SEC Filing | Pyxis Oncology

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-40881

Pyxis Oncology, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	83-1160910
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
35 Cambridge Park Drive Cambridge, Massachusetts	02140
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 221-9059

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, par value $0.001 per share

PYXS

Nasdaq Global Select Market

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 (§232.405 of this chapter) during the preceding 12 months (or 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, 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 12, 2021, the registrant had 32,763,887 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents


		Page
Summary Risk Factors		1
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2021 and 2020	4
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit for the three and nine months ended September 30, 2021 and 2020	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II.	OTHER INFORMATION	29
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	79
Item 3.	Defaults Upon Senior Securities	79
Item 4.	Mine Safety Disclosures	79
Item 5.	Other Information	79
Item 6.	Exhibits	80
Signatures		82

Where You Can Find More Information

Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (www.pyxisoncology.com), filings we make with the Securities and Exchange Commission, webcasts, press releases, and conference calls. We use these mediums, including our website, to communicate with our stockholders and the public about our company, our product candidates, and other matters. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website.

The information contained on the website referenced in this Quarterly Report on Form 10-Q is not incorporated by reference into this filing, and the website address is provided only as an inactive textual reference.

SUMMARY RISK FACTORS

You should consider carefully the risks described under “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. References to “we,” “us,” and “our” in this section titled “Summary Risk Factors” refer to Pyxis Oncology, Inc. and its wholly owned subsidiaries. A summary of the risks that could materially and adversely affect our business, financial condition, operating results and prospects include the following:



We are a preclinical stage biopharmaceutical company with a limited operating history and have incurred significant losses since our inception. We expect to incur losses over at least the next several years and may never achieve or maintain profitability.



We will require substantial additional capital to finance our operations, obtain regulatory approval for our product candidates, and commercialize our product candidates. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce or eliminate one or more of our research and product development programs or future commercialization efforts.



We are heavily dependent on the success of PYX-201, PYX-202, and PYX-203, all of which are in the early stages of development, and if PYX-201, PYX-202, and/or PYX-203 are not successful in clinical trials or do not receive regulatory approval or licensure or are not successfully commercialized, our business will be materially and adversely affected.



All of our product candidates are currently in preclinical development. Our product candidates may fail in development or suffer delays that materially and adversely affect their commercial viability. If we or our existing or future collaborators are unable to initiate and complete clinical development of, obtain regulatory licensure for or commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed.



Our preclinical studies and clinical trials may fail to demonstrate adequately the safety, purity and potency of any of our product candidates, which would prevent or delay development, regulatory licensure and commercialization.



Our preclinical programs may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory licensure or commercialize these programs on a timely basis or at all.



We face competition from entities that have developed or may develop product candidates for cancer, including companies developing novel treatments and technology platforms. If these companies develop technologies or product candidates more rapidly than we do or their technologies are more effective, our ability to develop and successfully commercialize product candidates may be adversely affected.



Clinical testing and product development is a lengthy and expensive process with an uncertain outcome. We may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the clinical testing and the development and commercialization of our product candidates.



The regulatory licensure and approval processes of the FDA and other comparable regulatory authorities are lengthy, time-consuming and inherently unpredictable and, if we are ultimately unable to obtain marketing licensure or approval for our product candidates, our business will be substantially harmed.



If we fail to attract and retain qualified senior management and key scientific personnel, our business may be materially and adversely affected.



We face risks related to health epidemics and outbreaks, including the COVID-19 pandemic, which could significantly disrupt our preclinical studies and clinical trials, and therefore our receipt of necessary regulatory licensure or approvals could be delayed or prevented.



We rely on third-parties to manufacture our product candidates. Any failure by a third-party manufacturer to produce acceptable raw materials or product candidates for us or to obtain authorization from the FDA or comparable foreign regulatory authorities may delay or impair our ability to initiate or complete our clinical trials, obtain regulatory licensure or approvals or commercialize approved products.



If we are unable to obtain and maintain patent protection for our product candidates, or if the scope of the patent protection obtained is not sufficiently broad, or if our patents are insufficient to protect our product candidates for an adequate amount of time, or if we are unable to obtain adequate protection for our proprietary know-how, we may not be able to compete effectively in our markets.



If we fail to comply with our obligations under any license, collaboration or other agreements, we may be required to pay damages and could lose intellectual property rights that are necessary for developing and protecting our product candidates or we could lose certain rights to grant sublicenses.



Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues. If we breach our University of Chicago, Pfizer, or LegoChem license agreements or any of the other agreements under which we acquired, or will acquire, intellectual property rights covering our product candidates, we could lose the ability to continue the development and commercialization of the related product.



If the market opportunities for any product that we develop are smaller than we believe they are, our revenue may be adversely affected and our business may suffer.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PYXIS ONCOLOGY, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)


	September 30, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	133,477		$	8,080
Prepaid expenses and other current assets		859			23
Total current assets		134,336			8,103
Property and equipment, net		1,154			1,103
Operating lease right-of-use assets		388			836
Deferred offering costs		3,501			—
Other assets, noncurrent		109			109
Total assets	$	139,488		$	10,151
Liabilities, Convertible Preferred Stock and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	1,927		$	1,077
Accrued expenses and other current liabilities		5,462			1,997
Derivative liability, current portion		9,123			—
Operating lease liabilities, current portion		325			615
Total current liabilities		16,837			3,689
Derivative liability, net of current portion	67				—
Operating lease liabilities, net of current portion		—			165
Total liabilities		16,904			3,854
Commitments and contingencies (Note 12)
Series A Convertible Preferred Stock, $0.001 par value per share; 22,724,926 shares authorized, 22,724,925 shares issued and outstanding as of September 30, 2021 and December 31, 2020, liquidation value of $22,000 as of September 30, 2021 and December 31, 2020		21,942			21,942
Series B Convertible Preferred Stock, $0.001 par value per share; 104,812,248 and zero shares authorized, issued and outstanding as of September 30, 2021 and December 31, 2020, respectively, liquidation value of $172,500 as of September 30, 2021		172,081			—
Stockholders’ deficit:
Common stock, $0.001 par value per share; 167,000,000 and 40,300,000 shares authorized at September 30, 2021 and December 31, 2020, respectively; 2,194,326 and 2,177,956 shares issued at September 30, 2021 and December 31, 2020 and 1,639,600 and 1,289,342 shares outstanding at September 30, 2021 and December 31, 2020, respectively		2			1
Additional paid-in capital		3,448			97
Accumulated deficit		(74,889	)		(15,743	)
Total stockholders’ deficit		(71,439	)		(15,645	)
Total liabilities, convertible preferred stock and stockholders’ deficit	$	139,488		$	10,151

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PYXIS ONCOLOGY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Operating expenses:
Research and development	$	7,849		$	2,425		$	43,828		$	5,909
General and administrative		3,772			767			9,463			2,406
Total operating expenses		11,621			3,192			53,291			8,315
Loss from operations		(11,621	)		(3,192	)		(53,291	)		(8,315	)
Other income (expense):
Interest income		6			1			16			66
Service fee income from related party		—			—			181			—
Change in fair value of derivative liability		(2,560	)		—			(5,821	)		—
Total other income (expense)		(2,554	)		1			(5,624	)		66
Loss from equity method investment in joint venture		—			—			(231	)		—
Net loss and comprehensive loss	$	(14,175	)	$	(3,191	)	$	(59,146	)	$	(8,249	)
Net loss per common share, basic and diluted	$	(8.96	)	$	(2.93	)	$	(40.27	)	$	(8.43	)
Weighted average common shares outstanding, basic and diluted		1,581,610			1,088,222			1,468,777			979,081

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PYXIS ONCOLOGY, INC.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit

(In thousands, except share amounts)

(Unaudited)


	Series A Convertible Preferred Stock				Series B Convertible Preferred Stock				Common Stock
	Shares		Amount		Shares		Amount		Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Deficit
Balance at January 1, 2021		22,724,925	$	21,942		—	$	—		1,289,342	$	1	$	97	$	(15,743	)	$	(15,645	)
Issuance of Series B convertible preferred stock, net of issuance costs of $419		—		—		104,812,248		172,081		—		—		—		—			—
Vesting of restricted common stock		—		—		—		—		123,085		—		3		—			3
Stock-based compensation		—		—		—		—		—		—		2,450		—			2,450
Net loss		—		—		—		—		—		—		—		(36,968	)		(36,968	)
Balance at March 31, 2021		22,724,925	$	21,942		104,812,248	$	172,081		1,412,427	$	1	$	2,550	$	(52,711	)	$	(50,160	)
Vesting of restricted common stock		—		—		—		—		106,580		1		2		—			3
Stock-based compensation		—		—		—		—		—		—		572		—			572
Net loss		—		—		—		—		—		—		—		(8,003	)		(8,003	)
Balance at June 30, 2021		22,724,925	$	21,942		104,812,248	$	172,081		1,519,007	$	2	$	3,124	$	(60,714	)	$	(57,588	)
Vesting of restricted common stock		—		—		—		—		104,223		—		3		—			3
Stock options exercised										16,370		—		14		—			14
Stock-based compensation		—		—		—		—		—		—		307		—			307
Net loss		—		—		—		—		—		—		—		(14,175	)		(14,175	)
Balance at September 30, 2021		22,724,925	$	21,942		104,812,248	$	172,081		1,639,600	$	2	$	3,448	$	(74,889	)	$	(71,439	)


	Series A Convertible Preferred Stock				Series B Convertible Preferred Stock				Common Stock
	Shares		Amount		Shares		Amount		Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Deficit
Balance at January 1, 2020		22,724,925	$	21,942		—	$	—		828,356	$	1	$	40	$	(2,915	)	$	(2,874	)
Vesting of restricted common stock		—		—		—		—		76,933		—		1		—			1
Stock-based compensation		—		—		—		—		—		—		9		—			9
Net loss		—		—		—		—		—		—		—		(1,958	)		(1,958	)
Balance at March 31, 2020		22,724,925	$	21,942		—	$	—		905,289	$	1	$	50	$	(4,873	)	$	(4,822	)
Vesting of restricted common stock		—		—		—		—		76,933		—		1		—			1
Stock-based compensation		—		—		—		—		—		—		9		—			9
Issuance of common stock		—		—		—		—		48,919		—		2		—			2
Net loss		—		—		—		—		—		—		—		(3,100	)		(3,100	)
Balance at June 30, 2020		22,724,925	$	21,942		—	$	—		1,031,141	$	1	$	62	$	(7,973	)	$	(7,910	)
Vesting of restricted common stock		—		—		—		—		102,160		—		3		—			3
Stock-based compensation		—		—		—		—		—		—		11		—			11
Net loss		—		—		—		—		—		—		—		(3,191	)		(3,191	)
Balance at September 30, 2020		22,724,925	$	21,942		—	$	—		1,133,301	$	1	$	76	$	(11,164	)	$	(11,087	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PYXIS ONCOLOGY, INC.

Condensed Consolidated Statements of Cash Flows (In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2021			2020
Cash flows from operating activities
Net loss	$	(59,146	)	$	(8,249	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		489			299
Stock-based compensation		3,329			29
Non-cash research and development expenses		20,000			—
Non-cash lease expense		448			289
Non-cash loss from equity method investment in joint venture		50			—
Change in fair value of derivative liability		5,821			—
Changes in operating assets and liabilities:
Prepaid and other current assets		(836	)		(84	)
Accounts payable		610			117
Accrued expenses and other current liabilities		3,164			960
Operating lease liabilities		(455	)		(278	)
Derivative liability		3,369			—
Net cash used in operating activities		(23,157	)		(