X4 Pharmaceuticals Inc
NASDAQ:XFOR
Earnings Call Analysis
Q4-2023 Analysis
X4 Pharmaceuticals Inc
The company has navigated the financial landscape effectively, raising over $87 million throughout 2023. This financial boost, a mix of equity and debt, has placed the company in an advantageous position, ending the year with $115.2 million in cash equivalents. Such liquidity is expected to sustain operations well into 2025, allowing the company to focus on its strategic goals without the immediate pressure of fundraising.
Research and development expenses saw an uptick to $72 million for the full year, indicating a strategic push to advance pipeline projects. Similarly, sales, general, and administrative expenses grew to $35.5 million for the year as the company ramped up for a potential product launch with increased marketing and administrative efforts. This reflects a deliberate investment into the company's future, suggesting confidence in its pipeline and market strategies.
A reported net loss of $101.2 million for the year reflects significant investments for future growth. While losses widened compared to the previous year, they are in line with the company's progress towards commercialization and expansion of its operations.
With a PDUFA date expected, the company is on the verge of potentially launching its flagship product. There’s a sense of excitement about this milestone, which could be transformative for the company. The preparations for the launch include assembling a trained sales force specializing in rare diseases, highlighting the company’s commitment to delivering its product effectively post-approval.
The company is focused on building demand through physician-targeted marketing campaigns and patient awareness initiatives, rather than expecting an immediate rush of patients post-launch. This phased approach suggests a strategic and sustainable route to market penetration, setting the stage for long-term product success.
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Greetings, and welcome to the X4 Pharmaceuticals' Fourth Quarter and Full Year 2023 Financial and Operating Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Dan Ferry from LifeSci Advisors. Please begin.
Thank you, operator, and good morning, everyone. Presenting on today's call will be X4's Chief Executive Officer, Dr. Paula Ragan; and Chief Financial Officer, Adam Mostafa. Following prepared remarks by each, we will open the call to your questions and will be joined by Chief Commercial Officer, Mark Baldry; Chief Medical Officer, Dr. Christophe Arbet-Engels; Chief Operating Officer; Mary DiBiase; and Chief Scientific Officer, Art Taveras.
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 subject to risks and uncertainties that may cause actual results to differ from those forecasted. Description of these risks can be found in X4's most recent filings with the SEC, including this year's Form 10-K, which is expected to be filed after market close today.
I'd now like to turn the call over to X4's President and CEO, Dr. Paula Ragan. Paula?
Thanks, Dan. Good morning, everyone, and thank you for joining us on the call today. As we look ahead to 2024, we thought we'd take the time to reflect on all that we've accomplished over the past year, milestones that have set the stage for what we expect will be an incredibly exciting and truly transformative year for X4, a year where we aim to become a fully integrated research, development and commercialization company with the goal of delivering new options for rare disease patients.
Start 2023, we hit several major milestones. Most importantly, submission and acceptance under FDA's priority review process of our NDA seeking approval of mavorixafor, our oral targeted CXCR4 antagonist for the treatment of WHIM syndrome. As you may recall, WHIM is a rare combined primary immunodeficiency caused by genetic variations to the CXCR4 receptor. The CXCR4 pathway helps regulate the migration of white blood cells, including neutrophils and lymphocytes into the bloodstream.
WHIM is named for its four most common manifestations: Warts, which are typically caused by unresolved HPV infections; Hypogammaglobulinemia or low levels of antibodies; Infections, both viral and bacterial; and Myelokathexis or retention of white blood cells in the bone marrow. Diagnosis of WHIM has historically proven challenging because only a minority of patients actually experience all four manifestations and the acronym, although not all symptoms are required for diagnosis. The most challenging burden faced by people with WHIM syndrome results from their low blood levels of neutrophils or neutropenia and low blood levels of lymphocytes or lymphopenia, which research supports our experience by essentially all WHIM patients. As a consequence of neutropenia and lymphopenia, an estimated 92% of WHIM patients experience frequent recurrent infections that significantly impact their health and quality of life. Over time, when patients with recurrent infections may experience debilitating and life-threatening complications, including increased cancer risk, irreversible end organ damage and/or sepsis.
I mentioned this not only to emphasize the incredible burden of disease for these patients and their caregivers, but also to highlight that mavorixafor has been granted breakthrough therapy designation by the FDA, indicating the recognition of mavorixafor as a product candidate with the potential to provide substantial improvement over the standard of care in the treatment, diagnosis or prevention of a serious condition.
So we were very pleased to have reported on the additional positive safety and efficacy results from our completed global pivotal Phase III trial in WHIM in May of last year and further analysis of the trial at several important medical meetings and congresses both last year and earlier this year, publication of the full 4WHIM trial results is currently pending at a highly respected international medical journal.
As you know, the Phase III trial successfully met its primary endpoint and several key secondary end points, with participants on mavorixafor achieving statistically significant elevations in both their neutrophil and lymphocyte counts versus placebo, and importantly, statistically significant reductions in the rate of annualized infections and clinically meaningful reductions in the severity and duration of infections versus placebo.
Based on these results, we submitted our first NDA to the FDA in late August of last year, receiving notice of acceptance for priority review, setting a target PDUFA date of April 30, which is fast approaching. As you can well appreciate, we've been incredibly busy preparing for this potential approval since we spoke with you last year. We've been having discussions with our payers, multiple meetings with FDA and finalizing our supply and distribution arrangements to be ready in the event that we receive FDA approval.
Our commercial and medical affairs organizations have grown meaningfully, although prudently as we continue to build our brand marketing and sales infrastructure to increase our presence at medical meetings and engage with our targeted hematologists and immunologists that we expect to have WHIM patients under their care. We look forward to leveraging our rare disease commercial capabilities to start building the WHIM market over time with 2024 as the year to lay the foundation for future success. And looking beyond 2024 as we are successful in educating physicians, helping them identify WHIM patients and build demand for our product candidate.
WHIM syndrome is a very rare form of combined immunodeficiency first described over 60 years ago in the medical literature. Given its rarity and lack of available therapies, disease awareness amongst our targeted physician audience has historically been quite low with no approved treatments for WHIM and only supportive care for symptomatic management, not addressing the underlying cause of the disease. With our successful Phase III WHIM trial recently being presented at major medical conferences, we are very encouraged that the physician community is now gaining more awareness.
Additionally, we've experienced strong engagement with our What If It's WHIM Disease awareness campaign, which is also demonstrating an even broader interest in WHIM syndrome. At the ASH meeting in December, the organizers made a point of highlighting the need for new research and development in classical hematological diseases. At the meeting, our Chief Medical Officer, Dr. Christophe Arbet-Engels, gave a talk on the lack of innovation and the need for new treatments at the meeting. His presentation was enthusiastically welcomed by a standing room-only audience.
We're also pleased to report that at the recent Quad AAAAI immunology meeting in late February, not only was our abstract on the lymphocyte subset data from our 4WHIM trial accepted as an oral presentation by Dr. Teresa Tarrant, an esteemed immunologists from Duke University, who you've heard from our several past investor events, but Dr. Tarrant was also invited by the conference organizers to give a non-X4-sponsor talk on mavorixafor and WHIM syndrome specifically. Both of her presentations were extremely well attended, as was What If It's WHIM booth, all of which serve to increase our visibility and enable what we believe can result in a major leap forward for patients through physician awareness and education.
The X4 team working on our Congress exhibition booth have recounted many stories of physicians thanking them for drawing their attention to this disorder and they reported that multiple physicians who approached us never before having heard of WHIM syndrome left believing they might, in fact, have a WHIM patient under their care. As you can imagine, we get the question often about the size of the market for WHIM in the U.S. With rare diseases that have no treatments, it's always difficult to assess. These interactions with physicians serve to reinforce our belief that there may, in fact, be more WHIM patients out there beyond the 1,000 or so that we've estimated are diagnosed at present based on claim data and analysis.
And while we eagerly await word from the FDA on our first NDA, we're continuing to advance our plans to seek approval for mavorixafor in WHIM outside of the U.S. as well. We've had productive interactions with regulators in Europe and now believe we may be able to submit for EMA approval in late 2024, early 2025. We've had discussions with potential partners on how best to leverage our U.S. approval as received across other geographies as well. More to come on that later this year.
Now turning to our chronic neutropenia program. We were able to make significant progress in advancing mavorixafor in CN during 2023 as well. Although our Phase II clinical trial was a little slower to enroll than we'd initially expected, we were able to learn and increase enrollment and achieve our target of at least 15 patients by early November and we continue to expect to announce additional Phase II results in the 15-plus trial participants in the coming months. We expect that our data to be presented will include a meaningful number of patients who are receiving mavorixafor alone without [ concomitant ] GCSF treatment, enabling the assessment of mavorixafor as a potential monotherapy in those diagnosed with CN. We also expect that data to be presented will include information on additional participants being treated with the combination of mavorixafor and GCSF.
Importantly, all of the preliminary data presented to date and other learnings from the Phase II trial, along with our interactions with the FDA have enabled us to finalize the protocol for a global pivotal Phase III clinical trial of mavorixafor in CN and advance the initiation of this important next trial in the first half of 2024.
As we've previously discussed, we plan to enroll approximately 150 participants in the trial, which will be a 52-week double-blinded placebo-controlled trial with one-to-one randomization. We will be assessing the safety and efficacy of mavorixafor plus or minus [ concomitant ] G-CSF treatment in those with congenital, autoimmune or idiopathic neutropenia. The patients included into the study will also have to present with neutropenia and symptomatic infections despite current standard of care, including GCSF.
There is a significant unmet medical need across this established Phase III patient population, a U.S. market we estimate to represent approximately 15,000 people. The primary endpoint will be a 2-component endpoint comprised of both the annualized infection rate and AMC responder analysis across the study population. Secondary endpoints will include the severity and duration of infections, antibiotic use, quality of life measurements, among others, and of course, safety. We are in the process of initiating our global study sites and are looking forward to enrolling patients across a number of these sites beginning in the next few months. We are, as of now, planning to host a CN event before the end of June to update on both the Phase II trial data and CN Phase III trial progress. So stay tuned for more information on that.
I'll now turn it over to our CFO, Adam Mostafa to review the fourth quarter and full year 2023 financials. Adam?
Thanks, Paula, and thanks to all of you for being on the call with us today. Having raised more than $87 million during 2023, comprised of a mix of equity and debt capital through an at-the-market pipe and through our expanded loan facility with Hercules, we ended 2023 with $115.2 million in cash and cash equivalents, short-term marketable securities and restricted cash. We expect that these funds will support our operations into 2025.
We would like to note that we may have multiple nondilutive sources of funding available to us throughout 2024. Given mavorixafor's rare pediatric disease designation, we are optimistic that we'll receive a priority review voucher, which can be used for a subsequent application or sold to another drug sponsor should mavorixafor will be approved. If all goes well, we also may have additional access to milestone-based debt tranches through our Hercules facility this year and anticipate revenues from U.S. sales of mavorixafor over the course of this year and beyond.
A quick recap of our 2023 financials. R&D expenses were $15.3 million and $72 million for the fourth quarter and full year ended December 31, 2023, respectively, compared to $19 million and $61.1 million for the comparable periods in 2022. Our R&D expenses included $1.1 million and $4.4 million of certain noncash expenses for the fourth quarter and full year ended December 31, respectively. SG&A expenses were $9.9 million and $35.5 million for the fourth quarter and full year of 2023, respectively, compared to $6.6 million and $27 million for the comparable periods in 2022. Our SG&A expenses included $1.4 million and $4.3 million of certain noncash expenses for the fourth quarter and full year ended December 31, respectively.
Finally, we reported a net loss of $19.1 million and $101.2 million for the fourth quarter and full year ended December 31, compared to $29.1 million and $93.9 million for the comparable periods in 2022. Net losses included $2.5 million and $8.7 million of stock-based compensation expenses for the fourth quarter and full year 2023, respectively, compared to $1.1 million and $5.2 million for the comparable periods in 2022.
With that, I'll pass it back to Paula.
Thanks so much, Adam. I -- to conclude, as we said in the press release earlier this morning, the excitement at X4 is now palpable. We have a countdown clock on the wall as our expected PDUFA date and we could not be more energized to know that we are so close to potentially achieving our vision of delivering meaningful benefits for those with rare diseases of the immune system by gaining approval for what would be the first and only targeted therapy for the treatment of people with WHIM syndrome. And we look forward to continuing to report on our other milestones throughout the rest of the year.
We'll now open up the call for your questions. Operator?
We will now conduct a question-and-answer session. [Operator Instructions] Our first question comes from Kristen Kluska with Cantor Fitzgerald.
Kudos, I've seen your team had a lot of these medical conferences. So great work getting the community aware of what's going on there. I wanted to ask about commercialization and thoughts around CN. So the KOLs that we speak to note that even [ meeting ] some G-CSF would be a huge win. But understand that in a commercial setting, patients are going to present differently, some on monotherapy map, some on combination and some on combinations that may be less G-CSF. So to account for this, what is your expectation on what the monitoring and neutrophil measured protocols would look like in a commercial setting?
Thanks, Kristen. I think what we're hearing at X4 is around neutrophil counts and chronic neutropenia and then how we are considering how best to develop the product to address the range of patients. So assuming that I got that right, we're certainly very excited about our pending data update on the Phase II study coming out in the first half of this year. Of course, in our first three patients, we saw a nice durable elevations in patients with combination G-CSF. Importantly, we'll be having data on a group of monotherapy patients. So I think that will really help us appreciate the impact of mavorixafor on neutrophil counts in this broader patient population. And of course, we'll continue to study the drug in combination with [ G ]. There's more work to do to support physicians and patients on the best hybrid combination or introduction of mav and then if and when G-CSF might be needed. So hopefully, I got your question.
Yes. And maybe if I could squeeze in the second one. For WHIM syndrome, you noted that sometimes physicians are thinking, "Hey, actually, maybe I do have a patient that fits the criteria for WHIM syndrome." Curious if you're seeing any trends about what specifically it is about the indication that is kind of putting this light bulb in their head or if you've heard any specific feedback there to help with your education efforts?
Yes. I mean, I think what the field has been sharing with us is just the general excitement because the data are so strong with an oral once-daily, but I do think some of the interesting light bulbs are around -- there is no ICD-10 code. It's a very poorly educated disease. So I'll turn it over to our Chief Commercial Officer, to add a bit more color.
Yes. Thanks. And what's been interesting is through our disease awareness campaign, we've really seen that light bulb go on as we highlight the fact that these patients can present very differently. No one WHIM patient is alike. And so this kind of dispels the whole assumption that you have to have all four symptoms to be a WHIM patient. And physicians are beginning to realize they may have more WHIM patients in their practice than they originally thought.
The next question comes from Ted Tenthoff with Piper Sandler.
Great. Thank you very much. Really getting excited for the launch here. I had just a couple of questions. Firstly, on the FDA [Technical Difficulty] Appreciating that was not a panel. Are there any final issues to resolve in terms of manufacturing visits? Have you initiated labeling discussions? When do you think that happens, all those kinds of things? And then when it comes to the actual selling effort, how many reps do you anticipate to satisfy the U.S.? And what do you think the sort of cost would be, annual cost for that sales force?
Our Chief Medical Officer will take your regulatory question, and Mark can comment on the commercial.
So our interactions with the FDA has been the typical interactions. We are on track for PDUFA date on April 30 and we're working through the regular process with the FDA.
Yes. And assuming we get approved at the end of April, we'll be ready to deploy a fully trained, experienced rare disease field team. We can share more details around the time of approval in terms of the size of the sales force, but we'll be also engaging with payers to communicate the burden of WHIM and the value proposition of mavorixafor and offering a comprehensive suite of patient support services. So patients can get access to mavorixafor as quickly as possible after approval.
Our next question comes from [ Sean Lee ] with H.C. Wainwright.
This is Sean on for [ RK ]. I just had a quick question regarding the awareness campaign. So because it's such a rare disease, once it's launched, would you be doing a marketing campaign targeting patients as well just to have the outreach there so that they can start reaching out for mavorixafor?
[ I'm sure. ] Great question, of course. We encourage everyone to check the -- what if it's WHIM website that's available to the public. So certainly, we are developing the tools that would be directed towards physicians and of course, support the patient groups appropriately. I'll turn it over to Mark for a bit more detail.
Yes, it's a great question. And as Paula said, we're really building the foundations for a launch that enables the product to get to patients as quickly as possible. For clarity, we don't expect a bolus of patients at launch. Our goal is to get patients back in to see their doctors as we build demand for our products. So we'll be doing marketing campaigns targeted at physicians where we expect to have WHIM patients in their practice as well as marketing campaigns to potential patients and also educating payers on the burden of WHIM syndrome and the value proposition of mavorixafor.
[Operator Instructions] Our next question comes from Stephen Willey with Stifel.
Maybe just a couple Phase III CN questions. So I think you are stratifying on CN subtype in the Phase III. But I guess I'm just wondering how you expect those subtypes to be represented within the Phase III given patient eligibility criteria and if you're enrolling in a way to get kind of a minimal representation of each of these, whether it's congenital, auto-immune or idiopathic.
So yes, this is Christophe out here. The included criteria will have congenital, idiopathic or autoimmune patients. And through the study, we will have the patients on monotherapy and on G-CSF as well. We're not planning on stratifying specifically for some of those subtypes, where we'll do additional analysis, obviously, when we have -- given the sample size, we'll have a substantial number of those subtypes that we'll be able to consequently analyze.
Yes. And just to add to Christophe's comment, the idiopathic, autoimmune are essentially the same bucket. They're different words for the same group of patients and that's quite a large majority. And then there's the congenital. So we'll be able to stratify by those bigger buckets. The congenital are so variable. It's really -- we're not able to stratify based on the heterogeneity of congenital. So we're stratifying across the big buckets that Christophe mentioned and also G-CSF and monotherapy.
Okay. And then is there a lower limit of neutrophils at the patient most have to be Phase III eligible? And then I guess just given the inherent variability of neutrophil counts, how many measurements do you require during the screening process prior to randomization?
So yes, we do have the -- so the measurements first, let me start with this. We have several measurements that we're going to be looking at. For the screening, we're looking at one measurement on the screening. And then we will establish the baseline of several hours of measurements. And the first part of the question was, if there is a lower limit of ANC? We don't have a lower limit of ANC. There will be some patients, that can be fairly low, especially in the congenital population and we have a range that in our inclusion criteria that include the severe, all the way to mild and moderate neutropenic patients.
And Steve, just as a reminder of benchmark, our WHIM Phase III, their baseline were about 180 cells per microliter. So quite severely neutropenic, so we would expect to be able to accommodate patients certainly well into those ranges and hopefully to see an effect similar to what we've seen in WHIM.
The next question comes from the Kalpit Patel with B. Riley.
This is [ Jay ] on for Kalpit. My first question is for the upcoming Phase II update, where we see data from patients who are on higher dose G-CSF, believe the data-same staying to date were for patients less than 1 microgram per kilogram but the approved dose of G-CSF is much higher? And my second question is for the Phase III that you are planning to start. What's in your view is a good delta for reduction in infection rate versus the control arm? Thank you.
So we'll tag team here. I mean, so in terms of the G-CSF dosing, you're incredibly sharp in assessing that the average dose of G-CSF of the patients is much lower than the labeled dose and that is practice. Unfortunately, this drug is so challenging to take and to manage that physicians and patients stay on the very low end, sometimes as low as 20% of the label dose.
And again, we don't give guidance on what doses the patients are on. They come in on their own stable doses. So we would expect that, that's the standard of care, that that's the range we'll continue to see in the trial. So I hope that addresses your first question. And then I think your second question was around what type of infection benefit target are we aiming for in the Phase III?
So our Phase III, I want to remind you about our WHIM data. Our WHIM data on average have seen an improvement of 60% of infections. And we've taken a rather conservative approach and we are estimating we've powered that study for 40% difference in annualized infection rate.
Thank you. At this time, I would like to turn the floor back over to Paula Ragan for closing comments.
Thank you so much for joining us today. We appreciate all the attention and insightful questions and wish you an enjoyable rest of your day.
Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.