md-autocomplete displays results as a list instead of dropdown

I am trying to use Angular Material md-autocomplete tag to display suggestions for zipcode in my form. I am calling an asynchronous service to get the suggestions and populate the results. I used the demo code on https://material.angularjs.org/latest/api/directive/mdAutocomplete as a reference. However, the results are getting displayed as a ul-li's below my form. Can someone please help me figure out what could be going wrong? I have included the required files in my html. Here are the code snippets:

HTML

<!-- Angular Material requires Angular.js Libraries -->
<script src="https://ajax.googleapis.com/ajax/libs/angularjs/1.7.6/angular.min.js"></script>
<script src="https://ajax.googleapis.com/ajax/libs/angularjs/1.7.6/angular-animate.min.js"></script>
<script src="https://ajax.googleapis.com/ajax/libs/angularjs/1.7.6/angular-aria.min.js"></script>
<script src="https://ajax.googleapis.com/ajax/libs/angularjs/1.7.6/angular-messages.min.js"></script>

<!-- Angular Material Library -->
<script src="https://ajax.googleapis.com/ajax/libs/angular_material/1.1.12/angular-material.min.js"></script>

input element in form

<md-autocomplete flex
md-selected-item="selectedItem" 
md-search-text="searchText" 
md-items="x in query(searchText)"
md-item-display="x.display"
md-clear-button="false">
  <md-item-template>
    <span md-highlight-text="searchText">{{x}}</span>
  </md-item-template>
</md-autocomplete>

AngularJS Controller

var app = angular.module("App", ['ngMaterial', 'ngMessages']);
app.controller("MainController", function ($scope, $http) {

    $scope.query = function(searchText) {
        return $http.get(BACKEND_URL + '/items/' + searchText)
          .then(function(response) {
             return response.data;
       });
    };
});

I am calling the required api from the backend and getting the response as an array. It is getting printed in the console as well. But, the final results get displayed as a list below my form like this:

You should add angularjs material css file.

<link rel="stylesheet" href="//rawgit.com/angular/bower-material/master/angular-material.css">