Description of Business and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2026

Description of Business and Summary of Significant Accounting Policies

X4 Pharmaceuticals Inc., together with its subsidiaries (the “Company”), is a biopharmaceutical company developing and commercializing novel therapeutics for the treatment of rare hematology diseases. The Company continues to progress its global, pivotal Phase 3 clinical trial, (the “4WARD” trial) to evaluate the efficacy, safety, and tolerability of oral, once-daily mavorixafor (with or without stable doses of granulocyte colony-stimulating factor (“G-CSF”)) in people with congenital, acquired primary autoimmune, or idiopathic chronic neutropenia (“CN”) who are experiencing recurrent and/or serious infections. The 52-week trial is a randomized, double-blind, placebo-controlled, multicenter study aiming to enroll up to 176 patients, with full enrollment expected by the end of the third quarter of 2026. The U.S. Food and Drug Administration (“FDA”) has granted Fast Track designation to mavorixafor for the treatment of CN, which is defined as periods lasting more than three months persistently or intermittently where there are abnormally low levels of neutrophils circulating in the blood, and may be idiopathic (of unknown origin), cyclic (episodes typically occurring every three weeks), or congenital (of genetic causation). CN disorders 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. The Company has one commercially approved product, XOLREMDI ® (mavorixafor), which has received accelerated approval in the United States from the FDA for use as an oral, once-daily therapy in patients 12 years of age and older with WHIM (warts, hypogammaglobulinemia, infections, and myelokathexis) syndrome, to increase the number of circulating mature neutrophils and lymphocytes. WHIM syndrome is a rare combined primary immunodeficiency and chronic neutropenic disorder. The Company is committed to making XOLREMDI available to patients in need in the U.S. while maintaining its focus on its long-term strategy to successfully complete the 4WARD trial in patients with moderate and severe CN. The Company is headquartered in Boston, Massachusetts.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements as of and for the three months ended March 31, 2026 and 2025, respectively have been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring adjustments as necessary, for the fair statement of the Company’s condensed financial position, condensed results of its operations and cash flows have been made. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2025 included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 17, 2026. The condensed consolidated balance sheet at December 31, 2025 that is presented in these interim condensed consolidated financial statements was derived from audited financial statements but does not include all disclosures required by GAAP.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, including X4 Pharmaceuticals (Austria) GmbH, which is incorporated in Vienna, Austria, and X4 Therapeutics, Inc. All intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting period. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the accrual of research and development expenses, the accrual of operational and financial license milestones, the accrual of reserves for variable consideration related to product revenue, and the impairment or lack of impairment of long-lived assets including operating lease right-of-use assets and goodwill. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the

circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. As of the date of issuance of these condensed consolidated financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. Actual results could differ from those estimates, and any such differences may be material to the Company’s condensed consolidated financial statements.

Liquidity

The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. Although the Company has an approved drug product, licensing and sales of the Company’s drug product over the next 12 months will not be sufficient to fund the Company’s operating expenses. Since inception, the Company has incurred significant operating losses and negative cash flows from operations, and the Company expects to continue to generate operating losses and negative cash flows from operations for the foreseeable future. For the three months ended March 31, 2026, the Company’s net loss was $20.2 million and net cash used in operating activities was $19.6 million. As of March 31, 2026, the Company had $233.7 million of cash, cash equivalents and short-term marketable securities, and an accumulated deficit of $614.8 million.

Based on its current operating plan, the Company believes (a) that its current cash, cash equivalents and short-term marketable securities will be sufficient to fund its operations for at least the next 12 months and (b) it will continue to comply with all covenants under the Hercules Loan Agreement, as defined and further described in Note 8, through at least the 12-month period from the issuance date of these condensed consolidated financial statements.

The Company is subject to risks common to companies in the biopharmaceutical industry including, but not limited to, uncertainties relating to conducting preclinical and clinical research and development, the manufacture and supply of products and product candidates for clinical and commercial use, obtaining and maintaining regulatory approvals and pricing and reimbursement for its products and product candidates, market acceptance, managing global growth and operating expenses, availability of additional capital, competition, obtaining and enforcing patents, stock price volatility, dependence on collaborative relationships and third-party service providers, dependence on key personnel, and from time to time government investigations, litigation, and potential product liability claims.

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 17, 2026. Since the date of those consolidated financial statements, there have been no material changes to the Company’s significant accounting policies.

Restricted Cash


(in thousands)	As of March 31, 2026		As of December 31, 2025
Letter of credit security: Vienna Austria lease	$	—	$	224
Letter of credit security: Boston lease	579		579
Total restricted cash	$	579	$	803

In connection with the Company’s lease agreements for its facilities in Boston, Massachusetts, the Company maintains a letter of credit, which is secured by restricted cash, for the benefit of the respective landlord. As of December 31, 2025, restricted cash related to the Company’s former Vienna, Austria lease, which the Company terminated effective November 30, 2025, is included in other current assets and was subsequently converted to unrestricted cash during the three months ended March 31, 2026. Restricted cash related to the Boston lease is also included in other current assets.

In accordance with the Company’s Hercules Loan Agreement, the Company at all times must maintain a minimum level of cash of $15.0 million in an account or accounts in which Hercules has a first priority security interest.

Cash, Cash Equivalents, Restricted Cash and Marketable Securities

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the total of amounts shown in the Company’s condensed consolidated statements of cash flows as of March 31, 2026 and December 31, 2025:


(in thousands)	March 31, 2026		December 31, 2025
Cash and cash equivalents	$	216,908	$	217,049
Restricted cash, current (included within prepaid expenses and other current assets)	579		803

Total cash, cash equivalents and restricted cash	$	217,487	$	217,852

The Company’s cash equivalents consisted of money market funds invested in U.S. Treasury securities. The money market funds were valued based on quoted prices in active markets for identical assets, which represents a Level 1 measurement. All marketable securities are classified as short-term investments as all are due within one year and include investments in U.S. Treasury notes, U.S. Treasury bills and federal government agency notes. The amortized cost of each investment, individually and in aggregate, approximated fair value. The Company has evaluated each marketable security for impairment that is other-than-temporary and concluded that no marketable security was impaired as of March 31, 2026 and December 31, 2025.


	Fair Value Measurements as of March 31, 2026 Using:
(in thousands)	Level 1		Level 2		Level 3		Total

Cash equivalents—money market funds	$	214,009	$	—	$	—	$	214,009
Marketable securities— U.S. Treasury notes, U.S. Treasury bills, and federal government agency notes	—		16,812		—		16,812
	$	214,009	$	16,812	$	—	$	230,821


	Fair Value Measurements as of December 31, 2025 Using:
(in thousands)	Level 1		Level 2		Level 3		Total

Cash equivalents—money market funds	$	123,838	$	—	$	—	$	123,838
Marketable securities—U.S. Treasury notes, U.S. Treasury bills, and federal government agency notes	—		35,949		—		35,949
	$	123,838	$	35,949	$	—	$	159,787

The following table provides amortized cost, unrealized gains and losses and the carrying amount of available-for-sale debt marketable securities as of March 31, 2026:


(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Treasury securities	$	3,991	$	—	$	—	$	3,991
Federal Government Agency securities	12,824		—		3		12,821
Total available-for-sale debt securities	$	16,815	$	—	$	3	$	16,812

The following table provides amortized cost, unrealized gains and losses and the carrying amount of available-for-sale debt marketable securities as of December 31, 2025:


(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Treasury securities	$	7,959	$	3	$	—	$	7,962
Federal Government Agency securities	27,980		11		4		27,987
Total available-for-sale debt securities	$	35,939	$	14	$	4	$	35,949

Liabilities Measured at Fair Value

The following tables present information about the Company’s financial liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values:


	Fair Value Measurements as of March 31, 2026 Using:
(in thousands)	Level 1		Level 2		Level 3		Total




Liabilities:
Embedded derivative liability	$	—	$	—	$	10	$	10

Class C warrant liability	—		—		897		897
	$	—	$	—	$	907	$	907


	Fair Value Measurements as of December 31, 2025 Using:
(in thousands)	Level 1		Level 2		Level 3		Total




Liabilities:
Embedded derivative liability	$	—	$	—	$	10	$	10

Class C warrant liability	—		—		977		977
	$	—	$	—	$	987	$	987

The following table provides a roll-forward for the three months ended March 31, 2026 of the aggregate fair values of financial instruments for which fair values are determined using Level 3 inputs:


(in thousands)	Embedded Derivative Liability		Class C Warrant Liability		Total
Balance as of December 31, 2025	$	10	$	977	$	987


Change in fair value	—		80		80

Balance as of March 31, 2026	$	10	$	897	$	907

Valuation of Embedded Derivative Liability— The fair value of the embedded derivative liability recognized in connection with the Company’s Hercules Loan Agreement, which is associated with additional fees due to Hercules upon non-credit related events of default, was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair value of this embedded derivative liability, which is reported within other non-current liabilities on the condensed consolidated balance sheets, is estimated by the Company at each reporting date based, in part, on the results of third-party valuations, which were prepared based on a discounted cash flow model that considered the timing and probability of occurrence of a redemption upon an event of default, the potential amount of prepayment fees or contingent interest upon an event of default and the Company’s risk-adjusted discount rate of 17%. As of March 31, 2026 and December 31, 2025, the fair value of this derivative liability was $10 thousand.

Class C Warrant Liability— In December 2022, the Company issued Class C Warrants for the purchase of shares of its common stock in a public offering. The Class C Warrants are accounted for as a liability on the condensed consolidated balance sheet and are adjusted to fair value at period end through “change in fair value of warrant liability” on the condensed consolidated statements of operations and comprehensive (loss) income.

The Company calculated the fair value of the Class C Warrants using the Black-Scholes option pricing model, with the following inputs:


	March 31, 2026		December 31, 2025
Common stock price	$4.13		$4.00
Risk-free interest rate	3.8	%	3.5	%
Expected term (in years)	1.7		1.9
Expected volatility	138.1	%	136.0	%
Expected dividend yield	—	%	—	%

Net (Loss) Income Per Share

Basic net (loss) income per common share is calculated based on net (loss) income divided by the weighted average number of shares outstanding for the period. The calculation of diluted loss per common share excludes the impact of potential common stock as their inclusion would be to reduce net loss per common share and are thus antidilutive. The calculation of diluted income per share includes the impact of dilutive securities as described below.

Basic and diluted net (loss) income per share was calculated as follows:


	Three Months Ended March 31,
(in thousands, except share and per share data)	2026		2025
Numerator:
Net (loss) income	$	(20,241)	$	282
Denominator:
Weighted average shares outstanding—basic	126,288,723		6,840,035
Net (loss) income per share— basic	$	(0.16)	$	0.04
Effective of dilutive securities
Time-based restricted stock units	—		14,328

Employee stock purchase plan	—		14,721
Dilutive potential common shares	—		29,049
Weighted average shares outstanding-—diluted	126,288,723		6,869,084
Net (loss) income per share— diluted	$	(0.16)	$	0.04

Basic and diluted weighted average shares of common stock outstanding for the three months ended March 31, 2026 and 2025 includes the weighted average effect of pre-funded warrants for the purchase of shares of common stock, for which the remaining unfunded exercise price is less than or equal to $0.03 per share.

For the three months ended March 31, 2026, during which the Company recorded net loss, the Company’s potentially dilutive securities included outstanding stock options, unvested restricted stock units and warrants to purchase shares of common stock. These potentially dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share, and thus they are considered “anti-dilutive.” Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same for this period.

For the three month period ended March 31, 2025, during which the Company recorded net income, the dilutive effect of outstanding stock options, restricted stock units, employee stock purchase plan shares and warrants were calculated using the treasury stock method, whereby all such awards were assumed to be exercised at the beginning of the period. The hypothetical proceeds from such exercises, including the average unrecognized stock compensation expense for outstanding stock options

and restricted stock units, were assumed to be used to purchase outstanding common stock at the average price during the period. The net share impact of dilutive securities was added to the weighted average basic common shares outstanding to calculate weighted average diluted shares outstanding.

The Company excluded the following potential shares of common stock from the computation of diluted net (loss) income per share for the periods indicated because including them would have had an anti-dilutive effect:


	Three Months Ended March 31,
(in thousands)	2026	2025
Options to purchase shares of common stock	15,856	325
Unvested restricted stock units	54	249
Warrants to purchase shares of common stock (excluding prefunded warrants, which are included in basic shares outstanding)	2,546	2,546
	18,456	3,120

Recently Issued Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Topic 220) (“ASU 2024-03”) requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The requirements in ASU 2024-03 may be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The Company continues to evaluate the impact of the future adoption of ASU 2024-03 to its consolidated financial statements.