Full Press Release Details
Arsanis, Inc. and X4
Pharmaceuticals, Inc.
Tuesday, November 27th, 2018
Operator: Good day, ladies and gentlemen, and welcome to the Arsanis and X4 Pharmaceuticals Conference Call. At this time, all participants are in a
listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. If anyone should require assistance during the
conference, please press star then zero to reach an operator. As a reminder, this call is being recorded.
I would now like to turn the call over to Mike
Gray. You may begin.
Transaction Overview
Michelle. Good morning and thanks to everyone for joining us today to discuss the proposed merger of Arsanis and X4 Pharmaceuticals. Joining me on the call this morning are X4 s President and CEO, Dr. Paula Ragan, and X4 s CFO, Adam
Please note, in addition to the press release issued this morning to announce the merger, we have included presentation slides in the webcast of
today s call and posted a PDF of the slides on the website of both companies. If you have not already done so, I encourage you to open the webcast and our presentation PDF to follow along with our prepared remarks this morning.
Safe harbor statement
Turning to Slide Two. Slide Two
provides an overview of our forward-looking statements. I d like to remind everyone that our call today will include remarks about future expectations, plans and prospects for Arsanis and X4, which constitute forward-looking statements for the
purpose of the safe harbor provisions under applicable Federal Securities laws.
These forward-looking statements include, without limitation, statements
regarding the proposed merger and other contemplated transactions, including statements relating to the satisfaction of the conditions to and consummation of the proposed merger, the expected ownership of the combined company, the alternative to the
proposed merger, the expected benefits of the merger, the management and organization of the combined company, the initiation cost, timing, progress, and results of X4 s development activities,
non-clinical studies and clinical trials, the potential benefits that may be derived from any product candidates, X4 s strategy to advance strategic collaborations and the strategies, prospects, plans,
expectations, forecasts or objectives of Arsanis X4, the combined company. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those expected, including those listed
on Slide Two of this presentation.
Participants and Additional Information
Turning to Slide Three. And as outlined on this slide, please be advised to read, when available, Arsanis filings with the SEC, including a registration
statement that will contain a proxy statement and a prospectus of Arsanis and an information statement of X4 Pharmaceuticals because these documents will contain important information about the
transaction and the participants interest in such transactions. These documents can be obtained without charge by contacting Arsanis, once these filings are complete, at the address
provided on Slide Three or at the SEC s internet website, which is www.sec.gov.
Before I begin prepared remarks on Slide Four, I just want to say a
quick personal remark. As you may have noted from this morning s press release, Ren has stepped down, as President and CEO, to pursue other opportunities and I ll be taking over this role, effective today. Ren has been a
great leader for Arsanis and on behalf of the entire Arsanis team, I want to thank Ren for this leadership as CEO over the last two and a half years.
The Arsanis board and I are pleased that Ren has agreed to continue to serve on our board and is also expected to be one of the two Arsanis board
Representatives for the combined company. So, she ll remain an important part of Arsanis and will continue to represent Arsanis and its stockholders as a member of the X4 board, following transaction closing.
Transaction overview
So now, turning to Slide Four
contents, I ll begin with an overview of the transaction and then I ll turn it over to Dr. Ragan for an introduction of the X4 business.
For anyone who s not familiar with Arsanis, we had been conducting a Phase 2 clinical trial of our lead asset, ASN100, for the prevention of staph
pneumonia in high-risk mechanically-ventilated patients. We announced the discontinuation of this Phase 2 clinical trial based on results from a planned interim analysis of unblinded trial data.
Shortly thereafter, we began to consider strategic options with our board of directors to maximize shareholder value. We engaged Leerink as part of this
process and worked closely with Leerink and our board to conduct a formal process that culminated in an extensive and thorough review of several proposals.
As a result of this process, we concluded that this merger with X4 represents the best path forward for Arsanis stockholders by providing a significant equity
position on what we believe is a promising clinical stage biopharmaceutical company developing novel therapies for multiple rare diseases of the immune system as well as rare cancers.
Combined company will operate as X4 Pharmaceuticals
The combined company will operate as X4 Pharmaceuticals and expects to initiate a Phase 3 clinical trial for its lead product candidate, X4P-001 in WHIM syndrome in the first half of 2019. X4 s infrastructure will be strengthened by Arsanis clinical development and regulatory employees in our Vienna R&D facility.
Paula will serve as President and CEO of the combined company and its board of directors will include five members from X4, including the chairperson, and two
members from Arsanis. As I mentioned, Ren is expected to be one of those directors from Arsanis as well as Dave McGirr, who is our Audit Committee Chair as well.
Transaction expected to close by Q1 2019
The merger has been approved by the boards of both companies and we have secured voting agreements supporting the transaction from stockholders representing
approximately 48% of Arsanis common stock. We anticipate the transaction will close in the first quarter of 2019, subject to the approval of the stockholders of both companies and the satisfaction or waiver of other customary conditions.
Expected ownership split at the time of transaction closing
At closing, we expect X4 stockholders will own about 70% of the combined company and Arsanis stockholders will own the balance of 30%. The exchange ratios for
X4 common stock and X4 preferred stock are set forth in the merger agreement and assume a pre-transaction valuation for X4 of $115 million and $50 million Arsanis business. However, in the case
for Arsanis, the pre-transaction valuation is subject to downward or upward adjustment to the extent Arsanis net cash as of the business day prior to closing is above or below $20 million.
Arsanis evaluation of $50 million is based on projected available cash at closing, the value of certain aspects of our organization, including the
clinical and regulatory teams in the Vienna research development site, the potential of certain of Arsanis programs, including potential payments from partner programs as well as the value of our NASDAQ listing. X4 s assumed value of
$115 million is based on the value of its pipeline, the valuation of its last private round, and also X4 s achievement of various milestones since completing that round. In addition, reference was made to other comparable publicly-traded
rare disease companies.
That concludes my prepared remarks on the transaction. And I d like to now turn the call over to Dr. Ragan for an
Overview of X4 Pharmaceuticals
and CEO, X4 Pharmaceuticals, Inc.
Thank you, Mike, and good morning, everyone. I m very pleased to be here today to announce this transformative event for both companies and to share the
X4 story. We believe this merger represents a unique opportunity to provide capital to support our Phase 3 clinical trial of X4P-001 in WHIM syndrome, advance our other pipeline program, expand our future
financing options, and enhance our team and infrastructure, particularly in Europe, which supports our corporate objective of conducting a global Phase 3 clinical trial in our lead program, X4P-001, and its
subsequent global launch in commercialization.
Moving on to Slide Five. Here, we show a high-level overview of X4. Our mission is to develop treatments designed to have a clear and profound impact for
patients suffering with rare diseases, including WHIM syndrome, and patients with rare cancers.
We seek to achieve this mission through the development
of novel therapeutics designed to improve immune cell trafficking. The company was founded in 2014 in Cambridge, Massachusetts, based on assets developed at Genzyme. We ve raised $75 million to date and our largest investor is Cormorant
Building a global rare disease franchise
Turning to Slide Six. We believe X4 is positioned to rapidly create a global rare disease franchise built on the following key pillars:
Proven leadership team with rare disease expertise
So, on to Slide Seven. We ve provided an overview of our team which includes this deep rare disease experience across the executive team, board and
Prior to founding X4, I consulted as the Chief Business Officer of Lysosomal Therapeutics. And before that, I held various leadership roles in
corporate development and operations at Genzyme Sanofi, including leading Genzyme s rare disease business, strategic partnering efforts and the supply chain planning for Genzyme s flagship commercial products. Importantly, during my time
at Genzyme, the company developed and launched Mozobil, a treatment delivered solely by injection and the only approved CXCR4 antagonist.
team and board of directors bring a breadth of experiences in the development and commercialization of rare disease products launched by companies such as Genzyme, Alexion, Sarepta and Biogen: specifically, Mike Wyzga, X4 s Chairman of the
Board, was a prior Chief Financial Officer of Genzyme for over a decade. Gary Bridger, an X4 Director, was the prior Chief Scientific Officer at AnorMED, a company which was acquired by Genzyme. Gary led the Research and Development efforts, which
ultimately led to the many global approvals of Mozobil.
Finally, I d like to recognize the role that Henri Termeer played in X4. Henri, who
pioneered treatments for rare diseases and led Genzyme as a CEO for over 25 years, was one of the co-founders of X4, helping the company begin its journey. His inspiration and mission live on in me and in X4
On Slide Eight, we provided an overview here of our pipeline. Our lead product candidate is X4P-001, an oral small molecule that we are initially investigating across rare immunodeficiency indications and in oncology. We expect to initiate the Phase 3 clinical trial of
X4P-001 for WHIM syndrome in the first half of 2019 with topline results targeted for 2021.
half of next year, we plan to initiate Phase 1/2 study for X4P-001 in severe congenital neutropenia (SCN) and Waldenstrom s macroglobunemia. We ve also completed Phase 1B clinical trials of X4P-001 for the treatment of melanoma in renal cell carcinoma (RCC) in combination with checkpoint inhibitors. These studies demonstrated acceptable safety profiles, proof of mechanism and favorable clinical
activity. Additionally, we have a
second ongoing Phase 2A study in RCC in combination with axitinib, which we expect to read out in mid-2019.
In the second half of 2019, we aim to file INDs for our next two product candidates, X4P-003 in primary
immunodeficiencies and X4P-002 in brain cancers, namely glioblastoma.
Strategy focused on building a strong
diversified commercial rare disease business
On to Slide Nine. So as a result, we have a strong cadence of anticipated value-building milestones over
the both near and longer term, as outlined here. These expected milestones are staggered across our pipeline over the next few years, potentially expanding our opportunities in rare disease and cancers as we build towards the Phase 3 topline results
of our lead program. Importantly, we also have the potential to advance some partnerships with our oncology programs as well.
CXCR4/CXCL12 and immune
On to Slide Ten. So with that high-level overview of the company, our opportunities and development plans, now let s drive a bit
more detail into the underlying biology of our key program.
The diagram on this slide shows the relationship between the chemokine CXC Receptor Type 4
(CXCR4) and a full ligand, CXCL12. This receptor-ligand pair is well-known to play in an essential role in normal trafficking, maturation and surveillance of immune cells. In the setting of various diseases, we believe the overstimulation of the
receptor-ligand tear results in impairment of normal signaling functions and results in decreased trafficking of these key immune cells. This can ultimately lead to increased infections and the promotion of cancer cell survival.
Our lead program, X4P-001, is an orally delivered small molecule that blocks overstimulation of the receptor-ligand
pathway and aims to restore functional immune surveillance. We believe X4P-001 is the only oral CXCR4 foreign antagonist in clinical development. We believe it is also the only oral allosteric inhibitor of the
receptor, which can potentially be the best approach for inhibiting overstimulation. And finally, it s administered as a single once-daily dose.