Pyxis Oncology, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022; unaudited. Pyxis is a pre-revenue oncology biotechnology company developing antibody-drug conjugates (ADCs), immuno-oncology therapies and antibody discovery programs. Its product candidates remain in preclinical development.
Financial results and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $19.0m | $7.8m | $56.3m | $43.8m |
| General and administrative expense | $9.4m | $3.8m | $29.2m | $9.5m |
| Total operating expenses | $28.4m | $11.6m | $85.5m | $53.3m |
| Net loss | $27.7m | $14.2m | $84.6m | $59.1m |
| Net loss per share, basic and diluted | $0.85 | $8.96 | $2.61 | $40.27 |
As of September 30, 2022, cash and cash equivalents were $198.5m (plus $1.5m restricted cash), compared with $274.7m and $1.5m, respectively, at December 31, 2021. Total assets were $223.9m; total liabilities were $35.1m, including $16.1m in operating lease liabilities. The filing reports no borrowings or other debt. Stockholders’ equity was $188.7m and accumulated deficit was $176.3m.
For the first nine months of 2022, operating cash use was $71.9m, investing cash use was $4.5m, and financing provided $0.2m. Cash, cash equivalents and restricted cash decreased by $76.3m to $200.0m. Gross profit and operating margins are not meaningful because the company had no revenue.
Changes versus prior comparable periods
- Q3 net loss increased $13.5m year over year; nine-month net loss increased $25.5m. Total operating expenses rose $16.8m in Q3 and $32.2m for the nine-month period.
- Higher R&D reflected increased manufacturing and preclinical toxicity-study costs, as well as higher personnel and stock-based compensation. Nine-month program costs also reflected increased manufacturing and toxicity work, partly offset by lower licensing fees.
- Higher G&A reflected increased headcount and stock compensation, professional and consulting fees, rent, and directors’ and officers’ insurance.
- Operating cash use increased from $23.2m to $71.9m for the nine-month period. The prior-year period included $151.6m of net proceeds from Series B preferred stock; 2022 financing cash flow was limited to stock-option exercises.
Outlook, developments and risks
- Management estimated that September 30 cash would fund operating expenses and capital needs into the end of calendar 2024, based on its current plan and assumptions. It cautioned that spending or circumstances could change and capital could be used sooner. The financial-statement liquidity note separately says existing cash is expected to cover at least twelve months from issuance.
- Management said it remained on track to submit INDs for PYX-201 and PYX-106 by year-end 2022. Both were still preclinical; no product candidates had entered clinical trials. These are targets, not assurances of submission or FDA clearance.
- In August 2022, the company paused preclinical development of PYX-203 and PYX-102 to prioritize PYX-201 and PYX-106, and stopped development of PYX-202 after reviewing toxicity data and anticipated clinical and commercial prospects.
- Effective October 6, 2022, Pfizer granted exclusive worldwide rights under its FACT platform for specified ADC targets, including PYX-201 and PYX-203. The company agreed to pay $8m and issued 2,229,654 common shares; it also agreed to issue shares equivalent to $5m after 180 days, subject to a 19.5% Pfizer ownership cap, with any value shortfall payable in cash. The agreement also includes potential milestones, royalties and sublicensing payments.
- Key risks include the early, unproven status of the pipeline; dependence on PYX-201 and PYX-106; need for future capital; development, regulatory and manufacturing delays; reliance on third-party manufacturers and licensors; competition; and potential intellectual-property challenges. The company reported no material legal proceedings and no significant COVID-19-related business disruption to date.
Important facts for investors to verify
- Whether PYX-201 and PYX-106 IND submissions occurred on the stated timeline and whether regulators permitted trials to proceed.
- Cash burn, updated runway assumptions, and the effects of ongoing R&D, capital spending and the Boston laboratory lease.
- The full economic and dilution impact of the Pfizer FACT agreement, including the later share issuance, cash true-up, milestones, royalties and sublicensing terms.
- The status and financial consequences of pausing PYX-203 and PYX-102 and discontinuing PYX-202, including any continuing license or supply obligations.
- Future financing needs and potential dilution; at November 1, 2022, 35,097,256 common shares were outstanding.