Greetings. Welcome to X4 Pharmaceuticals' Second Quarter 2023 Financial and Operating Results 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 Chief Executive Officer, Dr. Paula Ragan; and Company's Chief Financial Officer, Adam Mostafa; and Interim Chief Medical Officer, Dr. Murray Stewart. Following the prepared remarks by each, we will open the call for questions and will be joined by will be joined by Chief Scientific Officer, Art Taveras; and Chief Commercial Officer, Mark Baldry. 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 this quarter's Form 10-Q, which is expected to be filed after market close today. I'd now like to turn the call over X4's President and CEO, Dr. Paula Ragan. Paula?

Thanks, Dan. Hello everyone. We will be covering a lot of exciting updates this morning. So thank you for joining us on this call. Adam and I will be providing an update on our second quarter and recent events and will then focus the rest of the call on three key updates regarding our ongoing chronic neutropenia program. First, we'll provide some further insights on what we estimate to be the minimum addressable US market for Mavorixafor in the CN populations we are pursuing. Next, we will report on some exciting emerging data from our ongoing Phase II trial. And finally, we will also provide a regulatory update as we prepare for a Phase III clinical trial in 2024. We will then conclude and open it up to your questions. This was another extremely productive quarter for X4. Importantly, we presented new data from our Phase III, WHIM trial in May that followed disclosure in late 2022 that the trial had met its primary endpoint, and first key secondary endpoint and was well tolerated throughout the trial. In addition to demonstrating that Mavorixafor support treatment statistically significantly and durably raised both absolute neutrophil and lymphocyte counts, both ANC and ALC versus placebo, these new data revealed that Mavorixafor treatment also resulted in a statistically significant reduction in annualized infection rate, and affected clinically meaningful reductions in both the severity and duration of infections versus placebo. We presented these data initially at our company webinar in mid-May. Additionally, the data were also accepted for oral presentation at two notable conferences. First, the annual meeting of the Clinical Immunology Society, or CIS, where Dr. Raffaele Badolato presented the data. And second, the European Hematology Association, or EHA, for Dr. Jean Donadieu presented the data to a standing only crowd in Frankfurt, Germany.…

Thanks, Paula, and thanks to all of you on the call today. Concurrent with the announcement of the positive additional Phase III for WHIM results in mid-May, we were able to complete a pipe financing priced at the market, raising approximately $65 million in gross proceeds. Participants in the financing comprised both new and existing life science investors. During the quarter, we also announced that X4 was added to the Russell 3000 Index, when the index completed its annual reconstitution in late June. As a reminder, the annual reconstitution captures the 4000 largest U.S. stocks as of April 28, 2023, ranking them by total market capitalization, and membership in the index remains in place for one year. And just last week, we announced the completion of $115 million debt facility with Hercules Capital. We believe this overall transaction is strategically impactful to X4, as it creates expanded future optionality beyond the equity capital markets as we head into an important growth trajectory for the company. In our release earlier this morning, we disclosed that, we had cash, cash equivalents, restricted cash and marketable securities totaling $142.3 million as of June 30, 2023. We believe that, these funds plus the $22.5 million drawn down from the debt facility upon closing, extend our cash runway into 2025. And we would note that this projection does not include potential additional draw downs on the debt facility and does not include the potential monetization of the priority review voucher we would expect to receive should Mavorixafor be approved for WHIM syndrome in the U.S. in 2024. I'll now pass it back to Paula to provide the update on our chronic neutropenia program. Paula?

Thanks, Adam. Before we get into our new data, let's quickly review Mavorixafor for those who may not be familiar. Mavorixafor is an orally available CXCR4 antagonist that we are developing for a number of chronic neutropenic disorders and WHIM syndrome, a rare primary immunodeficiency. If we are successful, Mavorixafor would be the first therapy for those with WHIM syndrome and chronic neutropenia, Mavorixafor would be the first oral treatment option in a market currently only served by injectable therapies associated with treatment limiting adverse events. In trials to date Mavorixafor has proven its ability to increase the mobilization of white blood cells, including neutrophils and lymphocytes into the bloodstream where they can perform immunosurveillance and help fight infections. As I just mentioned, we successfully completed a Phase 3 clinical program in WHIM syndrome and are poised to submit the US NDA for Mavorixafor in that indication. We've also successfully completed a Phase 1b clinical trial of Mavorixafor in certain chronic neutropenic disorders and are currently studying Mavorixafor in a Phase 2 CN trial. As a reminder, we previously reported that our market research using ICD-10 code diagnosis methods suggests that roughly 50,000 people in the US have been diagnosed with chronic neutropenia. Specifically, about 40,000 of these are diagnosed with chronic idiopathic neutropenia, and about 8,000 of these are diagnosed with congenital and cyclic neutropenia. A key question that all of us have been aiming to better understand is the size of the expected initial target population for Mavorixafor across the spectrum of these estimated 50,000 individuals diagnosed with chronic neutropenia. We've now completed this additional market research and we'll share our approach and results next. Our recent work has focused on advancing the understanding of the unmet needs and patient segmentation across CN through additional market research that…

Thank you, Paula. As a reminder, we completed a Phase 1b study in people's idiopathic cyclical or congenital chronic neutropenia and reported results in late 2022. This 25 patient study of a single dose of Mavorixafor demonstrated 100% response rate. All participants with or without concurrent GCF dosing achieved an increase in ANC of at least 500 cells per microliter at peak versus baseline. We consider this a profoundly positive result across the spectrum of CN disorders studied. Based on these exciting data, we quickly advanced to study chronic dosing of Mavorixafor in the same CN population. In the Phase 2 portion of the study, Mavorixafor being dosed daily on top of each participant's baseline standard-of-care, either nothing or injectable G-CSF. During the Phase III trial, mean ANCs are being evaluated monthly, where the mean is the average of multiple counts at time zero and it four hours post dosing. For time zero represents the nature and four hours approximates of peak ANC post mavericks for dosing. The goal of the ongoing Phase 2 study is to determine if Mavorixafor for results and an increase in ANC response. If this response is durable and maintained over months of treatment and where appropriate to assess if patients can reduce G-CSF therapy with ANC values being maintained in the normal range, when recommended by treating physicians. Safety and tolerability are also being assessed during the study period. We are pleased to share emerging data from the first three participants in the study with at least 3 months of dosing data, all of whom were on stable doses of G-CSF at baseline. Given the market research results, we have just shown correlating the higher met need despite G-CSF available to in use, we believe it's important to show that Mavorixafor safely increases ANC…

Thank you, Marie. As you can hopefully hear in our voices, we are thrilled at the tremendous progress that we have made in just a few short months for a range of immunocompromised patients with high unmet needs. Last quarter, we shared our positive WHIM Phase III results where Mavorixafor treatment demonstrated durable ANC increases and reduced frequency, severity and duration of infections, and we are now poised to submit our first NDA for Mavorixafor. Given that, we are planning to provide an update on our launch readiness, physician outreach efforts and updates on the WHIM market in our third quarter earnings call, and we hope you will join us for that. And today, we have shared three important new advances. First, data clarifying our initial target population in CN as being the approximately 15,000 diagnosed in the U.S. with high unmet need. Second, our favorable emerging data of long-term Mavorixafor where the durable large increases in ANC over months of dosing led to physicians election to reduce G-CSF dosing. And third, we have completed initial FDA discussions based on our emerging data, and gained further clarity around our CN Phase III trial, keeping us on track to initiate the study in the first half of next year. We are now forging ahead with both the commercial launch and WHIM and the launch of our next Phase 3 in CN in the first half of next year. We are well positioned to potentially deliver a meaningful oral option first to those with WHIM Syndrome, next to those with CN. And our hope is to expand beyond these initial indications to bring new options to even more patients throughout the world. And with that, we'll now open up the call for your questions. Operator?

[Operator Instructions] Our first question is from Stephen Willey with Stifel.

Good morning, guys. Thanks for taking the questions and congrats on the quarter and the updated data. I guess can you remind us within the Phase 2 CN protocol, if there's a threshold ANC at which the investigator makes the GCSF tapering decision, and I guess does that have to be a structured taper in terms of a 50% reduction, a 25% reduction, and then fully off? Or could patient one just have been taken off GCSF at any time point for the subjective assessment of the investigator.

Thanks Steve. I'll pass it over to Murray to answer that.

So in this specific protocol, in Phase 2, we want patients to taper for safety reasons if they get above 10,000. But we're also open to discussions with the PIs if they feel they want to taper at another level. So, and you could obviously in the protocol of either stopped the GCSF or stopped Mavorixafor and in the cases we've described, they've actually chosen to taper. Now is the moment regarding your second point is do they taper 50%, 25%? We in Phase 2 are open to the physician deciding on how they want to taper. But when we move into Phase 3, I think it's got to be a lot more coordinated in terms of thresholds to taper and volume tapering. And maybe a couple of comments regarding tapering. So in most other diseases, if you're tapering, say off steroids, you've got to do it very carefully cause you can have what you call a rebound effect. In the case of tapering GCSF, you can't actually just stop GCSF, you don't have a problem other than obviously the risk of the count going low. So we don't need to be, structure doesn't tapering the steroids. We can actually do it in one or two steps. And that's the thing we're considering how to make it clear for physicians to follow, a one or two step process in discontinuation.

Okay. I guess I'll follow up with the obvious question. I mean, you've seen kind of a little bit of a stepwise reduction in ANCs as the tapering has increased. I guess what's your level of confidence that, I guess at the next time point, month five, month six, that you're still going to be kind of comfortably above the normal range in terms of ANC with this patient who's on Mavorixafor?

Yes, so obviously, I'd like data before I comment fully on that and that's partly why we want to continue following the patients out. But I think the reason we're excited to share this data, it is actually clinically I was surprised that it is happening so quickly. So if a physician observing patients in this study, seeing the ANC response or possibly in combination, the fact after a couple of months, they are able to G-CSF effect is really exciting clinically. So I'm optimistic, but I'm also realistic. And I think we need to wait for a long-term date to see how this plays out.

Okay. And then maybe my last question. Yes, go ahead.

No. I was just going to add, the 9000 cell increase in neutrophil counts is attributed to Mavorixafor. So that's been a very impressive initial response. And then the question is, obviously, the drugs are acting in concert together. So the question is, how low can we go with G-CSF ideally zero or ideally as infrequently as possible, and all the evidence today supports that we can get some patients across that paradigm.

Okay. And then maybe just last quick question. I guess, can you just speak to how many patients you have enrolled to date? And I guess, how many of those patients will be included in this next disclosure? Just trying to get a sense as to how many patients for how long of a follow-up we will see?

We’d be glad to know there is more than three. I'm not going to give that specific number, but the reason we spoke about these three is that this long, they have got more than three months. We have got a few patients a lot earlier on, and obviously later in the year, we will have more long-term data to give a more comprehensive picture, but we are pleased with what we are seeing, which is why we are sharing the data. This might have been a little bit slower than we would like over the summer. We hope we don't pick up. And we will have more data later in the year.

Our next question is from Kristen Kluska with Cantor Fitzgerald.

Good morning, everybody, and congrats on all these updates today. First, I wanted to ask at CIS this year, you had a pretty detailed poster on understanding the real world analysis of these patients. So first, can you help to contextualize how these findings also help you in terms of your Phase 3 protocol design and what your expectations at baseline might be for some of these patients, and ultimately what would be deemed clinically meaningful here?

Sure. Thanks, Kristen. I'll turn it over to Mark to answer that.

Hi. Good morning. We continue to believe there are about 50,000 living in the U.S. with chronic neutropenia. What's new is that, we have a better understanding now of the unmet need in this market. So as you know, it's standard practice and marketing strategy to segment a market based on groups of customers with similar needs. And here, we have identified that, about a third of the people diagnosed with chronic neutropenia are suffering from severe disease symptoms and infections or have been deemed severe enough that their physicians have decided to prescribe some dogs of G-CSF. So this is a significant opportunity for X4 as we are focused on bringing oral Mavorixafor to target the underlying disease and address the unmet needs in these patients. And as Murray explained in his presentation, these are important insights that have now informed our preparations for the Phase III trial in chronic neutropenia.

Thank you for that. And I recognize that the data update today is only a few months of follow-up. But can you give us some sense of that baseline where these patients experiencing infections and then also ultimately how long in follow-up, do you think that you will be able to see some general early trends to be able to determine if the drug does have an impact on infections?

Yes. It's Murray. So in Phase 2, we did allow people with, different ranges of ANC, but it was important to show an example of someone who would exactly fit the criteria for the Phase C, which is below normal ANC. And we know people who have an ANC below normal, are at risk of infection compared to people with normal ANC. And in the Phase 3 study, we're recruiting people who've got a low ANC and have had prior history of infection. So we know some people coming into the Phase 2 have had prior history of infection. It's too early to see any infection data. And as you may remember from our WHIM study, we started seeing really after three months, the reduction infection or the increase in ANC translate to reduction in infection over time. And that's why the Phase 3 study to show effect on infection is a year.

And then last question for me, I'm going a little bit into the weeds here, but how are you specifically going to define recurrent and severe infections for the Phase 3 trial? Like is there a threshold, a number that they have had to experience in the past, or how are you thinking about that definition?

Yes, at a higher level, you know, they have to at least have one or two serious infections. And by that, I mean that it is not just colds or sniffles. They will have needed to be prescribed antibiotics or hospitalized. In other words, a serious infection that needed medical attention.

Okay. Got it. Thanks for taking my questions and hope to see you in San Diego.

Looking forward to it.

Our next question is from Ted Tenthoff with Piper Sandler.

And I can really sense the excitement and understand why so much good progress going on. Just wanted to tighten up a little bit on the NDA, what remains to be done. Are there any inspections that need to occur and, you know, I mean maybe it's early to tell, but with a rapid review cycle, would you anticipate an outcome for reviewing all that.

Okay. So we're encouraged where we are at the NDA. So there's no data, there's no content waiting. Those who've done an NDA will know it's a lot of, it's QC and publishing. So it's really just tying up the loose ends in the next few weeks. Regarding the inspection once we submit, it wouldn't be unusual for the FDA to want to inspect a product that is up for approval and the quality team are ready for an inspection if the FDA choose to come and visit us.

Excellent. Thank you. And on outcome?

So I'd be shocked if we get an outcome. And the reason, the reason I say that is because it is, if it was borderline or didn't work, then they might want an outcome or there were some safety issues. So we don't have any serious safety issues that warrants an outcome. We've got clear clinical efficacy and that's why I think it's highly unlikely.

Our next question is from Mark Brown with Cowen and Company. Mark, your line is live. Please check and see if you're muted.

Thanks for taking my question. Congrats on the data and you obviously a ninefold changes seems quite significant in ANC, but can you just review the kind of enrollment process and kind of how many measures leading up to that baseline measure of ANC you are able to capture and can we speak to the variability you are seeing, in the one patient you are presenting, but maybe also more broadly in the trial?

So in the Phase 2 that came in with different levels of ANC. And I think what we are really seeing is, all are robust response. So what's clinically relevant today is greater than 500 cells. So in some sense is providing they do that, it can be very variable, but the important thing clinically is response of 500, and provided you get that, I'm less concerned about the availability. And obviously, we have got a threshold if it's well above normal for titration. But we are seeing different individuals do that, but all the individuals show the response.

So Mark, so far, in the Phase 2, every time we are examining a patient, durably, we see exactly what we have seen in the Phase 1, which is every patient is responding with at least a 500 cell per microliter jump. Obviously, with 9000 being an example, more patients are certainly along those lines, given the concurrence of G-CSF and our excitement for the patients and for us is, how can we get them to the low or no dose of G-CSF.

And then maybe on -- to that point of, that being an important goal, would you expect an endpoint around that to be maybe not the primary, but, in your Phase 3, to be formally kind of G-CSF sparing ability?

Yes. So certainly that's under consideration. I think what you have got to say is, how is a clinical endpoint? Is it withdrawal completely? Is that the endpoint? Is it related to the clinical benefit of withdrawing should be related to some of the issues like bone pain? So all that's under consideration.

Our next question is from Mayank Mamtani with B. Riley.

Hey, guys. It's Madison on for Mayank. Thanks for taking our call. Congrats on the the the data. If I can ask you a quick follow-up regarding your imminent NDA, I'm wondering if that package is going to include your recent impressive infection this data. And if that could really improve the strength of your label, and are you maybe thinking expecting a different label for different patient populations, either by age or severity? And then lastly, if I can get a quick one in, to your market research, did that factor in patient or, like, clinician, perspective or excitement? Thanks.

So I'll let Murray take the first part of that and Mark can jump in for the second.

So from -- lead point of view, we submit all the data to the NDA based on data cutoffs. So there was a data cut off earlier than the year where we put all the data into this far. And then there is an opportunity for either a 90- or 120-day review, where we then put in all the data up to say August to September. So we will be including all the past data and then your recent data will be in the natural follow-up request by the FDA for 120 day follow-up.

So I think just to clarify the question, Murray, because we are very excited about this. The data that we showed in May, which reflects reductions in frequency, severity and duration of Mavorixafor in WHIM patients versus placebo is absolutely submitted and we are absolutely positioning that in the label. Of course, we need to see how the FDA responds, but it's a huge clinical benefit demonstration of the drug, which is what the FDA asked for us. So the final label is to be determined, but it's a very key element of the proposed NDA filing.

Yes, no, sorry about that. I thought you were talking about the recent, any recent data now, but yes. Part of the NDA submission includes all the data that we've previously presented.

And then Mark, did you want to comment?

And just to clarify, indeed the market research that we just conducted did gather insights directly from both, you know, community based as well as academic physicians who treat large numbers of chronic neutropenia patients. So these are insights directly from those physicians. They're looking at the charts of their own patients. So it's a real world picture of the CN landscape.

Our next question is from Trevor Allred with Oppenheimer and Company.

Hey, good morning. Thanks for taking the question. Could you guys talk a bit about the FDA feedback on the Phase 3 trial design? For example, I mean, given the magnitude of benefit that we've seen, do you guys think that you need a 12-month trial? Is that something from the FDA? And then can you also talk about the FDA's thoughts on the tapering inclusion?

Yes, so first of all we had a very good meeting with the FDA and we do have a path forward with the Phase 3. The two major issues we discussed with them are not issues, the topics we discussed were related to the primary endpoint, and I think it's clear they want some clinical aspect into that, which is why I mentioned in my presentation looking at ANC, which we are very confident we will hit, and also clinical benefit, and we've got enough patients that were powered for this. And study design is therefore very similar to WHIM. We shared the data we've shared with you today with the FDA deliberately to discuss whether tapering would be appropriate and the FDA were aware of that and clearly said, you know, consider that and how you want to capture that. And that's what we're doing at the moment.

Our next question is from RK with H.C. Wainwright. Please proceed.

Thank you. Good morning, Paula and Adam. Most of my questions have been answered, but in general, you know, with the data that you've seen so far with Mavorixafor, what additional indications, you know, could you highlight as a possible way of label expansion from here beyond the CN?

Yes, so I'll take that, RK. I mean, maybe just a quick review. So we're thrilled about WHIM, right? We see this massive elevation across all white blood cell subtypes, including neutrophils, and that's led us to chronic neutropenia and kind of that correlation of increased neutrophils, reduced infection rates. In WHIM Phase 3, there's additional data that does suggest sort of a breadth of impact across the immune system. We previously kind of directed us kind of a mind share to around the adaptive immunity. So there's certainly a number of immunodeficiencies that have deficiencies in the adaptive component of their immune system. So I think more of it's just stay tuned, given the breadth of mechanism of action impacting the immune system. And right now, with WHIM certainly that nice correlation and reduction in frequency, severity of infections, you can appreciate there's a nice landscape for the next round of pipeline expansion. But we'll get to that next year.

We have reached the end of our question-and-answer session. I would like to turn the conference back over to Paula for closing comments.

We really appreciate everyone joining us today. You can appreciate how thrilled we are with such a productive 12 weeks, since we last had our WHIM Phase 3 update. We look forward to continuing to update everyone throughout the rest of the year. Enjoy the rest of your day.

Thank you. This does conclude today's conference. You may disconnect at this time and thank you again for your participation.