xfor-20211231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

For the fiscal year ended December 31, 2021

For the transition period from to

Commission File Number: 001-38295

_________________________________________________________________________________________________________

X4 PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

________________________________________________________________________________________________________

(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 Stock Market LLC

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 (of this chapter) during the preceding 12 months (of 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 has filed a report on an attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐

On June 30, 2021, the aggregate market value of the Registrant’s voting common stock held by non-affiliates of the registrant was approximately $158 million based upon the closing sale price on the Nasdaq Capital Market reported on June 30, 2021.

As of March 14, 2022, there were 30,809,376 shares of the registrant’s common stock, $0.001 par value per share outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement, the (“2022 Proxy Statement”) for its 2022 Annual Meeting of Stockholders, which the registrant intends to file pursuant to Regulation 14A with the Securities and Exchange Commission not later than 120 days after the registrant's fiscal year ended December 31, 2021, are incorporated by reference into Part III of this Annual Report on Form 10-K.

TABLE OF CONTENTS

PART I

Item 1. BUSINESS 5

Item 1A. RISK FACTORS 31

Item 1B. UNRESOLVED STAFF COMMENTS 74

Item 2. PROPERTIES 74

Item 3. LEGAL PROCEEDINGS 74

Item 4. MINE SAFETY DISCLOSURES 74

PART II

Item 6. [RESERVED] 75

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 87

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 87

Item 9A. CONTROLS AND PROCEDURES 87

Item 9B. OTHER INFORMATION 88

Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 89

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 89

Item 11. EXECUTIVE COMPENSATION 89

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 89

PART IV

Item 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES 90

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report contains 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. These statements may be identified by such forward-looking terminology as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. We may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” and elsewhere in this report, regarding, among other things:

•the timing, progress and reporting of results of our current trials of mavorixafor, including our global Phase 3 clinical trial in patients with Warts, Hypogammaglobulinemia, Infections, and Myelokathexis (“WHIM”), syndrome, our Phase 1b clinical trial in combination with ibrutinib in patients with Waldenström’s

macroglobulinemia (“Waldenström’s”), and our Phase 1b clinical trial as monotherapy in patients with severe congenital Neutropenia (“SCN”) and chronic neutropenia disorders;

•the initiation, timing, design, progress, and results of our current and future preclinical studies and clinical trials of X4P-002 and X4P-003 or any of our other product candidates or our research and development programs that we pursue;

•the impact of the ongoing COVID-19 pandemic on our business, operations, strategy, goals and anticipated timelines;

•the diversion of healthcare resources away from the conduct of clinical trials as a result of the ongoing COVID-19 pandemic and its variants, including the diversion of hospitals serving as our clinical trial sites and of hospital staff or independent physicians supporting the conduct of our clinical trials;

•the interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel, quarantines or social distancing protocols imposed or recommended by federal or state governments, employers and others in connection with the ongoing COVID-19 pandemic;

•the potential benefits, including clinical utility, 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 or any product candidates that we may develop in the future, 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;

•the size and growth potential of the markets for our product candidates, if approved, and the rate and degree of market acceptance of our product candidates, including reimbursement that may be received from payors;

•the benefits of U.S. Food and Drug Administration and European Commission designations, including, without limitation, Fast Track, Orphan Drug and Breakthrough Therapy;

•our commercialization, marketing and manufacturing capabilities and strategy;

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

•our competitive position and the development of and projections relating to our competitors or our industry;

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

•the success of competing therapies that are or may become available;

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

•our plans to in-license, acquire, develop and commercialize additional product candidates;

•the impact of laws and regulations;

•our plans to identify additional product candidates with significant commercial potential that are consistent with our commercial objectives;

•our ability to raise additional capital; and

•our strategies, prospects, plans, expectations or objectives.

You should refer to the section titled “Risk Factors” in this Annual Report for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Annual Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Annual Report.

Unless the context requires otherwise, references in this Annual Report to “X4”, “we”, “us” and “our” refer to X4 Pharmaceuticals, Inc. and its subsidiaries.

PART I

ITEM 1. BUSINESS

Overview

We are late-stage clinical biopharmaceutical company focused on the research, development and commercialization of novel therapeutics for the treatment of rare diseases, with an initial focus on the treatment of people with immune system dysfunction. Our lead product candidate, mavorixafor, is a first-in-class, small molecule inhibitor of the chemokine receptor CXCR4 and is being developed as a once-daily oral therapy. Due to mavorixafor’s demonstrated ability to antagonize CXCR4 and improve the healthy maturation and trafficking of white blood cells (“WBCs”), we believe that mavorixafor has the potential to provide therapeutic benefit across a wide variety of diseases, including primary immunodeficiencies (“PIDs”) and certain types of cancer.

We are currently studying the safety and efficacy of mavorixafor in a global Phase 3 clinical trial for the treatment of Warts, Hypogammaglobulinemia, Infections, and Myelokathexis (“WHIM”) syndrome, a rare, inherited PID caused by genetic mutations in the CXCR4 receptor gene. We are also conducting a Phase 1b clinical trial of mavorixafor in people with chronic neutropenia, and a Phase 1b clinical trial of mavorixafor in combination with the Bruton tyrosine kinase inhibitor (“BTKi”) ibrutinib in people with Waldenström’s macroglobulinemia (“Waldenström’s”), a rare B-cell lymphoproliferative disorder, and confirmed mutations to both the CXCR4 and MYD88 genes.

We completed enrollment in our global Phase 3 clinical trial of mavorixafor for the treatment of in WHIM syndrome, which we refer to as the “4WHIM trial”, in the third quarter of 2021, with 31 patients enrolled. We currently expect to report top-line data from the trial in the fourth quarter of 2022. The U.S. Food and Drug Administration (“FDA”) has granted certain special designations to mavorixafor, including Breakthrough Therapy Designation for the treatment of adults with WHIM syndrome, Fast Track Designation for adults with WHIM syndrome, and Rare Pediatric Designation for the treatment of people aged 12 to 18 with WHIM syndrome, which could result in accelerated review by the FDA. We have begun building our commercial team in anticipation of a possible New Drug Application (“NDA”) submission to the FDA in the second half of 2023, with the goal of obtaining approval for mavorixafor for the treatment of people in the United States, aged 12 and older, with WHIM syndrome should the final Phase 3 data support the filing of an NDA.

The incidence and prevalence of WHIM syndrome are not well established. Over the past several years, we have conducted multiple market research studies, querying both physicians and insurance databases, that have indicated that the prevalence of WHIM syndrome worldwide is significantly higher than previous registries have suggested. These studies have suggested that there may be as many as 3,700 WHIM patients in the United States based on certain WHIM-like phenotypes. In addition, in December 2021, we announced that our clinical and laboratory research had resulted in the identification of a new missense mutation (“D84H”) that shows gain-of-function signaling and WHIM disease phenotype. We believe that the frequency of the D84H mutation, as derived from broad population genomic databases, further supports our current WHIM prevalence estimate of 1,000 to 3,500 or more patients in the United States.

Following announcements of positive preliminary data from both of the ongoing Phase 1b clinical trials of mavorixafor during 2021, we have continued patient enrollment. Additional data are expected from the Phase 1b clinical trial in chronic neutropenia by the third quarter of 2022 and from the Phase 1b clinical trial in Waldenström’s in the second half of 2022.

Our Strategy

Our goal is to discover, develop, and commercialize novel therapeutics that address diseases resulting from dysfunction of the immune system by:

•Completing our ongoing global Phase 3 clinical trial to enable the approval of mavorixafor for the treatment of patients with WHIM syndrome. To date, we have reported positive data from our Phase 2 clinical trial with long-term extension of mavorixafor in patients with WHIM syndrome, achieving clinical proof-of-concept, observing long-term and clinically meaningful increases in neutrophil and lymphocyte counts, decreased frequency of infections, reductions in the number of wart lesions, and a favorable tolerability profile. We are conducting a global Phase 3 pivotal clinical trial, which we refer to as the 4WHIM trial, and completed enrollment in this trial in the third quarter of 2021.

•Driving community awareness of WHIM syndrome and building patient registries. We are building our efforts to increase awareness of underserved serious rare diseases, including WHIM syndrome, among patients, physicians, and their support systems. In addition to sponsored market research and outreach, we have partnered with key patient foundations and registries, including the Jeffrey Modell Foundation, University of Washington, Immune Deficiency Foundation, and Hopitaux Universitaires Est Parisien (Trousseau La Roche-Guyon). In addition, we have deployed a field force of Medical Science Liaisons (“MSLs”) and Patient Diagnostic Liaisons (“PDLs”) in the United States to further drive education and awareness of WHIM syndrome and to assist in identifying WHIM patients.

•Advancing mavorixafor in additional indications. To maximize the potential of mavorixafor, we have initiated two Phase 1b proof-of-concept clinical trials in two additional indications:

◦Chronic neutropenia: a Phase 1bclinicaltrial investigating the safety and efficacy of mavorixafor in patients with chronic idiopathic neutropenia is ongoing; preliminary results to date from the trial have been positive, with all patients reporting increases in WBCs, and absolute neutrophil, lymphocyte, and monocyte counts (“ANC,” “ALC,” and “AMC”).

◦Waldenström’s macroglobulinemia: a Phase 1b dose-ranging trial investigating the safety and efficacy of mavorixafor in combination with ibrutinib in patients with confirmed MYD88 and CXCR4 mutations is ongoing; preliminary results have been positive, with meaningful decreases in immunoglobulin M (“IgM”) levels, increases in hemoglobin, and a 100% overall response rate (“ORR”) seen in patients as of the data cut-off date of October 12, 2021.

•Advancing earlier-stage product candidates and leveraging insights into CXCR4 biology to further expand our pipeline. We have advanced X4P-003, a second-generation CXCR4 antagonist designed to have enhanced properties relative to mavorixafor, into pre-IND studies. We beleive this lead-optimization program could potentially enable us to pursue broader opportunities in CXCR4-dependent disorders and primary immunodeficiencies. Our second development program is X4P-002, a CXCR4 antagonist designed to cross the blood-brain barrier and provide appropriate therapeutic exposures to potentially treat brain cancers in combination therapy, which is being evaluted in IND-elabling studies. We may potentially expand the program to cover other CNS and non-CNS diseases where CXCR4 inhibitors may provide therapeutic benefit. In addition, we are also leveraging our insights into CXCR4 biology and our research capabilities to identify other targets and develop additional product candidates.

•Independently commercializing our product candidates in certain indications and geographies where we believe we can maximize value. Given the potential of our product candidates to treat a wide variety of diseases, we believe that it will be important to maintain our leadership role with respect to our development and commercialization efforts. We plan to independently develop therapeutic candidates in additional indications where we believe there are high unmet medical needs, including other rare diseases, and markets in that we believe we could successfully market and commercialize, if approved.

•Pursuing additional strategic collaborations for mavorixafor in immuno-oncology indications. Currently, we have an ongoing strategic collaboration under which we have licensed mavorixafor rights in China to Abbisko, a privately held immuno-oncology research and development company. Additionally, we intend to pursue strategic collaborations for future development and potential commercialization of mavorixafor in certain immuno-oncology indications in other global regions in order to maximize stockholder value of the program and our asset, while maintaining our focus on developing mavorixafor for the treatment of rare diseases.

Our Pipeline

X4 Pharmaceuticals, Data on File 1. Phase 2 open label trial extension (OLE) trial for WHIM ongoing 2. Company market research. Qessential market research, 2019 and IPM. ai artificial intelligence study, 2020 3. Estimate using Andersen et al. J Intern Med. 2016 Jun:279(6):566-75 4. WM Epidemiology Analysis Nemetz Group.

Our Focus on CXCR4

CXCR4, or C-X-C chemokine receptor type 4, is a G-coupled protein receptor, or GCPR, and its sole ligand is the chemokine CXCL12. Chemokines are signaling proteins that guide the migration of immune cells within the body by binding to receptors on the surface of target cells. When CXCR4 is stimulated by CXCL12, it plays a key role in regulating the expansion, maturation, and trafficking of white blood cells, or leukocytes, and maintaining healthy immune system function. (see Figure 1).

Figure 1: The CXCL12/CXCR4 Pathway: Regulators of Healthy Immune System Function

Dysregulation of white blood cells contributes to a broad range of serious conditions with unmet medical needs. This dysregulation can be caused by several factors:

•In the case of PIDs, such as WHIM syndrome and certain neutropenia conditions, overstimulation or overactivation of the CXCR4 pathway can be caused by mutations in the CXCR4 receptor, called “gain of function” mutations, that immobilize WBCs in the bone marrow where they are produced. This can dramatically impact their ability to move into the blood and circulate throughout the body to maintain a healthy immune system.

•In certain lymphomas, such as Waldenström’s, CXCR4 pathway dysfunction can cause cancerous B cells to remain in the bone marrow, shielding them from effective cancer therapeutics and impacting the ability to maintain a healthy immune system.

We believe that the inhibition of the CXCL12/CXCR4 signaling pathway has the potential to improve immune cell maturation and trafficking and create therapeutic benefit across a wide variety of diseases, whether caused by CXCR4 mutation or not. In previous clinical and research studies, CXCR4 antagonism has been proven to: increase the maturation and mobilization of WBCs in all those dosed, including healthy volunteers, increase circulating neutrophils, lymphocytes, and monocytes, reduce bacterial and viral infections, and reduce lymphoma burden in combination with approved oncology therapeutics.

Further supporting this hypothesis, inhibition of the CXCR4 receptor has been validated by the FDA-approved product plerixafor for injection (marketed as Mozobil®). Plerixafor is a CXCR4 antagonist that has been shown to induce white blood cell mobilization and is used as an injectable therapy for short-term treatment in preparation for stem-cell transplants. In a published investigator-sponsored pilot study of WHIM patients, twice-daily injections of low-dose plerixafor demonstrated increased WBC counts and reduced infections and wart lesions. Plerixafor is not approved for the treatment of WHIM syndrome nor are we aware of any plans to develop and commercialize it as a treatment for patients with WHIM syndrome or any other immunodeficiencies.

Our Development of Mavorixafor

Our lead product candidate is mavorixafor, a first-in-class, oral, selective small molecule CXCR4 antagonist that inhibits receptor binding by CXCL12, the cognate ligand of CXCR4. Mavorixafor is designed to correct the abnormal signaling caused by the dysfunction of the receptor/ligand interaction and enable mobilization and trafficking of immune cells, increasing levels of circulating WBCs, including neutrophils, to improve immune system function.

To date, more than 200 patients in clinical trials have been dosed with mavorixafor, which has demonstrated a favorable tolerability profile. In these trials, we have observed drug exposure in patients, a 23-hour half-life, and the bioavailability of mavorixafor to support once-daily oral dosing, which we believe would provide convenient dosing and better patient compliance for chronic or life-long use, if approved.

In December 2021, we presented summary data supporting what we believe to be a broader potential for mavorixafor than previously understood:

•Ongoing studies across a wide variety of diseases, including WHIM syndrome, chronic idiopathic neutropenia Waldenström’s, and clear cell renal cell carcinoma (“ccRCC”), show that oral administration of mavorixafor increases blood neutrophils, lymphocytes, and monocytes durability over months.

•Mavorixafor efficacy has been observed with short-term and long-term treatment both alone and in combination with other therapies, including axitinib, ibrutinib, and granulocyte-colony stimulating factor (“G-CSF”).

•We believe that these results suggest that mavorixafor, through its mechanism of CXCR4 antagonism, has the potential to reduce the prevalence and/or severity of a broader array of immunodeficiencies than previously recognized, regardless of the presence or absence of CXCR4 mutations.

The manufacturing process for mavorixafor utilizes well established small molecule chemistry, creating the potential for a commercial product that can be supported by specialty pharmacy distribution.

Mavorixafor in WHIM Syndrome

PIDs are a group of more than 450 rare, chronic disorders in which flaws in the immune system cause increased susceptibility to infections and, in some cases, increased risk of cancers. WHIM syndrome is a rare PID that results from “gain of function” mutations in the single gene that encodes for the CXCR4 receptor. In healthy individuals, the CXCR4 receptor is typically internalized into the cell after CXCL12 binds to it, enabling the receptor to be appropriately “recycled” and the signaling to be diminished. In WHIM patients, however, a mutation truncates the intracellular portion of the CXCR4 receptor, which prevents the post-binding internalization (“normal recycling”) of the receptor. As a result, the CXCR4 receptor is maintained on the surface of the cell and is exposed to the ligand, which creates a perpetual “on” signal and retention of WBCs in the bone marrow where they are produced, leading to the chronic peripheral neutropenia, lymphopenia and monocytopenia that are the clinical hallmarks of WHIM syndrome.

In addition to life-long cytopenias, WHIM patients can clinically present with additional manifestations of the disease, such as warts related to infection with the Human Papilloma Virus (“HPV”). Based on publications from the French Severe Congenital Neutropenia Registry and the broader literature, it is estimated that between 30% and 40% of WHIM patients develop HPV-associated cancers as they age. Patients may also demonstrate low immunoglobulin, or IG, levels, also known as hypogammaglobulinemia and pathology assessments of bone marrow samples (aspirates) of patients with WHIM syndrome show a hyper-dense population of pre-apoptotic immune cells in the bone marrow, a condition known as myelokathexis. These conditions reduce the body’s ability to achieve a healthy immune response.

For a diagnosis of WHIM syndrome, all four classic characteristics of warts, hypogammaglobulinemia, infections, and myelokathexis do not need to be present, which can complicate the diagnosis of these patients. Genetic testing is used to definitively diagnose WHIM syndrome by confirming the presence of a mutation in the CXCR4 receptor where only one mutated gene needs to be affected to cause the disorder. The diagnosis of WHIM syndrome may occur at any age: about one-half of reported patients are diagnosed as children, primarily before of at the age of 18 years, with the other half diagnosed as adults, mostly between 18 and 40 years of age.

The incidence and prevalence of WHIM syndrome are not well established. We believe that this is due to the relatively recent understanding of the genetics underlying WHIM syndrome, lack of universal or accessible genetic testing, and limited medical education and awareness of the disease, which is in part driven by the lack of available disease-modifying treatments. Based on a preliminary independent market research study that we sponsored in the U.S. conducted by a third-party research firm, we believe that the prevalence of WHIM syndrome worldwide is significantly higher than previous registries suggest. The study solicited

input from community-based physicians of different specialties, including physicians focused on non-malignant hematology, immunology, dermatology, pulmonology, and infectious diseases, who are known to manage and/or treat patients with WHIM syndrome. The 212 physicians across these specialties identified to participate in this study reported more than 1,700 patients in the United States with genetically confirmed or highly probable WHIM syndrome. In addition, we have also completed a study using artificial intelligence, interrogating a database of approximately 300 million American lives that included up to 10 years of insurance claims on diagnoses, drug treatments, procedures, and treatment pathways. This study suggests that there may be as many as 3,700 WHIM patients in the United States based on the WHIM-like phenotypes described.

In December 2021, we announced that our clinical and laboratory research has resulted in a broader understanding of the spectrum of WHIM syndrome, both phenotypically and genotypically. The first CXCR4 mutation determined to cause WHIM syndrome was identified in 2003. Since then, several CXCR4 mutations have been identified as “gain of function” mutations causing WHIM syndrome. Our research has subsequently identified a new missense mutation, called D84H, that is relatively frequent in the general population. The D84H mutation is the first mutation to be identified outside of the C-terminus of the CXCR4 receptor showing gain-of-function signaling and WHIM disease phenotype. We believe that the frequency of the D84H mutation, as derived from broad population genomic databases, further supports our current WHIM prevalence estimate of 1,000 to 3,500 or more patients in the United States. Our research into additional WHIM-causing genetic mutations and expanded understanding of the clinical phenotype is ongoing.

Clinical Development of Mavorixafor in WHIM Syndrome

Our approach to treating WHIM syndrome involves blocking abnormal CXCR4 signaling using our CXCR4 antagonist candidate, mavorixafor. Mavorixafor has been shown to bind to the mutated CXCR4 receptor in a manner that blocks the receptor from being stimulated by CXCL12 regardless of the presence of the ligand, enabling WBCs to properly mature and release into the bloodstream, restoring normal immune cell numbers and function.

In January 2017, we initiated a Phase 2 clinical trial of mavorixafor for the treatment of patients with WHIM syndrome. This trial was an open-label, dose-escalation trial in eight WHIM patients conducted at two sites in the United States and Australia pursuant to an Investigational New Drug (“IND”) application that we submitted to the FDA in June 2016. The primary objective of the Phase 2 clinical trial was to determine the safety and tolerability of mavorixafor and to determine the dose of mavorixafor for exploration in a Phase 3 pivotal clinical trial. The secondary objective of the Phase 2 trial was to evaluate the potential efficacy of mavorixafor in patients with WHIM syndrome by measuring biomarkers, specifically absolute neutrophil and lymphocyte counts, over 24-hour dosing cycles. The frequency of infections, antibiotic use, hospitalizations, severity of warts lesions, and vaccine titer levels, among other metrics, were also examined. To be included in the trial, patients must have had a confirmed genetic diagnosis of WHIM syndrome, be at least 18 years of age and have a neutrophil count equal to or less than 400/μL or a lymphocyte count equal to or less than 650/μL. Patients who had been infected with the human immunodeficiency virus (“HIV”) were excluded from the trial, as were patients with recent exposure to plerixafor.

In the trial, patients received escalating doses of mavorixafor starting at 50 mg once daily to up to 400 mg once daily. Patients received starting doses higher than 50 mg once daily as the trial progressed based on the safety and biomarker response data of earlier patients enrolled in the trial. Patients were dose-escalated from their starting dose based on an in-hospital 24-hour measurement of ANC and ALC above or below the pre-defined target thresholds of 600/μL and 1,000/μL, respectively.

We completed the dose-titration portion of the Phase 2 clinical trial in March 2018 and, based on the reported results, the Data Review Committee recommended the Phase 3 dose of 400 mg administered once daily. The choice of time above threshold for absolute neutrophil count (“TAT-ANC”), defined as the number of hours during which the absolute neutrophil count is raised above a 500 cells per microliter threshold, was selected as the primary endpoint of the Phase 3 clinical trial.

Results from the dose-titration portion of the trial were as follows:

•Mavorixafor was not associated with any treatment-related serious adverse events and was observed to be well tolerated in daily doses of up to 400 mg for durations of up to 400 days. Treatment-related adverse events reported were dry mouth (n=2), nausea (n=4), dry eye (n=1), nasal dryness (n=2), dyspepsia (n=1), conjunctivitis (n=1) and rash (n=1). All adverse events were Grade 1 (mild).

•ANCs were increased in total numbers (cells/μL) as well as duration of increase (hours) over the course of the intra-day assessment. The increase in ANC vs. pre-dosing levels was observed in all evaluable patients in the trial (n=7). In five of seven patients (71%), ANCs were consistently elevated above the pre-defined target threshold of 600/μL at peak as well as throughout the 24-hour assessment period.

•Similarly, ALCs were increased in total numbers (cells/μL) as well as duration of increase with the treatment of mavorixafor. The increase in ALCs were observed in all evaluable patients (n=7) with six of seven patients (86%) exceeding the pre-defined target threshold of 1,000/μL for ALCs (the lower limit of normal) throughout the 24-hour assessment period. (These thresholds of 600/μL for ANCs and 1,000/μL for ALCs correspond to the National Cancer Institute’s adverse event grading system, which considers ANCs below 500/μL to be severe or life threatening and ALCs of 1,000/μL within the range of healthy individuals.)

•Patients experienced improved infection rates, as reported by patients and the trial investigators.

•Significant and visible reductions in wart lesions were also reported in a patient with a history of untreatable severe wart lesions.

Following completion of the dose-titration portion of the Phase 2 clinical trial, patients were allowed to continue on study drug in a Phase 2 open-label extension trial. In June 2020, we announced the following positive data from the open-label extension portion of the Phase 2 clinical trial:

•Sustained, dose-dependent increases in WBCs, ANC, and ALC were achieved; higher doses of mavorixafor were shown to increase the TAT-ANC at least 4.5-fold versus the TAT-ANC at lower doses.

•These long-term hematological improvements correlated with fewer infections and reduced numbers of cutaneous warts.

◦A decreased yearly infection rate from 4.63 [95%CI 3.3,6.3] events in the 12 months prior to the trial, to 2.27 [95%CI 1.4, 3.5] events when treated with mavorixafor at higher doses once daily; notably, deeper reductions in yearly infection rates correlated with increased time on treatment.

◦The patients with cutaneous warts on hands and/or feet at baseline achieved an average 75% reduction in the number of warts.

•Mavorixafor was well-tolerated for the extended duration of up to more than two years without any attributable serious adverse effects.

In December 2021, we announced the following additional data from the Phase 2 open-label extension trial of mavorixafor in WHIM patients:

•Mavorixafor continued to show durable increases in neutrophils, lymphocytes, and monocytes, sustained improvements in infections and warts, and has been well tolerated (median treatment duration = 148.4 weeks).

•Decreases in mean annualized infection rates correlated well with TAT-ANC.

•Standardized patient interviews revealed that long-term treatment with mavorixafor was well tolerated and continued to demonstrate beneficial treatment effects, including decreased frequency, severity, and duration of infections and fewer hospital/doctor visits.

In June 2019, we initiated 4WHIM, a pivotal, global, randomized, double-blind, placebo-controlled, multicenter Phase 3 clinical trial designed to evaluate the efficacy and safety of mavorixafor in genetically confirmed WHIM patients. Originally designed to enroll 18-28 patients, the trial achieved full enrollment in September 2021, with 31 patients who are aged 12 and older receiving either 200-400 mg mavorixafor or placebo orally once daily for 52 weeks; all patients then become eligible to receive treatment with mavorixafor in an open-label trial extension. The primary endpoint of the 4WHIM trial is a clinically relevant reduction of duration of severe neutropenia as measured by the increase in TAT-ANC (500 cells per microliter) in peripheral blood. Secondary endpoints include time above threshold-absolute lymphocyte count (TAT-ALC) of ≥ 1000 cells/μL over a 24-hour period, a composite clinical efficacy endpoint for mavorixafor based on total infection score and total wart change score, total wart change score for mavorixafor based on central blinded, independent review of 3 target skin regions, total infection score for mavorixafor based on number and severity of infections adjudicated by a blinded, independent adjudication committee; and a number of quality-of-life measurements and other exploratory endpoints.

The FDA has granted several special designations for mavorixafor in the WHIM indication that could result in accelerated review, should the clinical results of the 4WHIM study support an NDA filing. The FDA has granted Breakthrough Therapy Designation for mavorixafor for the treatment of adults with WHIM. The FDA has also granted Fast Track Designation for mavorixafor for adults with WHIM and Rare Pediatric Designation for mavorixafor for the treatment of WHIM patients aged 12 to 18.

We currently expect to report top-line data from the 4WHIM trial in the fourth quarter of 2022 and are targeting submission to the FDA of an NDA in the second half of 2023 with the goal of obtaining approval for mavorixafor for the treatment of people in the United States, aged 12 and older, with WHIM syndrome should the final Phase 3 data support the filing of an NDA.

Limited Current Treatment Landscape for WHIM Syndrome

Currently, there are no approved targeted therapies for the treatment of WHIM syndrome and care is limited to the treatment of the syndrome’s different symptoms. The care of WHIM patients is mainly focused on the prevention and management of infections. None of these treatments, however, has been clinically proven to be effective for treating WHIM syndrome nor do any address the underlying cause of this multi-faceted disease, the genetic defect of the CXCR4 receptor. Current symptoms and their limitations are as follows:

•Warts: The presence of warts in WHIM syndrome is driven by an underlying HPV infection. Standard treatments, such as topical therapies (for example, imiquimod and salicylic acid), cryotherapy and laser therapy, as well as more aggressive approaches, such as cauterization or surgical removal, have been ineffective in providing durable treatment of warts associated with chronic HPV infections. As WHIM patients generally have limited response to vaccines, the HPV vaccine appears to have limited effectiveness. The number, size and severity of visible warts in WHIM patients can have a significant negative impact on the patient’s quality of life and result in social anxiety issues. Left untreated, chronic HPV-infections are also known to increase the risk of cancer. Patients with WHIM syndrome are reported to have more frequent occurrences of difficult to treat HPV-associated cancers, such as head and neck and anogenital cancers.

•Hypogammaglobulinemia: Intravenous or subcutaneous immunoglobulin (“IG”) administration, referred to as IVIG or SCIG, respectively, can be administered to patients with low IG levels. In WHIM patients, the administration of IG therapies raises IG levels, but has shown no impact on circulating leukocytes and limited or no impact on immune responses. IG treatment of patients with WHIM syndrome is based on empirical and anecdotal evidence, and there are no clinical data demonstrating the efficacy of IG treatment for WHIM syndrome. IG treatment also does not treat or protect against HPV-associated symptoms and diseases, such as warts and certain cancers. Furthermore, IG administration is costly and time consuming.

•Infections: Bacterial infections are managed with antibiotics. Acute infections usually resolve, although we are aware of reports from clinicians citing death due to pneumonia or sepsis in young WHIM patients. Importantly, even with antibiotic use, infections recur more frequently and persist longer in patients with WHIM syndrome. Further, the toll of multiple, chronic infections in WHIM patients has been known to lead to devastating irreversible pathologies such as hearing loss due to chronic ear infections and bronchiectasis, or damaged lung airways. Patients are sometimes given granulocyte-colony stimulating factor, or G-CSF, to increase neutrophil counts, but G-CSF has demonstrated little, if any, impact on lymphopenia or the incidence of infections in WHIM patients. In a small registry of eight WHIM patients in France, three of the four patients who received G-CSF continued to have persistent, repeated infections. Side effects of G-CSF have been reported to include disabling bone pain, which can be more severe in certain age groups. Additional, less common, treatment-limiting complications of chronic G-CSF administration include myelofibrosis and leukemia.

•Myelokathexis: G-CSF is sometimes used to treat the myelokathexis characteristic of WHIM syndrome to try to increase the number of neutrophils outside of the bone marrow, but G-CSF has no effect on lymphocytes and other types of white blood cells. Side effects of G-CSF can include mild to severe bone pain, myelofibrosis, and leukemia.

While the costs of managing the chronic impact of WHIM syndrome are unknown, the per-patient cost of treating PIDs that are similar to WHIM syndrome, based on drug costs alone, exceeds $100,000 per year in the United States for therapies such as antibiotics, IVIG, SCIG and/or G-CSF, despite the limited effectiveness of these treatments. Beyond these estimated direct costs, other costs associated with direct and indirect management of the disease, such as repeated immunization, physician visits, or hospitalizations, have not been quantified but are likely to be significant. We believe that there is a significant need for a treatment targeting the underlying excessive signaling caused by mutations to the CXCR4 receptor, which is the established cause of WHIM syndrome.

Mavorixafor for the treatment of Chronic Neutropenia (“CN”)

Due to its demonstrated ability to broadly and durably elevate WBCs including neutrophils, we believe that mavorixafor may be useful in the treatment of patients with severe congenital neutropenia, or SCN, and other chronic neutropenia disorders. Chronic neutropenia is defined as periods lasting more than three (3) months persistently or intermittently where there are abnormally low levels of neutrophils circulating in the blood, and may be congenital, idiopathic, or cyclic. Like WHIM syndrome, chronic neutropenia disorders, including SCN, are rare blood conditions similarly characterized by increased risks of infections and cancer due to abnormally low levels of neutrophils in the body. In all cases, the CXCL12/CXCR4 pathway is the key regulator of neutrophil release from the bone marrow.Additionally, some sub-types of CN have mechanisms that overlap with signaling of the CXCL12/CXCR4 pathway.

We recently completed an electronic medical records study to better understand the risk of serious or severe infection in people with CN in the United States, analyzing the medical records of 44 healthcare organizations treating approximately 66 million patients. The analysis examined patients who had experienced at least two Serious Infections Events (“SIEs”) following a documentation of chronic neutropenia in each calendar year compared with those who did not have neutropenia. SIEs are defined as infections requiring hospitalization or intravenous antibiotics or that result in disability or death. The results of this analysis indicated that the incidence rate of SIEs per 100,000 person days was increased for all levels of chronic neutropenia: it was two times greater for patients with any chronic neutropenia (ANC less than 1,500 cells per microliter) and four times greater for patients with severe congenital neutropenia (ANC less than 500 cells per microliter). The risk of serious infection increased with the worsening of neutropenia. Approximately 25% of patients with chronic neutropenia had at least 2 SIEs in the latest calendar year examined, which was 2019.

Based on this analysis, an initial extrapolation from the approximate 66 million patient sample to the total U.S. population would yield 20,000 patients with CN, with a prevalence of ~7 in 100,000. X4 plans to continue to refine this estimate based on additional analyses, as prevalence estimates vary in rare disease.

G-CSF is the current standard of care for CN and is used to stimulate the bone marrow to produce neutrophils. Side effects of G-CSF include disabling bone pain, which can be more severe in certain age groups. Additional, less common, treatment-limiting complications of chronic G-CSF administration include myelofibrosis and leukemia. In CN cases that are unresponsive to G-CSF, or if leukemia has developed, bone marrow transplants have been made with varying degrees of success. Bone marrow transplantation is often applied to severe neutropenia from bone marrow failure. Bone marrow transplants bring additional risks into the management of the disorders.

Clinical Development of Mavorixafor in Chronic Neutropenia

We are conducting a proof-of-concept, Phase 1b clinical trial designed to assess the safety and tolerability of daily, oral mavorixafor in participants with SCN and other chronic neutropenia disorders. In addition, the trial is evaluating the neutrophil response in these patient populations as an independent agent or in combination with G-CSF. The trial is now enrolling patients with moderate and severe congenital neutropenia to assess the safety and tolerability of one dose of mavorixafor and to measure the effect of this one dose on patient neutrophil counts in the peripheral blood. Originally designed to enroll up to 45 patients in total and treated for 14 days, we have reduced the enrollment goal in the trial to include up to 25 patients across a variety of neutropenia conditions; and reduced the treatment duration from 14 days to 1 day. Our data shows one day of treatment is sufficient to assess bone marrow reserve and response to mavorixafor, and we believe approximately 25 study participants will be sufficient to complete the enrollment goals of the trial.

In December 2021, we announced initial results from the ongoing mavorixafor Phase 1b clinical trial in patients with CN. Four adult patients with chronic idiopathic neutropenia taking stable, daily injections of G-CSF had their WBCs, ANC, ALC, and AMC measured over 6 hours the day before and on the following day after administration of the first dose of mavorixafor. The results from the trial showed a clear and consistent elevation of WBCs, ANC, ALC, and AMC in all 4 patients, which was seen after 1 hour and sustained over 6 hours. We expect to announce additional data from this ongoing Phase 1b clinical trial by the third quarter of 2022.

Mavorixafor in Waldenström's macroglobulinemia

We believe that mavorixafor may be used to treat certain blood cancers, including Waldenström’s. Waldenström’s is a rare form of non-Hodgkin’s lymphoma and B-cell lymphoproliferative disorder most often caused by mutations in a gene for MYD88. Approximately 30-40% of all Waldenström’s patients have been shown to have second mutation, a somatic WHIM-like activating mutation in the CXCR4 gene in the cancer cells that define this rare form of lymphoma. Mutational status influences both clinical presentation and prognosis as well as provides potential implications for therapeutic options. Patients with the CXCR4 mutations have higher serum immunoglobulin M (“IgM”) levels and greater incidence of symptomatic hyperviscosity. These patients also have a worse prognosis and weaker responses to treatment with Bruton tyrosine kinase (BTK) inhibitors.

In Waldenström’s, somatic mutations of CXCR4 have been found to be associated with activating and pro-survival signaling of tumor cells, as well as the possible acquisition of resistance to several drugs, including anti-CD20 monoclonal antibodies, and BTK inhibitors, such as ibrutinib, the current standard of care. For example, Waldenström’s patients with a CXCR4 mutation who have been treated with ibrutinib have generally not responded as well to treatment as compared to patients without a CXCR4 mutation. Seminal work from Dr. Steven P. Treon M.D., Ph.D., of Harvard Medical School and colleagues, have demonstrated that patients with the double mutation (MYD88/CXCR4-WHIM) have a lower rate of Very Good Partial Response, or VGPR, and Minor Response (“MR”) as well as longer time to MR (31% vs. 7% VGPR, 94% vs. 71% for MR and 1 month to MR in the

single-mutation vs. 7.3 months in the double-mutation population). This is true in treatment-naïve patients with similar worse outcomes in the double-mutation population shown by both Drs. Treon and Buske in previously treated patients.

Clinical Development of Mavorixafor in Waldenström's Macroglobulinemia

In December 2019, we initiated a Phase 1b clinical trial of mavorixafor, in combination with ibrutinib, in patients with Waldenström’s and confirmed MYD88 and CXCR4 genetic mutations. The ongoing Phase 1b, open-label, multicenter, single-arm clinical trial examines intra-patient dose escalation, safety, pharmacokinetics, and pharmacodynamics of mavorixafor in combination with ibrutinib in 12 to 18 patients aged 18 years or older. In the trial, all three cohorts (Cohorts A, B and C) are dosed with oral, once-daily doses of ibrutinib 420mg. In Cohorts A and B, patients are initiated on a dose of oral, once-daily 200 mg mavorixafor (low dose) and are escalated to 400mg mavorixafor (mid-dose) after 28 days if tolerated and no dose-limiting toxicities are observed in at least five of six participants. Patients in Cohort C are initiated a does of oral, once daily 400mg mavorixafor. Participants are escalated to 600mg mavorixafor (high dose) after 400 mg mavorixafor is deemed tolerable. All patients are followed in the trial for adverse events and change from baseline in serum IgM and hemoglobin, pharmacokinetics, and pharmacodynamic markers, including peripheral WBCs and clinical response. Clinical responses are also determined over time.

In December 2021, we announced clinical results from the ongoing Phase 1b dose-ranging clinical trial:

•As of the data cutoff of October 12, 2021, 16 patients were enrolled, with 14 being evaluable, all evaluated at low- (200 mg) and mid-level (400mg) dosing of mavorixafor. The median duration of treatment at that time was 272.5 days (range 33-435 days) and 12 patients remained on study.

•For all patients on study at that time, including both frontline and refractory, the median level of serum IgM reduced from 47.2 g/L (n=14) at baseline to 7.73 g/L (n=3) after 12 months of treatment.

•In 10 patients evaluable for response, the ORR was 100% (ORR defined as a greater than 25% but less than 50% reduction in serum IgM), with four achieving a Major Response (greater than 50% reduction in serum IgM), including one Very Good Partial Response of greater than 90% reduction in serum IgM.

•The median level of hemoglobin approached normal, increasing by approximately 38 g/L from baseline (n=14) to month 12 (n=3).

•Overall, the combination of mavorixafor and ibrutinib was tolerated with a manageable safety profile at the low- and mid-level dosing of mavorixafor.

The trial has successfully enrolled patients to assess the safety of the 600mg dose; no dose limiting toxicities occurred and all patients in the trial at the 400mg dose are now eligible to be dose-escalated to the 600mg dose of mavorixafor. We anticipate reporting additional data from this trial during the second half of 2022.

This trial is being conducted as part of a collaboration with The Leukemia & Lymphoma Society (“LLS”) to accelerate the development of mavorixafor for the treatment of Waldenström’s. Mavorixafor was selected for LLS’s Therapy Acceleration Program®, a strategic initiative where LLS builds business alliances and collaborations with biotechnology companies and academic researchers to speed the development of new therapies for blood cancers.

Mavorixafor in Immuno-Oncology Indications

In solid tumors, the tumor micro-environment (“TME”) consists of the tumor cells and cancer associated fibroblasts (“CAFs”), each of which overproduce growth factors and chemokines to support immune-suppression and malignant cell proliferation and growth. Evidence suggests that the pro-tumor signals between tumor cells and CAFs occur, in part, through chemokine signaling, including through the over-production of CXCL12. The CXCL12/CXCR4 pathway has been shown to be overstimulated in more than 20 solid and blood-derived tumor types. Excessive stimulation of CXCR4 due to high concentrations of CXCL12 influences the trafficking of immune cells, including myeloid-derived suppressor cells, or MDSCs, CD4+ regulatory T cells (“Tregs”), CD8+ T cells (“killer T cells”), and mature dendritic cells. We believe that blocking CXCR4 overstimulation can lead to improved immune cell trafficking and increase the absolute number of CD8+ T-cells, thereby also increasing the ratio of CD8+ T-cells to Tregs in the TME, turning the TME from an immunosuppressive environment to an immunostimulatory one.

Previously, we have completed three clinical trials in solid tumors (two in clear cell renal cell carcinoma, one in melanoma) to explore the impact of mavorixafor on relevant tumor biomarkers and clinical responses. In all studies, combination of mavorixafor with standard of care proved to be well-tolerated and showed favorable impact on key immune-response biomarkers (e.g. increased proliferation of CD8+ T-cells and CD8+ T-cells to Treg ratios in the TME) and improvement in clinical metrics (response rates) vs. historical controls of single-agent standard of care. On-going trials in triple-negative breast cancer are being undertaken by Abbisko, our strategic partner for development and commercialization in greater China. Future development and potential commercialization of mavorixafor in potential immuno-oncology indications in markets outside of greater China will be pursued only as part of additional potential strategic collaboration(s).

Earlier-Stage Candidates and Research Efforts

We are also advancing two early stage candidates: X4P-003, a second-generation CXCR4 antagonist designed to have

enhanced properties relative to mavorixafor, potentially enabling broader opportunities in CXCR4-dependent disorders and primary immunodeficiencies; and X4P-002, a CXCR4 antagonist with a unique distribution profile for potential use in CXCR4-dependent diseases in the periphery, but also with the ability to cross the blood-brain barrier and provide appropriate therapeutic exposures to treat brain cancers and other diseases where exposure in brain is essential. We anticipate that we will file an IND application for X4P-002 in the second half of 2022.

Competition

The pharmaceutical and biotechnology industries are characterized by rapidly advancing technologies, intense competition, and a strong emphasis on proprietary products. We face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions. Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.

Many of our competitors may have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved products than we do. Other firms also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient enrollment for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Mergers and acquisitions in the pharmaceutical, biotechnology, and diagnostic industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors with us, particularly through collaborative arrangements with large and established companies.

Our commercial opportunities could be reduced or eliminated if our competitors develop and commercialize therapeutics that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain marketing approvals for their products more rapidly than we may obtain approval for our products, which could result in our competitors establishing a strong market position before we are able to enter the market. In addition, our ability to compete may be affected because in some cases insurers or other third-party payors, including government programs, seek to encourage the use of generic products. This may have the effect of making branded products less attractive to buyers from a cost perspective.

We are aware of other companies that are developing CXCR4 inhibitors that are in a similar stage of development as mavorixafor, including BioLineRx (motixafortide), Noxxon (NOXA12), Upsher-Smith, Polyphor (Balixafortide) and Glycomimetics (GMI1359). To our knowledge, there do not appear to be any competitors with programs in development for WHIM syndrome or CN. With respect to chronic neutropenia, filgrastim injections (human granulocyte colony-stimulating factor (“G-CSF”)) and two biosimilars (Zarxio and Nivestym) are FDA-approved to reduce the incidence and duration of after-effects of severe neutropenia (e.g.‚ fever‚ infections‚ oropharyngeal ulcers) in symptomatic patients with congenital neutropenia‚ cyclic neutropenia‚ or idiopathic neutropenia.

In Waldenström’s, there are several treatment approaches currently being developed, including targeted therapies and immunotherapies (as monotherapies and combination therapies), chemotherapy, stem cell transplantation, and cancer vaccines.To our knowledge, only mavorixafor is targeting the CXCR4 pathway. The Bristol Meyers Squibb anti CXCR4 antibody was discontinued from development.

Manufacturing

We do not own or operate, and currently have no plans to establish, manufacturing facilities for the production of clinical or commercial quantities of mavorixafor or any of our other product candidates. We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates and any products that we may develop.

We currently have a master services agreement (“the Aptuit Agreement”) in place with Aptuit (Oxford) Ltd (“Aptuit”), pursuant to which Aptuit develops and manufactures the active pharmaceutical ingredient, or API, for mavorixafor. We use this mavorixafor drug substance in our Phase 3 clinical trial for the treatment of WHIM and in our other clinical trials. Aptuit is our sole supplier for mavorixafor drug substance and is currently manufacturing mavorixafor drug substance at a commercially relevant scale to support our ongoing and anticipated future clinical trials.

The term of the Aptuit Agreement expires onFebruary 19, 2024unless terminated by us and/or Aptuit as follows: (i) by mutual agreement of the parties; (ii) by us, if there is a material breach by the other party that remains uncured; (iii) by us, in the event of insolvency or bankruptcy of Aptuit; or (iv) by either party, upon 30 days’ written notice.

We also have a master services agreement in place with Mayne Pharma Inc. (“Mayne Pharma”), which is our sole manufacturer for the final capsule drug product formulation of mavorixafor for use in our clinical trials. The term of the master services agreement expires on September 10, 2023, and may be terminated by (1) us upon 30 days-notice to Mayne Pharma or (2) by either party following a material breach by the other party that remains uncured for 30 days.

We obtain the supplies of our active pharmaceutical ingredient (“API”) and drug products from Aptuit and Mayne Pharma pursuant to typical industry standard clinical supply agreements. We believe that both API and drug product manufacturers have the capability and capacity to manufacture currently projected clinical trial supply and commercial volumes of mavorixafor and we are engaged in active discussions with both parties to plan anticipated commercial manufacturing arrangements. We obtain the supplies of our product candidates from these manufacturers under master services contracts and specific work orders. However, we do not have long-term supply arrangements in place. We do not currently have arrangements in place for redundant supply or a second source for API. If any of our current manufacturers becomes unavailable to us for any reason, we believe that there are a number of potential replacements, although we might incur some delay in identifying and qualifying such replacements.

License Agreements

License Agreement with Genzyme

In July 2014, we entered into a license agreement with Genzyme, or the Genzyme Agreement, pursuant to which we were granted an exclusive license to certain patent applications and other intellectual property owned or controlled by Genzyme related to the CXCR4 receptor to develop and commercialize products containing licensed compounds (including but not limited to mavorixafor) for all therapeutic, prophylactic and diagnostic uses with the exception of autologous and allogenic human stem cell therapy. Genzyme has retained the exclusive right to use the intellectual property licensed to us in specific indications related to

Genzyme’s product Mozobil® and allogenic/autologous hematopoietic stem cell transplantation treatments. Genzyme has also

retained the non-exclusive right to conduct preclinical research involving compounds in any field, including any fields licensed to

us, but has not retained rights to conduct any clinical development or commercialization of those compounds identified in the

agreement in any of the fields licensed to us. We are primarily responsible for the preparation, filing, prosecution and

maintenance of all patent applications and patents covering the intellectual property licensed to us under the agreement at our sole

expense.

We are obligated to use commercially reasonable efforts to develop and commercialize licensed products for use in the field in the United States and at least one other major market country. We have the right to grant sublicenses of the licensed rights that cover mavorixafor to third parties. If we wish to grant a sublicense to any licensed product other than mavorixafor, we are obligated to first offer the sublicense to Genzyme. If Genzyme expresses written interest for the sublicense, then we will negotiate exclusively with Genzyme for a certain stated period to obtain a license to such rights, after which Genzyme shall have no further rights with respect to such licensed product and we will be free to negotiate a sublicense with respect to such licensed product with any third party.

We are obligated to pay Genzyme milestone payments in the aggregate amount of up to $25 million, contingent upon our achievement of certain late-stage regulatory and sales milestones with respect to licensed products, and tiered royalties based on net sales of licensed products that we commercialize under the Genzyme agreement. Our obligation to pay royalties for each licensed product expires on a country-by-country basis on the latest of (i) the expiration of licensed patent rights that cover that

licensed product in that country, (ii) the expiration of regulatory exclusivity in that country and (iii) ten years after the first commercial sale of such licensed product in that country. Royalty rates are subject to reduction under the agreement in specified circumstances, including in any country if we are required to obtain a license from any third party to the extent our patent rights might infringe the third party’s patent rights, if a licensed product is not covered by a valid claim in that country or if sales of generic products reach certain thresholds in that country. Sublicenses that we enter into under the Genzyme agreement, including our license agreement with Abbisko obligate us to pay Genzyme a percentage of certain upfront, maintenance fees, milestone payments and royalty payments paid to us by the sublicensee.

The term of the Genzyme Agreement will continue until the later of the expiration of the last to expire valid claim of the patents licensed under the agreement that cover any licensed product, the expiration of regulatory exclusivity applicable to any licensed product and 10 years from the date of first commercial sale of any licensed product. Either we or Genzyme may terminate the Genzyme Agreement in the event of the bankruptcy or uncured material breach by the other party. Genzyme may terminate the Genzyme Agreement if we or our affiliates initiate a patent challenge of the patents licensed under the agreement. We may terminate the Genzyme Agreement immediately upon notice to Genzyme if we reasonably believe that the development or commercialization of a licensed compound or product under the Genzyme agreement would result in a material safety issue for patients.

License Agreement with Georgetown University

In December 2016, we entered into a license agreement with the Georgetown University, or Georgetown, pursuant to which we obtained an exclusive, worldwide license to practice certain methods, and to make, have made, use, sell, offer for sale and import products, covered by licensed patent rights co-owned by Georgetown. The rights licensed to us are for all therapeutic, prophylactic and diagnostic uses in all disease indications in humans and animals. We have the right to grant sublicenses of the licensed rights to third parties to the extent consistent with the terms of the Georgetown agreement.

Under the terms of the Georgetown agreement we paid a one-time only, upfront fee of $50 thousand, and we may be required to pay milestone payments of up to an aggregate of $800 thousand related to commercial sales of a licensed product. We are responsible for all patent prosecution costs incurred with respect to the licensed patents. We are obligated under the agreement to use commercially reasonable efforts to develop and commercialize licensed product, to make licensed product reasonably available to the public, to obtain government approvals for licensed product and to market licensed product in quantities sufficient to meet the market demand.

The term of the Georgetown agreement will continue until the expiration of the last valid claim within the patent rights covering the licensed products. Georgetown may terminate the Georgetown agreement or convert our license to non-exclusive in the event (i) we fail to pay any amount and fail to cure such failure within 30 days after receipt of notice, (ii) we default in our obligation to obtain and maintain insurance and fail to remedy such breach within 45 days after receipt of notice, (iii) we declare insolvency or bankruptcy or (iv) we materially default in the performance of any material obligations under the Georgetown agreement which is not cured within a certain period from the date of written notice of such default. We may terminate the Georgetown agreement at any time upon at least 60 days’ written notice.

License Agreement with Beth Israel Deaconess Medical Center

In December 2016, we entered into a license agreement with Beth Israel Deaconess Medical Center, or BIDMC, pursuant to which we obtained an exclusive, worldwide license to make, have made, use, sell, offer for sale and import of licensed products and certain processes covered by licensed patent rights co-owned by BIDMC and a nonexclusive royalty-free right to use certain information pertaining to any invention claimed in the licensed patents that is owned by BIDMC to develop, make, have made, use, have used, sell, have sold and commercialize such licensed products and processes. The rights licensed to us are for all fields of use. We have the right to grant sublicenses of the licensed rights to third parties to the extent consistent with the terms of the BIDMC agreement.

Under the terms of the BIDMC agreement we paid a one-time only, upfront fee of $20 thousand and we are responsible for all future patent prosecution costs.

The term of the BIDMC agreement will continue until the expiration of the last valid claim within the patent rights covering the licensed product. BIDMC may terminate the agreement in the event (i) we fail to pay any amount and fail to cure such failure within 15 days after receipt of notice, (ii) the insurance coverage that we are obligated to maintain under the agreement is terminated and we fail to obtain replacement insurance within a certain period of time following notice to BIDMC, or (iii) we declare insolvency or bankruptcy. In addition, if we are in material breach of any material provisions of the BIDMC agreement and fail to remedy such breach within 60 days after receipt of notice, BIDMC may terminate the BIDMC agreement or terminate any licenses granted under the BIDMC agreement with respect to the country or countries in which such material breach has occurred. We may terminate the BIDMC agreement at any time upon at least 90 days’ written notice.

License Agreement with Dana Farber Cancer Institute

In November 2020, we entered into a license agreement with Dana Farber Cancer Institute (“DFCI”) pursuant to which we obtained a non-exclusive, worldwide license to use, make, have made, develop, market, import, distribute, sell and have sold licensed products and certain processes covered by licensed patent rights owned by DFCI. The rights licensed to us are for the therapeutic use of our CXCR4 antagonists for the treatment of Waldenström’s in combination with BTK inhibitors, including ibrutinib. We have the right to grant sublicenses of the licensed rights to third parties to the extent consistent with the terms of the DFCI agreement.

Under the terms of the DFCI agreement we paid a one-time, upfront fee of $25 thousand and we are responsible for the reimbursement of certain future patent prosecution cost and the payment of an annual maintenance fee. We are obligated to pay DFCI milestone payments in the aggregate amount of up to approximately $32 million, contingent upon our achievement of certain regulatory and sales milestones with respect to licensed products, and a flat royalty based on net sales of licensed products that we commercialize under the DFCI agreement.

The term of the DFCI agreement will continue until the expiration of the last valid claim within the patent rights covering the licensed product. DFCI may terminate the DFCI agreement in the event (i) we fail to pay any amount and fail to cure such failure within 30 days after receipt of notice, (ii) we cease to carry on our business with respect to the licensed products or process, (iii) the insurance coverage that we are obligated to maintain under the DCFI agreement is terminated and we fail to obtain replacement insurance within a certain period of time following notice to DFCI, (iv) we fail to comply with certain diligence obligations and cure any such default within 60 days after receipt of written notice, (v) we have granted a sublicense without notifying DFCI or on terms inconsistent with the terms required of sublicenses under the DCFI agreement, (vi) an officer of our company, an affiliate or sublicensee is convicted of a felony relating to the manufacture, use, sale or importation of a licensed product, (vii) we or any of our affiliates, sublicensees or sublicensees’ affiliates initiate a patent challenge of the patents licensed under the DFCI agreement or assists others in doing so or (viii) we declare insolvency or bankruptcy. In addition, if we are in material breach of any material obligations under the DFCI agreement and fail to remedy such breach within 90 days after receipt of notice, DFCI may terminate the DFCI agreement or terminate any licenses granted under the agreement. We may terminate the DFCI agreement at any time upon at least 90 days’ written notice.

Abbisko Agreement

In July 2019, we entered into a license agreement with Abbisko. Under the terms of the agreement, we granted Abbisko the exclusive right to develop, manufacture and commercialize mavorixafor in mainland China, Taiwan, Hong Kong and Macau. The agreement provides Abbisko with the exclusive rights in this territory to develop and commercialize mavorixafor in combination with checkpoint inhibitors or other agents in oncology indications. Pancreatic cancer, ovarian cancer and triple negative breast cancer will be explored initially. We retain the full rest-of-world rights to develop and commercialize mavorixafor outside of Greater China for all indications and the ability to utilize data generated pursuant to the Abbisko collaboration for rest-of-world development. In addition, Abbisko has the right of first refusal if we determine to pursue additional products in the Abbisko Territory, as defined in the agreement. We entered into a separate agreement in April 2020 whereby we will provide Abbisko with a clinical supply and, if the product is commercialized in the territory licensed by Abbisko, we intend to enter into a commercial supply of the licensed compound.

Pursuant to the agreement with Abbisko, upon the closing of a qualified financing of Abbisko, as defined in the agreement, which occurred in March 2020, Abbisko made a one-time, non-refundable, non-creditable financial milestone payment of $3 million to us. We are also eligible to receive potential development, regulatory and commercial milestone payments of up to $208 million, which will vary based on the ultimate sales, if any, of the approved licensed products. Upon commercialization of mavorixafor in the Abbisko Territory, we are eligible to receive a tiered royalty, with a percentage range in the low double-digits, on net sales of approved licensed products. Abbisko is obligated to use commercially reasonable efforts to develop and commercialize mavorixafor in the Abbisko Territory. Abbisko has responsibility for all activities and costs associated with the further development, manufacture and commercialization of mavorixafor in the Abbisko Territory.

Intellectual Property

Our ability to commercialize our product candidates depends in large part on our ability to obtain and maintain intellectual property protection for our product candidates, including mavorixafor, and our preclinical compounds and core technologies. Our policy is to seek to protect our intellectual property position by, among other methods, filing U.S. and foreign patent applications related to the technology, inventions and improvements that are important to the development and implementation of our business strategy. We also rely on trade secrets, know-how and continuing technological innovation to develop and maintain our proprietary position.

We file patent applications directed to our product candidates, preclinical compounds and related technologies to establish intellectual property positions on these compounds and their uses in disease. As of December 31, 2021, we owned or exclusively licensed20issued U.S. patents,14 pending U.S. non-provisional patent applications, seven pending U.S. provisional patent application, and approximately177 PCT and foreign patents and patent applications in the following foreign jurisdictions: Belgium, Brazil, Canada, China, European Patent Office, France, Germany, Great Britain, Hong Kong, India, Ireland, Italy, Israel, Japan, Lichtenstein, Mexico, Netherlands, New Zealand, Singapore, South Africa, Spain, Sweden and Switzerland.

As of December 31, 2021, our in-licensed intellectual property portfolio for mavorixafor includedfour issued U.S. patents and one pending U.S. patent application directed to compositions of matter for mavorixafor, which are expected to expire in December 2022 excluding possible patent term extensions of up to an additional five years. The intellectual property portfolio for mavorixafor also included one issued U.S. patent with claims directed to a crystalline salt form of mavorixafor, one issued U.S. patent directed to pharmaceutical compositions of mavorixafor in unit dosage form, and four issued U.S. patents directed to methods of making mavorixafor and key intermediates. We also had four issued U.S. patents directed to compositions and methods of making chemical compounds related to the X4P-001 program. Approximately85corresponding PCT and foreign patents and patent applications directed to compositions of matter and related chemical compounds as well as methods of making and methods of use were issued or pending. All of the above patents and patent applications were exclusively licensed to us pursuant to the terms of the Genzyme agreement.

Additionally, we have filed our own patent applications with respect to the mavorixafor and X4P-002 product candidates. Some of these patent applications are co-owned with Genzyme, BIDMC or Georgetown, with their rights exclusively licensed to us. As of December 31, 2021, our independently generated intellectual property portfolio included four granted U.S. patents, nine pending U.S. non-provisional patent applications, seven pending U.S. provisional patent application, and approximately 57 pending PCT and foreign patent applications related to our mavorixafor clinical programs in cancer and primary immunodeficiencies. In addition, we have two granted U.S. patents, four pending U.S. non-provisional patent applications, two granted U.S. patents, and approximately 35 pending PCT and foreign patent applications related to our preclinical compounds and X4P-002 in glioblastoma. Patents issuing from these applications, if any, are expected to expire between 2036 and 2042.

The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries, including the United States, the patent term is 20 years from the earliest filing date of a non-provisional patent application. In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office, (the “USPTO”), in examining and granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier filed patent. The term of a U.S. patent that covers a drug or biological product may also be eligible for patent term extension when approval from the FDA is granted, provided statutory and regulatory requirements are met. In the future, if our product candidates receive approval from the FDA or foreign regulatory authorities, we expect to apply for patent term extensions on issued patents covering those products, depending upon the length of the clinical trials for each drug and other factors. There can be no assurance that any of our pending patent applications will issue or that we will benefit from any patent term extension or other favorable adjustment to the term of any of our patents.

As with other biotechnology and pharmaceutical companies, our ability to maintain and solidify our proprietary and intellectual property position for our product candidates, including mavorixafor, and our preclinical compounds, and our core technologies will depend on our success in obtaining effective patent claims and enforcing those claims if granted. However, patent applications that we may file or license from third parties may not result in the issuance of patents. We also cannot predict the breadth of claims that may be allowed or enforced in our patents. Any issued patents that we may receive in the future may be challenged, invalidated or circumvented. For example, prior to March 16, 2013, in the United States, patent applications were subject to a “first to invent” rule of law. Applications filed after March 16, 2013 (except for certain applications claiming the benefit of earlier-filed applications) are subject to a “first to file” rule of law.

Discoveries reported in the scientific literature often lag the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. We cannot be certain that any existing or future application will be subject to the “first to file” or “first to invent” rule of law, that we were the first to make the inventions claimed in our existing patents or pending patent applications subject to the prior laws, or that we were the first to file for patent protection of such inventions subject to the new laws. If third parties prepare and file patent applications in the United States that also claim technology we have claimed in our patents or patent applications, we may have to participate in interference proceedings in the USPTO to determine priority of invention, which could result in substantial costs to us, even if the eventual outcome is favorable to us. In addition, because of the extensive time required for clinical development and regulatory review of a product candidate we may develop, it is possible that, before any of our product candidates can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of any such patent.

In addition to patents, we rely upon unpatented trade secrets, know-how, and continuing technological innovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, by using confidentiality agreements with our collaborators, scientific advisors, employees and consultants, and invention assignment agreements with our employees. We also have agreements requiring assignment of inventions with selected consultants, scientific advisors and collaborators. The confidentiality agreements are designed to protect our proprietary information and, in the case of agreements or clauses requiring invention assignment, to grant us ownership of technologies that are developed under those agreements.

Government Regulation and Product Approval

The FDA Approval Process

In the United States, pharmaceutical products are subject to extensive regulation by the FDA. The Federal Food, Drug, and Cosmetic Act, or the FDCA, and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products. Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as imposition of clinical holds, refusal by the FDA to approve pending NDAs, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement, civil penalties and criminal prosecution.

Pharmaceutical product development in the United States typically involves preclinical or other nonclinical laboratory and animal tests and the submission to the FDA of an IND, which must become effective before clinical testing may commence. For commercial approval, the sponsor must submit adequate tests by all methods reasonably applicable to show that the drug is safe for use under the conditions prescribed, recommended or suggested in the proposed labeling. The sponsor must also submit substantial evidence, generally consisting of adequate, well-controlled clinical trials to establish that the drug will have the effect it purports or is represented to have under the conditions of use prescribed, recommended or suggested in the proposed labeling. In certain cases, the FDA may determine that a drug is effective based on one clinical study plus confirmatory evidence.

Nonclinical tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as animal studies to assess the characteristics and potential safety and efficacy of the product. The conduct of the nonclinical tests must comply with federal requirements, including the FDA’s good laboratory practices regulations and the U.S. Department of Agriculture’s, or USDA’s, regulations implementing the Animal Welfare Act. The results of nonclinical testing are submitted to the FDA as part of an IND along with other information, including information about product chemistry, manufacturing and controls, and a proposed clinical trial protocol. Long-term nonclinical tests, such as animal studies of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.

A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has not imposed a clinical hold on the IND or otherwise commented or questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin.

Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients under the supervision of a qualified investigator. Clinical trials must be conducted: (i) in compliance with federal regulations, (ii) in compliance with GCP, an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and monitors, and (iii) under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the FDA as part of the IND.

The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time or impose other sanctions if it believes that the clinical trial either is not being conducted in accordance with the FDA requirements or presents an unacceptable risk to the clinical trial patients. The trial protocol and informed consent information for patients in clinical trials must also be submitted to an institutional review board, or IRB, at each site where a trial will be conducted for approval. An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements or may impose other conditions.

Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap. In general, in Phase 1, the initial introduction of the drug into healthy human volunteers or, in some cases, patients, the drug is tested to assess metabolism, pharmacokinetics, pharmacological actions, side effects associated with increasing doses and, if possible, early evidence of effectiveness. Phase 2 usually involves trials in a limited patient population to determine the effectiveness of the drug for a particular indication, dosage tolerance and optimum dosage, and to identify common adverse effects and safety risks. If a compound demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are undertaken to obtain the additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug. In most cases, the FDA requires two adequate and well-controlled Phase 3 clinical trials to demonstrate the efficacy of the drug. The FDA may, however, determine that a drug is effective based on one clinical trial plus confirmatory evidence. In some cases, the FDA may require post-market studies, known as Phase 4 studies, to be conducted as a condition of approval to gather additional information on the drug’s effect in various populations and any side effects associated with long-term use. Depending on the risks posed by the drugs, other post-market requirements may be imposed.

After completion of the required clinical testing, an NDA is prepared and submitted to the FDA. FDA approval of the NDA is required before marketing of the product may begin in the United States. The NDA must include the results of all preclinical, clinical, and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture, and controls. Under federal law, the submission of most NDAs is additionally subject to a substantial application user fee, subject to certain exceptions and waivers, such as for orphan-designated drugs.

The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA begins an in-depth review. Under the performance goals established pursuant to the Prescription Drug User Fee Act the FDA aims to complete review of 90% of standard (non-priority) NDAs within 10 months filing and within six months for priority NDAs.

The FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to an advisory committee, which is typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured. The FDA will not approve the product unless compliance with current GMP is satisfactory and the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication studied.

After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information, in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter.

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition of NDA approval, the FDA may require a risk evaluation and mitigation strategy (“REMS”) to help ensure that the benefits of the drug outweigh the potential risks. REMS can include medication guides, communication plans for health care professionals, and elements to assure safe use, or ETASU. ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries. The requirement for a REMS can materially affect the potential market and profitability of the drug. Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

The Hatch-Waxman Act

Orange Book Listing

In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent whose claims cover the applicant’s product. Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book. Drugs listed in the Orange Book can, in turn, be cited by potential generic competitors in support of approval of an abbreviated new drug application, or ANDA. An ANDA provides for marketing of a drug product that has the same active ingredients in the same strengths and dosage form as the listed drug and has been shown through bioequivalence testing to be bioequivalent to the listed drug. Other than the requirement for bioequivalence testing, ANDA applicants are not required to conduct, or submit results of, pre-clinical or clinical tests to prove the safety or effectiveness of their drug product. Drugs approved in this way are considered to be therapeutically equivalent to the listed drug, are commonly referred to as “generic equivalents” to the listed drug, and can often be substituted by pharmacists under prescriptions written for the original listed drug in accordance with state law.

The ANDA applicant is required to certify to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book. Specifically, the applicant must certify that: (i) the required patent information has not been filed; (ii) the listed patent has expired; (iii) the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or (iv) the listed patent is invalid or will not be infringed by the new product. The ANDA applicant may also elect to submit a section viii statement, certifying that its proposed ANDA labeling does not contain (or carves out) any language regarding the patented method-of-use, rather than certify to a listed method-of-use patent.

If the applicant does not challenge the listed patents, the ANDA application will not be approved until all the listed patents claiming the referenced product have expired.

A certification that the new product will not infringe the already approved product’s listed patents, or that such patents are invalid, is called a Paragraph IV certification. If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit, or a decision in the infringement case that is favorable to the ANDA applicant.

The ANDA application also will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the referenced product has expired.

Exclusivity

Upon NDA approval of a new chemical entity, or NCE, which is a drug that contains no active moiety that has been approved by the FDA in any other NDA, that drug receives five years of marketing exclusivity during which time the FDA cannot receive any ANDA or 505(b)(2) application seeking approval of a drug that references a version of the NCE drug. Certain changes to a drug, such as the addition of a new indication to the package insert, are associated with a three-year period of exclusivity during which the FDA cannot approve an ANDA or 505(b)(2) application that includes the change.

An ANDA or 505(b)(2) application may be submitted one year before NCE exclusivity expires if a Paragraph IV certification is filed. If there is no listed patent in the Orange Book, there may not be a Paragraph IV certification and thus no ANDA or 505(b)(2) application may be filed before the expiration of the exclusivity period.

Five-year and three-year exclusivities do not preclude FDA approval of a 505(b)(1) application for a duplicate version of the drug during the period of exclusivity, provided that the 505(b)(1) applicant conducts or obtains a right of reference to all of the preclinical studies and adequate and well controlled clinical trials necessary to demonstrate safety and effectiveness.

Patent Term Extension

After NDA approval, owners of relevant drug patents may apply for up to a five-year patent extension. The allowable patent term extension is calculated as half of the drug’s testing phase—the time between IND submission and NDA submission—and all of the review phase—the time between NDA submission and approval up to a maximum of five years. The time can be shortened if the FDA determines that the applicant did not pursue approval with due diligence. The total patent term after the extension may not exceed 14 years.

For patents that might expire during the application phase, the patent owner may request an interim patent extension. An interim patent extension increases the patent term by one year and may be renewed up to four times. For each interim patent extension granted, the post-approval patent extension is reduced by one year. The director of the USPTO must determine that approval of the drug covered by the patent for which a patent extension is being sought is likely. Interim patent extensions are not available for a drug for which an NDA has not been submitted.

Advertising and Promotion

Once an NDA is approved, a product will be subject to certain post-approval requirements. For instance, the FDA closely regulates the post-approval marketing and promotion of drugs.

Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved labeling. Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs.

Adverse Event Reporting and GMP Compliance

Adverse event reporting and submission of periodic reports is required following FDA approval of an NDA. The FDA also may require post-marketing testing, known as Phase 4 testing, require a REMS special communications regarding the safety of the drug or heightened surveillance to monitor the effects of an approved product, or may place conditions on an approval that could restrict the distribution or use of the product. In addition, quality control, drug manufacture, packaging, and labeling procedures must continue to conform to GMP after approval. Drug manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies. Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the agency inspects manufacturing facilities to assess compliance with GMP. Accordingly, manufacturers must continue to expend time, money and effort in the areas of production and quality control to maintain compliance with GMP. Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with regulatory standards, if it encounters problems following initial marketing or if previously unrecognized problems are subsequently discovered.

Pediatric Exclusivity and Pediatric Use

The Best Pharmaceuticals for Children Act, or BPCA, provides NDA holders a six-month period of exclusivity attached to any other exclusivity listed with FDA—patent or non-patent—for a drug if certain conditions are met. Conditions for pediatric exclusivity include a determination by the FDA that information relating to the use of a new drug in the pediatric population may produce health benefits in that population; a written request by the FDA for pediatric studies; and agreement by the applicant to perform the requested studies and the submission to the FDA, completion of the studies in accordance with the written request, and the acceptance by the FDA of the reports of the requested studies within the statutory timeframe.

In addition, under the Pediatric Research Equity Act, or PREA, NDAs or supplements to NDAs must contain data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the drug is safe and effective, unless the sponsor has received a deferral or waiver from the FDA. Unless otherwise required by regulation, PREA does not apply to any drug for an indication for which orphan designation has been granted. The sponsor or the FDA may request a deferral of pediatric studies for some or all of the pediatric subpopulations. A deferral may be granted for several reasons, including a finding that the drug is ready for approval for use in adults before pediatric studies are complete or that additional safety or effectiveness data need to be collected before the pediatric studies begin.

Orphan Drugs

Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition—generally a disease or condition that affects fewer than 200,000 individuals in the United States (or affects more than 200,000 in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for such disease or condition will be recovered from sales of such drug in the United States). Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. The first NDA applicant to receive FDA approval for a particular active ingredient to treat a particular disease with FDA orphan drug designation is entitled to a seven-year exclusive marketing period in the United States for that product, for that indication. During the seven-year exclusivity period, the FDA may not approve any other applications to market the same drug for the same disease, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity. If the FDA designates an orphan drug based on a finding of clinical superiority, the FDA must provide a written notification to the sponsor that states the basis for orphan designation, including “any plausible hypothesis” relied upon by the FDA. The FDA must also publish a summary of its clinical superiority findings upon granting orphan drug exclusivity based on clinical superiority.

Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the same drug for a different disease or condition. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA application user fee.

Breakthrough Designation

A product can be designated as a breakthrough therapy by FDA if it is intended to treat a serious or life-threatening condition and preliminary clinical evidence indicates that it may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints. A sponsor may request that a product candidate be designated as a breakthrough therapy concurrently with the submission of an IND or any time before an end-of-Phase-2 meeting, and the FDA must determine if the product candidate qualifies for breakthrough therapy designation within 60 days of receipt of the sponsor’s request. If so designated, the FDA shall act to expedite the development and review of the product’s marketing application, including by meeting with the sponsor throughout the product’s development, providing timely advice to the sponsor to ensure that the development program to gather pre-clinical and clinical data is as efficient as practicable, involving senior managers and experienced review staff in a cross-disciplinary review, assigning a cross-disciplinary project lead for the FDA review team to facilitate an efficient review of the development program and to serve as a scientific liaison between the review team and the sponsor, and taking steps to ensure that the design of the clinical trials is as efficient as practicable.

Europe/Rest of World Government Regulation

In addition to regulations in the United States, we are and will be subject, either directly or through our distribution partners, to a variety of regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and distribution of our products, if approved.

Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in non-U.S. countries prior to the commencement of clinical trials or marketing of the product in those countries.

In the European Union, medicinal products are subject to extensive pre- and post-marketing regulation by regulatory authorities at both the European Union and national levels. Additional rules also apply at the national level to the manufacture, import, export, storage, distribution and sale of controlled substances. In many E.U. member states, the regulatory authority responsible for medicinal products is also responsible for controlled substances. Responsibility is, however, split in some member states. Generally, any company manufacturing or distributing a medicinal product containing a controlled substance in the European Union will need to hold a controlled substances license from the competent national authority and will be subject to specific record-keeping and security obligations. Separate import or export certificates are required for each shipment into or out of the member state.

Clinical Trials and Marketing Approval

Certain countries outside of the United States have a process that requires the submission of a clinical trial application much like an IND prior to the commencement of human clinical trials. In all cases, the clinical trials must be conducted in accordance with the International Conference on Harmonization, or ICH, guidelines on GCP and other applicable regulatory requirements.

To obtain regulatory approval to place a drug on the market in the European Union, we must submit a marketing authorization application. This application is similar to the NDA in the United States, with the exception of, among other things, country-specific document requirements. All application procedures require an application in the common technical document, or CTD, format, which includes the submission of detailed information about the manufacturing and quality of the product, and non-clinical and clinical trial information. Drugs can be authorized in the European Union by using (i) the centralized authorization procedure, (ii) the mutual recognition procedure, (iii) the decentralized procedure or (iv) national authorization procedures.

The European Commission created the centralized procedure for the approval of human drugs to facilitate marketing authorizations that are valid throughout the European Union and, by extension (after national implementing decisions) in Iceland, Liechtenstein and Norway, which, together with the E.U. member states, comprise the European Economic Area, or EEA. Applicants file marketing authorization applications with the EMA, where they are reviewed by a relevant scientific committee, in most cases the Committee for Medicinal Products for Human Use, or CHMP. The EMA forwards CHMP opinions to the European Commission, which uses them as the basis for deciding whether to grant a marketing authorization. This procedure results in a single marketing authorization granted by the European Commission that is valid across the European Union, as well as in Iceland, Liechtenstein and Norway. The centralized procedure is compulsory for human drugs that are: (i) derived from biotechnology processes, such as genetic engineering, (ii) contain a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative diseases, autoimmune and other immune dysfunctions and viral diseases, (iii) officially designated “orphan drugs” (drugs used for rare human diseases) and (iv) advanced-therapy medicines, such as gene-therapy, somatic cell-therapy or tissue-engineered medicines. The centralized procedure may at the voluntary request of the applicant also be used for human drugs which do not fall within the above-mentioned categories if the CHMP agrees that (a) the human drug contains a new active substance not yet approved on November 20, 2005; (b) it constitutes a significant therapeutic, scientific or technical innovation or (c) authorization under the centralized procedure is in the interests of patients at the E.U. level.

Under the centralized procedure in the European Union, the maximum timeframe for the evaluation of a marketing authorization application by the EMA is 210 days (excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the CHMP), with adoption of the actual marketing authorization by the European Commission thereafter. Accelerated evaluation might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of a major public health interest from the point of view of therapeutic innovation, defined by three cumulative criteria: the seriousness of the disease to be treated, the absence of an appropriate alternative therapeutic approach, and anticipation of exceptional high therapeutic benefit. In this circumstance, the EMA ensures that the evaluation for the opinion of the CHMP is completed within 150 days and the opinion issued thereafter.

For those medicinal products for which the centralized procedure is not available, the applicant must submit marketing authorization applications to the national medicines regulators through one of three procedures: (i) the mutual recognition procedure (which must be used if the product has already been authorized in at least one other E.U. member state, and in which the E.U. member states are required to grant an authorization recognizing the existing authorization in the other E.U. member state, unless they identify a serious risk to public health), (ii) the decentralized procedure (in which applications are submitted simultaneously in two or more E.U. member states) or (iii) national authorization procedures (which results in a marketing authorization in a single E.U. member state).

Mutual Recognition Procedure

The mutual recognition procedure, or MRP, for the approval of human drugs is an alternative approach to facilitate individual national marketing authorizations within the European Union. Basically, the MRP may be applied for all human drugs for which the centralized procedure is not obligatory. The MRP is applicable to the majority of conventional medicinal products and must be used if the product has already been authorized in one or more member states.

The characteristic of the MRP is that the procedure builds on an already–existing marketing authorization in a member state of the European Union that is used as a reference in order to obtain marketing authorizations in other E.U. member states. In the MRP, a marketing authorization for a drug already exists in one or more member states of the European Union and subsequently marketing authorization applications are made in other E.U. member states by referring to the initial marketing authorization. The member state in which the marketing authorization was first granted will then act as the reference member state. The member states where the marketing authorization is subsequently applied for act as concerned member states. The concerned member states are required to grant an authorization recognizing the existing authorization in the reference member state, unless they identify a serious risk to public health.

The MRP is based on the principle of the mutual recognition by E.U. member states of their respective national marketing authorizations. Based on a marketing authorization in the reference member state, the applicant may apply for marketing authorizations in other member states. In such case, the reference member state shall update its existing assessment report about the drug in 90 days. After the assessment is completed, copies of the report are sent to all member states, together with the approved summary of product characteristics, labeling and package leaflet. The concerned member states then have 90 days to recognize the decision of the reference member state and the summary of product characteristics, labeling and package leaflet. National marketing authorizations shall be granted within 30 days after acknowledgement of the agreement.

If any E.U. member state refuses to recognize the marketing authorization by the reference member state, on the grounds of potential serious risk to public health, the issue will be referred to a coordination group. Within a timeframe of 60 days, member states shall, within the coordination group, make all efforts to reach a consensus. If this fails, the procedure is submitted to an EMA scientific committee for arbitration. The opinion of this EMA Committee is then forwarded to the European Commission for the start of the decision making process. As in the centralized procedure, this process entails consulting various European Commission Directorates General and the Standing Committee on Human Medicinal Products.

Data Exclusivity

In the European Union, marketing authorization applications for generic medicinal products do not need to include the results of pre-clinical and clinical trials, but instead can refer to the data included in the marketing authorization of a reference product for which regulatory data exclusivity has expired. If a marketing authorization is granted for a medicinal product containing a new active substance, that product benefits from eight years of data exclusivity, during which generic marketing authorization applications referring to the data of that product may not be accepted by the regulatory authorities, and a further two years of market exclusivity, during which such generic products may not be placed on the market. The two-year period may be extended to three years if during the first eight years a new therapeutic indication with significant clinical benefit over existing therapies is approved.

Orphan Medicinal Products

The EMA’s Committee for Orphan Medicinal Products, or COMP, may recommend orphan medicinal product designation to promote the development of products that are intended for the diagnosis, prevention or treatment of life-threatening or chronically debilitating conditions affecting not more than five in 10,000 persons in the European Union. Additionally, this designation is granted for products intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition and when, without incentives, it is unlikely that sales of the product in the European Union would be sufficient

to justify the necessary investment in developing the medicinal product. The COMP may only recommend orphan medicinal product designation when the product in question offers a significant clinical benefit over existing approved products for the relevant indication. Following a positive opinion by the COMP, the European Commission adopts a decision granting orphan status. The COMP will reassess orphan status in parallel with EMA review of a marketing authorization application and orphan status may be withdrawn at that stage if it no longer fulfills the orphan criteria (for instance because in the meantime a new product was approved for the indication and no convincing data are available to demonstrate a significant benefit over that product). Orphan medicinal product designation entitles a party to financial incentives such as a reduction of fees or fee waivers and 10 years of market exclusivity is granted following marketing authorization. During this period, the competent authorities may not accept or approve any similar medicinal product, unless it offers a significant clinical benefit. This period may be reduced to six years if the orphan medicinal product designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity.

Pediatric Development

In the European Union, companies developing a new medicinal product must agree to a Pediatric Investigation Plan, or PIP, with the EMA and must conduct pediatric clinical trials in accordance with that PIP unless a waiver applies, for example, because the relevant disease or condition occurs only in adults. The marketing authorization application for the product must include the results of pediatric clinical trials conducted in accordance with the PIP, unless a waiver applies, or a deferral has been granted, in which case the pediatric clinical trials must be completed at a later date. Products that are granted a marketing authorization on the basis of the pediatric clinical trials conducted in accordance with the PIP are eligible for a six-month extension of the protection under a supplementary protection certificate (if the product covered by it qualifies for one at the time of approval). This pediatric reward is subject to specific conditions and is not automatically available when data in compliance with the PIP are developed and submitted.

If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension of clinical trials, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Pharmaceutical Coverage, Pricing and Reimbursement

Sales of pharmaceutical products in the United States will depend, in part, on the extent to which the costs of the products will be covered by third-party payers, such as government health programs, and commercial insurance and managed health care organizations. These third-party payers are increasingly challenging the prices charged for medical products and services.

Significant uncertainty exists as to the coverage and reimbursement status of any drug products for which we obtain regulatory approval. In the United States, sales of any products for which we receive regulatory approval for commercial sale will depend in part on the availability of coverage and reimbursement from third-party payors. Third-party payors include government authorities, managed care providers, private health insurers and other organizations. Coverage and reimbursement policies for drug products can differ significantly from payor to payor as there is no uniform policy of coverage and reimbursement for drug products among third party payors in the United States. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement rates, but also have their own methods and approval process apart from Medicare determinations. The process for determining whether a payor will provide coverage for a drug product may be separate from the process for setting the reimbursement rate that the payor will pay for the drug product. Third-party payors may limit coverage to specific drug products on an approved list, or formulary, which might not include all of the FDA-approved drugs for a particular indication. Moreover, a payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.

Additionally, the containment of health care costs has become a priority of federal and state governments, and the prices of drugs have been a focus in this effort. The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls, utilization management and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. If these third-party payers do not consider our products to be cost-effective compared to other available therapies, they may not cover our products after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or the MMA, imposed requirements for the distribution and pricing of prescription drugs for Medicare beneficiaries and included a major expansion of the prescription drug benefit under Medicare Part D. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities that provide coverage of outpatient prescription drugs. Part D is available through both stand-alone prescription drug benefit plans and prescription drug coverage as a supplement to Medicare Advantage plans. Unlike Medicare Parts A and B, Part D coverage is not standardized. Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs, and each drug plan can develop its own drug formulary that identifies which drugs it will cover and at what tier or level. However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D drugs, though not necessarily all the drugs in each category or class. Any formulary used by a Part D prescription drug plan must be developed and reviewed by a pharmacy and therapeutic committee.

Government payment for some of the costs of prescription drugs may increase demand for products for which we receive marketing approval. However, any negotiated prices for our products covered by a Part D prescription drug plan will likely be lower than the prices we might otherwise obtain. Moreover, while the MMA applies only to drug benefits for Medicare beneficiaries, private payers often follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment that results from the MMA may result in a similar reduction in payments from non-governmental payers.

Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy. In order to obtain coverage and reimbursement for any product that might be approved for sale, we may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of our products, in addition to the costs required to obtain regulatory approvals. Our product candidates may not be considered medically necessary or cost-effective. If third-party payors do not consider a product to be cost-effective compared to other available therapies, they may not cover the product after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow a company to sell its products at a profit.

Healthcare Reform

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, collectively, the ACA, was enacted with the goal of expanding coverage for the uninsured while at the same time containing overall health care costs. With regard to pharmaceutical products, among other things, the ACA expanded and increased industry rebates for drugs covered under Medicaid programs and made changes to the coverage requirements under the Medicare D program. There have been challenges to certain aspects of the ACA. For example, on June 17, 2021, the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. Thus, the ACA will remain in effect in its current form. Prior to the U.S. Supreme Court ruling, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is possible that the ACA will be subject to judicial or Congressional challenges in the future. It is unclear how any such challenges and the healthcare reform measures of the Biden administration will impact the ACA.

Also, there has been heightened governmental scrutiny recently over pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics. Such scrutiny has resulted in several Presidential executive orders, Congressional hearings and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products. For example, in July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,” with multiple provisions aimed at prescription drugs. In response to Biden’s executive order, on September 9, 2021, HHS released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles. No legislation or administrative actions have been finalized to implement these principles. It is unclear whether these or similar policy initiatives will be implemented in the future. Further, Congress is considering additional health reform measures. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Further, it is possible

that additional governmental action is taken in response to the COVID-19 pandemic.

In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example, some E.U. jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost-effectiveness of a particular product candidate to currently available therapies. Other member states allow companies to fix their own prices for medicines but monitor and control company profits. Such differences in national pricing regimes may create price differentials between E.U. member states. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. Historically, products launched in the European Union do not follow price structures of the United States. In the European Union, the downward pressure on healthcare costs in general, particularly prescription medicines, has become intense. As a result, barriers to entry of new products are becoming increasingly high and patients are unlikely to use a drug product that is not reimbursed by their government.

Other Healthcare Laws and Compliance Requirements

Our current and future operations may subject us to various federal and state laws targeting fraud and abuse in the healthcare industry. These laws may impact, among other things, our research and proposed sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by both the federal government and the states and foreign jurisdictions in which we conduct our business. The laws that may affect our ability to operate include:

•the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;

•federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent;

•the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;

•the federal transparency laws, including the federal Physician Payments Sunshine Act, that require drug manufacturers to disclose payments and other transfers of value provided to physicians, (currently defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare professionals (such as physician assistants and nurse practitioners) and teach ing hospitals, as well as ownership and investment interests held by physicians and their immediate family members;

•HIPAA, as amended by the Health Information Technology and Clinical Health Act, or HITECH, and its implementing regulations, which imposes certain requirements on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, and their covered subcontractors, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; and

•Foreign and state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers, state and local laws governing the disclosure of payments to health care professionals, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, state laws that require the reporting of information related to drug pricing, state and local laws requiring the registration of pharmaceutical sales representatives and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to it, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations.

Human Capital Policies and Procedures

As of December 31, 2021, we had83 full-time employees. Of these employees, 52 were engaged in research and development

and 31 were engaged in general and administrative functions. All of our employees are located in the United States or Vienna, Austria. We have no collective bargaining agreements with our employees and have not experienced any work stoppages. We consider our relationship with our employees to be good.

Human capital is critical to our success. Our overarching human capital resource strategy is to recruit, hire, incentivize and retain employees consistent with our stage of operations and strategic objectives. We believe we offer our employees compensation that is competitive and consistent with the markets in which we operate, namely the Greater Boston and the Vienna, Austria metropolitan areas. We supplement base cash employee compensation with awards of stock options and/or restricted stock units under our equity incentive plans. We review employee performance annually and our Compensation Committee approves associated merit increases and annual incentive bonus payments during the first quarter of the year annually. When needed, we augment our employee base with outside consultants who specialize in various fields.

Corporate Information

We were incorporated under the laws of the State of Delaware in 2010 under the name Arsanis Inc. Following the Merger with X4 Therapeutics Inc. (formerly X4 Pharmaceuticals Inc.) on March 13, 2019, we changed our name to X4 Pharmaceuticals, Inc. Our principal executive offices are located at 61 North Beacon Street, 4th Floor, Boston, Massachusetts 02134 and our telephone number is (857) 529-8300.

Available Information

We maintain a website at http://www.x4pharma.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, proxy statements, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge on our website as soon as reasonably practicable after electronically filing such reports with the SEC. Such reports and other information may be accessed through the SEC's website at www.sec.gov. Information contained in our website is not part of this or any other report that we file with or furnish to the SEC.

ITEM 1A. RISK FACTORS

An investment in our securities involves a high degree of risk. You should carefully consider the following information about these risks, together with the other information appearing elsewhere in this Annual Report, including our audited consolidated financial statements and related notes hereto, before deciding to invest in our common stock. The occurrence of any of the following risks could have a material adverse effect on our business, financial condition, results of operations and future growth prospects, or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time. In these circumstances, the market price of our common stock could decline, and you may lose all or part of your investment. We cannot assure you that any of the events discussed below will not occur.

Summary of Selected Risks Associated with Our Business

Our business faces significant risks and uncertainties. If any of the following risks are realized, our business, financial condition and results of operations could be materially and adversely affected. You should carefully review and consider the full discussion of our risk factors in the section titled “Risk Factors” in Part I, Item 1A of this Annual Report. Some of the more significant risks include the following:

•We have incurred significant losses and have not generated revenue from product sales since our inception. We expect to continue to incur losses for the foreseeable future, and we may never achieve or maintain profitability.

•We will require substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate any product development programs or commercialization efforts.

•Raising additional capital may cause dilution to our investors, restrict our operations or require us to relinquish rights to our technologies or product candidates. Future debt obligations may expose us to risks that could adversely affect our business, operating results and financial condition and may result in further dilution to our stockholders.

•We depend almost entirely on the success of our lead product candidate, mavorixafor, which we are developing initially for the treatment of WHIM syndrome, for the treatment of SCN and chronic neutropenia disorders, for the treatment of Waldenström’s, and contingent on a potential strategic partner, for the treatment of ccRCC. We cannot be certain that we will be able to obtain regulatory approval for, or successfully commercialize, mavorixafor or any other product candidate.

•We expect to develop mavorixafor, and potentially future product candidates, in combination with other therapies, which exposes us to additional risks.

•The regulatory review and approval processes of the FDA and comparable foreign regulatory authorities are lengthy, time-consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, including mavorixafor, our business will be substantially harmed.

•We depend on license agreements with Genzyme, Beth Israel Deaconess Medical Center, Dana-Farber Cancer Institute, and Georgetown University to permit us to use patents and patent applications. Termination of these rights or the failure to comply with obligations under these agreements could materially harm our business and prevent us from developing or commercializing our product candidates.

•The results of clinical trials may not support our product candidate claims.

•We may fail to enroll a sufficient number of patients in our clinical trials in a timely manner, which could delay or prevent clinical trials of our product candidates.

•If the commercial opportunity in WHIM syndrome, CN or Waldenström’s is smaller than we anticipate, our potential future revenue from mavorixafor for the treatment of any of the diseases may be adversely affected and our business may suffer.

•If we experience any of a number of possible unforeseen events in connection with our clinical trials, potential marketing approval or commercialization of our product candidates, or our entry into licensing, collaboration or similar arrangements, could be delayed or prevented.

•Interim top-line and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

•A breakthrough therapy designation or Fast Track designation by the FDA for our product candidates may not lead to a faster development or regulatory review or approval process, and neither of these designations increases the likelihood that our product candidates will receive marketing approval.

•Product candidates may cause undesirable side effects that could delay or prevent their marketing approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any, including marketing withdrawal.

•If, in the future, we are unable to establish sales and marketing capabilities or to selectively enter into agreements with third parties to sell and market our product candidates, we may not be successful in commercializing our product candidates if and when they are approved.

•We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

•Even if we obtain and maintain approval for our product candidates from the FDA, we may never obtain approval for our product candidates outside of the United States, which would limit our market opportunities and could harm our business.

•Even if we are able to commercialize mavorixafor or any other product candidate that we develop, the product may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which would harm our business.

•We have minimal experience manufacturing our product candidates on a large clinical or commercial scale and have no manufacturing facility. We are currently dependent on a single third party manufacturer for the manufacture of mavorixafor, the active pharmaceutical ingredient, or API, and a single manufacturer of mavorixafor finished drug product capsules. If we experience problems with these third parties, the manufacturing of mavorixafor could be delayed, which could harm our results of operations.

•We rely on third-party CROs to conduct our preclinical studies and clinical trials. If these CROs do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

•Disruptions in our supply chain could delay the commercial launch of our product candidates.

•Our employees, principal investigators, CROs and consultants may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business.

•We may depend on such collaborations for the development and commercialization of our product candidates. If those collaborations are not successful, we may not be able to capitalize on the market potential of our product candidates.

•We may engage in future acquisitions or in-licenses of technology that could disrupt our business, cause dilution to our stockholders and harm our financial condition and operating results.

•If we are unable to protect our intellectual property rights, our competitive position could be harmed.

•Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

•The global coronavirus pandemic is adversely affecting, and is expected to continue to adversely affect, our business, including our clinical trials and preclinical studies.

•Our future success depends on our ability to retain executives and to attract, retain and motivate key personnel in a competitive environment for skilled biotechnology personnel.

•We will need to grow the size of our organization, and we may experience difficulties in managing this growth.

•Our stock price is expected to continue to be volatile.

•We are an “emerging growth company,” and a “smaller reporting company” and as a result of the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies, our common stock may be less attractive to investors.

Risks Related to Our Financial Position and Need for Additional Capital

We have incurred significant losses since our inception. We expect to continue to incur losses for the foreseeable future and we may never achieve or maintain profitability.

We are a late-stage clinical biopharmaceutical company with a limited operating history.Since inception, we have incurred significant operating losses. Our net losses were $88.7 million, $62.1 million and $52.8 million for the years ended December 31, 2021, 2020 and 2019 respectively, and we had an accumulated deficit of $282.9 million as of December 31, 2021. We have funded our operations to date primarily with proceeds from sales of common stock, warrants and prefunded warrants for the purchase of our preferred stock and our common stock, sales of preferred stock, proceeds from the issuance of convertible debt and borrowings under loan and security agreements.

We expect to continue to incur significant expenses and increasing operating losses for at least the next few years as we conduct additional clinical trials for our product candidates; continue to discover and develop additional product candidates; acquire or in-license other product candidates and technologies; maintain, expand and protect our intellectual property portfolio; hire additional clinical, scientific and commercial personnel; establish a commercial manufacturing source and secure supply chain capacity sufficient to provide commercial quantities of any product candidates for which we may obtain regulatory approval; seek regulatory approvals for any product candidates that successfully complete clinical trials; establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain regulatory approval; and add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts.We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. For example, we experienced delays in clinical trial site activation and slower patient enrollment in some of our clinical trials as a result of the COVID-19 pandemic, which have delayed our expectations regarding our ability to report data from those trials, and we may encounter additional delays, disruptions and other direct and indirect negative effects of the ongoing COVID-19 pandemic on our clinical trials. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. The net losses we incur may fluctuate significantly from quarter to quarter and year to year.

Our ability to generate profits from operations and thereafter to remain profitable depends heavily on:

•the scope, number, progress, duration, endpoints, cost, results and timing of clinical trials and nonclinical studies of our current or potential future product candidates, including in particular the scope, progress, duration, endpoints, cost, results and timing for completion of our Phase 3 trial of mavorixafor for the treatment of Warts, Hypogammaglobulinemia, Infections, and Myelokathexis (“WHIM”) syndrome, our Phase 1b clinical trial of mavorixafor for the treatment of Severe Congenital Neutropenia (“SCN”) and other chronic neutropenia disorders, and our Phase 1b clinical trial of mavorixafor for the treatment of Waldenström’s macroglobulinemia (“Waldenström’s”);

•our ability to raise sufficient funds to support the development and potential commercialization of our product candidates;

•the outcomes and timing of regulatory reviews, approvals or other actions;

•our ability to obtain marketing approval for our product candidates;

•our ability to establish and maintain licensing, collaboration or similar arrangements on favorable terms and whether and to what extent we retain development or commercialization responsibilities under any new licensing, collaboration or similar arrangement;

•the success of any other business, product or technology that we acquire or in which we invest;

•our ability to maintain, expand and defend the scope of our intellectual property portfolio;

•our ability to manufacture any approved products on commercially reasonable terms;

•our ability to establish a sales and marketing organization or suitable third-party alternatives for any approved product; and

•the number and characteristics of product candidates and programs that we pursue.

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XFOR · 10-K · period ended 2021-12-31

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ITEM 1A. RISK FACTORS

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XFOR · 10-K · period ended 2021-12-31

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ITEM 1A. RISK FACTORS

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