X4 Pharmaceuticals, Inc. — Q1 2022 Form 10-Q
Business context and reporting period. This unaudited quarterly filing covers the three months ended March 31, 2022. X4 is a clinical-stage biopharmaceutical company with no product-sales revenue. Its lead candidate, mavorixafor, is in a global Phase 3 trial for WHIM syndrome; the company is also studying it in Phase 1b trials for Waldenström’s macroglobulinemia and chronic neutropenia disorders. X4P-002 and X4P-003 are earlier-stage programs.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Product-sales revenue | None | None |
| Research and development expense | $14.1 million | $12.1 million |
| Selling, general and administrative expense | $7.7 million | $5.8 million |
| Operating loss | $21.3 million | $17.9 million |
| Net loss | $22.0 million | $18.7 million |
| Net loss attributable to common stockholders | $24.2 million; $0.72 per share | $26.9 million; $1.30 per share |
| Cash used in operating activities | $20.2 million | $18.4 million |
| Cash and cash equivalents at period end | $66.4 million | $81.8 million at December 31, 2021 |
| Cash, cash equivalents and restricted cash | $67.7 million | $83.1 million at December 31, 2021 |
The company reported no meaningful product-sales margin. The $0.5 million gain on sale of a non-financial asset partly offset operating expenses; without that item, year-over-year operating expense growth would have been higher. R&D expense rose mainly with staffing, facility costs and X4P-002 development; SG&A increased primarily from stock-based compensation, recruiting and facilities.
At March 31, total assets were $99.6 million and total liabilities were $49.9 million. Hercules debt had $32.5 million principal outstanding and a $33.2 million reported carrying amount; the loan’s effective annual interest rate was 10.7%. The loan matures July 2024, with principal payments scheduled to begin February 2023. Financing activities provided $5.0 million in Q1 2022, compared with $55.0 million in Q1 2021. The company raised $3.0 million gross in a March private placement and reported $5.9 million of proceeds from share sales and offerings in its cash-flow discussion.
Changes, outlook and material risks
- Net loss increased year over year, while loss attributable to common stockholders and per-share loss decreased, reflecting a smaller deemed dividend from the Class B warrant price reset ($2.3 million versus $8.2 million). The warrant exercise price reset to $1.80 after the March financing, creating potential dilution.
- Management expected top-line results from the completed, 31-patient 4WHIM Phase 3 trial in Q4 2022. An NDA submission in the second half of 2023 was a goal conditional on supportive final data. The company also expected chronic-neutropenia Phase 1b data by the end of Q3 2022, Waldenström’s Phase 1b data in the second half of 2022, and to submit an IND for X4P-002 in Q4 2022.
- Going-concern warning: Management said existing cash was expected to fund operating and capital needs only into Q4 2022 and disclosed substantial doubt about the company’s ability to continue as a going concern for the year following issuance. Under the Hercules agreement, a minimum-cash covenant becomes effective September 1, 2022, subject to specified milestones. Based on current projections and without additional funding, the company expected a breach in Q3 2022; Hercules could then demand repayment of outstanding debt. X4 was seeking additional capital and other funding, with no assurance it would succeed.
- Clinical execution remains exposed to COVID-19-related site and enrollment delays. The Russia-Ukraine conflict also affected a Russian Phase 3 site with three enrolled patients; alternative arrangements had been secured, but the company could not determine the full impact. Mavorixafor supply depends on single third-party manufacturers for API and finished capsules.
- The company had no material legal proceedings. Management concluded disclosure controls were effective as of March 31, 2022.
Most important facts for investors to verify
- Whether the 4WHIM Phase 3 results were reported on schedule and support an NDA, and whether the stated regulatory timeline remains achievable.
- Cash burn, subsequent financing, and progress toward the Hercules minimum-cash covenant milestones; confirm whether any covenant breach, waiver or debt repayment demand occurred.
- Actual cash runway and the terms, dilution and availability of equity, debt or strategic funding.
- Updates to enrollment, data timing and operational effects from COVID-19 and the Russia-Ukraine conflict across clinical programs.
- Manufacturing continuity and availability of mavorixafor clinical supply, given reliance on single-source suppliers.