X4 Pharmaceuticals, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual report; it does not provide a clear standalone fourth-quarter income statement. X4 is a clinical-stage biopharmaceutical company with no product sales. Its lead candidate, mavorixafor, was in a global Phase 3 trial for WHIM syndrome, with additional Phase 1b trials for chronic neutropenia and Waldenström’s macroglobulinemia.
Financial results and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $0 | $3.0 million license revenue |
| Research and development expense | $50.6 million | $41.9 million |
| General and administrative expense | $24.7 million | $20.9 million |
| Goodwill impairment | $9.8 million | None |
| Operating loss | $85.1 million | $59.9 million |
| Net loss | $88.7 million | $62.1 million |
| Net loss per share attributable to common stockholders | $3.99 | $3.09 |
| Cash used in operating activities | $70.9 million | $58.8 million |
| Cash, cash equivalents and restricted cash at year-end | $83.1 million | $80.7 million |
There were no product sales, so product gross margin is not applicable. The $3.0 million of 2020 revenue was a milestone payment under the Abbisko license agreement, not recurring product revenue. The 2021 per-share loss includes a $13.9 million deemed dividend associated with a Class B warrant exercise-price reset.
At December 31, 2021, cash and cash equivalents were $81.8 million; restricted cash was $1.3 million. Debt principal outstanding under the Hercules facility was $32.5 million, with a $33.9 million carrying amount including accrued end-of-term charges and other adjustments. The facility bears interest at 8.75% at year-end; principal payments were scheduled to begin in February 2023, with maturity in July 2024. Total assets were $117.2 million, total liabilities $52.8 million, and stockholders’ equity $64.4 million.
Changes versus the prior year
- Net loss increased by $26.6 million, reflecting higher R&D and G&A expenses, the $9.8 million goodwill impairment, and higher net interest expense.
- R&D spending rose $8.7 million, primarily from mavorixafor trial and manufacturing costs and increased clinical, regulatory, and manufacturing personnel costs. G&A rose $3.7 million, mainly due to stock compensation, recruiting, and facility costs.
- Operating cash use increased by $12.1 million. Financing provided $74.2 million in 2021, principally from equity and pre-funded warrant offerings and ATM sales, versus $12.4 million in 2020.
- Year-end cash and restricted cash increased $2.4 million overall, despite the higher operating cash burn. Common shares outstanding rose from 16.3 million to 28.1 million during 2021.
Outlook, risks, and notable items
- Management expected to report top-line results from the 31-patient Phase 3 4WHIM trial in the fourth quarter of 2022 and targeted a possible U.S. NDA submission in the second half of 2023, contingent on supportive results. FDA Breakthrough Therapy, Fast Track, and Rare Pediatric designations do not assure approval.
- Additional Phase 1b data were expected in 2022: chronic neutropenia by the third quarter and Waldenström’s in the second half. X4 also anticipated filing an IND for X4P-002 in the second half of 2022.
- Management said existing cash was expected to fund operations into the fourth quarter of 2022. The company disclosed substantial doubt about its ability to continue as a going concern for the year following issuance of the financial statements, citing expected cash needs and a Hercules minimum-cash covenant beginning September 1, 2022. Additional financing was needed; failure to obtain it could force program delays or reductions, or threaten continued operations.
- The Hercules loan is secured by substantially all assets other than intellectual property, although proceeds and payment rights related to intellectual property are included. A covenant breach could accelerate repayment. The company also had no long-term or backup supplier for mavorixafor API or finished capsules.
- COVID-19 had caused site-activation and enrollment delays. As of the filing, the Phase 3 trial included a Russian site with three enrolled patients; the company said it might need to close the site amid the Russia-Ukraine conflict.
- The fourth-quarter goodwill impairment followed a sustained decline in market capitalization; further declines could result in additional impairment. Other key risks include clinical and regulatory failure, uncertain rare-disease market size, competition, reimbursement and pricing, intellectual-property and licensing exposure, and reliance on collaborators and contract manufacturers.
- After year-end, X4 received approximately $3.0 million from an initial Lincoln Park share sale in January 2022 and $3.0 million gross from a March 2022 private placement. These subsequent financings do not change the reported December 31, 2021 cash balance. The filing also reports a February 2022 Hercules amendment and further Class B warrant repricing.
Most important facts for investors to verify
- Whether Phase 3 4WHIM results met the primary and secondary endpoints, and whether the results support an NDA and the stated timetable.
- Cash burn, financing availability, and compliance with the Hercules minimum-cash covenant; review the terms and dilution implications of post-year-end financing and outstanding warrants.
- Whether reported preliminary Phase 1b signals persist in larger or later data sets and establish clinically meaningful benefit and acceptable safety.
- Whether management’s WHIM and chronic-neutropenia patient estimates are validated and translate into an addressable, reimbursable market.
- Manufacturing readiness, backup supply arrangements, trial-site continuity, and the effects of COVID-19 and geopolitical disruption on trial timelines.