X4 Pharmaceuticals Q2 2024 Earnings Call Transcript

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August 8, 2024

There are 11 speakers on the call.

Operator

Good morning, everyone, and welcome to X4 Pharmaceuticals Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Also, today's call is being recorded. It is now my pleasure to introduce your host, Mr.

Operator

Dan Ferry from LifeSci Advisors. Dan, please go ahead.

Speaker 1

Thank you, operator, and good morning, everyone. Thank you for joining us today. Presenting on today's call will be Doctor. 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 will be joined by Chief Commercial Officer, Mark Baldry Chief Medical Officer, Doctor.

Speaker 1

Christophe Arbitt Engels Chief Operating Officer, Doctor. Mary DiBiase Chief Scientific Officer, Doctor. Art Tavares and Jose 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 and financial projections. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted.

Speaker 1

A description of these risks can be found in Exforge's most recent filings with the SEC, including this year's Form 10 ks, which was filed on March 21, 2024, and in the company's Form 10 Q for the 2nd quarter, which is expected to be filed later today. I'll now turn it over to Paula Ragan. Paula?

Speaker 2

Thanks so much, Dan, and welcome, everyone. I'll just start by saying what an incredible year we've had so far. Just a few weeks ago, we celebrated the 10th anniversary of X4. When we founded the company a decade ago, a small group of us had a vision to advance our lead asset, an orally active CXCR4 antagonist called maverixaphore to help those with rare diseases who have few to no treatment options. As you saw this past April, we were able to realize this vision receiving U.

Speaker 2

S. Approval of maverixophore branded as Zolrembe for the treatment of WIM syndrome, a rare primary immunodeficiency. The U. S. Launch of Zolrembe is now underway and our full commercial team is in place and when patients 12 years and older are now being treated with the only approved therapy targeting the underlying cause of their disease.

Speaker 2

Sales guidance on Zolremdi will come at a future point. However, today, I'd like to highlight our strong launch progress. Overall, we've been very pleased with the launch to date. Our launch meeting in early May was a great success where we completed the training and education of our field teams, enabling them to hit the ground running. We got product into our distribution channel very quickly and had our first patients on commercial drug within just a few weeks of product approval.

Speaker 2

Coordination with our specialty pharmacy Panther Rx Rare has gone smoothly and we've already received positive feedback on the patient support services provided through our X4 Connect and Nurse Educator programs. And very encouragingly, reimbursement decisions have been coming through quickly with almost all patients currently on therapy receiving reimbursement via prior authorizations and medical exceptions. Our commercial team is fully deployed across the U. S. Calling on key hematologists and immunologists.

Speaker 2

To date, there has been limited ability to establish centers of excellence for the WIM community. We knew this going in and therefore are continuing to execute on our disease awareness and education campaigns as well as leveraging our strong relationships with patient advocacy groups. We recently participated in the annual meeting of the Immune Deficiency Foundation or IDF where we engage with physicians, patients and advocates. And members of our team visited with the Jeffrey Modell Foundation in New York just a few weeks ago. Through all of these efforts, we have become better at engaging with the treating physicians, understanding physician and patient questions, and most importantly, building a community of interest around WIM syndrome across the U.

Speaker 2

S. We also continue to leverage the positive data from our pivotal Phase III trial in WIM that were published in April in Blood, the Journal of the American Society of Hematology. These and new data from the trial and its open label extension phase were presented at the Annual Meeting of the Clinical Immunological Society or CIS in early May. As we reported at the time, the CIS poster revealed that longer term treatment with ZolremD was associated with durable improvements in neutrophil and lymphocyte counts as well as reductions in annualized infection rates and that no new safety signals have been observed during the OLE phase of the trial with some participants treated for more than 2 years. We also made tremendous progress this past quarter in our development of MAVERICKZIPORE for those with chronic neutropenia, another rare immunodeficiency.

Speaker 2

At our investor event in late June, we presented positive interim clinical data from our ongoing Phase 2 clinical trial demonstrating that once daily oral mavrixophore was generally well tolerated and durably increased participants' absolute neutrophil counts or ANC both as a monotherapy and in combination with stable doses of injectable granulocyte colony stimulating factor or G CSF up to as long as 6 months. Importantly, 100% of evaluable participants who had completed the 6 month study as of the mid May cutoff date achieved target ANC increases of greater than 500 cells per microliter at months 36 on once daily MAVERICK-four as a monotherapy and in combination with stable TCSF dosing. In addition, participants on MAVERICKS-four monotherapy achieved mean ANC levels above the lower limit of normal for CN at 3 6 months. And MAVERICK's for monotherapy also durably increased AMC in participants with severe CN defined as ANCs less than 500 cells per microliter at baseline, achieving mean ANCs of 800 to 1000 cells per microliter, which is the A and C range targeted by experts for patients with severe CN. Feedback on these interim results from the physician community has been positive and we were pleased to see the durable impact of MAVERICK-four as a monotherapy and in combination with stable dose G CSF.

Speaker 2

These interim data support our strong belief that MAVERICKS-four may be able to address the needs of the CN patients and their physicians, specifically the desire for an oral treatment that does not carry short or long term dose related toxicities described with G CSF use and for an oral treatment that also increases ANC levels and lessens the risk and severity of infections whether used on its own or in combination with G CSF. We're now expecting present the full data from the Phase 2CN trial in November ahead of the American Society of Hematology or ASH meeting. This data set will include results from the group of participants receiving MAVERICK's support and those who are allowed to dose adjust G CSF from baseline. We've been asked what success looks like for these data that will be presented in November. The good news is we already know what success looks like from our WIM Phase 3 study and subsequent approval in the U.

Speaker 2

S. In that 52 week study, MAVERICK score meaningfully increased neutrophils and lymphocytes over a sustained period reducing infection rate, duration and severity. From the interim CN Phase II results we shared in June, we saw again that MAVERICK's IV as a monotherapy and in combination with G CSF can increase ANCs to levels expected to reduce infections. In November, we'll be looking to replicate what we saw in June across all participants in the MAVERICKS-four monotherapy and MAV plus stable dose G CSF groups who completed the 6 months of the trial. From the 3rd group, we'll be looking for data that supports physicians' ability to reduce G CSF dosing while on MAVERICK-four and maintain patients' ANCs at clinically meaningful levels.

Speaker 2

Finally, we'll be also looking for continued tolerability and safety of MAVERICKS-four as seen in all of our other clinical programs to date. In June, we also announced the initiation of our global pivotal Phase 3 clinical trial branded the FORWARD study evaluating the efficacy, safety and tolerability of oral once daily MAVERICK's 4 with and without stable doses of G CSF in people with congenital acquired primary autoimmune or idiopathic CN who are experiencing recurrent and or serious infections. The 52 week FORWARD trial is a randomized, double blinded, placebo controlled, multicenter study aiming to enroll 150 participants. The clinical operations team is in full swing opening up sites and we are on track to fully enroll the trial in mid-twenty 25. We believe that the interim Phase 2 CN data presented to date strongly support our decision to initiate the Phase 3 trial as well as its design.

Speaker 2

Importantly, we believe that the interim results derisk the Phase 3 trial given that the ANC increases seen in CN patients to date mirror those in our successfully completed for a WIM Phase 3 trial, where similar levels of ANC increases led to clinical benefit by reducing the frequency, duration and severity of infections. As we focus our efforts on the FORWARD CAND trial, we are also looking to maximize the global opportunity in WIMS syndrome. We expect an MAA submission to the European Medicines Agency for MAVERICK 4 and WIM syndrome by early 2025, while we also explore additional potential opportunities in geographies where we may be able to efficiently leverage our U. S. FDA approval.

Speaker 2

With that, I'll now turn it over to our CFO, Adam Asthafaa to review the Q2 financials. Adam?

Speaker 3

Thanks, Paula, and thanks to all of you for being on the call with us today. As we had previously discussed, upon FDA approval of XolRemd, we were awarded a Priority Review Voucher or PRV based on Maverick's 4 rare pediatric disease designation. We monetized this PRV very shortly after receipt and in May, we recognized a gain on the sale to a third party for $105,000,000 in cash. So as of the end of the Q2, ExCoR had $169,500,000 in cash, cash equivalents, restricted cash and short term marketable securities. We believe these funds are sufficient to support our company operations until late 2025.

Speaker 3

I want to note that this projected runway does not include potential future Zolram D revenue. For the 3 months ended June 30, we reported revenues of $600,000 and cost of revenue of 0 point $3,000,000 related to the sale of Zolremby. This cost of revenue includes approximately $200,000 of license costs, including sales based royalties and operational milestones capitalized as an intangible asset and amortized over the life of the underlying intellectual property. We would like to note that there was a small amount of inventory stocking at our specialty pharmacy during the quarter and this is reflected in the sales number. Research and development expenses were $20,900,000 for the 2nd quarter compared to $15,600,000 for the comparable period in 2023.

Speaker 3

R and D expenses for the Q2 of 2024 included $1,200,000 of non cash expense. Selling, general and administrative expenses were $13,300,000 for the Q2 of 2024. This compares to $10,200,000 for the comparable period in 2023. SG and A expenses for the Q2 also included $1,200,000 of non cash expense. Finally, we reported net income of $90,800,000 for the Q2 of 2024 compared to a net loss of $55,700,000 for the comparable period in 2023.

Speaker 3

Note that net income in the current period included the sale of PRV for $105,000,000 as well as a non cash gain of $20,200,000 related to the fair value remeasurement of the company's Class C warrant liability. I'll now turn it back to Paula for some concluding remarks.

Speaker 2

As you can see, all of these accomplishments mark a significant step forward for X4, now a fully integrated biopharmaceutical company. As we continue to explore additional uses for and maximize the global potential of MAVERICK's 4 for patients, we look forward to reporting on our sales, regulatory and clinical progress over the coming 6 to 12 months. We'll now open up the call for your questions. Operator?

Operator

Thank you, Doctor. Reagan. We'll go first this morning to Kristin Kluska of Cantor.

Speaker 4

Hey, good morning, everybody, and congratulations on reaching 10 years. It's a great milestone and how better to celebrate with a drug approval this year. So first I wanted to ask how you believe physicians are going to measure success differently in a commercial setting versus the clinic for ZolremD? Will it be primarily on patient anecdotes, reports around infections or anything else to consider?

Speaker 2

Thanks, Kristen. I'll turn it over to Mark to give some perspectives on what they're hearing from the field.

Speaker 5

Yes. We're the launch is well underway, Kristen. And what's exciting is that we're hearing that physicians and patients been waiting for a treatment that targets the underlying cause of the disease. And so now we have the approval of Zolremdi. It's really opening up these conversations and allowing us to help physicians become aware of the disease, recognize the patients in their practice and then think about how they can help these patients with Zolremdi.

Speaker 5

We know from the market research that it's really the impact on infections that drives the value of Zolremdi for physicians, for patients and payers. So that's really what I think physicians will be looking for as they get more experience with the product.

Speaker 4

Thank you for that. And can you give us a sense of how partnership discussions ex U. S. Are going at this stage? And just curious, your press release noted some ways you're looking to maximize the value of meverx before beyond Wynd syndrome and CN.

Speaker 4

So curious as in these conversations this has come up with potential partners about ways that they can also potentially utilize this drug and other indications as well?

Speaker 2

Yes. So thanks, Kristen. I mean, when we currently think about the FDA approval, there are certain regions in the world that can leverage that existing approval. So there's some exploration there currently ongoing. Adam can comment more on the more strategic sides of potential collaborations.

Speaker 3

Yes. Thanks, Kristen. So certainly there is interest and we have discussions as Paul mentioned ongoing with potential partners. We'll certainly come back and update the market as appropriate if we're going to consummate a transaction. But I think given the recent approval and our recent positive cry neutropenia Phase 2 data, there's only growing interest in this area.

Speaker 2

Great. Thank you.

Operator

Thank you. We go next now to Ted Tenthoff at Piper Sandler.

Speaker 6

Great. Thank you very much for taking my question. And yes, excited to see some revenues at the company that's and a lot of work has gone to get that first couple of 100 dollars, and I know it will grow from here. My question had to do with sort of characterizing the patients that are on drug. Can you give us a sense for how many patients are on drug?

Speaker 6

And anything about sort of the backlog? And if you're not able to give us direct patient numbers, maybe tell us sort of a little bit about the journey of patients that you're seeing as you sort of get them into commercial use of Zolremdi? Thank you.

Speaker 2

Thanks so much, Ted. So I think we won't be breaking down any details and continue to report on revenue. But I mean, we're overall extremely pleased with just the cascade of commitment that the company has made and then now we're experiencing the receipt of that commitment in the communities as we head out. But Mark can add some more color and kind of how they're seeing the journey from the diagnosis and education support all the way through patients on drug.

Speaker 5

Yes. And I think the first thing to remember, this is an ultra rare disease. And so the key here is to begin to really raise awareness both through the conversations we're having with physicians, our engagement with patient advocacy groups and also through our digital marketing campaigns because that's where we can get extended reach and we've refreshed our disease awareness campaign. We've also launched our branded Zolremdi digital campaigns. So we're really creating this kind of momentum around the conversations.

Speaker 5

And the patients as Paula mentioned on the call, all of the patients that were in the open label extension have been prescribed ZIL REMBI here in the U. S. And so from there we're just learning more and more about how the patients have been waiting for a treatment that targets their disease and they're now having those conversations with physicians.

Speaker 6

Great. That's really helpful. I appreciate the additional color.

Operator

Thank you. We go next now to RK at H. C. Wainwright.

Speaker 7

Thank you. Good morning, Paula and Adam. Congratulations on the 10 years and also the launch. In terms of I know it's early stages of the launch, but when you go and attend these conferences such as the immunodeficiency conference, However, what is it that you're hearing from physicians and patients at this point in terms of getting ready to take to adopt the drug? And also have you learned anything else that needs to be looked at in terms of improving I'm not saying improving, getting that option to a better level from the get go.

Speaker 2

Thanks so much, RK. I think we're very pleased with kind of the cascade of thinking and development. And certainly what we're hearing and Mark will add to this is, number 1, they're excited about a targeted therapy and I'll even add the oral targeted therapy. It's been a field of injectable treatments with varying degrees of study and rigor. Our Phase 3 was phenomenally successful showing infection burden reduction across rate severity and duration.

Speaker 2

So that is a great story to begin with and a great data set to share. And then in terms of the clinicians, of course, they're all on their own journey even understanding the disease and then learning about the benefits of ZolremD. But I'll turn it over to Mark to add some color to that as well.

Speaker 5

Yes, exactly. I think it's really now that we have an approved product, it's really energized physicians to go back and really look in their practice for these patients who before now have really had no treatment available for their disease. And so now we've actually given them a reason to go back, look for these patients, make the diagnosis and then have a conversation with the patient about Zolremdi.

Speaker 7

Fantastic. And then for the SCN indication, so between now and if there is an interim analysis for the FORWARD study, is there any other data that will be presented so that we can understand how this program is moving forward?

Speaker 2

Sure. So, as we shared today, we'll be giving the full Phase 2 data set in November of this year. So, of course, we were extremely pleased with the data set already, but it was interim. So we've already seen durable responses of the drug as monotherapy and then sustained and durable responses in addition to stable G CSF. So the final puzzle piece is just exploring, in what circumstances G can get reduced.

Speaker 2

So that full data set will come in November, which is going to be certainly well timed, just before ASH, we'll be at the ASH meeting to help support the CN community and also get the word further out on our trial enrollment. So it's an excellent timing perspective and then we'll look forward as appropriate to giving updates on how the whole study is going, but certainly that will be a 2025 update.

Speaker 7

Perfect. Thank you very much for taking my questions, Paul.

Speaker 2

Thanks, RK.

Operator

We'll take our next question now from Lia Can of Brookline Capital Markets.

Speaker 8

Good morning. I have a financial question. So Adam, could you help us with the number of fully diluted shares at the end of the quarter, including the prefunded warrants?

Speaker 7

Sure.

Speaker 3

Thanks. So there's about 167,000,000 basic shares, regular shares outstanding, dollars 33,000,000 prefunded warrants. So $200,000,000 of share equivalents, if you will. And then there are $75,000,000 warrants that are cash only. Those are divided into 2 tranches, $130,000,000 tranche, dollars 145,000,000 tranche.

Speaker 3

So overall, dollars 275,000,000 in fully diluted shares. There's some historical warrants you'll see later today in our 10 Q that are significantly out of the money and are typically not included, but that accounts for a small piece.

Speaker 8

Thank you so much. Most helpful.

Operator

We go next now to Stephen Willey at Stifel.

Speaker 9

Yes, good morning. Thank you for taking the questions.

Speaker 5

Could you maybe just talk

Speaker 9

a little bit about and again, I understand that it's early, but the kinetics of the reimbursement process, I know the paperwork that is required sometimes for these higher price rare disease drugs can be a somewhat lengthy process. And just curious if you have an early read just based on the limited experience thus far as to what that process might look like from just a timing perspective?

Speaker 2

Sure, Steve. I mean, I'll turn it over to Mark. I think classic ultra rare disease typically has barriers that a lot of these insurance companies naturally provide given the magnitude of the drug and its options for patients. But the good news is I think we've had an very experienced team well ahead of this. So I'll turn it over to Mark to give some insights there.

Speaker 5

Yes. Thanks, Paul. Hi, Steve. Yes, as Paul mentioned during the call, payers are using their standard methods for new drugs. And so, they're looking at PAs and exceptions process, But these are working quite smoothly and patients have been able to access Oremdi.

Speaker 5

Of course, we also have our full suite of patient service programs through our X4 Connect, which is our patient hub. And this ensures that patients are quickly get quick access to the product while we work through the reimbursement. But it's good to see the process working smoothly.

Speaker 9

Okay. That's helpful. And maybe a guidance question, not one related to actual sales, but just curious how you're thinking about communicating enrollment progress in the Phase III FORWARD trial going forward? Should we expect updates in conjunction with certain milestones hit like 50%? Or is this just going to be kind of a moving target and we'll hear about it when we hear about it?

Speaker 2

Yes. Thanks, Steve. I think we'll always aim to communicate meaningful progress. Of course, we don't want to make any commitments just because it's a 2025 target and it's almost a year away at this point. However, certainly as we get confidence under our belt here, we'll be able to provide some more specifics.

Speaker 2

But again, I would say that's a 2025 zone to share.

Speaker 9

Okay. And then maybe just another financial question for Adam. SG and A just looks to be down about 25% sequentially, which I guess I wouldn't have been anticipated in the context of undertaking a launch. So can you just remind us if there's anything either unique to the 1 quarter number or this quarter number that impacts that SG and A line item? Thank you.

Speaker 3

Sure. Thanks, Steve. Yes, so this second quarter number is probably more representative of a typical recurring figure. The Q1, as we mentioned last time, had a number of one time non recurring sort of startup related costs to building a sales force and getting a launch underway early in the year ahead of approval. So that quarter was a little more inflated, if you will, on the SG and A line than I would expect going forward.

Speaker 3

So that's why the drop looks as it does.

Speaker 9

Very helpful. Thanks for taking the questions and congrats on the progress.

Speaker 2

Thanks, Steve.

Operator

Thank you. We go next now to David Bautz at Zacks Small Gap Research.

Speaker 10

Hey, good morning, everybody. Question on the mechanism for how prescriptions are filled. Are they filled on a monthly basis? Is it multiple monthly? And then if you could talk a little bit about how revenue is recognized in relation to when those prescriptions are filled?

Speaker 2

Sure. So I mean, I don't think we have intended to disclose kind of the play by play for our patients. I mean, as we mentioned with our current revenue line, it does blend, obviously, both an inventory build as well as revenue recognition for individual patients that are now on commercial therapy. So I don't think at this point we're ready to provide any more details, but certainly we do want we do understand the market's interest in helping them forecast. So as we head into later this year in 2025, we'll try to provide a bit more metrics, which really can help provide some benefit to you all as we think about how the product will grow

Speaker 10

over time. Okay. Thanks for taking the question.

Speaker 2

Thank you.

Operator

Thank you. And ladies and gentlemen, it appears we have no further questions this morning. Doctor. Reagan, I'd like to turn things back to you, ma'am, for any closing comments.

Speaker 2

Well, thank you so much operator. Thank you everyone for joining the call today and we hope you have an excellent rest of your day. Take care.

Operator

Thank you, Doctor. Reagan. Ladies and gentlemen, again, that does conclude today's X4 Pharmaceuticals 2nd quarter earnings call. Again, thanks so much for joining us everyone and again, we wish you all a great day.

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