X4 Pharmaceuticals Inc

Previous wording

On April 29, 2024, we announced that the U.S. FDA approved our NDA for mavorixafor, which is being marketed under the trade name XOLREMDITM, for use as an oral, once-daily therapy in patients aged 12 years of age and older with WHIM (warts, hypogammaglobulinemia, infections, and myelokathexis) syndrome, to increase the number of circulating mature neutrophils and lymphocytes. WHIM syndrome is a rare combined primary immunodeficiency and chronic neutropenic disorder. Concurrent with the U.S. approval of XOLREMDI and pursuant to its Rare Pediatric Disease designation, the FDA granted us a Priority Review Voucher that we intend to sell to another drug sponsor.

Current wording

We are a biopharmaceutical company discovering, developing, and commercializing novel therapeutics for the treatment of rare diseases and those with limited treatment options, with a focus on conditions resulting from dysfunction of the immune system. On April 29, 2024, we announced that the U.S. FDA approved our NDA for mavorixafor, which is being marketed in the U.S. under the trade name XOLREMDI, for use as an oral, once-daily therapy in patients aged 12 years of age and older with WHIM (warts, hypogammaglobulinemia, infections, and myelokathexis) syndrome, to increase the number of circulating mature neutrophils and lymphocytes. WHIM syndrome is a rare combined primary immunodeficiency and chronic neutropenic disorder. Concurrent with the U.S. approval of XOLREMDI and pursuant to its Rare Pediatric Disease designation, the FDA granted us a Priority Review Voucher that we sold to another drug sponsor shortly thereafter.

Previous wording

We are currently engaged in our U.S. launch of XOLREMDI in WHIM syndrome, and have built out our go-to-market organization, with key hires across commercial and medical functions, increased interactions with key stakeholders and rare disease patient advocacy organizations, and continued our disease-awareness campaign to further the understanding of WHIM syndrome and educate patients and physicians on the importance and benefits of early diagnosis. We have entered into agreements with a third-party logistics organization and a specialty pharmacy to support the distribution of XOLREMDI to patients in the U.S. We are also planning to seek regulatory approvals to commercialize mavorixafor outside of the U.S. We expect to submit an application for regulatory approval of mavorixafor for the treatment of WHIM syndrome to the EMA in late 2024 or early 2025. We are also exploring additional potential opportunities in geographies where we may be able to efficiently leverage our FDA approval.

Current wording

We are currently engaged in our U.S. launch of XOLREMDI in WHIM syndrome and have built out our go-to-market organization, with all key hires across commercial and medical functions now complete. We have increased our interactions with targeted physicians and rare disease patient advocacy organizations and continued our disease-awareness campaign to further the understanding of WHIM syndrome and to educate patients and physicians on the importance and benefits of early diagnosis. We have entered into agreements with a third-party logistics organization and a specialty pharmacy to support the distribution of XOLREMDI in the U.S., to mitigate barriers to product access, to provide a suite of patient support services to help patients through their treatment journey. We are planning to seek regulatory approvals to commercialize mavorixafor outside of the U.S. by submitting an application for regulatory approval of mavorixafor for the treatment of WHIM syndrome to the European Medicines Agency (“EMA”) by early 2025. We are also exploring additional potential opportunities in geographies where we may be able to efficiently leverage our FDA approval.

Previous wording

The U.S. approval of XOLREMDI in the WHIM syndrome indication is the first for mavorixafor, which is an orally active bioavailable selective antagonist of chemokine receptor CXCR4, a key regulator of the movement of immune cells throughout the body. Due to its ability to increase the mobilization of white blood cells from the bone marrow into the bloodstream, we believe that mavorixafor has the potential to provide therapeutic benefit across a variety of immune system disorders in addition to WHIM syndrome.

Current wording

The U.S. approval of XOLREMDI in the WHIM syndrome indication is the first for mavorixafor, which is an orally active, selective antagonist of chemokine receptor CXCR4, a key regulator of the movement of immune cells throughout the body. Due to its ability to increase the mobilization of white blood cells from the bone marrow into the bloodstream, we believe that mavorixafor has the potential to provide therapeutic benefit across a variety of immune system disorders in addition to WHIM syndrome.

Previous wording

As a result, we are also currently advancing mavorixafor for the treatment of people with certain chronic neutropenic disorders. Following positive results from a Phase 1b clinical trial of a single dose of mavorixafor in people with idiopathic, cyclic, and congenital chronic neutropenia, we are conducting an ongoing Phase 2 clinical trial evaluating the durability, safety, and tolerability of chronic dosing of once-daily oral mavorixafor with or without concurrent treatment with injectable G-CSF in the same patient population. Preliminary results from the trial showed that the first three participants experienced clinically meaningful increases in absolute neutrophil count (“ANC”). We expect to share additional data from the Phase 2 trial in June 2024. We are also planning to initiate a Phase 3 trial of mavorixafor in the second quarter of 2024 that aims to evaluate the efficacy, safety, and tolerability of oral once-daily mavorixafor (with or without G-CSF) in people with congenital or acquired primary autoimmune and idiopathic chronic neutropenia who are experiencing recurrent and/or serious infections.

Current wording

We continue to advance mavorixafor for the treatment of people with certain chronic neutropenic disorders following positive results from a Phase 1b clinical trial of a single dose of mavorixafor in people with idiopathic, cyclic, and congenital chronic neutropenia (“CN”). We are now completing a Phase 2 clinical trial evaluating the durability of effect, safety, and tolerability of chronic dosing of once-daily oral mavorixafor with or without concurrent treatment with injectable granulocyte colony-stimulating factor (“G-CSF”) in the same patient population. In June 2024, we announced positive interim clinical data from this Phase 2 clinical trial assessing the efficacy and safety of mavorixafor in the treatment of people with CN. The interim analysis of data from the ongoing six-month study showed that once-daily oral mavorixafor was generally well tolerated and durably increased participants’ absolute neutrophil counts (“ANC”) both as a monotherapy and in combination with stable doses of G-CSF, the only therapy approved in the U.S. for severe chronic neutropenia. Full data from the Phase 2 CN trial, including data from a treatment group of participants receiving mavorixafor and dose-adjusted G-CSF, are expected to be presented in November 2024.

Previous wording

Comparison of the Three Months Ended March 31, 2024 and 2023

Current wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Previous wording

The following table summarizes the results of our operations for the three months ended March 31, 2024 and 2023:

Current wording

The following table summarizes the results of our operations for the three and six months ended June 30, 2024 and 2023:

Previous wording

Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates, including employee salaries and related expenses, preclinical and clinical development expenses for our product candidates; internal and third-party costs of manufacturing our drug products for use in our preclinical studies and clinical trials and validation batches of our drug substance and drug product. Research and development expenses also include facility, depreciation and other expenses; costs related to compliance with regulatory requirements; and payments made under third-party licensing agreements. We expense research and development costs as incurred.

Current wording

Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates. For the three and six months ended June 30, 2024 and 2023, research and development costs were primarily focused on the advancement and commercialization of mavorixafor. Research and development costs include employee salaries and related expenses, preclinical and clinical development expenses, internal and third-party costs of manufacturing our drug products for use in our preclinical studies and clinical trials. Research and development expenses also include facility, depreciation and other expenses; costs related to compliance with regulatory requirements; and prior to the FDA’s approval of our drug product in the U.S., payments made under third-party licensing agreements were charged to research and development expense.

Previous wording

Research and development expenses decreased by $2.2 million in the three months ended March 31, 2024, as compared to the same period in the prior year. Research and development expenses in the prior period included a $5.0 million in-license fee related to a development milestone under our Genzyme agreement. No similar milestone payments were incurred in the current period. Clinical costs, including third-party costs associated with our pivotal Phase 3 clinical trial of mavorixafor for patients with WHIM syndrome, were lower in the current period due to the completion of this clinical trial in 2023. These decreases in research and development expenses were partially offset by higher compensation costs due to an increase in personnel within our research and development functions.

Current wording

Research and development expenses increased by $5.3 million and $3.1 million in the three and six months ended June 30, 2024, respectively, as compared to the same periods in the prior year. Research and development cost increased in the current quarter primarily due to an increase in clinical operations costs, including CRO fees and pass-through costs, associated with our Phase 2 CN trial and the launch of our Phase 3 CN clinical trial, as well as increased regulatory, medical affairs and quality costs associated with our second quarter product launch and clinical trials. Research and development expenses were also higher in the current three and six-month periods due to an increase in personnel within our research and development functions. Such increase in the six month period ended June 30, 2024 was partially offset by a $5.0 million in-license fee related to a development milestone under our Genzyme agreement that was changed to research and development expense in 2023 where no such similar charges to research and development expense were recorded in the six months ended June 30, 2024.

Previous wording

Other expense, net, for three months ended March 31, 2024 increased approximately $20.0 million as compared to the same period in the prior year primarily due to an increase in the fair value of our Class C warrants, which are accounted for as a liability at fair value. We value our Class C warrants using the Black-Scholes option pricing model, which includes the market value of our common stock as an input. The market price of shares of our common stock increased during the first quarter of 2024, which was the primary contributor to the increase in the Class C warrant liability and associated expense. These Class C warrants will continue to be measured at fair value and may continue to generate gains or losses each quarter, until they are exercised.

Current wording

Other income (expense), net, for three and six months ended June 30, 2024 increased $49.6 million and $29.9 million, respectively, as compared to the same period in the prior year primarily due to a significant decrease in the fair value of our Class C warrants, which are accounted for as a liability at fair value, relative to the prior period. We value these Class C warrants using the Black-Scholes option pricing model, which includes the market value of our common stock as an input. The market price of shares of our common stock decreased during the second quarter of 2024, which was the primary contributor to the decrease in the Class C warrant liability and associated expense. These Class C warrants will continue to be measured at fair value and may continue to generate gains or losses each quarter, until they are exercised.

Previous wording

Hercules Loan Agreement—We have a Loan and Security Agreement, amended from time to time, with Hercules Capital, Inc., the (“Hercules Loan Agreement”). The Hercules Loan Agreement provides for a term loan facility of up to $115.0 million, under which we have borrowed an aggregate of $55.0 million of term loans to date representing the maximum borrowings as of March 31, 2024. The term loan facility allows for $60.0 million in additional borrowings, which includes:

Current wording

Hercules Loan Agreement—We have a Loan and Security Agreement, amended from time to time, with Hercules Capital, Inc., the (“Hercules Loan Agreement”). The Hercules Loan Agreement provides for a term loan facility of up to $115.0 million, under which we have borrowed an aggregate of $75.0 million of term loans to date, including $20.0 million in new borrowings during the three months ended June 30, 2024, representing the maximum borrowings as of June 30, 2024. The term loan facility allows for $40.0 million in additional borrowings, which includes:

Previous wording

Management has concluded that substantial doubt exists about our ability to continue as a going concern for the one-year period following the issuance of our condensed consolidated financial statements for the quarter ended March 31, 2024. To finance our operations, we will need to raise additional capital, which cannot be assured. Unless and until we reach profitability in the future, we will require additional capital to fund our operations, which could be raised through a combination of equity offerings, debt financings, other third-party funding, marketing and distribution arrangements and other collaborations and strategic alliances. If we are unable to obtain funding, we could be forced to delay, reduce or eliminate some or all of our research and development programs, product portfolio expansion or commercialization efforts, which would adversely affect our business prospects, or we may be unable to continue operations.

Current wording

To finance its future operations beyond the one-year period following the issuance of these condensed consolidated financial statements, we will need to raise additional capital, which cannot be assured. Unless and until we reach profitability in the future, we will require additional capital to fund our operations, which could be raised through a combination of equity offerings, debt financings, other third-party funding, marketing and distribution arrangements, or other collaborations and strategic alliances. If we are unable to obtain funding, we could be forced to delay, reduce, or eliminate some or all of our research and development programs, product portfolio expansion or commercialization efforts, which would adversely affect our business prospects, or we may be unable to continue operations.

Previous wording

During the three months ended March 31, 2024, net cash used in operating activities was $34 million, primarily resulting from our net loss of $52 million, adjusted for noncash expenses of $16 million and changes in our operating assets and liabilities of $2 million. Non-cash expenses primarily includes a $14 million loss on the change in fair value of our Class C Warrant liability, stock-based compensation expense, non-cash lease expense and non-cash interest expense. Net cash used in operating activities for the three months ended March 31, 2023 was $27 million, primarily resulting from our net losses of $24 million, adjusted for noncash expenses of $3 million. Net cash used in operating activities increased during the three months ended March 31, 2024 as compared to the same period in the prior year primarily due to the payment of our annual bonuses and increases in our pre-commercialization expenses associated with preparations for the U.S. commercial launch of XOLREMDI.

Current wording

During the six months ended June 30, 2024, net cash used in operating activities was $64 million, primarily resulting from operating expenses of $71 million, adjusted for noncash expenses of $5 million and changes in our operating assets and liabilities of $3 million. Non-cash expenses primarily include stock-based compensation expense, non-cash lease expense and non-cash interest expense. Net cash used in operating activities for the six months ended June 30, 2023 was $48 million, primarily resulting from our net losses of $80 million, adjusted for noncash expenses of $30 million. Net cash used in operating activities increased during the six months ended June 30, 2024 as compared to the same period in the prior year primarily due to increases in our sales and marketing and commercialization expenses associated with the U.S. commercial launch of XOLREMDI.

Previous wording

During the three months ended March 31, 2024, cash used in investing activities included $5 million of net investments in short-term marketable securities. Investing activities in the prior period were not significant.

Current wording

During the six months ended June 30, 2024, cash provided by investing activities included $105.0 million in proceeds from the sale of a priority review voucher obtained as a result of the approval of our drug product by the FDA. Cash outflows from investing activities included $7.0 million in license payments classified as the acquisition of an intangible assets and $6 million of net investments in short-term marketable securities. During the six months ended June 30, 2023, cash used in investing activities included an investment in short-term marketable debt securities.

Previous wording

Based on our cash, cash equivalents and marketable securities on hand as of March 31, 2024 and the increases to our borrowing capacity noted above and in Note 7 to the accompanying condensed consolidated financial statements, we believe that our cash, cash equivalents and marketable securities will allow us to fund operations into 2025. However, based on our current financial projections, which exclude the potential sale of our PRV, additional borrowings under our Hercules Loan Agreement that could become available, and additional c we believe we would be in violation of a minimum cash covenant of the Hercules Loan Agreement in the first quarter of 2025. In order to fund operations and satisfy the minimum cash covenant in the Hercules Loan Agreement, we will be required to raise additional capital, which may be through a combination of equity offerings, debt financings, other third-party funding, marketing and distribution arrangements and other collaborations and strategic alliances.

Current wording

Based on our cash, cash equivalents and marketable securities on hand as of June 30, 2024 and the increases to our borrowing capacity noted above and in Note 10 to the accompanying condensed consolidated financial statements, we believe that our cash, cash equivalents and marketable securities will allow us to fund operations for at least the next 12 months. In order to fund operations and satisfy the minimum cash covenant in the Hercules Loan Agreement thereafter, we will be required to raise additional capital, which may be through a combination of equity offerings, debt financings, other third-party funding, marketing and distribution arrangements, or collaborations and strategic alliances.

Previous wording

During 2025 and beyond, assuming no changes to our current operational expectations, we expect our expenses to continue to increase in connection with our ongoing activities, particularly as we advance the current and anticipated clinical trials of our product candidates in development. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the exact amount of our funding requirements. Our short term and long term funding requirements will depend on and could increase significantly as a result of many factors, including:

Current wording

During 2025 and beyond, assuming no changes to our current operational expectations, we expect our expenses to be relatively consistent with our current operating expenses excluding the sale of non-financial assets. Because of the numerous risks and uncertainties associated with the future sale of our approved drug product and the research, development, and commercialization of future product candidates, we are unable to estimate the exact amount of our funding requirements. Our short-term and long-term funding requirements will depend on and could increase significantly as a result of many factors, including:

Previous wording

•the scope, number, initiation, progress, timing, costs, design, duration, any potential delays, and results of clinical trials and nonclinical studies for our current or future product candidates, particularly our Phase 2 clinical trial of mavorixafor for the treatment of individuals with chronic neutropenic disorders;

Current wording

•the scope, number, initiation, progress, timing, costs, design, duration, any potential delays, and results of clinical trials and nonclinical studies for our current or future product candidates, particularly our Phase 3 clinical trial of mavorixafor for the treatment of individuals with chronic neutropenic disorders;

Previous wording

During the three months ended March 31, 2024, there were no material changes to our critical accounting policies as reported for the year ended December 31, 2023 as part of our Annual Report. In addition, see Note 2 of these condensed consolidated financial statements under the heading “Recently Adopted Accounting Pronouncements” for new accounting pronouncements or changes to the accounting pronouncements during the three months ended March 31, 2024.

Current wording

During the three months ended June 30, 2024, there were no material changes to our critical accounting policies as reported for the year ended December 31, 2023 as part of our Annual Report other than as updated in Note 2 of these condensed consolidated financial statements. Also see Note 2 under the heading “Recently Adopted Accounting Pronouncements” for new accounting pronouncements or changes to the accounting pronouncements during the three months ended June 30, 2024.