a)

Each share of common stock, par value $0.0001 per share, of Apexigen (the “Apexigen Common Stock”) that is issued and outstanding immediately prior to the Effective Time (other than (i) treasury shares, and (ii) any shares of Apexigen Common Stock held directly by the Company or Merger Sub) will automatically be converted into the right to receive 0.1725 (the “Exchange Ratio”) shares of common stock, par value $0.001 per share, of Pyxis Oncology (the “Company Common Stock” or “Pyxis Oncology Common Stock”). No fractional shares of Company Common Stock will be issued in connection with the Merger and the number of shares of Company Common Stock to be issued to Apexigen stockholders shall be rounded down to the nearest whole share. The Exchange Ratio and shares to be issued to Apexigen stockholders in connection with the Merger will be subject to adjustment for stock splits and similar events as provided in the Merger Agreement.

b)

Each option to purchase shares of Apexigen Common Stock (each, an “Apexigen Option”) that is outstanding immediately prior to the Effective Time will be assumed and converted as of the Effective Time into an option to acquire, on substantially similar terms and conditions as were applicable under such Apexigen Option, the number of shares of Company Common Stock determined by multiplying the number of shares of Apexigen Common Stock subject to such Apexigen Option immediately prior to the Effective Time by the Exchange Ratio (rounded down to the nearest whole share), with an exercise price per share equal to the exercise price per share of such Apexigen Option as of immediately prior to the Effective Time, divided by the Exchange Ratio (rounded up to the nearest whole cent).

c)

Each award of restricted stock units of Apexigen (each, an “Apexigen RSU Award”) outstanding as of immediately prior to the Effective Time will be assumed and converted as of the Effective Time into an award of Pyxis Oncology restricted stock units, with substantially similar terms and conditions as were applicable under such Apexigen RSU Award, that covers the number of shares of Company Common Stock determined by multiplying the number of shares of Apexigen Common Stock subject to such Apexigen RSU Award immediately prior to the Effective Time by the Exchange Ratio (rounded down to the nearest whole share).

d)

Each warrant to purchase shares of Apexigen Common Stock (each, an “Apexigen Warrant”) outstanding immediately prior to the Effective Time will be assumed and converted as of the Effective Time into a warrant to acquire, on substantially similar terms and conditions as were applicable under such Apexigen Warrant, a number of shares of Company Common Stock determined by multiplying the number of shares of Apexigen Common Stock subject to such Apexigen Warrant immediately prior to the Effective Time by the Exchange Ratio (rounded down to the nearest whole share), with an exercise price per share equal to the exercise price per share of such Apexigen Warrant as of immediately prior to the Effective Time, divided by the Exchange Ratio (rounded up to the nearest whole cent), with any fractional shares to be dealt with in accordance with the terms of such Apexigen Warrant.

●

The accompanying notes to the unaudited pro forma condensed combined financial information;

●

The audited historical consolidated financial statements of Pyxis Oncology as of and for the year ended December 31, 2022 and 2021 and the related notes set forth in the Annual Report on Form 10-K filed with the SEC on March 22, 2023, incorporated by reference into this proxy statement/prospectus;

●

The unaudited historical condensed consolidated financial statements of Pyxis Oncology as of and for the three months ended March 31, 2023, and the related notes set forth in the Quarterly Report on Form 10-Q filed with the SEC on May 11, 2023, incorporated by reference into this proxy statement/prospectus;

●

The audited historical consolidated financial statements of Apexigen as of and for the year ended December 31, 2022 and 2021 and the related notes set forth in the Annual Report on Form 10-K filed with the SEC on February 22, 2023, included elsewhere in this proxy statement/prospectus;

●

The unaudited historical condensed consolidated financial statements of Apexigen as of and for the three months ended March 31, 2023, and the related notes set forth in the Quarterly Report on Form 10-Q filed with the SEC on May 15, 2023, included elsewhere in this proxy statement/prospectus; and

●

The disclosures contained in the sections titled “Pyxis Oncology Management’s Discussion and Analysis of Financial Condition and Results of Operations,” incorporated by reference into this proxy statement/prospectus and “Apexigen Management’s Discussion and Analysis of Financial Condition and Results of Operations of Apexigen”, included elsewhere in this proxy statement/prospectus.

Historical

Pyxis Oncology

Apexigen

Transaction

Adjustments

Note 4

Pro Forma

Combined

Assets

Current assets:

Cash and cash equivalents

$

53,059

$

12,730

$

(655

)

(A)(B)

$

65,134

Marketable debt securities, short-term

96,290

—

—

96,290

Restricted cash

1,472

—

—

1,472

Prepaid expenses and other current assets

5,361

2,123

—

7,484

Deferred financing costs, current

—

1,776

(1,776

)

(C)

—

Total current assets

156,182

16,629

(2,431

)

170,380

Property and equipment, net

13,163

—

—

13,163

Operating lease right-of-use assets

13,458

—

—

13,458

Intangible assets, net

—

—

20,218

(D)

20,218

Goodwill

—

—

625

(E)

625

Deferred financing costs, non-current

—

592

(592

)

(C)

—

Other assets

—

355

—

355

Total assets

$

182,803

$

17,576

$

17,820

$

218,199

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

4,025

$

2,809

$

—

$

6,834

Accrued expenses and other current liabilities

6,363

5,494

11,917

(F)

23,774

Operating lease liabilities, current portion

1,213

—

—

1,213

Deferred revenue

—

6,150

—

6,150

Total current liabilities

11,601

14,453

11,917

37,971

Operating lease liabilities, net of current portion

19,039

—

—

19,039

Derivative warrant liabilities

—

10

—

10

Total liabilities

30,640

14,463

11,917

57,020

Commitments and contingencies

Stockholders’ equity:

Preferred stock

—

—

—

—

Common stock

37

2

2

(G)

41

Additional paid-in capital

383,108

185,957

(170,812

)

(H)

398,253

Accumulated other comprehensive income

696

—

—

696

Accumulated deficit

(231,678

)

(182,846

)

176,713

(I)

(237,811

)

Total stockholders’ equity

152,163

3,113

5,903

161,179

Total liabilities and stockholders’ equity

$

182,803

$

17,576

$

17,820

$

218,199

Historical

Pyxis

Oncology

Apexigen

Transaction

Adjustments

Note 4

Pro Forma

Combined

Operating expenses:

Research and development

$

11,901

$

2,937

$

—

$

14,838

General and administrative

9,053

3,279

—

12,332

Total operating expenses

20,954

6,216

—

27,170

Loss from operations

(20,954

)

(6,216

)

—

(27,170

)

Other income, net:

Interest and investment income

1,673

—

—

1,673

Sublease income

38

—

—

38

Other income, net

 —

163

—

163

Total other income, net

1,711

163

—

1,874

Net loss

$

(19,243

)

$

(6,053

)

$

—

$

(25,296

)

Net loss per common share - basic and diluted

$

(0.54

)

$

(0.25

)

$

—

$

(0.64

)

Weighted average shares of common stock outstanding - basic and diluted

35,351,671

24,156,890

4,275,521

(M)

39,627,192

Historical

Pyxis Oncology

Apexigen

Transaction

Adjustments

Note 4

Pro Forma

Combined

Operating expenses:

Research and development

$

86,129

$

23,035

$

1,579

(J)

$

110,743

General and administrative

37,352

9,651

4,553

(K)(L)

51,556

Total operating expenses

123,481

32,686

6,132

162,299

Loss from operations

(123,481

)

(32,686

)

(6,132

)

(162,299

)

Other income, net:

Interest income

2,764

—

—

2,764

Other income, net

—

617

—

617

Total other income

2,764

617

—

3,381

Net loss

$

(120,717

)

$

(32,069

)

$

(6,132

)

$

(158,918

)

Net loss per common share - basic and diluted

$

(3.65

)

$

(1.62

)

$

—

$

(4.26

)

Weighted average shares of common stock outstanding - basic and diluted

33,033,081

19,787,212

4,275,521

(M)

37,308,602

Amount

Apexigen Common Stock outstanding as of June 5, 2023 (i)

24,785,634

Exchange ratio

0.1725

Estimated equivalent Pyxis Oncology Common Stock to be issued to Apexigen stockholders

4,275,521

Closing price of Pyxis Oncology Common Stock on June 5, 2023 (ii)

$

3.19

Estimated Merger Consideration

$

13,639

Estimated fair value of replacement Apexigen Options attributable to pre-combination service (iii)

50

Estimated fair value of replacement Apexigen RSUs attributable to pre-combination service (iv)

444

Estimated fair value of Apexigen Warrants (v)

1,011

Preliminary estimated purchase price

$

15,144

(i)

The final purchase price will be determined based on the number of shares of Apexigen Common Stock of the combined company that Apexigen stockholders own as of the Closing Date. For purposes of this unaudited pro forma condensed combined financial information, the estimated number of shares represents 24,785,634 shares of Apexigen Common Stock outstanding as of June 5, 2023, the most recent practicable date before the filing date.

(ii)

The estimated purchase price was based on the closing price of Pyxis Oncology Common Stock as reported on The Nasdaq Global Select Market on June 5, 2023, the most recent practicable date before the filing date. The final purchase price will be based on the number of shares and fair market value of Pyxis Oncology Common Stock outstanding immediately prior to the Closing Date and could result in a purchase price different from that assumed in this unaudited pro forma condensed combined financial information, and that difference may be material.

(iii)

Pursuant to the Merger Agreement, at the closing of the Merger, Pyxis Oncology will replace all outstanding Apexigen Options into Pyxis Oncology stock options, on substantially similar terms and conditions as were applicable under such Apexigen Option, by applying the Exchange Ratio. At the Closing Date, Pyxis Oncology will replace approximately 4,471,403 Apexigen Options with approximately 771,317 Pyxis Oncology stock options. The acquisition date fair value of the Apexigen Options replaced with Pyxis Oncology’s stock options is determined by the Black-Scholes option-pricing model and the acquisition date fair value attributable to the pre-combination services of $50 thousand is included in the estimated purchase price.

Additionally, pursuant to the change-in-control provisions in the employment contracts with certain Apexigen employees, unvested Apexigen Options granted to Apexigen executive officers and certain employees will be vested in full upon closing of the Merger. Accordingly, these Apexigen Options will not require post-combination service and no stock compensation expense has been recorded in the unaudited pro forma condensed combined statement of operations.

(iv)

Pursuant to the Merger Agreement, at the Closing Date, Pyxis Oncology will replace all Apexigen RSU Awards outstanding immediately prior to the Effective Time into Pyxis Oncology restricted stock units, on substantially similar terms and conditions as were applicable under such Apexigen RSU Award, by applying the Exchange Ratio. At the closing of the Merger, Pyxis Oncology will replace approximately 807,639 Apexigen RSU Awards with approximately 139,317 Pyxis Oncology restricted stock units. The acquisition date fair value of the Apexigen RSU Awards replaced with Pyxis Oncology’s restricted stock units was based on the closing price of Pyxis Oncology Common Stock as reported on The Nasdaq Global Select Market on June 5, 2023, the most recent practicable date before the filing date. The acquisition date fair value attributable to the pre-combination services of $0.4 million is included in the estimated purchase price.

Additionally, pursuant to the change-in-control provisions in the employment contracts with certain Apexigen employees, unvested Apexigen RSU Awards granted to Apexigen executive officers and certain employees will be vested in full upon closing of the Merger. Accordingly, these Apexigen RSU Awards will not require post-combination service and no stock compensation expense has been recorded in the unaudited pro forma condensed combined statement of operations.

(v)

Pursuant to the Merger Agreement, at the Closing Date, Pyxis Oncology will assume and convert all Apexigen Warrants outstanding immediately prior to the Effective Time into a warrant to acquire, on substantially similar terms and conditions as were applicable under such Apexigen Warrant, by applying the Exchange Ratio. At the closing of the Merger, Pyxis Oncology will replace approximately 5,692,113 Apexigen Warrants with approximately 981,889 Pyxis Oncology warrants. The acquisition date fair value of the Apexigen Warrants assumed and converted to Pyxis Oncology warrants is $1.0 million, which is included in the estimated purchase price. The fair value of these replaced warrants is determined using the Black-Scholes option-pricing model and the following assumptions:

Assumptions

Expected term (in years)

4.17

–

5.00

Expected volatility

92.66%

-

96.23%

Risk-free interest rate

3.70%

-

3.84%

Expected dividend yield

0.00%

Stock
Price

Estimated
purchase price

As presented

$

3.19

$

15,144

10% increase

$

3.51

$

16,603

10% decrease

$

2.87

$

13,487

Amount

Assets acquired:

Cash and cash equivalents (i)

$

12,165

Prepaid expenses and other current assets

2,123

Other assets

355

Total identifiable assets

14,643

Liabilities assumed:

Accounts payable

(2,809

)

Accrued liabilities (ii)

(11,373

)

Deferred revenue (iii)

(6,150

)

Derivative warrant liabilities

(10

)

Total identifiable liabilities

(20,342

)

In-process research and development (“IPR&D) (iv)

20,218

Goodwill (v)

625

Total preliminary purchase price

$

15,144

(i)

On February 26, 2023, Apexigen approved a retention plan in connection with the corporate restructuring in order to retain certain employees required to explore strategic alternatives and maintain operations as it explores those strategic alternatives. These employees were granted cash retention bonuses, which will become payable upon the earliest of the occurrence of (i) certain actions relating to a strategic transaction, (ii) June 30, 2023 and/or September 30, 2023, depending on the employee, and (iii) such employee’s earlier termination, subject to certain exceptions. In connection with the Merger Agreement, these cash retention bonuses became payable, of which $0.2 million was paid by Apexigen post March 31, 2023. The remaining $0.4 million will be paid by Apexigen on or before the Closing Date.

(ii)

The unaudited pro forma condensed combined financial information presented includes liabilities assumed of Apexigen which includes $5.9 million of transaction costs incurred since March 31, 2023 or expected to be incurred by Apexigen, in connection with the Merger, such as advisor fees, legal fees, printer fees, accounting expenses and the cost of Apexigen’s Directors and Officers insurance policy.

(iii)

The unaudited pro forma condensed combined financial information presented reflects the early adoption of Accounting Standards Update (“ASU”) 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. Under this new standard, deferred revenue acquired in a business combination is measured pursuant to ASC 606, Revenue from Contracts with Customers, rather than at its assumed acquisition date fair value. Pyxis Oncology early adopted the requirements of ASU 2021-08 and is required to apply the amendments prospectively to all business combinations that occurred on or after April 1, 2023. The adoption of the standard will have no retrospective impact to Pyxis Oncology’s or Apexigen’s historical financial statements.

Deferred revenue represents sales-based product royalty payments received under an existing out-licensing agreement for which management determined that the variable consideration was fully constrained as there have been disputes from the counterparty over the obligation to pay Apexigen such royalties under the out-licensing agreement.

(iv)

IPR&D represents the research and development assets of Apexigen which were in-process, but not yet completed, and which Pyxis Oncology has the opportunity to advance. Under ASC 805, acquired IPR&D assets cannot be written off upon acquisition. Instead, acquired IPR&D assets are required to be measured at their acquisition date fair value and considered indefinite-lived intangible assets until the completion or abandonment of the associated research and development efforts. The fair value of acquired IPR&D is estimated based on a market benchmark of prior transactions within the biotech industry with similar size companies having a similar asset profile. The final fair value of the acquired IPR&D could differ significantly from the current estimate.

(v)

Goodwill is calculated as the difference between the preliminary estimate of the fair value of the consideration transferred and the preliminary estimates of the fair value assigned to the assets acquired and liabilities assumed. The fair value estimate for goodwill is preliminary. The final determination of fair value of goodwill remains subject to change.

(A)

Reflects a reduction to cash and cash equivalents of $0.1 million to refund remaining Apexigen Employee Stock Purchase Plan (“ESPP”) cash contributions due back to eligible Apexigen employees upon termination of the ESPP at the Closing Date.

(B)

Reflects a reduction to cash and cash equivalents of $0.6 million for cash retention bonuses payable in cash by Apexigen to certain Apexigen employees. See Note 3 (i), “Preliminary Purchase Price Allocation” for further detail.

(C)

Reflects the elimination of deferred financing fees as the amount does not represent an asset for which fair value would be ascribed in purchase accounting.

(D)

Reflects the identifiable intangible assets in the amount of $20.2 million, which represent Apexigen’s in-process development of clinical assets, intellectual properties and its technology, collectively, IPR&D, acquired at the Closing Date. The fair values of the identifiable intangible assets acquired are based on preliminary estimates using assumptions that are believed to be reasonable and based on information that is currently available. See Note 3 (iv), “Preliminary Purchase Price Allocation” for further detail.

(E)

Reflects adjustments to recognize preliminary estimated goodwill of $0.6 million. Goodwill represents the excess of the purchase price of $15.1 million over the preliminary fair value of Apexigen’s underlying net tangible and identifiable intangible assets net of liabilities of $14.5 million. See Note 3 (v), “Preliminary Purchase Price Allocation” for further detail.

(F)

Reflects the preliminary adjustments to accrued expenses and other current liabilities for the following (in thousands):

Amount

Pro forma adjustments:

Estimated Pyxis Oncology transactions costs (i)

$

850

Estimated liability for Apexigen transaction costs (ii)

5,879

Estimated severance costs for Apexigen employees (iii)

5,283

Eliminate ESPP liability (iv)

(95

)

Net pro forma adjustment to accrued expenses and other current liabilities

$

11,917

(i)

Reflects estimated, non-recurring transaction costs of $0.9 million incurred since March 31, 2023 or expected to be incurred by Pyxis Oncology, in connection with the Merger, such as legal fees, printer fees, and accounting expenses. As of March 31, 2023, Pyxis Oncology did not incur transaction costs in connection with the Merger, therefore, no related costs have been included in the historical financial statements.

(ii)

Reflects Apexigen’s estimated, non-recurring transaction costs of $5.9 million incurred since March 31, 2023 or expected to be incurred by Apexigen, in connection with the Merger. See Note 3(ii), “Preliminary Purchase Price Allocation” for further detail.

(iii)

Reflects estimated, non-recurring severance costs of $5.3 million resulting from pre-existing employment agreements of certain Apexigen executive officers and employees. The pre-existing agreements result in the payment of severance and benefits upon multiple triggers, including a change-in-control and termination by the acquirer. As a result, this amount reflects the expected severance expense to be recorded by Pyxis Oncology as a result of probable terminations that will occur in connection with or after completion of the Merger.

(iv)

Reflects the elimination of the liability related to the ESPP, which will terminate in connection with the Merger.

(G)

Reflects the preliminary adjustments to eliminate Apexigen’s historical common stock and record the par value of the estimated Pyxis Oncology Common Stock issued to acquire Apexigen (in thousands): See Note 2, “Preliminary Purchase Price” for further detail.

Amount

Pro forma adjustments:

Eliminate historical Apexigen Common Stock

$

(2

)

Record par value of estimated shares of Pyxis Oncology Common Stock issued to acquire Apexigen (i)

4

Net pro forma adjustment to common stock

$

2

(i)

Reflects issuance of 4,275,521 shares of Pyxis Oncology Common Stock to Apexigen stockholders as purchase price to acquire Apexigen.

(H)

Reflects the preliminary adjustments to additional paid-in capital for the following (in thousands):

Amount

Pro forma adjustments:

Eliminate Apexigen’s historical additional paid-in-capital

$

(185,957

)

Estimated fair value of replacement Apexigen Options attributable to pre-combination service (i)

50

Estimated fair value of replacement Apexigen RSUs attributable to pre-combination service (ii)

444

Estimated fair value of Apexigen Warrants (iii)

1,011

Record issuance of shares under the ESPP, post March 31, 2023 (iv)

5

Record estimated purchase consideration in excess of the par value of Pyxis Oncology Common Stock issued to acquire Apexigen (v)

13,635

Net pro forma adjustment to additional paid-in capital

$

(170,812

)

(i)

Reflects $50 thousand of consideration transferred related to the pre-combination service of the replacement stock options granted to Apexigen employees by Pyxis Oncology, including Apexigen Options accelerated under pre-existing employment agreements with certain Apexigen executives. See Note 2(iii), “Preliminary Purchase Price” for further detail.

(ii)

Reflects $0.4 million of consideration transferred related to the pre-combination service of the replacement RSUs granted to Apexigen employees by Pyxis Oncology, including Apexigen RSU Awards accelerated under pre-existing employment agreements with certain Apexigen executives. See Note 2(iv), “Preliminary Purchase Price” for further detail.

(iii)

Reflects $1.0 million of acquisition date fair value of Apexigen Warrants assumed and converted into Pyxis Oncology warrants upon closing of the Merger. See Note 2(v), “Preliminary Purchase Price” for further detail.

(iv)

Reflects issuance of shares under the ESPP to eligible employees, post March 31, 2023 and prior to terminating the existing the ESPP in connection with the Merger.

(v)

Represents the estimated purchase price in excess of the par value of Pyxis Oncology Common Stock issued to acquire Apexigen. See Note 2, “Preliminary Purchase Price” for further detail.

(I)

Reflects the preliminary adjustments to accumulated deficit for the following (in thousands):

Amount

Pro forma adjustments:

Eliminate Apexigen’s accumulated deficit

$

182,846

Estimated Pyxis Oncology transaction costs (i)

(850

)

Estimated severance costs for Apexigen employees (ii)

(5,283

)

Net pro forma adjustment to accumulated deficit

$

176,713

(i)

Reflects estimated, non-recurring transaction costs to be incurred by Pyxis Oncology post March 31, 2023, in connection with the Merger. See adjustment (F)(i) above for further detail.

(ii)

Reflects estimated, non-recurring severance costs of $5.3 million for Apexigen employees that will be incurred by Pyxis Oncology, in accordance with employment and related agreements that were executed in advance of the Merger. Refer to adjustment (F)(iii) for further detail.

(J)

Reflects estimated, non-recurring severance costs of $1.6 million related to planned termination of Apexigen employees within the research and development function, by Pyxis Oncology post-closing of the Merger, in accordance with employment and related agreements that were executed in advance of the Merger. Refer to adjustment (F)(iii) for further detail.

(K)

Reflects estimated, non-recurring severance costs of $3.7 million related to planned termination of Apexigen employees within the general and administration function, by Pyxis Oncology post-closing of the Merger, in accordance with employment and related agreements that were executed in advance of the Merger. Refer to adjustment (F)(iii) for further detail.

(L)

Reflects estimated, non-recurring transaction costs of $0.9 million incurred since March 31, 2023 or expected to be incurred by Pyxis Oncology, in connection with the Merger, such as legal fees, printer fees, and accounting expenses. Refer to adjustment (F)(i) for further detail.

(M)

The pro forma combined basic and diluted earnings per share have been adjusted to reflect the pro forma net loss for the year ended December 31, 2022 and the three months ended March 31, 2023. In addition, the number of shares used in calculating the pro forma combined basic and diluted net loss per share has been adjusted to reflect the estimated total number of shares of common stock of the combined company that would be outstanding as of the Closing Date. For the year ended December 31, 2022 and the three months ended March 31, 2023, the pro forma weighted average shares outstanding has been calculated as follows:

Three Months
Ended
March 31, 2023

Year

Ended
December 31, 2022

Pyxis Oncology’s weighted average shares outstanding

35,351,671

33,033,081

Estimated shares of Pyxis Oncology Common Stock to be issued to Apexigen stockholders upon closing of the Merger

4,275,521

4,275,521

Pro forma combined weighted average number of shares of common stock outstanding —basic and diluted

39,627,192

37,308,602