X4 Pharmaceuticals(US:XFOR)2025-08-08 21:03PART I: FINANCIAL INFORMATION Item 1. Financial Statements The company reports H1 2025 revenue of $30.8 million and a net loss of $25.5 million, citing substantial doubt about its going concern status Condensed Consolidated Balance Sheets Key Balance Sheet Metrics | Financial Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $39,220 | $55,699 | | Marketable securities | $23,731 | $46,361 | | Total current assets | $72,942 | $112,175 | | Total assets | $105,168 | $146,447 | | Total current liabilities | $22,896 | $32,877 | | Long-term debt, net | $75,841 | $75,425 | | Warrant liability | $283 | $13,755 | | Total liabilities | $101,197 | $124,298 | | Total stockholders' equity | $3,971 | $22,149 | Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income Statements of Operations | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $1,973 | $563 | $30,780 | $563 | | Research and development | $18,352 | $20,914 | $36,865 | $40,768 | | Selling, general and administrative | $9,527 | $13,278 | $24,548 | $30,713 | | Gain on sale of non-financial asset | $0 | $(105,000) | $0 | $(105,000) | | (Loss) income from operations | $(26,232) | $71,103 | $(35,675) | $33,814 | | Net (loss) income | $(25,741) | $90,833 | $(25,459) | $39,067 | | Net (loss) income per share: basic | $(3.47) | $13.59 | $(3.59) | $5.85 | Condensed Consolidated Statements of Cash Flows Cash Flow Summary | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(42,269) | $(63,874) | | Net cash provided by investing activities | $19,974 | $91,540 | | Net cash provided by financing activities | $5,631 | $20,159 | | Net decrease in cash, cash equivalents and restricted cash | $(16,453) | $47,748 | | Cash, cash equivalents and restricted cash at end of period | $40,022 | $147,996 | Notes to Condensed Consolidated Financial Statements - Management has concluded there is substantial doubt about the Company's ability to continue as a going concern due to significant operating losses and potential debt covenant violations3839 - The company executed a 1-for-30 reverse stock split on April 28, 2025, with all share and per-share amounts retroactively adjusted945125 - A license agreement with Norgine resulted in the recognition of $27.6 million in license revenue and $0.5 million for R&D services in H1 2025728186 - The company anticipates it will not meet the $15.0 million minimum cash covenant required by its loan agreement, risking loan acceleration39107 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The company discusses the commercial launch of XOLREMDI, a strategic restructuring, and a going concern risk due to insufficient cash reserves Overview - The U.S. FDA approved XOLREMDI (mavorixafor) on April 29, 2024, for patients aged 12 and older with WHIM syndrome166 - A strategic restructuring in February 2025 involved a 30% workforce reduction to decrease annual spending by $30-35 million173 - The company is progressing a global, pivotal Phase 3 clinical trial (4WARD study) for mavorixafor in people with chronic neutropenia172 Results of Operations Comparison of Six Months Ended June 30, 2025 and 2024 | Metric (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $30.8 | $0.6 | $30.2 | | Research and development | $36.9 | $40.7 | $(3.8) | | Selling, general and administrative | $24.6 | $30.7 | $(6.1) | | Gain on sale of non-financial asset | $0.0 | $(105.0) | $105.0 | | Net (loss) income | $(25.5) | $39.1 | $(64.6) | - The significant increase in revenue for H1 2025 was primarily due to recognizing $27.6 million from a license delivery under the Norgine Agreement179180 - R&D expenses decreased by $3.8 million in H1 2025, mainly due to the strategic restructuring and lower spending on non-clinical programs185 - SG&A expenses decreased by $6.1 million in H1 2025, driven by lower stock appreciation rights compensation, reduced launch costs, and lower headcount187 Liquidity and Capital Resources - The company has concluded there is substantial doubt about its ability to continue as a going concern, as its $63.0 million in cash is insufficient for the next 12 months196203 - The company is at risk of violating the Minimum Cash Covenant and Performance Covenant of its Hercules Loan Agreement, which could accelerate its outstanding loans197198 - Net cash used in operating activities was $42.3 million for H1 2025, a decrease from $63.9 million for the same period in 2024199200 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, it is not required to provide information on market risk - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk210 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal controls - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025212 - There were no material changes in internal control over financial reporting during the three months ended June 30, 2025213 PART II: OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings215 Item 1A. Risk Factors Key risks include going concern uncertainty, reliance on a single product, and various operational, regulatory, and financial challenges Risks Related to Our Financial Position and Need for Additional Capital - The company's history of recurring losses raises substantial doubt about its ability to continue as a going concern and requires substantial additional funding218 - The company anticipates it will not be able to maintain the minimum cash required to satisfy its debt covenant with Hercules for at least the next 12 months223 - The company has an accumulated deficit of $540.8 million as of June 30, 2025, and expects to continue incurring losses225 Risks Related to Development of Our Product Candidates - The company's business depends almost entirely on the successful development and commercialization of its lead product, mavorixafor (XOLREMDI)241 - The commercial opportunity for mavorixafor in WHIM syndrome may be smaller than anticipated, which could adversely affect future revenue239 - Disruptions at the FDA and other agencies could hinder the ability to develop or commercialize new products in a timely manner246250 Risks Related to the Marketing and Commercialization of Our Product Candidates - Approved products like XOLREMDI are subject to extensive post-approval regulatory requirements and could face marketing restrictions or withdrawal277 - Commercial success is dependent on achieving significant market acceptance and securing adequate reimbursement from payors285305 - The company faces substantial competition from major pharmaceutical and biotech companies with greater financial resources292296 Risks Related to Our Dependence on Third Parties - The company is dependent on a single third-party manufacturer for both the API and finished drug product of mavorixafor, posing a significant supply chain risk324 - Reliance on third-party CROs for clinical trials means that if these CROs fail to perform, regulatory approval and commercialization could be harmed328 Risks Related to Our Intellectual Property - Recent changes in U.S. patent laws create uncertainty and may weaken the company's ability to obtain and enforce patents337338 - The company's competitive position could be harmed if it is unable to maintain patent protection for its technology and products342345 - The company may become involved in expensive and time-consuming lawsuits to protect its intellectual property or defend against infringement claims351359 Risks Related to Our Business Operations, Employee Matters and Managing Growth - The company's success depends on its ability to retain key executives and personnel, which may be challenging following the recent restructuring373376 - The February 2025 restructuring, which reduced headcount by 30%, creates challenges in managing the scaled-down organization377 - Internal IT systems are vulnerable to cyber-attacks and data breaches, which could lead to significant liabilities and operational disruption380 Risks Related to Ownership of Our Common Stock - Failure to maintain compliance with Nasdaq's minimum bid price requirement could lead to delisting390393394 - The company's stock price is likely to remain volatile, and trading is subject to SEC "penny stock" rules which can limit liquidity395398 - Provisions in the company's corporate charter and Delaware law could make a potential acquisition more difficult412 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the period - None reported417 Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - None reported418 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable419 Item 5. Other Information No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans during the quarter - During the three months ended June 30, 2025, no directors or officers adopted, materially modified, or terminated any Rule 10b5-1 trading plans420 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate documents and required officer certifications - The report includes a list of filed exhibits, such as the Certificate of Incorporation, By-laws, a Purchase Agreement, and required CEO/CFO certifications421