10-Q 1 xfor-10q_20190630.htm 10-Q xfor-10q_20190630.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-38295

 

X4 PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

27-3181608

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

955 Massachusetts Avenue, 4th Floor

Cambridge, Massachusetts

02139

(Address of principal executive offices)

(Zip Code)

(857) 529-8300

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class 

 

Trading Symbol(s) 

 

Name of each exchange on which registered 

Common Stock

 

XFOR

 

The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of August 2, 2019, the registrant had 12,430,434 shares of common stock outstanding.

 

 

 


X4 Pharmaceuticals, Inc.

 

EXPLANATORY NOTE

 

3

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

3

 

 

PART I: FINANCIAL INFORMATION

 

 

Item 1.

 

FINANCIAL STATEMENTS

 

5

 

 

Condensed Consolidated Balance Sheets (unaudited) as of June 30, 2019 and December 31, 2018

 

5

 

 

Condensed Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2019 and 2018

 

6

 

 

Condensed Consolidated Statements of Comprehensive Loss (unaudited) for the Three and Six Months Ended June 30, 2019 and 2018

 

7

 

 

Condensed Consolidated Statements of Convertible Preferred Stock, Redeemable Common Stock and Stockholders’ Equity (Deficit) (unaudited) for the Three and Six Months Ended June 30, 2019 and 2018

 

8

 

 

Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2019 and 2018

 

9

 

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

10

Item 2.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

41

Item 3.

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

54

Item 4.

 

CONTROLS AND PROCEDURES

 

54

 

 

PART II: OTHER INFORMATION

 

 

Item 1.

 

LEGAL PROCEEDINGS

 

56

Item 1A.

 

RISK FACTORS

 

56

Item 2.

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

56

Item 3.

 

DEFAULTS UPON SENIOR SECURITIES

 

56

Item 4.

 

MINE SAFETY DISCLOSURES

 

56

Item 5.

 

OTHER INFORMATION

 

56

Item 6.

 

EXHIBITS

 

57

SIGNATURES

 

59

 

 

2


EXPLANATORY NOTE

On March 13, 2019, X4 Pharmaceuticals, Inc. (formerly Arsanis, Inc), or the Company, completed its business combination in accordance with the terms of the Agreement and Plan of Merger, dated as of November 26, 2018, as amended on December 20, 2018 and March 8, 2019, or the Merger Agreement, by and among the Company, X4 Therapeutics, Inc. (formerly X4 Pharmaceuticals, Inc.) and Artemis AC Corp., a Delaware corporation and a wholly owned subsidiary of the Company, or the Merger Sub, pursuant to which, among other matters, Merger Sub merged with and into X4 Therapeutics, Inc., with X4 Therapeutics, Inc. continuing as a wholly owned subsidiary of the Company and the surviving corporation of the merger, or the Merger. Following the Merger, on March 13, 2019, the Company effected a 1-for-6 reverse stock split of its common stock, or the Reverse Stock Split, and changed its name to “X4 Pharmaceuticals, Inc.” Following the completion of the Merger, the business conducted by the Company became primarily the business conducted by X4 Therapeutics, Inc., which is a clinical-stage biopharmaceutical company focused on the research, development and commercialization of novel therapeutics for the treatment of rare diseases.

Unless otherwise noted, all references to common stock share and per share amounts in this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the conversion of shares in the Merger based on an exchange ratio of 0.5702 and, the Reverse Stock Split. As used herein, the words “the Company,” “we,” “us,” and “our” refer to, for periods following the Merger, X4 Pharmaceuticals, Inc. (formerly Arsanis, Inc.), together with is direct and indirect subsidiaries, and for periods prior to the Merger, X4 Therapeutics, Inc. (formerly X4 Pharmaceuticals, Inc.), and its direct and indirect subsidiaries, as applicable. In addition, the word “Arsanis” refers to the Company prior to the completion of the Merger, and we sometimes refer to X4 Therapeutics, Inc. as “X4.”

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that relate to future events or to our future operations or financial performance. Any forward-looking statement involves known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statement. Forward-looking statements include statements, other than statements of historical fact, about, among other things:

 

the progress, scope, cost, duration or results of our development activities, nonclinical studies and clinical trials of mavorixafor (X4P-001), X4P-002 and X4P-003 or any of our other product candidates or programs, such as the target indication(s) for development, the size, design, population, conduct, cost, objective or endpoints of any clinical trial, or the timing for initiation or completion of or availability of results from any clinical trial, including our planned trials for mavorixafor in WHIM syndrome, severe congenital neutropenia, or SCN, and Waldenström macroglobulinemia, or WM, for submission or approval of any regulatory filing or for meeting with regulatory authorities;

 

the potential benefits that may be derived from any of our product candidates;

 

the timing of and our ability to obtain and maintain regulatory approval of our existing product candidates, any product candidates that we may develop, and any related restrictions, limitations, or warnings in the label of any approved product candidates;

 

our plans to research, develop, manufacture and commercialize our product candidates

 

the timing of our regulatory filings for our product candidates, along with regulatory developments in the United States and other foreign countries;

 

our commercialization, marketing and manufacturing capabilities and strategy;

 

our ability to attract and retain qualified employees and key personnel;

 

our competitive position;

 

our expectations regarding our ability to obtain and maintain intellectual property protection;

 

our estimates and expectations regarding future operations, financial position, revenues, costs, expenses, uses of cash, capital requirements or our need for additional financing;

3


 

our ability to raise capital and

 

our strategies, prospects, plans, expectations or objectives.

Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “forecast,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “targets,” “likely,” “will,” “would,” “could,” “should,” “continue,” “scheduled” and similar expressions or phrases, or the negative of those expressions or phrases, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Although we believe that we have a reasonable basis for each forward-looking statement contained in this report, we caution you that these statements are based on our estimates or projections of the future that are subject to known and unknown risks and uncertainties and other important factors that may cause our actual results, level of activity, performance, experience or achievements to differ materially from those expressed or implied by any forward-looking statement. These risks, uncertainties and other factors are described in greater detail under the caption “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as updated by our Current Report on Form 8-K filed on April 11, 2019 and our subsequent filings under the Exchange Act, and in other filings that we make with the Securities and Exchange Commission, or SEC. As a result of the risks and uncertainties, the results or events indicated by the forward-looking statements may not occur. We caution you not to place undue reliance on any forward-looking statement.

In addition, any forward-looking statement in this Quarterly Report represents our views only as of the date of this quarterly report and should not be relied upon as representing our views as of any subsequent date. We anticipate that subsequent events and developments may cause our views to change. Although we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, except as required by applicable law. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

4


PART I: FINANCIAL INFORMATION

Item 1.

FINANCIAL STATEMENTS

X4 PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

June 30,

2019

 

 

December 31,

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

90,180

 

 

$

8,134

 

Restricted cash

 

 

3,163

 

 

 

 

Research and development incentive receivable

 

 

1,708

 

 

 

 

Prepaid expenses and other current assets

 

 

1,598

 

 

 

1,205

 

Total current assets

 

 

96,649

 

 

 

9,339

 

Property and equipment, net

 

 

258

 

 

 

241

 

Intangible assets

 

 

4,900

 

 

 

 

Goodwill

 

 

27,109

 

 

 

 

Right-of-use assets

 

 

2,187

 

 

 

 

Restricted cash

 

 

2,298

 

 

 

364

 

Other assets

 

 

106

 

 

 

 

Total assets

 

$

133,507

 

 

$

9,944

 

Liabilities, Convertible Preferred Stock, Redeemable Common Stock and

   Stockholders’ Equity (Deficit)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,099

 

 

$

2,969

 

Accrued expenses

 

 

5,094

 

 

 

3,251

 

Current portion of lease liability

 

 

860

 

 

 

 

Current portion of long-term debt, net of discount

 

 

4,151

 

 

 

1,687

 

Total current liabilities

 

 

13,204

 

 

 

7,907

 

Preferred stock warrant liability

 

 

 

 

 

4,947

 

Long-term debt, including accretion, net of discount and current portion

 

 

21,748

 

 

 

8,145

 

Deferred rent

 

 

 

 

 

417

 

Lease liability

 

 

2,369

 

 

 

 

Other liabilities

 

 

18

 

 

 

205

 

Total liabilities

 

 

37,339

 

 

 

21,621

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Convertible preferred stock (Series Seed, A and B), $0.001 par value;

   10,000,000 and 59,413,523 shares authorized as of June 30, 2019 and

   December 31, 2018, respectively; 0 and 40,079,567 shares issued and

   outstanding as of June 30, 2019 and December 31, 2018, respectively

 

 

 

 

 

64,675

 

Redeemable common stock, $0.001 par value; 0 and 107,364 shares issued

   and outstanding as of June 30, 2019 and December 31, 2018, respectively

 

 

 

 

 

734

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

 

 

Common stock, $0.001 par value. 33,333,333 and 11,070,776 shares

   authorized as of June 30, 2019 and December 31, 2018, respectively;

  12,429,057 and 351,652 shares issued and outstanding as of June 30,

   2019 and December 31, 2018, respectively

 

 

13

 

 

 

 

Additional paid-in capital

 

 

199,690

 

 

 

2,151

 

Accumulated other comprehensive income

 

 

(42

)

 

 

 

Accumulated deficit

 

 

(103,493

)

 

 

(79,237

)

Total stockholders’ equity (deficit)

 

 

96,168

 

 

 

(77,086

)

Total liabilities, convertible preferred stock, redeemable common

   stock and stockholders’ equity (deficit)

 

$

133,507

 

 

$

9,944

 

 

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

5


X4 PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

8,854

 

 

$

4,755

 

 

$

14,509

 

 

$

9,499

 

General and administrative

 

 

4,560

 

 

 

1,621

 

 

 

9,343

 

 

 

2,987

 

Total operating expenses

 

 

13,414

 

 

 

6,376

 

 

$

23,852

 

 

 

12,486

 

Loss from operations

 

 

(13,414

)

 

 

(6,376

)

 

$

(23,852

)

 

 

(12,486

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

394

 

 

 

67

 

 

 

463

 

 

 

136

 

Interest expense

 

 

(512

)

 

 

(167

)

 

 

(911

)

 

 

(336

)

Change in fair value of preferred stock warrant liability

 

 

 

 

 

283

 

 

 

(288

)

 

 

(309

)

Change in fair value of derivative liability

 

 

 

 

 

159

 

 

 

183

 

 

 

(406

)

Other income (expense)

 

 

149

 

 

 

 

 

 

149

 

 

 

 

Total other income (expense), net

 

 

31

 

 

 

342

 

 

 

(404

)

 

 

(915

)

Net loss

 

 

(13,383

)

 

 

(6,034

)

 

 

(24,256

)

 

 

(13,401

)

Accruing dividends on Series A convertible preferred stock

 

 

 

 

 

(748

)

 

 

(592

)

 

 

(1,488

)

Adjustment to accumulated deficit in connection with repurchase

   of Series Seed convertible preferred stock

 

 

 

 

 

(22

)

 

 

 

 

 

(22

)

Net loss attributable to common stockholders

 

$

(13,383

)

 

$

(6,804

)

 

$

(24,848

)

 

$

(14,911

)

Net loss per share attributable to common stockholders—basic and

   diluted

 

$

(1.02

)

 

$

(14.83

)

 

$

(3.32

)

 

$

(32.53

)

Weighted average common shares outstanding—basic and diluted

 

 

13,177,235

 

 

 

458,718

 

 

 

7,479,178

 

 

 

458,346

 

 

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

 

6


 

X4 PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net loss

 

$

(13,383

)

 

$

(6,034

)

 

$

(24,256

)

 

$

(13,401

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation adjustments

 

 

(65

)

 

 

 

 

 

(42

)

 

 

 

Total comprehensive loss

 

$

(13,448

)

 

$

(6,034

)

 

$

(24,298

)

 

$

(13,401

)

 

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements

7


X4 PHARMACEUTICALS, INC

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share amounts)

(Unaudited)

 

 

 

Series Seed, A and B

Convertible Preferred

 

 

Redeemable

Common Stock

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

(Deficit)

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2018

 

 

40,079,567

 

 

$

64,675

 

 

 

107,364

 

 

$

734

 

 

 

 

351,652

 

 

$

 

 

$

2,151

 

 

$

 

 

$

(79,237

)

 

$

(77,086

)

Conversion of redeemable common stock

   into common stock

 

 

 

 

 

 

 

 

(107,364

)

 

 

(734

)

 

 

 

107,364

 

 

 

1

 

 

 

733

 

 

 

 

 

 

 

 

 

734

 

Conversion of convertible preferred

   shares into common stock

 

 

(40,079,567

)

 

 

(64,675

)

 

 

 

 

 

 

 

 

 

3,808,430

 

 

 

4

 

 

 

64,671

 

 

 

 

 

 

 

 

 

64,675

 

Exchange of common stock in connection

   with Merger

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,440,582

 

 

 

2

 

 

 

45,539

 

 

 

 

 

 

 

 

 

45,541

 

Fair value of replacement equity awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

817

 

 

 

 

 

 

 

 

 

817

 

Reclassification of warrant liability to

   permanent equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,235

 

 

 

 

 

 

 

 

 

5,235

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,483

 

 

 

 

 

 

113

 

 

 

 

 

 

 

 

 

113

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

262

 

 

 

 

 

 

 

 

 

262

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

 

 

 

 

23

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,873

)

 

 

(10,873

)

Balance at March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,724,511

 

 

 

7

 

 

 

119,521

 

 

 

23

 

 

 

(90,110

)

 

 

29,441

 

Issuance of common stock and prefunded

   warrants for the purchase of common

   stock, net of issuance costs of $931

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,670,000

 

 

 

6

 

 

 

79,291

 

 

 

 

 

 

 

 

 

 

 

79,297

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

700

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

 

 

5

 

Exercise of warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33,846

 

 

 

 

 

 

 

440

 

 

 

 

 

 

 

 

 

 

 

440

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

433

 

 

 

 

 

 

 

 

 

 

 

433

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(65

)

 

 

 

 

 

 

(65

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,383

)

 

 

(13,383

)

Balance at June 30, 2019

 

 

 

 

$

-

 

 

 

 

 

$

-

 

 

 

 

12,429,057

 

 

$

13

 

 

$

199,690

 

 

$

(42

)

 

$

(103,493

)

 

$

96,168

 

 

 

 

 

 

Series Seed, A and B

Convertible Preferred

 

 

Redeemable

Common Stock

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

(Deficit)

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2017

 

 

38,018,968

 

 

$

60,903

 

 

 

107,364

 

 

$

734

 

 

 

 

350,607

 

 

$

 

 

$

1,385

 

 

$

 

 

$

(45,930

)

 

$

(44,545

)

Repurchase of Series Seed convertible

   preferred stock, net of issuance

   costs of $1

 

 

(598,975

)

 

 

(517

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22

)

 

 

(22

)

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

128

 

 

 

 

 

 

 

 

 

 

 

128

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,367

)

 

 

(7,367

)

Balance at March 31, 2018

 

 

37,419,993

 

 

 

60,386

 

 

 

107,364

 

 

 

734

 

 

 

 

350,607

 

 

 

 

 

 

1,513

 

 

 

 

 

 

(53,319

)

 

 

(51,806

)

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,045

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

 

 

7

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

145

 

 

 

 

 

 

 

 

 

145

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,034

)

 

 

(6,034

)

Balance at June 30, 2018

 

 

37,419,993

 

 

$

60,386

 

 

 

107,364

 

 

$

734

 

 

 

 

351,652

 

 

$

-

 

 

$

1,665

 

 

$

-

 

 

$

(59,353

)

 

$

(57,688

)

 

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

 

8


X4 PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(24,256

)

 

$

(13,401

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

695

 

 

 

273

 

Depreciation expense

 

 

44

 

 

 

51

 

Non-cash lease expense

 

 

244

 

 

 

 

Non-cash interest expense

 

 

369

 

 

 

59

 

Change in fair value of preferred stock warrant liability

 

 

288

 

 

 

309

 

Change in fair value of derivative liability

 

 

(183

)

 

 

406

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

13

 

 

 

490

 

Accounts payable

 

 

(1,702

)

 

 

(605

)

Accrued expenses

 

 

(1,157

)

 

 

453

 

Lease liabilities

 

 

(397

)

 

 

 

Net cash used in operating activities

 

 

(26,042

)

 

 

(11,965

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash acquired in connection with the Merger

 

 

26,406

 

 

 

 

Acquisition of property, plant and equipment

 

 

(10

)

 

 

 

Net cash provided by investing activities

 

 

26,396

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options and warrants

 

 

565

 

 

 

7

 

Proceeds from borrowings under loan and security agreements, net of issuance costs

 

 

9,849

 

 

 

 

Repurchase of Series Seed convertible preferred stock

 

 

 

 

 

(1,160

)

Repayments of borrowings under loan and security agreement

 

 

(2,914

)

 

 

(1,000

)

Sale of common stock, pre-funded warrants and Class A warrants, net of issuance costs

 

 

79,291

 

 

 

 

Net cash provided by (used in) financing activities

 

 

86,791

 

 

 

(2,153

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(2

)

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

87,143

 

 

 

(14,118

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

8,498

 

 

 

27,048

 

Cash, cash equivalents and restricted cash at end of period

 

$

95,641

 

 

$

12,930

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Issuance costs not yet paid

 

$

354

 

 

 

 

Conversion of convertible preferred stock into common stock

 

$

64,675

 

 

 

 

Conversion of redeemable common stock into common stock

 

$

734

 

 

 

 

Conversion of convertible preferred stock warrants into common stock warrants

 

$

5,235

 

 

 

 

Fair value of net assets acquired in the Merger

 

$

46,358

 

 

 

 

 

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

9


X4 PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIALS STATEMENTS

(Amounts in thousands, except share and per share amounts)

(Unaudited)

1.

Nature of the Business and Basis of Presentation

X4 Pharmaceuticals, Inc. (formerly Arsanis, Inc.), together with its subsidiaries (the “Company”), is a clinical-stage biotechnology company focused on the research, development and commercialization of novel therapeutics for the treatment of rare diseases. The Company’s lead product candidate, mavorixafor (X4P-001), is a potential first-in-class, once-daily, oral inhibitor of CXCR4 and is currently in Phase 3 development for treatment of WHIM syndrome, a rare, inherited, primary immunodeficiency disease caused by genetic mutations in the CXCR4 receptor gene.  The Company is headquartered in Cambridge, Massachusetts.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with governmental regulations and the ability to secure additional capital to fund operations. Drug candidates currently under development will require extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel, and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Merger with Arsanis