10-Q
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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

OR

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.

i


 

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.

1


 

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.

2


 

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.

3


 

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.

4


 

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.

5


 

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

)

 

 

(6,917

)

Cash flows from investing activities

 

 

 

 

 

 

Purchase of property and equipment

 

 

(540

)

 

 

(1,483

)

Investment in joint venture

 

 

(50

)

 

 

 

Net cash used in investing activities

 

 

(590

)

 

 

(1,483