerald.

Kristen Kluska

Hi, good morning. Everyone. Thanks for taking the questions. First is on C. and R. wild-type support that the biggest complaint from the community is really around the bone pain that comes with G-CSF. So obviously no two patients in the trial are going to appear identical, but is there a certain threshold that reduction of G-CSF would lead to improvements across some of this pain to make it a little bit more tolerable for patients if they were to go into combination with, as you know now, which is safe and oral because it's a great question about a year ago, we actually put a little bit of data and one of our posters around this arm just around what is meaningful for patients and of course, dose and frequency are meaningful sort of anecdotal early information, but that 25% to 50% range would certainly as sort of being meaningful to them and anything improved on that would certainly hit it out of the park. So maybe I'll just turn it over to Christoph. I'm sure you've heard some anecdotes from the patient community as well.

Christophe Arbet-Engels

Yes. So we agree on all our information, what we hear from the our HCPs and KOLs that with G-CSF bone pain is a real issue for patients and decreasing the volume of injections. The frequency might help and some of those patients will be up will be held probably by using Mavericks for especially for the one using G-CSF chronically every day. Injections is a it's a real burden and it can those bone paints are really having an effect on their lifestyle. So it's it's something that we're going to be trying to look at and trying to help patients better understand how we can use some G-CSF on top of Maverick support or G-CSF at all, we'll see where our where we are our studies will help us with that.

Kristen Kluska

Okay. Thanks. And on that note, is there some good data out there supporting the amount or the frequency of this specifically?
So greater GSTCF. usage is ultimately resulting in greater pain. And I guess for the Phase three experience, how is that going to help you and a potential commercial setting kind of help the outweighs some of these things or do you think, you know, for the first couple of months, it's going to be a little bit of trial and error approaches with seeing whether you're decreasing G-CSF or doing less frequent or essentially to get to that suite, Bob five.

Christophe Arbet-Engels

So I would separate the Phase three study. G-csf will be stable. So are patients who are stable on a high dose of G-CSF and they remain on it or they are on monotherapy. And throughout the 12 months of the duration of the study, we're exploring additional studies to see how we can manage a modification of dosing regimens of DCSA. We have some experience some in our Phase two study and we're going to be continuing to explore how to best do this into our future program.

Operator

Swayampakula Ramakanth, H.C. Wainwright.

Swayampakula Ramakanth

Thank you and good morning, folks. I'm just trying to figure out on what sort of data you said you'll get get to publish complete data of the and chronic neutropenia studies at the end of the year. And so is it just more patients are even additional data points in terms of from primary endpoints and secondary endpoints, we will be able to get at the end of the year compared to June update?

Paula Ragan

Thanks, RK. I'll start and then Chris can chime in. But as we mentioned in our update, we were enrolling patients through on earlier this year. So the data at the end of the year will really let us complete the study on all patients and perhaps most importantly, give us full insight into for those patients who are varying their dose, the G-CSF, what kind of that average outcome for those patients, we really need to have all patients complete the study so that we give them the full time to resolve and land on their stable dose of G. within that six month window. But I think that's kind of the deepest lens or deepest component of a study that we'll be able to update towards the end of the year from Brazil.
Thank you.
Thanks for taking my question.

Operator

Kalpit Patel, B. Riley.

Kalpit Patel

Hi, this is for Kalpit. Thanks for taking my questions.
My first question is what's your expectation towards over the bar for efficacy in the upcoming data set that perhaps could drive confidence for Phase three was key pieces of data?
Do you recommend investors to zoom into?

Paula Ragan

Yes.
I think we originally shared there's three ways that we're looking at are meaningful responses in CF patients and versus it's similar to our WHIM Phase three, where increases in 500 to 600 cells per microliter showed a 60% reduction in infection rates over a 12 month study. So we think at a minimum sort of clinical threshold for meaningfulness of around the same numbers for agencies will be able to place our CM data in context, certainly number two, it's the durability of those increases in neutrophil counts over time. And then of course, finally, we'll be applying our Phase three criteria of success and to the to the subset of patients in the Phase two that are relevant for the Phase three to help build confidence and establish why our statistical power is where it is. So hopefully that those are the three lenses for success.
And that's very helpful. My second question is that since this trial has been for over eight years, curious if we will have at least six months is a follow up for the 15 or more patients.

Kalpit Patel

And what's the split of our model versus kind of a base of 15 patients and I'm sorry, could you just repeat your question a little bit.

Paula Ragan

I was just coming in and out a little bit with the volume. And my second question is that since this trial has been running for over a year. So we are curious if we will have at least six months, eight of a follow up for the 16 or more patients and what's the split of the model, all of the 15 patients aspect?

Kalpit Patel

Yes.

Paula Ragan

So I think if I heard you correctly, you're asking where are we getting six months of pain of patients worth of data across at least the 15 patients in the monotherapy therapy component of that. I mean, as you can appreciate, I would say generally, yes, there's a little bit of wiggle room in there, of course, because of when patients come in and when we do data cuts. But there will be a very robust dataset across a 15 plus patient population and perhaps most meaningfully will be, as we mentioned, about 40% of those patients are on monotherapy, which I think will really help clarify the potential benefit of Maverick's for as a single agent in this patient population.
That's very helpful. Now my not my last question is without the scripts of a win detectable on the database like a symphony of Bloomberg. And again, I'm not sure yet about maybe you're talking about the database cut. I'm sorry that I didn't follow the question.
Yes. I mean when we release level, yes, okay.

Kalpit Patel

So Miranda and we are very grateful for wind, be tractable on the database, a symphony of Bloomberg. As you know, our our distribution of sole remedy in wind will be through our specialty pharmacy Panther. And that's a that's in order to be able to provide patient services to support our patients as they navigate the therapy will focus business extension.

Operator

David Bautz, Zacks Small-Cap Research, please.

David Bautz

Hey, good morning, everyone. Just a quick one from me on the PRV. I'm just curious if you could give us a sense for how many companies are out there, looking to purchase a PRV and then maybe if you could characterize the negotiations and how they're going at this point?

Adam Mostafa

Yes.
As we said, we do intend to monetize the PRV shortly. That's not currently part of our cash runway guidance, but we'll certainly give an update when now when we're ready to do that with respect to the PRV in terms of the market and who's out there and things like that, where we want to have them and a position of the company's interest at this point.

Operator

Thank you. Ladies and gentlemen, we have reached the end of question and answer session. I would now like to turn the floor over to Paula Ragan for closing.

Paula Ragan

Thank you so much, operator, and thank you to everyone for joining us today, and we hope you have a great rest of your day.

Operator

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.