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 March 31, 2024

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.)

321 Harrison Avenue

Boston, Massachusetts

02118

(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 May 13, 2024, the registrant had 58,888,473 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 March 31, 2024 and December 31, 2023

3

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months ended March 31, 2024 and 2023

4

Condensed Consolidated Statements of Stockholders’ Equity for the Three Months ended March 31, 2024 and 2023

5

Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2024 and 2023

6

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

Controls and Procedures

24

PART II.

OTHER INFORMATION

25

Item 1.

Legal Proceedings

25

Item 1A.

Risk Factors

25

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

77

Item 3.

Defaults Upon Senior Securities

77

Item 4.

Mine Safety Disclosures

77

Item 5.

Other Information

77

Item 6.

Exhibits

78

Signatures

79

 

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 “Pyxis Oncology,” the “Company,” “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 clinical 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-106 and PYX-107, which are in the early stages of development, and if PYX-201, PYX-106 and/or PYX-107 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.
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 approval or 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 approval or 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 approval or 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 treatment, including companies developing novel treatments and technology platforms. If these companies develop technologies or product candidates more rapidly than we do or if 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 of our product candidates and may never achieve commercialization for any 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 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 relating thereto may delay or impair our ability to initiate or complete our clinical trials, obtain regulatory licensure or approvals or commercialize approved products.
We face substantial competition, which may result in others discovering, developing or commercializing products more quickly or marketing them more successfully than we do.
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 Inc., or Pfizer, or Biosion USA, Inc., or Biosion, 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 candidate(s).
We are subject to stringent and changing obligations related to data privacy and cybersecurity. Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions, litigation, fines and penalties, a disruption of our business operations, including our clinical trials, harm to our reputation, and other adverse effects on our business or prospects.
Our internal computer systems, or those of any of our existing or future contract research organizations, or CROs, manufacturers, other contractors, consultants, or collaborators, may fail or suffer security or data privacy breaches or other unauthorized or improper access to, use of or destruction of our proprietary and confidential data, employee data or personal data, which could result in additional costs, significant liabilities, harm to our reputation and material disruption of our operations.
If we achieve commercialization and the market opportunities for any product that we develop are smaller than we believe they are, our revenues 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)

 

 

 

 

 

 

 

 

 

March 31, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

27,967

 

 

$

9,664

 

Marketable debt securities, short-term

 

 

129,060

 

 

 

109,634

 

Restricted cash

 

 

1,472

 

 

 

1,472

 

Accounts receivable

 

 

8,000

 

 

 

 

Prepaid expenses and other current assets

 

 

5,880

 

 

 

3,834

 

Total current assets

 

 

172,379

 

 

 

124,604

 

Property and equipment, net

 

 

11,333

 

 

 

11,872

 

Intangible assets, net

 

 

23,730

 

 

 

24,308

 

Operating lease right-of-use assets

 

 

12,778

 

 

 

12,942

 

Total assets

 

$

220,220

 

 

$

173,726

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,293

 

 

$

3,896

 

Accrued expenses and other current liabilities

 

 

10,828

 

 

 

12,971

 

Operating lease liabilities, current portion

 

 

1,020

 

 

 

1,232

 

Deferred revenues

 

 

 

 

 

7,660

 

Total current liabilities

 

 

14,141

 

 

 

25,759

 

Operating lease liabilities, net of current portion

 

 

19,759

 

 

 

20,099

 

Deferred tax liability, net

 

 

2,164

 

 

 

2,164

 

Total liabilities

 

 

36,064

 

 

 

48,022

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, par value $0.001 per share, 10,000,000 shares authorized; zero shares issued and outstanding

 

 

 

 

 

 

Common stock, $0.001 par value per share; 190,000,000 shares authorized; 58,803,126 and 44,754,853 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.

 

 

59

 

 

 

45

 

Additional paid-in capital

 

 

473,638

 

 

 

411,821

 

Accumulated other comprehensive (loss) income

 

 

(60

)

 

 

63

 

Accumulated deficit

 

 

(289,481

)

 

 

(286,225

)

Total stockholders’ equity

 

 

184,156

 

 

 

125,704

 

Total liabilities and stockholders’ equity

 

$

220,220

 

 

$

173,726

 

 

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 March 31,

 

 

2024

 

 

2023

 

Revenues

 

 

 

 

 

 

Royalty revenues (See Note 6)

 

$

8,146

 

 

$

 

Sale of royalty rights (See Note 6)

 

 

8,000

 

 

 

 

Total revenues

 

 

16,146

 

 

 

 

Costs and operating expenses:

 

 

 

 

 

 

Cost of revenues

 

 

475

 

 

 

 

Research and development

 

 

13,029

 

 

 

11,901

 

General and administrative

 

 

8,247

 

 

 

9,053

 

Total costs and operating expenses

 

 

21,751

 

 

 

20,954

 

Loss from operations

 

 

(5,605

)

 

 

(20,954

)

Other income, net:

 

 

 

 

 

 

Interest and investment income

 

 

1,550

 

 

 

1,673

 

Sublease income

 

 

799

 

 

 

38

 

Total other income, net

 

 

2,349

 

 

 

1,711

 

Net loss

 

$

(3,256

)

 

$

(19,243

)

Net loss per common share - basic and diluted

 

$

(0.06

)

 

$

(0.54

)

Weighted average shares of common stock outstanding - basic and diluted

 

 

51,289,284

 

 

 

35,351,671

 

Other comprehensive (loss) income:

 

 

 

 

 

 

Net unrealized (loss) gain on marketable debt securities

 

 

(123

)

 

 

696

 

Other comprehensive (loss) income

 

 

(123

)

 

 

696

 

Comprehensive loss

 

$

(3,379

)

 

$

(18,547

)

 

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

4


PYXIS ONCOLOGY, INC.

 

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

(Loss) Income

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2023

 

 

44,754,853

 

 

$

45

 

 

$

411,821

 

 

$

63

 

 

$

(286,225

)

 

$

125,704

 

Issuance of common stock in private placement, net of offering costs (See Note 7)

 

 

8,849,371

 

 

 

9

 

 

 

39,163

 

 

 

 

 

 

 

 

 

39,172

 

Issuance of common stock pursuant to at-the-market (“ATM”) program, net of offering costs (See Note 7)

 

 

3,600,000

 

 

 

4

 

 

 

10,586

 

 

 

 

 

 

 

 

 

10,590

 

Issuance of pre-funded warrants in private placement, net of offering costs (See Note 8)

 

 

 

 

 

 

 

 

7,700

 

 

 

 

 

 

 

 

 

7,700

 

Issuance of restricted common stock, net of tax withholdings

 

 

1,497,921

 

 

 

1

 

 

 

(197

)

 

 

 

 

 

 

 

 

(196

)

Stock options exercised

 

 

100,981

 

 

 

 

 

 

245

 

 

 

 

 

 

 

 

 

245

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,320

 

 

 

 

 

 

 

 

 

4,320

 

Net unrealized loss on marketable debt securities

 

 

 

 

 

 

 

 

 

 

 

(123

)

 

 

 

 

 

(123

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,256

)

 

 

(3,256

)

Balance at March 31, 2024

 

 

58,803,126

 

 

$

59

 

 

$

473,638

 

 

$

(60

)

 

$

(289,481

)

 

$

184,156

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

(Loss) Income

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2022

 

 

34,958,730

 

 

$

34

 

 

$

373,225

 

 

$

 

 

$

(212,435

)

 

$

160,824

 

Issuance of common stock to Pfizer Inc. (See Note 5)

 

 

1,811,594

 

 

 

2

 

 

 

4,998

 

 

 

 

 

 

 

 

 

5,000

 

Issuance of restricted common stock, net of tax withholdings

 

 

148,047

 

 

 

1

 

 

 

1

 

 

 

 

 

 

 

 

 

2

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,884

 

 

 

 

 

 

 

 

 

4,884

 

Net unrealized gain on marketable debt securities

 

 

 

 

 

 

 

 

 

 

 

696

 

 

 

 

 

 

696

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,243

)

 

 

(19,243

)

Balance at March 31, 2023

 

 

36,918,371

 

 

$

37

 

 

$

383,108

 

 

$

696

 

 

$

(231,678

)

 

$

152,163

 

 

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)

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(3,256

)

 

$

(19,243

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

1,116

 

 

 

190

 

Stock-based compensation

 

 

4,320

 

 

 

4,884

 

Non-cash lease expense

 

 

164

 

 

 

144

 

Accretion of discount on marketable debt securities

 

 

(1,288

)

 

 

(607

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(8,000

)

 

 

 

Prepaid expenses and other current assets

 

 

(2,046

)

 

 

486

 

Accounts payable

 

 

(1,365

)

 

 

(753

)

Accrued expenses and other current liabilities

 

 

(2,143

)

 

 

(13,273

)

Operating lease liabilities

 

 

(552

)

 

 

1,331

 

Deferred revenues

 

 

(7,660

)

 

 

 

Net cash used in operating activities

 

 

(20,710

)

 

 

(26,841

)

Investing activities

 

 

 

 

 

 

Redemption of marketable debt securities

 

 

74,532

 

 

 

 

Purchase of marketable debt securities

 

 

(92,793

)

 

 

(94,987

)

Purchase of property and equipment

 

 

(237

)

 

 

(4,406

)

Net cash used in investing activities

 

 

(18,498

)

 

 

(99,393

)

Financing activities

 

 

 

 

 

 

Proceeds from issuance of common stock and pre-funded warrants in private placement, net of offering costs

 

 

46,872

 

 

 

 

Proceeds from issuance of common stock pursuant to ATM program, net of offering costs

 

 

10,590

 

 

 

 

Tax withholding payments related to net settlement of restricted common stock

 

 

(196

)

 

 

 

Proceeds from the exercise of stock options

 

 

245

 

 

 

 

Net cash provided by financing activities

 

 

57,511

 

 

 

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

 

18,303

 

 

 

(126,234

)

Cash, cash equivalents and restricted cash at beginning of year

 

 

11,136

 

 

 

180,765

 

Cash, cash equivalents and restricted cash at end of period

 

$

29,439

 

 

$

54,531

 

Noncash operating, investing and financing activities:

 

 

 

 

 

 

Property and equipment in accounts payable and accrued expenses

 

$

 

 

$

2,261

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

Cash and cash equivalents

 

$

27,967

 

 

$

53,059

 

Restricted cash

 

 

1,472

 

 

 

1,472

 

Total cash, cash equivalents and restricted cash shown in the statement of
   cash flows

 

$

29,439

 

 

$

54,531

 

 

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

6


PYXIS ONCOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Description of Business

Nature of Business

Pyxis Oncology, Inc. (the “Company”), a Delaware corporation, was founded in June 2018 and launched its operations in July 2019. The Company is a clinical stage company focused on defeating difficult-to-treat cancers. The Company is efficiently building next generation therapeutics that hold the potential for mono and combination therapies. The Company’s therapeutic candidates are designed to kill tumor cells and to address the underlying pathologies created by cancer that enable its uncontrollable proliferation and immune evasion. The Company’s antibody-drug conjugates (“ADCs”) and immuno-oncology (“IO”) programs employ novel and emerging strategies to target a broad range of solid tumors resistant to current standards of care.

On August 23, 2023, the Company completed the acquisition of Apexigen, Inc. (“Apexigen”) pursuant to a business combination agreement, whereby Ascent Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of the Company merged with and into Apexigen, with Apexigen surviving as a wholly owned subsidiary of the Company (the “Merger”).

The Company has one operating segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on a consolidated basis for the purposes of assessing performance and allocating resources.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The Company’s fiscal year ends on December 31 and its first three fiscal quarters end on March 31, June 30 and September 30. The accompanying condensed consolidated financial statements are unaudited. The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and follow the requirements of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements as certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The Company has no unconsolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

In the opinion of management, the unaudited condensed consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair statement of results for the interim periods. The results for the three months ended March 31, 2024 are not necessarily indicative of those expected for the year ending December 31, 2024 or for any future period. The condensed consolidated balance sheet as of December 31, 2023 included herein was derived from the audited consolidated financial statements as of that date. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the related notes thereto for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 21, 2024 (“Fiscal 2023 10-K”).

Liquidity

As of March 31, 2024, the Company had an accumulated deficit of $289.5 million. The Company has incurred losses and negative cash flows from operations since inception, including net losses of $3.3 million and $19.2 million for the three months ended March 31, 2024 and 2023, respectively.

The Company has not generated any revenues from product sales to date and does not anticipate generating any revenues from product sales unless and until it successfully completes development and obtains regulatory approval for its current or any future product candidates. The Company expects that its operating losses and negative cash flows will continue for the foreseeable future as the Company continues to expand its research and development programs and develop its product candidates.

The Company currently expects that its existing cash, cash equivalents and short-term investments of $157.0 million as of March 31, 2024 will fund its operating expenses and capital requirements at least twelve months from the date these unaudited condensed consolidated financial statements are issued. Additional funding may be necessary to fund future clinical and preclinical activities.

 

7


The Company plans to continue to fund its losses from operations and capital funding needs through public or private equity, convertible or debt financing or other sources. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned programs. Any of these actions could materially harm the Company’s business, results of operations and future prospects.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expense, and related disclosures. The Company regularly evaluates estimates and assumptions related to assets, liabilities, stock-based compensation, operating leases, assessment of the useful lives of property and equipment, marketable debt securities, fair value of intangible assets and research and development costs, including clinical trial accruals. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results could differ from those estimates and there may be changes to management’s estimates in future periods.

Risks and Uncertainties

The Company is subject to risks common to early-stage companies in the biopharmaceutical industry including, but not limited to, uncertainties related to commercialization of products, regulatory approvals, dependence on key suppliers for active ingredients and third-party service providers such as contract development and manufacturing organizations (“CDMOs”), protection of intellectual property rights and the ability to make milestone, royalty or other payments due under any license, collaboration or supply agreements.

Concentration of Credit Risks

Financial instruments which potentially subject the Company to significant concentration of credit risk consist of cash and cash equivalents, restricted cash and short-term investments.

The Company invests its excess cash primarily in money market funds and highly liquid U.S. Treasury securities. The Company has adopted an investment policy that includes guidelines relative to credit quality, diversification and maturities to preserve principal and liquidity.

Significant Accounting Policies

There have been no significant changes to the Company’s significant accounting policies disclosed in “Note 2 – Summary of Significant Accounting Policies” of the Company’s Fiscal 2023 10-K.

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 revises the guidance on calculating earnings per share, requiring use of the if-converted method for all convertible instruments and rescinding an entity’s ability to rebut the presumption of share settlement for instruments that may be settled in cash or other assets. On January 1, 2024, the Company adopted ASU 2020-06, which did not have a material effect on the Company’s financial position, results of operations, or cash flows.

Recently Issued Accounting Pronouncements

Recent authoritative guidance issued by the FASB (including technical corrections to the ASC), the American Institute of Certified Public Accountants (“AICPA”), and the SEC did not, or are not expected to, have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

8


3. Fair Value Measurements

The following tables present the financial instruments carried at fair value on a recurring basis as of March 31, 2024 and December 31, 2023, respectively, in accordance with the FASB ASC 820 hierarchy (in thousands):

 

 

 

March 31, 2024

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

24,767

 

 

$

 

 

$

 

 

$

24,767

 

Marketable debt securities

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

 

129,060

 

 

 

 

 

 

 

 

 

129,060

 

Total

 

$

153,827

 

 

$

 

 

$

 

 

$

153,827

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Cash Equivalents

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

8,360

 

 

$

 

 

$

 

 

$

8,360

 

Marketable debt securities

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

 

109,634

 

 

 

 

 

 

 

 

 

109,634

 

Total

 

$

117,994

 

 

$

 

 

$

 

 

$

117,994

 

 

The Company’s cash equivalents represent deposits in a short-term money market fund quoted in an active market and are classified as Level 1 assets. Marketable debt securities include investments in United States Treasury securities and are classified as Level 1 assets as they are valued using quoted prices in active markets. There were no assets or liabilities measured at fair value on a nonrecurring basis at March 31, 2024 and December 31, 2023. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the periods presented.

4. Marketable Debt Securities

Marketable debt securities, all of which were classified as available-for-sale, consist of the following (in thousands):

 

 

March 31, 2024

 

 

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Aggregate
Fair Value

 

Marketable debt securities

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

129,120

 

 

$

6

 

 

$

(66

)

 

$

129,060

 

 

 

 

December 31, 2023

 

 

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Aggregate
Fair Value

 

Marketable debt securities

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

109,571

 

 

$

71

 

 

$

(8

)

 

$

109,634

 

As of March 31, 2024, the remaining contractual terms of the U.S. Treasury securities were less than 12 months.

To date, the Company has not recognized any allowances for credit losses or impairments in relation to its marketable securities as these securities are comprised of high credit quality, investment grade securities that the Company does not intend or expect to be required to sell prior to their anticipated recovery, and the decline in fair value of these securities is attributable to factors other than credit losses.

Interest and investment income consists of the following (in thousands):

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Interest income

 

$

262

 

 

$

1,066

 

Accretion of discount, net

 

 

1,288

 

 

 

607

 

Total interest and investment income

 

$

1,550

 

 

$

1,673

 

 

9


5. Licensing Agreements

The University of Chicago Agreement

In April 2020, the Company entered into a license agreement (the “University License Agreement”), as well as a sponsored research agreement, with the University of Chicago (the “University”). Under the terms of the license, the Company has the global right to develop and commercialize products that are covered by a valid claim of a licensed patent, incorporate or use the licensed know-how and materials or are known to assess, modulate or utilize the activity of certain specified biological targets. In partial consideration for the license from the University, the Company issued to the University 48,919 shares of its common stock in 2020.

Pursuant to the University License Agreement, the Company is obligated to pay potential development and commercial milestones as well as running royalties on net sales of licensed products at varying rates. The Company assessed the milestone and royalty events under the University License Agreement as of March 31, 2024 and 2023, and determined that no such amounts were required.

Pfizer Inc. Agreement

In December 2020, the Company entered into a license agreement (as amended, the “Pfizer License Agreement”) with Pfizer Inc. (“Pfizer”) for worldwide development and commercialization rights to ADC product candidates directed to certain licensed targets, including PYX-201 and PYX-203, and products containing the ADC product candidates. The Company’s rights are exclusive with respect to certain patents owned or controlled by Pfizer covering the licensed ADCs. The initial licensed targets include CD123 and Extradomain-B Fibronectin (“EDB+FN”) and the Company has the option to expand the scope of its license to add additional licensed targets that have not been licensed to a third party or are not the subject of a Pfizer ADC development program. The Pfizer License Agreement became effective in March 2021 and the Company paid a combined $25.0 million for the license fee, consisting of an upfront cash payment of $5.0 million and issued 12,152,145 shares of Series B convertible preferred stock, which was converted into 1,911,015 shares of its common stock upon the initial public offering (“IPO”) in October 2021, with a value of $20.0 million to Pfizer.

On October 6, 2022, the Company entered into an amended and restated license agreement (the “A&R License Agreement”) with Pfizer, which amends and restates the Pfizer License Agreement. Pursuant to the A&R License Agreement, Pfizer granted to the Company exclusive worldwide rights under Pfizer’s Flexible Antibody Conjugation Technology Flexible Antibody Conjugation Technology (“FACT”) Platform technology to develop and commercialize ADC product candidates directed to certain licensed targets, including PYX-201 and PYX-203, and products containing the ADC product candidates. Additional ADC targets may be licensed for a nominal upfront payment and milestones. In accordance with the terms of the A&R License Agreement, the Company issued 2,229,654 shares of its common stock to Pfizer in October 2022, paid $8.0 million to Pfizer in January 2023 and issued 1,811,594 shares of its common stock to Pfizer in March 2023.

Further, pursuant to the A&R License Agreement, the Company is obligated to pay future contingent payments including development, regulatory and commercial milestones as well as running royalties on net sales of licensed products at varying rates. The Company assessed the milestone and royalty events under the A&R License Agreement as of March 31, 2024 and 2023, and determined that no such amounts were required.

License Agreement with Biosion USA, Inc.

On March 28, 2022, the Company entered into a license agreement (the “Biosion License Agreement”) with Biosion USA, Inc. (“Biosion”), pursuant to which the Company obtained an exclusive, worldwide (other than Greater China (mainland China, Hong Kong, Macau and Taiwan)) license for development, manufacturing and commercialization rights for BSI-060T, a Siglec-15 targeting antibody, an IO product candidate (now referred to as PYX-106), and products containing the licensed compound.

Pursuant to the Biosion License Agreement, the Company paid an upfront license fee of $10.0 million in March 2022. Further, the Company is also obligated to pay future contingent payments including development, regulatory and commercial milestones as well as running royalties on net sales of licensed products and sublicensing revenues at varying rates. The Company assessed the milestone and royalty events involving the Biosion License Agreement as of March 31, 2024 and 2023, and determined that no such amounts were required.

Acquired Out-Licensing Agreements

In August 2023, the Company completed the acquisition of Apexigen and assumed all out-licensing agreements of Apexigen upon the Merger.

Simcere License and Collaboration Agreement

In December 2008, Epitomics, Inc. (“Epitomics”) (Apexigen’s predecessor) and Jiangsu Simcere Pharmaceutical R&D Co., Ltd. (“Simcere”) entered into a license and collaboration agreement (the “Simcere Agreement”) for the development and commercialization of suvemcitug (BD0801) for oncology in China.

Simcere is obligated to pay the Company milestone payments for achievement of certain clinical development milestones and low to high single-digit percentage royalties on net sales of suvemcitug in China until 15 years after the first commercial sale of suvemcitug. The Company assessed the milestone and royalty events involving Simcere as of March 31, 2024 and determined that no such amounts were receivable.

10


T-Mab/Mabwell Agreement

In May 2008, Epitomics and Jiangsu T-Mab Biotechnology Ltd., Co. (“T-Mab”) entered into a license, co-development and contract manufacture agreement (the “T-Mab Agreement”) for the development and commercialization of therapeutic candidates, each directed to a specified target for specified fields, including VEGF for the treatment of ocular diseases, in China. Mabwell (Shanghai) Bioscience Co., Ltd. (“Mabwell”) acquired T-Mab in 2015.

Under the agreement, Mabwell was granted an exclusive, royalty-bearing, perpetual license (without the right to sublicense) to rights in certain intellectual property to develop and commercialize such therapeutic candidates. Mabwell is obligated to pay the Company a mid-single-digit percentage royalty on net sales of such therapeutic candidates in China. The Company assessed the milestone and royalty events involving Mabwell as of March 31, 2024 and determined that no such amounts were receivable.

Toray Sublicense Agreement

In May 2012, Epitomics and Toray Industries, Inc. (“Toray”), entered into a non-exclusive sublicense agreement (the “Toray Agreement”) under which Epitomics granted Toray a non-exclusive, worldwide sublicense, with the right to grant further sublicenses, to develop and commercialize drug product candidates that Toray developed using antibodies created using Apexigen’s antibody-discovery platform (the “APXiMAB Platform”) that target certain molecules to use in the development of its drug product candidates. Under the Toray Agreement, Toray paid an upfront fee, and agreed to pay certain development- and regulatory-related milestone payments and a low single-digit percentage royalty on net sales of licensed products and sublicense revenues by Toray or its affiliates. The Company assessed the milestone and royalty events involving Toray as of March 31, 2024 and determined that no such amounts were receivable.

6. Sale of Royalty Rights

In March 2007, Epitomics entered into an antibody candidate discovery and development agreement with ESBATech AG (“ESBATech”) (the “ESBATech Agreement”). ESBATech was acquired by Alcon Research, Ltd. in 2009 and later merged with Novartis AG (“Novartis”) in 2011.

Novartis, the successor in interest to ESBATech, has successfully developed and commercialized one of those drug product candidates, brolucizumab-dbll, a single-chain antibody fragment (scFv) targeting all of the isoforms of VEGF-A, which was approved for commercial sale in 2019 and marketed under the brand name Beovu®.

Upon commercialization, pursuant to the ESBATech Agreement, Novartis was obligated to pay Apexigen a very low single-digit royalty on net sales of the Beovu® product. However, Novartis disputed its obligation to pay these royalties on Beovu® sales under the ESBATech Agreement. As a result, Apexigen and the Company determined that any sales-based Beovu® product royalties received under the ESBATech Agreement should be fully constrained and reported royalties received by Apexigen and the Company as deferred revenues. The Company assessed this position at each period end to determine if events or changes in circumstances indicate a change in position.

On March 25, 2024, the Company entered into the Fourth Amendment, Settlement Agreement, and Royalty Purchase Agreement (the “Settlement Agreement”) with Novartis, pursuant to which Novartis agreed to pay the Company $8.0 million to transfer its rights to future royalties on the net sales of Beovu®. Additionally, the dispute regarding Novartis’ obligation to pay royalties on Beovu® sales was resolved and royalties previously received by Apexigen and the Company are free from any reclaim rights.

The ESBATech Agreement and the Settlement Agreement with Novartis both constitute contracts with a customer. Therefore, the Company has accounted for the payments received under these agreements as revenues in accordance with ASC 606, Revenue Recognition, (“ASC 606”). Upon execution of the Settlement Agreement, the $8.0 million payment was recorded as revenue within the accompanying condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2024. Additionally, the related deferred revenues of $8.1 million previously constrained was also recorded as revenue within the accompanying condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2024 as the uncertainty resulting in the revenue constraint has been resolved.

7. Stockholders’ Equity

Shelf Registration Statement and ATM Offering Program

On November 1, 2022, the Company filed a registration statement on Form S-3 with the SEC for the issuance of common stock, preferred stock, warrants, debt securities, rights and units up to an aggregate of $250.0 million. On November 14, 2022, the registration statement was declared effective by the SEC. The registration statement includes an ATM offering program for the sale of up to $125.0 million of shares of the Company’s common stock.

During the three months ended March 31, 2024, the Company completed the sale of an aggregate of 3,600,000 shares of common stock under the ATM offering program, with an average sale price of $3.00 per share, resulting in gross proceeds of $10.8 million, before deducting placement agent fees under the ATM offering program. The Company did not sell any shares under the ATM offering program during the three months ended March 31, 2023.

As of March 31, 2024, the Company had $107.9 million of remaining capacity available under the ATM facility.

 

11


Private Offerings

On February 26, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) for a private placement (the “Private Placement”) with certain institutional and accredited investors (each, a “Purchaser” and collectively, the “Purchasers”).

Pursuant to the Securities Purchase Agreement, the Company issued and sold to the Purchasers an aggregate of (i) 8,849,371 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share, at a purchase price of $4.78 per share, and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 1,611,215 shares of the Company’ common stock (the “Pre-Funded Warrant Shares”) at a purchase price of $4.779 per Pre-Funded Warrant.

The Private Placement closed on February 29, 2024 and the Company received gross proceeds from the Private Placement of $50 million, before deducting placement agent fees and offering expenses directly related to the Private Placement.

On February 26, 2024, the Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with the Purchasers, pursuant to which the Company agreed to register for the resale of the Shares and Pre-Funded Warrants (together, the “Registrable Securities”). The Registrable Securities were registered on Form S-3 (Registration No. 333-278282) on March 27, 2024. The Form S-3 was deemed effective by the SEC on April 3, 2024.

Preferred Stock

There were no issued and outstanding shares of preferred stock as of March 31, 2024 and December 31, 2023.

Common Stock

Voting, dividend and liquidation rights of the holders of the common stock are subject to and qualified by the rights, powers and preferences of the holders of the preferred stock.

Voting—Each holder of outstanding shares of common stock shall be entitled to one vote in respect of each share.

Reserved SharesThe Company reserved the following shares of common stock for issuance:

 

 

March 31, 2024

 

 

December 31, 2023

 

Stock options outstanding

 

 

6,892,951

 

 

 

5,982,464

 

Unvested restricted stock awards and units

 

 

3,110,597

 

 

 

3,631,431

 

Shares reserved for future issuance

 

 

1,649,038

 

 

 

1,013,840

 

Pre-Funded Warrant Shares

 

 

1,611,215

 

 

 

 

Apexigen replacement warrants

 

 

1,003,191

 

 

 

1,003,191

 

Employee stock purchase plan

 

 

675,485

 

 

 

565,405

 

Total

 

 

14,942,477

 

 

 

12,196,331

 

 

8. Common Stock Warrants

Apexigen Replacement Warrants

Upon the Merger, each outstanding warrant issued by Apexigen was assumed and converted into a warrant to acquire the Company’s common stock, on substantially similar terms and conditions as were applicable under such Apexigen warrant agreements. The Company replaced approximately 5,815,613 Apexigen warrants with approximately 1,003,191 Pyxis Oncology warrants.

As of March 31, 2024, there were 344,259 warrants outstanding with an exercise price of $8.12 per share, 17,212 warrants outstanding with an exercise price of $10.14 per share and 641,720 warrants with an exercise price of $66.67 per share. Each of the warrants with an exercise price of $66.67 per share will expire on the fifth anniversary of July 29, 2022, or earlier upon redemption or liquidation. Each of the warrants with an exercise price of $8.12 per share and $10.14 per share will expire on July 30, 2028, or earlier upon redemption or liquidation.

Private Placement Warrants

In connection with the Private Placement, the Company issued Pre-Funded Warrants to purchase up to an aggregate of 1,611,215 shares of the Company’s common stock at a purchase price of $4.779 per Pre-Funded Warrant, which represents the per share purchase price of the Shares less the $0.001 per share exercise price for each Pre-Funded Warrant. The Pre-Funded Warrants will be exercisable at any time after the date of issuance and will not expire. As of March 31, 2024, 1,611,215 Pre-Funded Warrants were outstanding.

The Company determined that the Pre-Funded Warrants and Apexigen replacement warrants met all of the criteria for equity classification. Accordingly, the warrants were recorded as a component of additional paid-in capital within the accompanying condensed consolidated balance sheets.

 

12


9. Stock-Based Compensation

The Company grants stock-based incentive awards pursuant to the 2021 Equity and Incentive Plan (the “2021 Plan”), 2019 Equity Incentive Plan (the “2019 Plan”), Apexigen Equity Incentive Plans (the “Apexigen Plan”) and the 2022 Equity Inducement Plan (the “2022 Inducement Plan”). As of March 31, 2024, there were 793,404 shares, 107,051 shares, 476,202 shares and 272,381 shares available for future issuance under the 2021 Plan, 2019 Plan, Apexigen Plan and 2022 Inducement Plan, respectively.

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2024 (in thousands, except share and per share amounts):

 

 

Number of Options

 

 

Weighted Average
Exercise Price

 

 

Weighted Average
Remaining Contractual
Term (Years)

 

 

Aggregate
Intrinsic Value

 

 

Outstanding at January 1, 2024

 

 

5,982,464

 

 

$

7.31

 

 

 

7.6

 

 

$

141

 

 

Granted

 

 

1,244,626

 

 

 

3.95

 

 

 

 

 

 

 

 

Exercised

 

 

(100,981

)

 

 

2.13

 

 

 

 

 

 

 

 

Expired

 

 

(180,872

)

 

 

12.68

 

 

 

 

 

 

 

 

Forfeited

 

 

(52,286

)

 

 

16.00

 

 

 

 

 

 

 

 

Outstanding at March 31, 2024

 

 

6,892,951

 

 

$

6.51

 

 

 

8.1

 

 

$

7,727

 

 

Options exercisable at March 31, 2024

 

 

3,184,805

 

 

$

7.68

 

 

 

7.0

 

 

$

3,621

 

 

The aggregate intrinsic value is calculated as the difference between the exercise price of all outstanding and exercisable stock options and the fair value of the Company’s common stock of $4.26 per share as of March 28, 2024, the last trading day prior to the quarter ended March 31, 2024. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2024 and 2023 was $0.2 million and $0, respectively, as no stock options were exercised during the three months ended March 31, 2023.

The Company has an aggregate $12.6 million of gross unrecognized stock-based compensation expense as of March 31, 2024, remaining to be amortized over a weighted average period of 2.24 years.

The weighted-average grant-date fair value of options granted during the three months ended March 31, 2024 and 2023, was $2.32 and $3.19 per share, respectively, and was calculated using the following key input assumptions in the Black-Scholes option-pricing model:

 

 

 

Three Months Ended March 31,

 

2024

 

2023

Expected volatility

 

99.41% - 102.27%

 

97.82%

Risk-free interest rate

 

4.06% - 4.23%

 

3.58%

Expected dividend yield

 

0.00%

 

0.00%

Expected term (in years)

 

5 - 6.08

 

6.08

 

Restricted Stock Units

The following table summarizes restricted stock units activity for the three months ended March 31, 2024:

 

 

 

Number of Shares

 

 

Weighted Average
Grant Date Fair Value

 

Non-vested and unsettled at January 1, 2024

 

 

3,631,431

 

 

$

2.51

 

Granted

 

 

1,187,882

 

 

 

3.84

 

Forfeited

 

 

(157,826

)

 

 

2.56

 

Vested and settled

 

 

(1,550,890

)

 

 

2.77

 

Non-vested and unsettled at March 31, 2024

 

 

3,110,597

 

 

$

2.89

 

 

During the three months ended March 31, 2024, the Company issued 1,497,921 shares of its common stock from the settlement of 1,550,890 restricted common stock, with the remaining shares withheld for taxes. The Company has an aggregate $8.7 million of gross unrecognized restricted stock-based compensation expense as of March 31, 2024, remaining to be amortized over a weighted average period of 3.0 years.

13


Summary of Stock-Based Compensation Expense

The following table summarizes the total stock-based compensation expense for the three months ended March 31, 2024 and 2023, respectively (in thousands):

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

General and administrative

 

$

3,642

 

 

$

3,256

 

Research and development

 

 

678

 

 

 

1,628

 

Total

 

$

4,320

 

 

$

4,884

 

Total stock-based compensation expense for stock options includes expense related to the 2021 ESPP of less than $0.1 million and $0 for the three months ended March 31, 2024 and 2023, respectively.

2021 Employee Stock Purchase Plan (“2021 ESPP”)

The Company has the 2021 ESPP in force. The Company did not issue shares under the 2021 ESPP during the three months ended March 31, 2024 and 2023. As of March 31, 2024, 675,485 shares are available for issuance under the 2021 ESPP.

10. Operating Leases

Leases classified as operating leases are included in operating lease right-of-use assets (“ROU”), operating lease liabilities, current portion and operating lease liabilities, net of current portion, in the Company’s accompanying condensed consolidated balance sheets.

The Company leases its office and facilities in Boston, Massachusetts under a non-cancellable operating lease agreement that continues through December 31, 2032. Cash paid for operating lease liabilities was $1.1 million and $0.2 million during the three months ended March 31, 2024 and 2023, respectively, which is included in operating cash flows. Operating lease expense for the three months ended March 31, 2024 and 2023 was $0.7 million for both periods. Variable lease expense was $0.5 million and $0 for the three months ended March 31, 2024 and 2023, respectively. Short term lease expense was $0 and $0.5 million for the three months ended March 31, 2024 and 2023, respectively.

The Company subleases approximately 17,729 square feet of office and laboratory space in the building located at 321 Harrison Avenue, Boston, Massachusetts. The Company remains jointly and severally liable under the head lease and accounts for the sublease as an operating lease. The lease term commenced on March 24, 2023 and is expected to end in March 2026. The Company recognized sublease income of $0.8 million and $38 thousand for the three months ended March 31, 2024 and 2023, respectively.

11. Income Taxes

The Company’s effective tax rate from continuing operations was 0% for the three months ended March 31, 2024 and 2023. The Company has not recorded a federal income tax provision for the three months ended March 31, 2024 and 2023. The Company recorded a nominal state and local income tax provision for the three months ended March 31, 2024 and 2023.

The Company assesses the realizability of the deferred tax assets at each reporting date. The Company continues to maintain a full valuation allowance for its U.S. federal and state deferred tax assets, which significantly consists of net operating losses and tax credits. If certain substantial changes in the entity’s ownership occur, there may be an annual limitation on the amount of the carryforwards that can be utilized. The Company will continue to assess the need for a valuation allowance on its deferred tax assets.

12. Net Loss per Common Share

The following potentially dilutive securities have been excluded from the calculation of diluted net loss per common share due to their anti-dilutive effect:

 

 

March 31,

 

 

 

2024

 

 

2023

 

Stock options outstanding

 

 

6,892,951

 

 

 

5,706,777

 

Unvested restricted stock awards and units

 

 

3,110,597

 

 

 

5,747,172

 

Shares reserved for future issuance

 

 

1,649,038

 

 

 

600,127

 

Apexigen replacement warrants

 

 

1,003,191

 

 

 

 

Employee stock purchase plan

 

 

675,485

 

 

 

644,755

 

Total

 

 

13,331,262

 

 

 

12,698,831

 

Pre-Funded Warrant Shares of 1,611,215 shares are included in the computation of basic and diluted net loss per common share for the three months ended March 31, 2024 as the Pre-Funded Warrants are issuable for nominal consideration.

 

14


13. Related Parties

The Company was founded out of Dr. Thomas Gajewski’s laboratory at the University of Chicago. In 2020, the Company entered into the License Agreement with the University of Chicago, as well as a sponsored research agreement. During the three months ended March 31, 2024 and 2023, the Company incurred $30 thousand and $0 in expenses related to the University License Agreement, respectively. Refer to Note 5. Licensing Agreements for additional discussion.

Pfizer owns more than 10% of the Company and is considered the principal owner of the Company. The Company did not incur expenses related to Pfizer during the three months ended March 31, 2024. During the three months ended March 31, 2023, in accordance with the terms of the A&R License Agreement, the Company paid $8.0 million to Pfizer in January 2023 and issued 1,811,594 shares of its common stock in March 2023. Refer to Note 5. Licensing Agreements for additional discussion.

14. Commitments and Contingencies

Legal Proceedings

From time to time, the Company may become involved in various legal proceedings that arise in the ordinary course of business. The Company is not currently a party to any material legal proceedings and is not aware of any pending or threatened legal proceeding against it that the Company believes could have an adverse effect on its business, operating results or financial condition.

Commitments

In the normal course of business, the Company enters into agreements with various third parties for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes, which are generally cancellable by the Company at any time, subject to payment of remaining obligations under binding purchase orders and, in certain cases, nominal early-termination fees. These commitments are not deemed significant.

15


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our (1) unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and (2) consolidated financial statements and related notes and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended December 31, 2023, included in our Fiscal 2023 10-K. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Pyxis Oncology,” the “Company,” “we,” “us,” and “our” refer to Pyxis Oncology, Inc. and its subsidiaries.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are often identified by the use of words such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “to be,” “will,” “would,” or the negative or plural of these words, or similar expressions or variations, although not all forward-looking statements contain these words. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur and actual results could differ materially from those expressed or implied by these forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors” set forth in Part II, Item 1A. of this Quarterly Report on Form 10-Q and in our other filings with the SEC. These risks are not exhaustive. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Overview

We are a clinical stage company focused on defeating difficult-to-treat cancers. We are efficiently building next generation therapeutics that hold the potential for mono and combination therapies. We develop our product candidates with the objective to kill tumor cells, and to address the underlying pathologies created by cancer that enable its uncontrollable proliferation and immune evasion. Since our launch in 2019, we have developed a broad portfolio that includes antibody-drug conjugates, or ADC, product candidates, and immuno-oncology, or IO, product candidates. Our ADC and IO programs employ novel and emerging strategies to target a broad range of solid tumors resistant to current standards of care.

Our pipeline is balanced across programs with an emphasis on solid tumors. We in-licensed two ADC programs in March 2021 from Pfizer and one IO program from Biosion in March 2022. Additionally, upon the acquisition of Apexigen in August 2023, we added another IO program to our pipeline. We have additional preclinical monoclonal antibody, or mAb, discovery programs derived from the work at the laboratory of Dr. Thomas Gajewski. We retain full worldwide development and commercialization rights to all our product candidates, with the exception of PYX-106 in Greater China (mainland China, Hong Kong, Macau and Taiwan).

Our clinical development pipeline focused on multiple difficult-to-treat tumors is displayed below:

https://cdn.kscope.io/1ff9ccec94131c14f973751eedbddd7a-img32419210_0.jpg 

16


Our Clinical Program Portfolio

PYX-201

Our lead ADC product candidate is PYX-201, an investigational, novel ADC consisting of human Immunoglobulin G1, or IgG1, site-specifically conjugated with a next generation auristatin derivative via proteases-cleavable linker. PYX-201 is an ADC that uniquely targets Extradomain-B Fibronectin, or EDB+FN, in the tumor stroma. EDB+FN regulates blood vessel morphogenesis, which provides the tumor access to nutrition and oxygen, a means to remove waste, and a pathway for metastasizing cells.

We believe EDB+FN within the tumor stroma may be an ideal target to address in many cancers with high unmet need. The stroma plays a major role in the initiation, growth, survival, invasion and drug-resistance of solid tumors, yet few therapeutics specifically target tumor-associated stroma. By targeting EDB+FN and specifically attacking the stroma, our goal is to destabilize the barrier that protects, feeds and provides structure to the tumor in addition to killing tumor cells directly. EDB+FN is overexpressed in many malignancies and is minimally expressed in most normal adult tissues, making it a potentially attractive means to target tumors while sparing healthy cells.

In preclinical models of patient-derived xenograft, or PDX models, we observed tumor regression with single agent PYX-201 in a dose-dependent manner. In addition, we observed that the treatment of preclinical syngeneic tumor models with PYX-201 resulted in enhanced T-cell infiltration into the tumor microenvironment, or TME, suggesting that PYX-201 may have caused immunogenic cell death, or ICD, and could potentially trigger downstream anti-tumor immune response. Recently, we shared our latest preclinical data at the 2024 American Association for Cancer Research, or AACR, Annual Meeting in San Diego, California. The preclinical data supports that PYX-201 is designed to have improved plasma stability, better potency, and tumor permeability due to optimized auristatin payload, or Aur-0101, and improved linker stability through site-specific conjugation to engineered cysteine residues for a target drug-to-antibody ratio, or DAR, of 4. Across a panel of approximately 100 preclinical PDX models representing ten tumor types, PYX-201 demonstrated broad, deep, and durable anti-tumor activity. The recent preclinical data provides insights into the mechanism associated with this novel agent observed across multiple solid tumors. PYX-201 has potential applications in both monotherapy and combination therapy and maintains a well-tolerated safety profile based on the lack of EDB+FN expression in healthy cells.

In December 2022, we announced clearance of our investigational new drug application, or IND, by the U.S. Food and Drug Administration, or FDA, to initiate a Phase 1 clinical trial. During the first quarter of 2023, we announced dosing of the first subject in a Phase 1 trial of PYX-201, referred to as PYX-201-101. PYX-201-101 is an open-label, multicenter, dose-escalation trial designed to evaluate the safety, tolerability, pharmacokinetics, or PK, pharmacodynamics, or PD, and preliminary efficacy of PYX-201 and identify recommended doses for further study. Patients with relapsed or refractory solid tumors, including non-small cell lung cancer, or NSCLC, locally advanced/metastatic breast cancer, hormone receptor and human epidermal growth factor receptor 2 positive and negative, or HR+ HER- and HR- HER2+, breast cancers, triple negative breast cancer, or TNBC, ovarian cancer, thyroid cancer, pancreatic ductal adenocarcinoma, or PDAC, soft tissue sarcoma, or STS, hepatocellular carcinoma, or HCC, head and neck squamous cell carcinoma, or HNSCC, and kidney cancer are eligible to enroll in this study. In May 2023, the FDA granted Orphan Drug Designation, or ODD, for use of PYX-201 in the treatment of pancreatic cancer.

In the Phase 1 portion of the trial, the starting dose of PYX-201 was 0.3 mg/kg. The Dose Escalation Steering Committee, or DESC, approved escalating the dose after each cohort. PYX-201 is administered once every three weeks. Dose escalation follows the Bayesian Optimal Interval, or BOIN, design until the recommended Part 2 dose(s), or RP2D, is determined.

To date, 42 subjects in eight cohorts have been dosed with PYX-201 in this Phase 1 trial. We are actively studying dose ranges from 5.4 mg/kg to 8 mg/kg. We plan to dose an additional 16 subjects with a continued focus on HNSCC, NSCLC, ovarian cancer, soft tissue sarcoma and PDAC based on an assessment of factors including immunohistochemistry target expression, stromal volume, unmet medical need and clinical judgment. PYX-201 safety data continues to support go-forward monotherapy and potential combination development strategies.

As we continue to analyze the data generated, we anticipate that the data from the dose finding studies will guide the selection for the RP2D for subsequent multi-dosing and potential combination studies. We anticipate reporting the study results, including efficacy, safety, PK, preclinical insights, further development plans, and the expected timing of the next anticipated milestones in the fall of 2024.

PYX-106

Our lead IO product candidate is PYX-106, an investigational, fully human IgG1 Siglec-15-targeting antibody designed to block Siglec-15 mediated suppression of T-cell proliferation and function. PYX-106 has high binding affinity to a unique epitope and high potency. Overall, by binding and blocking Siglec-15 activity on myeloid cells and tumors, our Siglec-15 targeting antibody is designed to enhance immune cell mediated tumor cell killing. We are developing this asset for the treatment of solid tumors and believe that PYX-106 has the potential to provide additional benefit to patients either alone or in combination with other therapies, including other immuno-therapies.

 

17


Preclinical studies provided us sufficient scientific rationale about the effect of blocking Siglec-15 in various animal models. PYX-106 was observed as well tolerated with no evidence of anti-drug antibodies. Further, PYX-106 was observed to have 7 days of half-life in monkeys in our preclinical studies. If the half-life of 7 days were observed in humans, it would allow for less frequent dosing, maintain exposure and target engagement.

In December 2022, we announced clearance of our IND by the FDA for PYX-106 to initiate a Phase 1 clinical trial. During the second quarter of 2023, we announced dosing of the first subject in a Phase 1 trial of PYX-106, referred to as PYX-106-101. PYX-106-101 is a first-in-human, Phase 1, multicenter, open-label dose escalation trial designed to evaluate the safety, tolerability, PK, PD, and preliminary efficacy of PYX-106 and identify recommended doses for further study. Patients with relapsed or refractory solid tumors, including non-small cell lung cancer without driver mutations/translocations, breast cancer, endometrial cancer, thyroid cancer, kidney cancer, cholangiocarcinoma, bladder cancer, colorectal cancer, and HNSCC are eligible to enroll in this study.

In the Phase 1 portion of the trial, the starting dose of PYX-106 was 0.5 mg/kg. The DESC approved escalating the dose after each cohort. To date, 24 subjects have been dosed with PYX-106 in the Phase 1 trial. PYX-106 is administered once every two weeks. Dose escalation will follow the BOIN design until the RP2D is determined.

We anticipate reporting preliminary data from this Phase 1 clinical trial, including PK/PD data and early signs of potential clinical activity, in the second half of 2024.

PYX-107

On August 23, 2023, we completed the acquisition of Apexigen, a Delaware corporation and a clinical-stage biopharmaceutical company focused on discovering and developing innovative antibody therapeutics for oncology.

The acquisition of Apexigen expanded our existing pipeline with the addition of sotigalimab (now PYX-107), a CD40 agonist with demonstrated anti-cancer activity in patients who previously progressed on PD-(L)1 inhibitors. PYX-107 has been evaluated in more than 500 patients in clinical trials and demonstrated strong activity, including rapid, deep and durable responses and a favorable tolerability profile, across multiple difficult-to-treat tumor types. In a Phase II trial, PYX-107 in combination with nivolumab has demonstrated strong activity in melanoma patients who are refractory to anti-PD-(L)1, with a 15.2% partial response rate and a 30.3% stable disease rate along with a favorable tolerability profile. Opportunity to advance clinical development of PYX-107 will be further assessed as part of portfolio evaluation.

Since our inception, we have focused substantially all of our resources on conducting research and development activities, undertaking preclinical studies and clinical trials, organizing and staffing our company, business planning, raising capital, establishing and maintaining our intellectual property portfolio and identifying potential product candidates. We do not have any products approved for sale and have not generated any revenues from product sales or from any other sources. We have incurred significant operating losses since our inception. We reported net losses of $3.3 million and $19.2 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, we had an accumulated deficit of $289.5 million, net equity of $184.2 million, and cash, cash equivalents and short-term investments of $157.0 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We expect that our expenses and capital expenditures will increase substantially in connection with our ongoing activities. Our operations to date have been financed primarily through sales of convertible preferred stock and sale of equity securities and additional funding may be necessary to fund future clinical and preclinical activities.

Components of Our Results of Operations

Revenues

To date, we have not generated any revenues from product sales and do not expect to generate any revenues from product sales in the foreseeable future. We record revenues from research and development agreements, including amounts related to upfront receipt for license fees, royalties, milestones and other contingent receipts and fees for research and development services.

Our ability to generate product revenues will depend upon our ability to successfully develop, obtain regulatory approval and commercialize our product candidates. Due to the numerous risks and uncertainties associated with product development and regulatory approval, we are unable to predict the amount, timing or whether we will be able to obtain product revenues.

Operating Expenses

Cost of Revenues

The components of our cost of revenues are expenses directly attributable to revenues. Pursuant to the Settlement Agreement with Novartis, we transferred our rights to future royalties on the net sales of Beovu® to Novartis and recorded the remaining definite-lived intangible asset of $0.5 million related to these royalty rights to cost of revenues. Refer to Note 6. Sale of Royalty Rights, to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.

 

18


Research and Development Expenses

Research and development expenses consist of costs incurred for our research activities, including our discovery efforts and research work to support clinical development, and the development of our programs. Research and development expenses are presented among program-specific costs and unallocated costs.

Program-specific costs include:

direct third-party costs, which include expenses incurred under agreements with contract research organizations, or CROs, and the cost of consultants who assist with the development of our product candidates on a program-specific basis, investigator grants, sponsored research, and any other third-party expenses directly attributable to the development of the product candidates;
costs of acquiring, developing, and manufacturing and testing clinical and preclinical materials, including costs incurred under agreements with contract development and manufacturing organizations, or CDMOs, to the extent they can be allocated to a specific program;
license fees and milestone payments related to the acquisition and retention of certain licensed technology and intellectual property rights for a specific product candidate; and
costs associated with preclinical activities that are directly attributable to the development of the product candidates.

Unallocated costs include:

employee-related expenses for research and development personnel, including salaries, bonus, payroll taxes, related benefits, severance and other staff-related expenses;
stock-based compensation expenses for employees engaged in research and development activities;
facilities and other costs, which include allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment, laboratory supplies, third-party cost for discovery research and the cost of consultants who assist with our research and development and costs related to contract manufacturing, but are not allocated to a specific program.

We expense research and development costs as incurred. Non-refundable advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed, or when it is no longer expected that the goods will be delivered, or the services rendered.

We expect that our research and development expenses will increase substantially in connection with our ongoing and planned preclinical and clinical development activities in the near term and in the future. The successful development of our product candidates is highly uncertain. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates and we may never succeed in obtaining regulatory approval for any of our product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and personnel-related costs, including stock-based compensation, and severance for our personnel in executive, legal, finance and accounting, human resources and other administrative functions. General and administrative expenses also include professional fees for auditing, tax, and legal services, as well as insurance, board of director compensation, consulting, other administrative expenses and facility costs not otherwise included in research and development expenses.

Other Income, Net

Other income, net primarily consists of interest earned on our invested cash and cash equivalent balances, accretion of discounts associated with our marketable debt securities and sublease income under our sublease.

 

19


Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023 (in thousands):

 

For the Three Months Ended March 31,

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

Revenues

 

 

 

 

 

 

 

 

 

Royalty revenues

 

$

8,146

 

 

$

 

 

$

8,146

 

Sale of royalty rights

 

 

8,000

 

 

 

 

 

 

8,000

 

Total revenues

 

 

16,146

 

 

 

 

 

 

16,146

 

Costs and operating expenses:

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

475

 

 

 

 

 

 

475

 

Research and development

 

 

13,029

 

 

 

11,901

 

 

 

1,128

 

General and administrative

 

 

8,247

 

 

 

9,053

 

 

 

(806

)

Total costs and operating expenses

 

 

21,751

 

 

 

20,954

 

 

 

797

 

Loss from operations