Greetings, and welcome to X4 Pharmaceuticals' First Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, the conference call 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 President and Chief Executive Officer, Dr. Paula Ragan; and Chief Financial Officer, Adam Mostafa. Following prepared remarks, we will open the call to your questions. And we'll be joined by Interim Chief Medical Officer, Dr. Murray Stewart; Chief Commercial Officer, Mark Baldry; Chief Scientific Officer, Dr. Art Taveras; and Chief Operating Officer, Dr. Mary DiBiase. 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 filings with the SEC, including the company's latest 10-K for the year 2022, and this quarter's Form 10-Q, which is expected to be filed today. I'd now like to turn the call over to Dr. Paula Ragan. Paula?

Thanks, Dan, and thank you, everyone, for joining us on the call this morning. We hope to make this an efficient call today and focus on what we hope will be value-building milestones throughout the rest of 2023. This is truly an exciting time at X4 as we continue to advance our lead investigational candidate, Mavorixafor, towards commercialization in the first potential chronic neutropenic disorder, WHIM syndrome. As you know, in late 2022, we announced that our Phase 3 clinical trial evaluating once daily, oral Mavorixafor in people with WHIM syndrome had met its primary endpoint and first key secondary endpoints, but Mavorixafor achieving statistically significant and clinically relevant longer times above threshold levels for both absolute neutrophil and absolute lymphocyte counts versus placebo. And demonstrating good tolerability in the trial. Subsequently, we announced that our late-breaker abstract reporting additional data from the Phase 3 WHIM trial was accepted for oral presentation at this year's meeting of the Clinical Immunology Society taking place from May 18th through the 21st in St. Louis. Dr. Raffaele Badolato, who is professor of pediatrics at the University of Brescia in Italy and an investigator in the 4WHIM clinical trial will present at 11:30 AM Central Time on Sunday, May 21st. Although this session will only be accessible live to the conference attendees, we will be posting the slides on our website concurrent with the presentation. Following the publication of conference abstracts by CIS on the morning of May 16th, we will be hosting an investor event later that day at 4:00 PM to present data on additional secondary endpoints from the trial, including results on infection burden among other outcome metrics. You can register for that event on our website or through the link provided in this morning's earnings press release. Joining us for…

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 31, 2023, X4 had $94.4 million in cash, cash equivalents, and restricted cash. We believe that these funds are sufficient to support company operations into the second quarter of 2024. Our research and development expenses were $22.1 million for the first quarter, which compares to $14.1 million for the comparable period in 2022. R&D expenses for the first quarter included $0.8 million of certain non-cash expenses and a $5 million accrual for an in-licensing milestone payments that the company deems probable of occurring. Our selling, general, and administrative expenses were $7.2 million for the first quarter as compared to $7.7 million for the comparable period in 2022. SG&A expenses included $0.8 million of certain non-cash expenses for the quarter. And lastly, we reported a net loss of $24 million for the first quarter ended March 31, 2023, as compared to $22 million for the comparable period in 2022. Net loss included $1.6 million of stock-based compensation expense and a $5.4 million gain for the change in fair value of our Class C warrant liability for the first quarter. And with that, why don't we open up the call for your questions. Operator?

[Operator Instructions] Stephen Willey, Stifel.

Good morning, guys. This is [Chun Yang] for Steve. I just have two quick questions on my end. So the first one is would it be possible, Adam, like would it be possible to give a little bit more detailed color on increased R&D expense? And secondly, can you guys also provide -- or like has there still been ongoing discussion with potential partnerships and when do you think we'll actually hear more updates on like partnering front? I think that's it on my end. Thank you very much.

Thanks for the question. And so the increase in the R&D line this quarter is related mostly to a $5-million accrual payment. That's for an in-licensing or regulatory-related milestone that we deemed probable of occurring. And so that's the change that you'll see there, which is a question on cash. On the partnership front, we continue to look at beneficial ways to finance the company. And that could include, for example, geographic-rights types of partnerships. And when we have something material to report an update, we'll certainly do that.

Mayank Mamtani, B. Riley Securities.

Hi, this is William on for Mayank today. Congratulations on your continued success. Two questions from us. One of them, a follow up. I'm just curious if you're as far as the infection data on infection rates that you'll be presenting at both the CIS and as well as your KOL, if you can provide any extra information or color on what we might see at these two presentations? And then are these going to be largely overlapping in new data or we should -- or should we be expecting different data cuts from each of these presentations? Thanks and then one follow up.

Thanks for the question. So as we highlighted in our press release, we're looking forward to sharing more data around the burden of infection, which can relate to frequency, severity, and duration among other metrics. And those are all relevant and important to clinicians, and you'll actually get to hear their perspective directly from the ones that we've outlined on today's call. And then in terms of -- and I apologize, I lost the train on the second part of that question -- the different -- thanks, Mark. The different data and different venue. So the data sets will be primarily the same. Obviously, one's more sort of oriented to the clinical communities. And then one is for a broader audience -- audience within investor community. But effectively, the data sets are going to be quite similar.

Got it. That's very helpful. And then in terms of your upcoming Phase 3 as well as, I guess, Phase 2 study execution, maybe if you could provide any insight that you gained when during your FDA discussions and what you're thinking about following Phase 2 data release, how are your plans going forward?

For clarity, this is around the chronic neutropenia study?

Yes, sorry about that.

No worries. Thank you. So for chronic neutropenia, we continue to guide that, we'll provide additional data in Q2 or Q3 as well as we'll have completed interactions with the agency so that we can have clarity on a Phase 3 registration program. So those are in progress right now. We're looking forward to sharing that both the additional data, which will primarily be focused on durability of neutrophil count. The crosswalk in all of these neutropenic patients, including WHIM, is looking for durable elevations and white blood cell counts, including neutrophil, and then the correlation with infection. We thought had very nice data with chronic neutropenia, the Phase 1b, the after a single dose, given that resoundingly positive result. Now looking forward to sharing future data, that will hopefully be consistent with WHIM, which is nicely durable and elevated from [CN] and then, of course, the registration trial in more of the value that we'll look for infection changes in benefit. And in similar size likely to that, that you're testing with WHIM.

Thanks. I appreciate all that, and congratulations again. Thank you for taking our questions.

Eva Privitera, TD Cowen.

Hi, good morning and thanks for taking our questions. For the Phase 2 chronic neutropenia update, what can we expect in terms of how many patients and how long the duration of follow-up --

So we're actively enrolling -- I'm sorry. I'm sorry, Eva. Go ahead.

Yeah and what's the split of the congenital, idiopathic, and cyclic patients roughly? And also the split of patients dosed with monotherapy versus combo with G-CSF?

Yeah. I mean so we're still actively enrolling. So I can't answer any of the split questions because we've --similar to the Phase 1b,we have a nice wide funnel. And of course, we're just trying to be as broad of a population as we can. So more to come on that when we have the data. And then in terms of the number of patients, I think we're aiming for somewhere between 15 and 25. We're trying to get as robust of a count as possible. We really thought the data set from the Phase 1b was valuable because you had enough across a couple of buckets to be able to make some generalizations. And that's what we're aiming for. But of course, it's always about recruitment and timing. But we look forward to sharing that. Certainly meaningful update around durability and meet patients as soon as we can in Q2 or Q3.

Great. Thanks for that. And on the Phase 3 WHIM presentation, secondary endpoints that will be presented at CIS, what level of reduction in infection rates and what burden do you think are clinically meaningful?

Yes. I mean, I can share with you what we -- what the agency and what we saw in the Phase 2. The agency granted us breakthrough therapy designation on the Phase 2 WHIM data, which I believe after a year showed about a 40% to 50% reduction in infection rates. It was a little bit of a different benchmark. Of course, because we were using patients historicals of their control. So certainly that sets the mark from the agency perspective, and they certainly view that as clinically relevant and meaningful to grant us breakthrough therapy designation. So we'll look forward to providing the totality of data, including all the infection information in just a couple of weeks.

RK, H.C. Wainwright.

Thank you. Good morning, Paula and Adam. This is RK from H.C. Wainwright. I think if I do my job right on May 16th and 21st, I should know all about them and that Mavorixafor. But at the same time, you're putting five KOLs together on the 16th. So should we expect these folks to be talking about additional neutropenic conditions where Mavorixafor could be used? And also, would this help you to initiate conversations regarding subtypes of SCN in the sense where SCN gets generated by -- due to various causes? Will some color around that come up in these conversations, for us to think about potential expansion -- indication expansions for Mavorixafor?

Thanks so much, RK. Great questions. So I think the KOLs on the call, our breadth of KOLs, US and Europe, and then across the hematology, immunology, and in some cases, rheumatology, which is where some of these patients are managed. So we felt we wanted to have that nice universe of experiences commenting not only on our own data on WHIM, but some of them certainly have relevance in treating a larger number of chronic neutropenia patients. So for those folks that have an experience, they will be able to bring in their experiences into the conversations. And we have a few of them live on the events at the end, so they'll be able to speak from their perspective. Certainly we'll look forward to the Q&A around that topic, around future indications.

Thank you. Looking forward to these two events.

Thank you so much, RK.

Kristen Kluska, Cantor Fitzgerald.

Good morning. This is Rick on for Kristen. Thank you for taking our questions. To kind of set the stage ahead of the CIS conference and WHIM, could you talk a little bit about the setting, the audience you're expecting at CIS, and how getting in front of this audience could help inform what you understand could be the prescriber community you could be focusing on in WHIM?

Sure. So I think at CIS is primarily immunologists. I know Mark has a team of his -- participating in this conference. I will turn it over to him to provide additional color. Mark?

Thanks, Paula. Hi, Rick. Yeah, we're looking forward to being at CIS where a lot of our customers are planning to be. We have a number of meetings set up with key customers, and we'll have a company boost there as well, which is focused on raising disease awareness of WHIM. So we think it's going to be a very valuable conference for us as the excitement builds around the release of that Phase 3 data.

Great. And maybe just one more on the CN poster presentation you announced for CIS. Could you also kind of set the stage here, what we could expect potentially from this real-world patient data that you talked about? Should we be expecting mostly patients managed on G-CSF? And do you plan on going into any information on genetic background for the patients in this study? Thanks.

So it's a higher-level study than that. We don't get into -- obviously genetics or sometimes not even captured in electronic medical records. So it is a higher-level study on the populations that are diagnosed with different types of chronic neutropenia. There's different ICD-10 codes. And then there's a different ability to drill down on their clinical histories in terms of their severe infection events. So the poster really connect those dots, is that real-world evidence connecting degrees of neutropenia with severity around morbidity and potentially in some cases, mortality. So we look forward to sharing that poster and certainly have a follow-up question to that as the community digest.

Excellent. Thank you very much.

This concludes the question-and-answer session. I would like to turn the conference back over to Dr. Ragan for any closing remarks.

Thank you so much. We appreciate everyone attending today, and we certainly look forward to having everyone and hopefully your interest on our big May 16th event. Have a great rest of your day. Take care.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.