For the transition period from __________ to __________ 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 September 30, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 ...

PART I: FINANCIAL INFORMATION [Item 1. FINANCIAL STATEMENTS](index=5&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) The unaudited condensed consolidated financial statements for the six months ended June 30, 2019, reflect significant asset growth to **$133.5 million** and a shift to **$96.2 million** in stockholders' equity following the March 2019 reverse merger and subsequent equity financing, with a net loss of **$24.3 million** [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (Unaudited) | | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $90,180 | $8,134 | | Total current assets | $96,649 | $9,339 | | Goodwill | $27,109 | $— | | Intangible assets | $4,900 | $— | | **Total assets** | **$133,507** | **$9,944** | | **Liabilities and Stockholders' Equity (Deficit)** | | | | Total current liabilities | $13,204 | $7,907 | | Long-term debt, net | $21,748 | $8,145 | | **Total liabilities** | **$37,339** | **$21,621** | | **Total stockholders' equity (deficit)** | **$96,168** | **($77,086)** | - The significant increase in assets and the shift from a stockholders' deficit to equity is primarily due to the reverse merger with Arsanis in March 2019 and a subsequent equity financing in April 2019[19](index=19&type=chunk)[37](index=37&type=chunk)[176](index=176&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (Unaudited, in thousands) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | **2019** | **2018** | **2019** | **2018** | | 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)** | | **Net loss** | **($13,383)** | **($6,034)** | **($24,256)** | **($13,401)** | | Net loss per share—basic and diluted | ($1.02) | ($14.83) | ($3.32) | ($32.53) | - Operating expenses more than doubled for the three-month period and nearly doubled for the six-month period year-over-year, driven by increased R&D activities for the mavorixafor program and higher G&A costs following the merger and becoming a public company[22](index=22&type=chunk)[270](index=270&type=chunk)[273](index=273&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) | | Six Months Ended June 30, | | :--- | :--- | :--- | | | **2019** | **2018** | | Net cash used in operating activities | ($26,042) | ($11,965) | | Net cash provided by investing activities | $26,396 | $— | | Net cash provided by (used in) financing activities | $86,791 | ($2,153) | | **Net increase (decrease) in cash, cash equivalents and restricted cash** | **$87,143** | **($14,118)** | - The significant increase in cash was driven by **$26.4 million** in cash acquired from the Arsanis merger, **$79.3 million** in net proceeds from an April 2019 public offering, and **$9.8 million** in net proceeds from a new loan agreement[32](index=32&type=chunk)[279](index=279&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the reverse merger with Arsanis on March 13, 2019, which was treated as an acquisition of Arsanis by X4, resulting in **$27.1 million** of goodwill and **$4.9 million** of IPR&D assets, alongside an April 2019 **$85.8 million** equity offering and June 2019 debt refinancing up to **$35.0 million**, with subsequent events including a collaboration with Abbisko Therapeutics and out-licensing of preclinical programs - On March 13, 2019, the company completed a reverse merger with Arsanis, Inc., with X4 deemed the accounting acquirer, valued at a purchase price of **$46.4 million**[37](index=37&type=chunk)[114](index=114&type=chunk) - The merger resulted in the recognition of **$27.1 million** in goodwill and **$4.9 million** in indefinite-lived in-process research and development (IPR&D) intangible assets related to Arsanis's ASN200, ASN300, and ASN500 programs[115](index=115&type=chunk)[116](index=116&type=chunk)[119](index=119&type=chunk) - In April 2019, the company raised gross proceeds of **$85.8 million** through a public offering of common stock and warrants[176](index=176&type=chunk) - In June 2019, the company refinanced its debt with Hercules Capital, entering into a new agreement for up to **$35.0 million** in borrowings, with an initial draw of **$20.0 million**[141](index=141&type=chunk) - Subsequent to the quarter end, in July 2019, the company entered into a collaboration with Abbisko Therapeutics to develop and commercialize mavorixafor in oncology indications in Greater China, and also out-licensed the ASN200, ASN300, and ASN500 programs acquired in the merger[228](index=228&type=chunk)[229](index=229&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company, a clinical-stage biopharmaceutical firm, discusses its financial condition and operations, highlighting the impact of the March 2019 reverse merger, April 2019 equity financing, and June 2019 debt refinancing on its **$90.2 million** cash position, alongside increased operating expenses and a **$24.3 million** net loss [Overview and Recent Developments](index=42&type=section&id=Overview%20and%20Recent%20Developments) - The company is a clinical-stage biopharmaceutical company focused on novel therapeutics for rare diseases, primarily targeting the CXCR4 receptor[233](index=233&type=chunk) - Lead product candidate, mavorixafor (X4P-001), is in a pivotal Phase 3 trial (4WHIM) for WHIM syndrome, with top-line data expected in 2021, and trials for Severe Congenital Neutropenia (SCN) and Waldenström Macroglobulinemia (WM) are planned for 2019[234](index=234&type=chunk) - Key recent corporate developments include the reverse merger with Arsanis (March 2019), a **$79.3 million** net equity financing (April 2019), a debt refinancing with Hercules for up to **$35.0 million** (June 2019), and a collaboration with Abbisko for mavorixafor in Greater China (July 2019)[236](index=236&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) Comparison of Operating Results (in thousands) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | **2019** | **2018** | **2019** | **2018** | | Research and development | $8,854 | $4,755 | $14,509 | $9,499 | | General and administrative | $4,560 | $1,621 | $9,343 | $2,987 | | **Loss from operations** | **($13,414)** | **($6,376)** | **($23,852)** | **($12,486)** | | **Net loss** | **($13,383)** | **($6,034)** | **($24,256)** | **($13,401)** | - R&D expenses for the six months ended June 30, 2019 increased by **$5.0 million** year-over-year, primarily due to increased direct expenses for the mavorixafor program as it entered Phase 3 development and costs from the research site in Vienna acquired in the merger[270](index=270&type=chunk) - G&A expenses for the six months ended June 30, 2019 increased by **$6.4 million** year-over-year, mainly due to higher professional fees related to the merger, increased patent costs, and higher personnel-related costs to support growth and public company compliance[273](index=273&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2019, the company had cash and cash equivalents of **$90.2 million**, which is expected to be sufficient to fund operations for at least the next 12 months[252](index=252&type=chunk) - Net cash used in operating activities was **$26.0 million** for the six months ended June 30, 2019, compared to **$12.0 million** for the same period in 2018[280](index=280&type=chunk) - Net cash provided by financing activities was **$86.8 million** for the first six months of 2019, primarily from the April 2019 public offering (**$79.3 million** net) and the June 2019 debt refinancing (**$9.8 million** net)[279](index=279&type=chunk)[282](index=282&type=chunk) - The company has a loan agreement with Hercules providing for up to **$35.0 million** in borrowings and an FFG loan agreement acquired from Arsanis with **$6.7 million** outstanding as of June 30, 2019[288](index=288&type=chunk)[295](index=295&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company, as a smaller reporting company, is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide the information requested by this item[317](index=317&type=chunk) [Controls and Procedures](index=55&type=section&id=Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2019, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2019[318](index=318&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[320](index=320&type=chunk) PART II: OTHER INFORMATION [Legal Proceedings](index=57&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) The company is not currently a party to any material legal proceedings and is unaware of any pending or threatened legal actions that could materially affect its business - The company is not currently a party to any material legal proceedings[322](index=322&type=chunk) [Risk Factors](index=57&type=section&id=Item%201A.%20RISK%20FACTORS) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2018, as updated by the Current Report on Form 8-K filed on April 11, 2019 - No material changes have been made to the risk factors described in previous SEC filings[323](index=323&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) No unregistered sales of equity securities or use of proceeds occurred during the period - There were no unregistered sales of equity securities during the period[324](index=324&type=chunk)

[Part I: Financial Information](index=6&type=section&id=PART%20I%3A%20FINANCIAL%20INFORMATION) [Financial Statements](index=6&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) The Q1 2019 financial statements show significant asset and liability increases due to the Arsanis merger, alongside a higher net loss from increased operating expenses [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets surged to **$62.5 million** by March 31, 2019, primarily from the Arsanis merger's goodwill and intangibles, with liabilities rising and equity turning positive Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $22,299 | $8,134 | | Total current assets | $26,223 | $9,339 | | Goodwill | $27,407 | $0 | | Intangible assets | $4,900 | $0 | | **Total assets** | **$62,549** | **$9,944** | | **Liabilities & Equity** | | | | Total current liabilities | $16,450 | $7,907 | | Long-term debt, net | $13,365 | $8,145 | | **Total liabilities** | **$33,108** | **$21,621** | | Total stockholders' equity (deficit) | $29,441 | $(77,086) | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2019, net loss increased to **$10.9 million** due to higher operating expenses, with net loss per share at **$(6.67)** influenced by increased shares outstanding Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Research and development | $5,655 | $4,744 | | General and administrative | $4,783 | $1,366 | | **Total operating expenses** | **$10,438** | **$6,110** | | Loss from operations | $(10,438) | $(6,110) | | **Net loss** | **$(10,873)** | **$(7,367)** | | Net loss per share—basic and diluted | $(6.67) | $(17.70) | | Weighted average common shares outstanding | 1,717,808 | 457,971 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2019 saw **$11.8 million** cash used in operations, largely offset by **$26.4 million** from investing activities due to the Arsanis merger, leading to a net cash increase Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(11,750) | $(6,182) | | Net cash provided by investing activities | $26,406 | $0 | | Net cash provided by (used in) financing activities | $113 | $(1,660) | | **Net increase (decrease) in cash** | **$14,748** | **$(7,842)** | | Cash at end of period | $23,246 | $19,206 | - The significant cash provided by investing activities was due to **$26.4 million** in cash and restricted cash acquired in connection with the Merger[29](index=29&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the Arsanis reverse merger, **$27.4 million** goodwill, ASC 842 adoption, significant debt, and an **$85.8 million** April 2019 equity financing - The merger with Arsanis on March 13, 2019 was accounted for as a reverse merger, with X4 as the accounting acquirer The transaction resulted in goodwill of **$27.4 million**[35](index=35&type=chunk)[110](index=110&type=chunk) - On April 16, 2019, the company closed a public offering with gross proceeds of **$85.8 million** Management expects that existing cash plus these proceeds will be sufficient to fund operations for at least the next twelve months[39](index=39&type=chunk)[241](index=241&type=chunk) - As of March 31, 2019, the company has significant long-term debt, including **$10.0 million** outstanding under the Hercules Loan Agreement and **$9.5 million** under the FFG Loan Agreement acquired from Arsanis[128](index=128&type=chunk)[147](index=147&type=chunk)[149](index=149&type=chunk) - The company adopted the new lease standard ASC 842 on January 1, 2019, resulting in the recognition of **$2.0 million** of right-of-use assets and **$2.5 million** of operating lease liabilities[97](index=97&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's biopharmaceutical focus, the Arsanis merger, and the **$85.8 million** April 2019 financing, which is expected to fund operations for at least 12 months [Overview and Recent Developments](index=40&type=section&id=Overview%20and%20Recent%20Developments) The company, a clinical-stage biopharmaceutical firm, focuses on CXCR4 antagonists, with recent developments including the Arsanis merger and an **$85.8 million** April 2019 equity financing - The company's lead product candidate, mavorixafor, is set to begin a Phase 3 pivotal trial for WHIM syndrome in Q2 2019, with top-line data expected in 2021[245](index=245&type=chunk) - On March 13, 2019, the company completed a reverse merger with Arsanis, Inc, with X4's business becoming the primary focus of the combined entity[9](index=9&type=chunk)[246](index=246&type=chunk) - On April 16, 2019, the company raised gross proceeds of **$85.8 million** through a public offering of common stock and warrants[241](index=241&type=chunk)[252](index=252&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Q1 2019 operating expenses rose to **$10.4 million** from **$6.1 million**, primarily due to increased R&D and G&A costs, notably professional fees and personnel expenses from the merger Comparison of Operating Results (in thousands) | Expense Category | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Research and development | $5,655 | $4,744 | $911 | | General and administrative | $4,783 | $1,366 | $3,417 | | **Total operating expenses** | **$10,438** | **$6,110** | **$4,328** | | **Net loss** | **$(10,873)** | **$(7,367)** | **$(3,506)** | Research and Development Expenses by Candidate (in thousands) | Candidate | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Mavorixafor | $2,851 | $3,010 | | X4P-002 | $84 | $0 | | X4P-003 | $8 | $0 | | Unallocated R&D expenses | $2,712 | $1,734 | | **Total R&D expenses** | **$5,655** | **$4,744** | - The increase in G&A expenses was primarily due to a **$1.9 million** increase in professional fees (legal, audit, market research) related to the merger and a **$1.4 million** increase in personnel-related costs[287](index=287&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2019, cash and equivalents were **$22.3 million**, significantly bolstered by **$78.9 million** net proceeds from the April 2019 offering, expected to fund operations for at least 12 months - As of March 31, 2019, cash and cash equivalents were **$22.3 million** Together with **$78.9 million** in net proceeds from the April 2019 financing, the company expects to have sufficient funds for at least the next 12 months[259](index=259&type=chunk)[291](index=291&type=chunk)[321](index=321&type=chunk) - The company has two main debt facilities: the Hercules Loan Agreement with **$10.0 million** borrowed and the FFG loans (acquired via merger) with **$9.5 million** outstanding as of March 31, 2019[301](index=301&type=chunk)[302](index=302&type=chunk)[315](index=315&type=chunk) - Future funding needs will be driven by clinical trial costs, particularly the Phase 3 trial for mavorixafor, regulatory activities, and potential commercialization expenses[319](index=319&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section is not required for smaller reporting companies, and therefore no information is provided - Disclosure is not required for smaller reporting companies[346](index=346&type=chunk) [Controls and Procedures](index=54&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls and procedures were effective as of March 31, 2019, with new internal controls implemented for the lease standard and business combination - The company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[347](index=347&type=chunk) - Changes in internal controls during the quarter included the implementation of controls related to the new lease standard and the business combination[348](index=348&type=chunk) [Part II: Other Information](index=55&type=section&id=PART%20II%3A%20OTHER%20INFORMATION) [Legal Proceedings](index=55&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) The company reports that it is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[350](index=350&type=chunk) [Risk Factors](index=55&type=section&id=Item%201A.%20RISK%20FACTORS) No material changes to risk factors have occurred since prior filings, including the 2018 Form 10-K and April 2019 Form 8-K - No material changes to risk factors have occurred since prior filings[351](index=351&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) An unregistered warrant was issued to Hercules Capital, and all net proceeds from Arsanis's 2017 IPO were used for clinical programs and general corporate purposes - A warrant to purchase **5,000** shares of common stock at an exercise price of **$19.80** per share was issued to Hercules Capital, Inc as an unregistered security[352](index=352&type=chunk) - As of March 31, 2019, all net proceeds from the Arsanis November 2017 IPO have been used for advancing product candidates and for working capital[356](index=356&type=chunk) [Exhibits](index=56&type=section&id=Item%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including merger amendments, corporate governance, material contracts, and Sarbanes-Oxley certifications

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 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 ARSANIS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organizat ...