SEC Filing | Pyxis Oncology

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended June 30, 2024


☐	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 August 13, 2024, the registrant had 58,942,243 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 June 30, 2024 and December 31, 2023	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months ended June 30, 2024 and 2023	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months ended June 30, 2024 and 2023	5
	Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 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	25
Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION	27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	79
Item 3.	Defaults Upon Senior Securities	79
Item 4.	Mine Safety Disclosures	79
Item 5.	Other Information	79
Item 6.	Exhibits	80
Signatures		81

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 and PYX-106, which are in the early stages of development, and if PYX-201 and/or PYX-106 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.

•

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 Biosion USA, Inc. 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.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PYXIS ONCOLOGY, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)


	June 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	25,074		$	9,664
Marketable debt securities, short-term		130,650			109,634
Restricted cash		1,472			1,472
Prepaid expenses and other current assets		3,842			3,834
Total current assets		161,038			124,604
Property and equipment, net		11,069			11,872
Intangible assets, net		23,675			24,308
Right-of-use asset		12,607			12,942
Total assets	$	208,389		$	173,726
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	5,470		$	3,896
Accrued expenses and other current liabilities		10,089			12,971
Lease liabilities, current portion		1,338			1,232
Deferred revenues		—			7,660
Total current liabilities		16,897			25,759
Operating lease liabilities, net of current portion		19,399			20,099
Financing lease liabilities, net of current portion		135			—
Deferred tax liability, net		2,164			2,164
Total liabilities		38,595			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; 58,914,712 and 44,754,853 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively.		59			45
Additional paid-in capital		476,619			411,821
Accumulated other comprehensive (loss) income		(102	)		63
Accumulated deficit		(306,782	)		(286,225	)
Total stockholders’ equity		169,794			125,704
Total liabilities and stockholders’ equity	$	208,389		$	173,726

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

PYXIS ONCOLOGY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			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		13,953			11,391			26,982			23,292
General and administrative		6,079			6,730			14,326			15,783
Total costs and operating expenses		20,032			18,121			41,783			39,075
Loss from operations		(20,032	)		(18,121	)		(25,637	)		(39,075	)
Other income, net:
Interest and investment income		2,023			1,656			3,573			3,329
Sublease income		708			564			1,507			602
Total other income, net		2,731			2,220			5,080			3,931
Net loss	$	(17,301	)	$	(15,901	)	$	(20,557	)	$	(35,144	)
Net loss per common share - basic and diluted	$	(0.29	)	$	(0.41	)	$	(0.37	)	$	(0.95	)
Weighted average shares of common stock outstanding - basic and diluted		60,495,675			38,389,123			55,892,479			36,878,787
Other comprehensive loss:
Net unrealized loss on marketable debt securities		(42	)		(781	)		(165	)		(85	)
Other comprehensive loss		(42	)		(781	)		(165	)		(85	)
Comprehensive loss	$	(17,343	)	$	(16,682	)	$	(20,722	)	$	(35,229	)

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

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
Issuance of common stock under employee stock purchase plan ("ESPP")		59,882		—		105			—			—			105
Issuance of restricted common stock, net of tax withholdings		30,553		—		(43	)		—			—			(43	)
Stock options exercised		21,151		—		48			—			—			48
Stock-based compensation		—		—		2,871			—			—			2,871
Net unrealized loss on marketable debt securities		—		—		—			(42	)		—			(42	)
Net loss		—		—		—			—			(17,301	)		(17,301	)
Balance at June 30, 2024		58,914,712	$	59	$	476,619		$	(102	)	$	(306,782	)	$	169,794


							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
Shares issued pursuant to the ATM program, net of commission		1,001,208		1		6,121		—			—			6,122
Stock options exercised		20,496		—		3		—			—			3
Vesting of restricted common stock		1,436,866		1		—		—			—			1
Stock-based compensation		—		—		3,668		—			—			3,668
Net unrealized loss on marketable debt securities		—		—		—		(781	)		—			(781	)
Net loss		—		—		—		—			(15,901	)		(15,901	)
Balance at June 30, 2023		39,376,941	$	39	$	392,900	$	(85	)	$	(247,579	)	$	145,275

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

PYXIS ONCOLOGY, INC.

Condensed Consolidated Statements of Cash Flows (In thousands)

(Unaudited)


	Six Months Ended June 30,
	2024			2023
Operating activities
Net loss	$	(20,557	)	$	(35,144	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,701			714
Stock-based compensation		7,191			8,552
Non-cash operating lease expense		335			319
Accretion of discount on marketable debt securities		(2,924	)		(1,867	)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(8	)		678
Accounts payable		1,812			(2,313	)
Accrued expenses and other current liabilities		(2,951	)		(11,147	)
Operating lease liabilities		(594	)		2,336
Financing lease liabilities		(62	)		—
Deferred revenues		(7,660	)		—
Net cash used in operating activities		(23,717	)		(37,872	)
Investing activities
Redemption of marketable debt securities		113,848			15,193
Purchase of marketable debt securities		(132,105	)		(130,176	)
Purchase of property and equipment		(237	)		(6,665	)
Net cash used in investing activities		(18,494	)		(121,648	)
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			6,122
Tax withholding payments related to net settlement of restricted common stock		(239	)		—
Proceeds from the exercise of stock options		293			3
Proceeds from issuance of common stock under ESPP		105			—
Net cash provided by financing activities		57,621			6,125
Net increase (decrease) in cash, cash equivalents and restricted cash		15,410			(153,395	)
Cash, cash equivalents and restricted cash at beginning of year		11,136			180,765
Cash, cash equivalents and restricted cash at end of period	$	26,546		$	27,370
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	25,074		$	25,898
Restricted cash		1,472			1,472
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	26,546		$	27,370

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

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 and six months ended June 30, 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 June 30, 2024, the Company had an accumulated deficit of $306.8 million. The Company has incurred losses and negative cash flows from operations since inception, including net losses of $20.6 million and $35.1 million for the six months ended June 30, 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 $155.7 million as of June 30, 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.

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.

3. Fair Value Measurements

The following tables present the financial instruments carried at fair value on a recurring basis as of June 30, 2024 and December 31, 2023, respectively, in accordance with the FASB ASC 820 hierarchy (in thousands):


	June 30, 2024
	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	21,099	$	—	$	—	$	21,099
Marketable debt securities
U.S. Treasury securities		130,650		—		—		130,650
Total	$	151,749	$	—	$	—	$	151,749

	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 June 30, 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):


	June 30, 2024
	Amortized Cost		Unrealized Gains		Unrealized Losses			Aggregate Fair Value
Marketable debt securities
U.S. Treasury securities	$	130,756	$	-	$	(106	)	$	130,650

	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 June 30, 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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Interest income	$	387	$	396	$	649	$	1,462
Accretion of discount, net		1,636		1,260		2,924		1,867
Total interest and investment income	$	2,023	$	1,656	$	3,573	$	3,329

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 June 30, 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 (“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 June 30, 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 June 30, 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 June 30, 2024 and determined that no such amounts were receivable.

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 June 30, 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 June 30, 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 agreed to be 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 unaudited condensed consolidated statements of operations and comprehensive loss for the six months ended June 30, 2024. Additionally, the related deferred revenues of $8.1 million previously constrained was also recorded as revenue within the accompanying unaudited condensed consolidated statements of operations and comprehensive loss for the six months ended June 30, 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 six months ended June 30, 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. During the six months ended June 30, 2023, the Company completed the sale of an aggregate of 1,001,208 shares of common stock under the ATM offering program, with an average gross sale price of $6.30 per share, resulting in gross proceeds of $6.3 million, before deducting placement agent fees.

As of June 30, 2024, the Company had $107.9 million of remaining capacity available under the ATM facility.

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 June 30, 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 Shares—The Company reserved the following shares of common stock for issuance:


	June 30, 2024		December 31, 2023
Stock options outstanding		6,956,497		5,982,464
Non-vested and unsettled restricted stock units		3,053,833		3,631,431
Shares reserved for future issuance		1,578,783		1,013,840
Pre-Funded Warrant Shares		1,611,215		—
Apexigen replacement warrants		1,003,191		1,003,191
Employee stock purchase plan		615,603		565,405
Total		14,819,122		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 5,815,613 Apexigen warrants with 1,003,191 Pyxis Oncology warrants.

As of June 30, 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 June 30, 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 unaudited condensed consolidated balance sheets.

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 June 30, 2024, there were 970,100 shares, 132,051 shares, 399,688 shares and 76,944 shares available for future issuance under the 2021 Plan, 2019 Plan, Apexigen Plan and 2022 Inducement Plan, respectively.

On May 1, 2024, the Company’s board of directors approved the Non-Qualified Deferred Compensation Plan ("the NQDC Plan"), which became effective on that date. The NQDC Plan was made available to eligible employees including the non-employee directors, and allows those who elect to participate to defer the settlement of certain restricted stock units to a future period. Certain members of management participated in the NQDC Plan and deferred settlement of restricted stock units to fiscal 2027 through 2031.

Stock Options

The following table summarizes stock option activity for the six months ended June 30, 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		1,427,222			3.90
Exercised		(122,551	)		2.14
Expired		(200,406	)		15.96
Forfeited		(130,232	)		11.32
Outstanding at June 30, 2024		6,956,497		$	6.38		7.8	$	4,034
Options exercisable at June 30, 2024		3,294,687		$	7.72		6.7	$	1,989

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 $3.31 per share as of June 28, 2024, the last trading day prior to the quarter ended June 30, 2024. The aggregate intrinsic value of stock options exercised during the three and six months ended June 30, 2024 were less than $0.1 million and $0.3 million, respectively. The aggregate intrinsic value of stock options exercised during the three and six months ended June 30, 2023, were $0.1 million.

The weighted-average grant-date fair value of stock options granted during the three and six months ended June 30, 2024, were $3.57 and $3.90 per share, respectively, and $2.04 and $3.04 per share for the three and six months ended June 30, 2023, respectively.

The Company estimated the fair value of each stock option on the date of grant using the following key input assumptions in the Black-Scholes option-pricing model:


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Expected volatility	100.20% - 100.34%	97.11%	99.41% - 102.27%	97.11% - 97.82%
Risk-free interest rate	4.33% - 4.75%	4.05%	4.06% - 4.75%	3.58% - 4.05%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Expected term (in years)	6.00 - 6.08	6.08	5.00 - 6.08	6.08

The Company has an aggregate $11.1 million of gross unrecognized stock-based compensation expense for stock options as of June 30, 2024, remaining to be amortized over a weighted average period of 2.1 years.

Restricted Stock Units

The following table summarizes restricted stock units activity for the six months ended June 30, 2024:


	Number of Units			Weighted Average Grant Date Fair Value
Non-vested and unsettled at January 1, 2024		3,631,431		$	2.51
Granted		1,283,412			3.81
Forfeited		(268,217	)		2.56
Vested and settled		(1,592,793	)		2.64
Non-vested and unsettled at June 30, 2024		3,053,833		$	2.97

During the six months ended June 30, 2024, the Company issued 1,528,474 shares of its common stock from the settlement of 1,591,819 restricted common stock, with the remaining shares withheld for taxes. The Company has an aggregate $7.8 million of gross unrecognized restricted stock-based compensation expense as of June 30, 2024, remaining to be amortized over a weighted average period of 2.8 years.

2021 Employee Stock Purchase Plan (“2021 ESPP”)

The Company has the 2021 ESPP in force. During the three and six months ended June 30, 2024, the Company issued 59,882 shares of common stock pursuant to the ESPP. As of June 30, 2024, 615,603 shares are available for issuance under the 2021 ESPP.

Summary of Stock-Based Compensation Expense

The following table summarizes the total stock-based compensation expense for the three and six months ended June 30, 2024 and 2023, respectively (in thousands):

         
        Three Months Ended June 30,

        Six Months Ended June 30,