Greetings and welcome to X4 Pharmaceuticals Second Quarter Financial and Operating Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder this conference call is being recorded.

It is now my pleasure to introduce your host Candice Ellis Director of Corporate Communications and Investor Relations at X4. You may begin..

Thank you, operator and good morning everyone. Thanks so much for joining us. Presenting on today's call will be our Chief Executive Officer, Dr. Paula Ragan and our Chief Financial Officer, Adam Mostafa.

Following prepared remarks by each, we'll open the call to your questions and they will be joined by our Chief Scientific Officer Renato Skerlj and our Senior Vice President of Technical Operations and Quality, Mary Dibiase.

As a reminder, on today's call, we'll be making forward-looking statements regarding our regulatory and product development plan as well as our research activities. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted.

A description of these risks can be found in our most recent Form 10-K, on file with the SEC, and in our forthcoming Form 10-Q. I'd now like to turn the call over to our CEO Paula Ragan..

Thanks Candice and thank you everyone for joining us on the call this morning. We hope you are all continuing to stay safe and healthy. We are pleased to report today that despite the challenges posed by the ongoing COVID-19 pandemic, we were able to achieve important progress during the second quarter.

We benefited from what we believe to be two value adding and derisking events related to the development of our lead candidate mavorixafor for the treatment of WHIM syndrome, a rare inherited primary immunodeficiency disease caused by mutations in the chemokine receptors CXCR4, a receptor that plays a key role in enabling the healthy trafficking of immune cells and effective immunosurveillance.

As a reminder, mavorixafor is our first-in-class small molecule antagonist of the CXCR4 receptor and the first potential disease modifying treatment for WHIM patients. We are currently conducting a pivotal Phase 3 trial in patients with WHIM syndrome. The first of these important events was our Virtual Analyst Day that we hosted in early April.

At this event, we presented an overview of WHIM syndrome and increased our estimate related to the prevalence of this disease in the U.S. based on an in-depth primary market research that we conducted in 2019 and earlier this year.

As we discussed at that time, our updated research now indicates the range of diagnosed and undiagnosed WHIM patients in the United States to be greater than 3,500, a significant increase from the prior estimate of approximate a 1,000 genetically diagnosed patients.

Our research also indicated a concentrated target physician population, primarily consisting of immunologists, hematologists, and infectious disease specialist that we believe we could cover with a small targeted salesforce. This positive market snapshot was followed by a second key event related to the mavorixafor WHIM indication.

Our presentation of additional Phase 2 data at the European Hematology Association, or EHA Annual Congress in June. I won't go into many specifics here as we review the data in a detailed call on our June EHA Call.

But I do want to highlight several key takeaways as they serve to strengthen our confidence in mavorixafor's potential to be successful in our ongoing Phase 3 trial and deliver a disease modifying therapy in patients with WHIM syndrome.

The data presented were from the open-label extension of our Phase 2 clinical trial evaluated in long-term safety and efficacy of mavorixafor in patients with WHIM syndrome.

Most importantly, the data support the Phase 3 selection of the dose of 400 milligrams once daily which demonstrated a greater than 4.5-fold increase in the metric of time above threshold for absolute neutrophil counts or TATANC as we abbreviate it, over the low dose as explored in the study.

The metric TATANC is the Phase 3 study defined primary endpoint agreed upon by the U.S. and European regulators. Additionally, the Phase 2 data showed sustained dose-dependent increases in white blood cells, absolute neutrophil counts, and absolute lymphocyte counts at the median follow-up time of 16.5 months.

Also important to note these hematologic improvements correlated with a direct clinical benefit that patients treated for at least six months experiencing a 54% decrease in annualized infection rate versus the infection rates in the 12 months prior to treatment.

Additionally, patients experienced a 75% reduction in cutaneous warts versus baseline suggesting a favorable impact on the HPV-related disease risk of WHIM syndrome. Rate of infection and wart burden are two important secondary endpoints of our Phase 3 trial.

Enrollment in our Phase 3 trial is ongoing and making progress as certain countries and sites have reopened in the context of COVID-19, we remain on track to report topline Phase 3 results in WHIM in 2022. Our second ongoing mavorixafor clinical program is a Phase 1b trial in patients with severe congenital neutropenia or SCN.

It's a 14-day proof-of-concept trial designed to assess the safety and tolerability of daily oral mavorixafor and up to 45 patients with SCN and other selected congenital neutropenia disorders and we continue to expect initial data in 2021. We intend to provide further clarity around these timelines for both WHIM and SCN at a future point.

While our public-facing presentations during the first half of 2020 were focused primarily on WHIM syndrome we've also continued to make progress in our ongoing Phase 1b study of mavorixafor in patients with Waldenstrom's macroglobulinemia, a rare form of non-Hodgkin lymphoma.

This trial is expected to enroll between 12 and 18 patients with Waldenstrom's and is a multicenter open-label dose escalation trial assessing the safety and tolerability of mavorixafor in combination with the standard of care treatment ibrutinib, a tyrosine kinase inhibitor.

The trial is being conducted as part of a collaboration with The Leukemia & Lymphoma Society to accelerate the development of mavorixafor for the treatment of Waldenstrom's. Enrollment is continuing in this trial as well and we continue to anticipate announcing initial Phase 1b clinical results towards the end of this year.

These results will contain both safety data and important efficacy signals. We expect these data to inform future FDA discussion we plan to hold regarding a registration trial in Waldenstrom's. Lastly, we wanted to acknowledge here the promotion of Dr. Renato Skerlj, the position of Chief Scientific Officer of X4.

Renato was one of the scientific founders of X4 and a co-inventor of mavorixafor and has more than 25 years of experience leading the discovery and development of disease modifying small molecule drug to treat genetically-defined rare diseases.

In this expanded role, he's leading all research and non-clinical development functions at the company, overseeing our operations in Vienna, Austria, as well as our efforts to advance and expand our pipeline targeting additional genetic rare disease indications. I'm now going to turn it over to Adam to discuss our financial results for the quarter.

Adam?.

Thank you, Paula and thanks to all of you on the call today. As presented in our press release this morning, I will summarize our financial activities and results for the second quarter of 2020. As of June 30th 2020, X4 had $105.6 million in cash, cash equivalents and restricted cash.

We continue to expect that our cash and cash equivalents will fund our operations into early 2022. Note that, this guidance does not include the $25 million in potential proceeds from our amended Hercules debt facility or any cash exercise proceeds from investors holding our outstanding warrants.

Research and development expenses were $9.3 million for the second quarter of 2020 as compared to $8.9 million for the comparable period in 2019. General and administrative expenses were $5.3 million for the second quarter of 2020 as compared to $4.6 million for the comparable period in 2019.

And our net loss was $15.1 million for the second quarter of 2020 compared to a net loss of $13.4 million for the comparable period in 2019.

With that why don't we open it up to questions? Operator?.

Thank you, sir. [Operator Instructions] I show our first question comes from the line of Stephen Willey from Stifel. Please go ahead..

Hi this is Ellen Sands on for Steve. Thanks for taking the question.

So my first question is there any scenario whereby you decided dose escalate beyond 600 milligrams in the Waldenstrom's trial?.

Hi. Thanks Ellen, this is Paula. Just to answer your question, I think that's insightful. I think at this point, we think that the 600-milligram exposure certainly gets us well above the IC90 at the trough level, but we can consider doing that given the safety profile of the drug.

So I think there will be some flexibility there in terms of safety, but likely not given what we're already dosing the patients with..

Okay makes sense. And then maybe just two more for me. So can you remind us if you predefined give a number of representative genotypes that you want to specifically enroll in the Phase 1b for SCN or is it all comers? I know you're looking at genetic panel for the patients..

They're sort of two buckets. There's patients that don't have an existing genetic profile, but do qualify from the inclusion price criteria, so we'll be screening those to better understand their genetic profile.

There will be some that are already defined with certain genetics phenotype or genetic profile such as GATA2 or G6PC3, but we will still actually genetically panel those as well in case there's additional genetic alterations that we need to understand. So I think there's a flexibility there.

Everyone will get genotypes but some have a bit of a better understanding entering the study..

Okay. Great.

And then last one, are there any updates around potential collaborative partners for mavorixafor in solid tumors?.

Adam, you want to take that?.

Sure. It's a good question. So we have our partnership with Abbisko which is progressing nicely. They recently announced a fundraising and that's for China rights. Outside of China, we don't currently have any updates on that strategic front. We continue to focus on rare oncology with our Waldenstrom's trial with data expected later this year..

Okay. Great. Thank you for taking the questions..

Thank you. Our next question comes from Arlinda Lee from Canaccord. Please go ahead..

Good morning. It's Ben Shim for Arlinda. Thanks for taking my questions.

Paula just a couple general ones, can you give us an idea of what the scope of the Phase 1b Waldenstrom's data will be? What will be provided and maybe nail down a little bit more specific timing for that?.

Sure. Thanks Ben. So the Phase 1b is a dose escalating trial and think about it almost in two parts. Every patient will initiate 200 milligrams and assuming safety support, they will be dose escalated to the next level so 400 and then 600 after 28 days of safety. And that again 12 to 18 patients so that's kind of a part one.

Part two will be for any given patient reaching their maximum tolerated dose but will continue on the study for at least three more months and then roll into an open-label extension. So the way we think about the data are in those two-part.

The first part enables us to better understand safety PK/PD profiles and additionally we'll be looking at IgM level drops. IgM level changes certainly have been shown to occur in the first two to three months of dosing with ibrutinib in the single mutant population.

That's much more difficult in the double mutant population, so we're hopeful that seeing meaningful drops in IgM would be indicative of clinical activity of mavorixafor in that double mutant patient population..

Okay great. Just a second quite a general question.

As we get closer to getting hopefully a COVID-19 vaccine as early as this fourth quarter, my question to you is how directly relevant do you think this vaccine will be to your patient populations in each of the three indications you're studying directly or indirectly and is this recalibrating maybe your expectations for enrollment and potential data readouts? Thanks..

So it's a great question. I think anything related to COVID-19 data in WHIM patients is challenging because certainly we're not aware of any data yet that kind of elucidates what their risk profile is.

I actually have been following COVID in a broader sense of immunocompromised patients and they do have some -- that the Nature most recent Nature publication suggest that they do have some modest risk of course, but not to the extremes that we've see in various key populations.

So again, with that backdrop, I think what we can't control is just keeping focus on the trial and making sure our patients are safe. We have an independent Data Safety Monitoring Board that of course assesses their infection.

So I think in the content -- and then to get -- just to go back to the context of vaccines every vaccine is different and different patient populations respond differently. So we would obviously need to better study that and I think it's just a too much uncertainty and too much unknowns at this point to really conjecture..

Thank you very much, Paula. Good luck to you..

Thank you, Ben. Take care..

Thank you. Our next question comes from Leland Gershell from Oppenheimer. Please go ahead..

Hey, good morning guys. Thank you for the update thanks for taking the questions. Actually, I wanted to ask on the earlier pipeline behind mAb and 002, 003. I just want to check in if we'll be hearing a news flow on those compound the programs for those later this year or perhaps in 2021? Thanks..

Sure.

Renato you want to take that?.

Yes, so -- yes, thanks. I'll take that question. So, yes, we'll schedule to basically move one of those compounds into development later in the year. We're currently just looking at some properties of these molecules to make a decision in terms of which molecule we would move forward.

So, we're on track to basically move one of the molecules into development or potentially another molecule next year..

The indication that you have listed right I think it was GBM 402?.

Correct. So that's a molecule that causes the blood-brain barrier..

Thanks..

Thank you. I show our next question comes from the line of Joel Beatty from Citi. Please go ahead..

Hi. Thanks for taking the questions.

For the Waldenstrom's data coming out later this year, could you describe what would be next for the program if the data is successful?.

Sure. Thanks, Joel. Yes, we're -- we know so much about our molecule already and then certainly seeing signs of clinical activity in the Phase 1b would support directly moving into.

What we would be with the Phase 2/3 trial that would likely be a controlled trial combination versus likely standard of care or single treatment with ibrutinib, but we still need to have conversations with the FDA on that.

But we're in great shape I think in terms of we know so much about our drug from other trials that we would feel quite comfortable seeing strong signals to move forward with the registration trials subsequent to Phase 1b..

Great. That's helpful.

And then, with that Phase 2/3 trial, be in the current cash runway guidance?.

No, it would not. I'll let Adam expand on that..

It would be in that -- Joe, just to clarify in the current runway guidance was that the question?.

Yeah, the cash runway to early 2022?.

Yeah. No, it's not currently contemplated in our current runway guidance to early 2022. And the nature of that trial, the cost of that trial, et cetera, would be informed in part by the data that we'll plan to put out later this year and further discussions with the FDA..

Okay. It sounds great. Thank you..

Thank you. Our next question comes from the line of Swayampakula Ramakanth from H.C. Wainwright. Please go ahead..

Thank you. Good morning, Paul and Adam. Most of my questions had been answered. However, I just want to check on a couple of things.

Any update you can provide on enrollment stats in your clinical studies, given the current environment? And the second question is on the collaboration with Invitae for generating the genetic test or the diagnostic test that you want to generate..

Sure. Thanks, RK. So the enrollment status, I think we're maintaining our current guidance, maybe just to provide a little bit more nuance, I'm encouraged that the patients are still there. We've appreciated this through surveys through patient advocacy group. Our KOLs are very much engaged.

I think that continued challenge keeps relying on different countries and different hospitals even have a local requirements that are -- of varying degrees of restriction in terms of COVID. So, we're working very closely with them.

We feel the engagement is strong and continues, but we just need to continue to wait out how these various sites in countries kind of return back to a quasi-normal profile for patients. And then in terms of the Invitae collaboration, that's going well.

We don't yet have specific guidance on providing sort of a relevant output from that as we're still building the broader funnel to capture as many patients as possible. Obviously, a larger patient pool will help us generate confidence and sort of the overall profile of the data. So, stay tuned for next year on that one..

Thank you. Thank you both..

Thank you. Our next question comes from the line of Laura Christianson from Cowen. Please go ahead..

Thanks. Good morning. Thanks for taking my question. Just following up on the earlier one about the Waldenstrom's trial and expectations for the readout, I just was wondering if you can provide any more clarity about maybe the number of patients that will be at the 600-milligram dose.

And how much -- how robust the IgM reduction data might be just given that we don't know exactly when the patient is enrolled and cut-off for when you'll be presenting the data?.

Yeah. I mean I don't think we can give anything more clearer we're enrolling. It's very difficult to forecast and the Phase 1b how it all comes together. Ibrutinib has its own safety profile and we've not tested -- completed the testing in combination with ibrutinib so just block to wait and see when the data comes.

I think we are excited that there's a lot of room for improvement in terms of IgM level drop in the single-mutant population. Their drop is maybe 50% 60% after three months from their baseline. So I think if we can -- and then, the double-mutant is actually, they're much worse than that. So, I think there's opportunity to see changes.

We just need to complete the study and share that with everyone when we have that dataset..

Understood. Okay. Thanks..

Yes. Thank you..

Thank you. Our next question comes from Zegbeh Jallah from ROTH Capital Partners. Please go ahead..

Good morning. I feel like a lot of the questions had been asked, and I think the update was in line with expectation so just a quick question regarding thoughts on partnership now that you've added some WHIM data and you're going to have Waldenstrom's coming up soon.

I know they're rare diseases, but in aggregate it's a large opportunity so just thinking in terms of partnerships what were your thoughts there? And then, you did state that the efforts from Invitae hasn't fully materialized yet, but I was just wondering, if you had any learnings that you could communicate as you're going after these patient's awareness efforts and things like that..

Sure.

Adam, you want to take the first one?.

Sure. Yeah, so our strategic focus is to own and commercialize in the rare disease markets and that's the trajectory and path we're currently on. Like any company, we'll be opportunistic and consider the situations as they arise whether that be geographic or otherwise..

And then I'll take a quick comment on Invitae's question and ask Renato to join in, but – I mean I think the exciting thing about a lot of these genetic assessments are really doing a more thorough understanding of the full mutation frequencies.

You maybe aware that, in certain genes there's – they're called variations of unknown significance and the question are those pathogenic or not. So that actually is a subject of Renato's team focused and maybe Renato you can provide some commentary on why that's actually exciting for us..

Sure.

So, one of the things that we're doing from a research perspective, and just to remind everyone obviously it's just conducted in Vienna, Austria we're looking to best that we characterized all the known pathogenic variants, which there are about a dozen of those as well as the variants of unknown state that the Paula just mentioned and we're looking to characterize that in terms of the functional ability regarding signaling, specifically internalization calcium plots et cetera.

And then we're also looking more deeply into some of the secondary roles in terms of B cell phenotyping and some of the other signaling through the ERK and AKT pathway.

This is obviously exciting in a sense that no one actually done a comprehensive analysis that will lead to different variants and ultimately what we're looking to do is connect them to the phenotype that's presented clinically..

Yeah, I think – just to bring it all back around, there are basically might be more kind of undiscovered WHIM patients because nobody – because they're yet has not been an understanding of the full paradigm of all the mutations that do cause disease. So that's an area of interest for us that has kind of spilled up from our genetic testing work.

But stay tuned on that that certainly – Renato's team is doing excellent job. And in the future certainly when we have some meaningful updates to share we'll look forward to doing that..

Perfect. Thanks guys..

Thank you. [Operator Instructions] I show our next question comes from Mayank Mamtani from B. Riley. Please go ahead..

Good morning. Thanks for taking my question and impressive broad – broaden reduction data indeed at EHA and congrats to Renato also for the promotion.

Could you just remind us about the status of the manuscript for this data? And I know you talked a lot about Invitae just any near term learning’s from that could also help the SCN Phase 1b study enrollment that you could comment on that?.

Sure..

Renato –.

Yes, you want to –.

Yeah. sorry, Go ahead Renato..

Yes, so I mean, I think regarding to basically have the publication up in the second half of the year, which is still basically on track. Regarding the Invitae data I think again one other thing that I mentioned earlier is that we can increase the development in terms of x number of patients that we can treat with mavorixafor.

And the – what we're putting in place of the platform regarding the characterization of this different variants, we can also apply to SCN. So this is a platform that, we can actually apply into other potential non-CXCR4-related genes that can impact primary immunodeficiency.

So we're putting the schedule the in-house to really expand our capability in the primary immunodeficiency space..

Okay. Great and then on the WHIM Phase 3 study, can you comment on the proportion of sites again U.S. ex-U.S.

and even within U.S., how many might be in the south? Any color you could give?.

You know, I think it's about a third U.S. two-third ex-U.S. and then beyond that, I think the relevant thing is other sites engage in enrolling, and our answer is yes where it's possible. I am excited that, we've been enrolling patients and they are there.

We just have to be mindful that these are immunocompromised patients and ultimately it's always the physician and the patient decision about when the right – when it's the right time, but we're making progress. We maintained our guidance and we look forward to sharing more clarity when we achieve that..

Okay. Great.

And just final question on Waldenstrom's, can you comment on like how many or what proportion of patients are in the part two that you just talked about Paula?.

Yeah. They're all be given the – I mean the Phase 1b is part one and 2 so all patients will pass through both parts of the trial so long as safety permits..

Okay. Great. Thanks for taking my question..

Thank you. I show no further questions in the queue. At this time, I'd like to turn the call over to Paula Ragan, CEO for closing remarks..

Well, thank you so much for joining us today. We look forward to continuing to provide updates on our progress as we approach our next key milestones. If you have any further questions, please don't hesitate to reach out to Candice, and we hope you all stay safe and healthy, and enjoy the rest of the summer. Thank you again, and have a great day..

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