Pyxis Oncology, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Unaudited consolidated results. Pyxis Oncology is a clinical-stage oncology company; all product candidates were in preclinical development at period-end, and the company had generated no revenue.
Financial performance and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $17.2m | $3.2m | $37.2m | $36.0m |
| General and administrative expense | $8.6m | $2.7m | $19.9m | $5.7m |
| Total operating expenses | $25.7m | $5.9m | $57.1m | $41.7m |
| Net loss | $25.6m | $8.1m | $56.9m | $45.0m |
| Basic and diluted loss per share | $0.79 | $5.54 | $1.76 | $31.86 |
With no revenue, gross margin is not meaningful. Q2 R&D rose mainly from higher contract manufacturing costs and preclinical toxicity studies, while six-month R&D was broadly flat: lower licensing fees were offset by manufacturing, toxicity-study and personnel costs. G&A increased with headcount, professional fees, rent and directors’ and officers’ insurance.
- Cash and cash equivalents: $223.4m at June 30, 2022, down from $274.7m at December 31, 2021. Restricted cash was $1.5m.
- Cash flows, six months: $51.4m used in operations; $0.3m used in investing; $0.2m provided by financing. Operating cash use was higher than the $15.9m used in the prior-year period; 2021 financing included $151.6m net proceeds from preferred-stock issuance.
- Liquidity: Current assets were $226.6m versus current liabilities of $14.9m. The company reported $30.6m total liabilities, including $15.7m of operating lease liabilities; it reported no borrowings or debt financing.
- Accumulated deficit: $148.7m; stockholders’ equity was $212.0m.
The year-over-year per-share loss comparison is not directly comparable: weighted-average shares were substantially higher in 2022 following the 2021 IPO and conversion of preferred stock. The company also completed a 1-for-6.359 reverse stock split in October 2021.
Material changes, outlook and risks
- Portfolio reprioritization: Management focused resources on PYX-201, an EDB-targeting ADC, and PYX-106, a Siglec-15-targeting antibody. It planned to submit INDs for both in the second half of 2022. These were plans, not completed milestones as of the filing.
- Preclinical development of PYX-203 and PYX-102 was paused. Development of PYX-202 was stopped after review of toxicity-study data and anticipated clinical and commercial prospects.
- Management expected cash to fund operating expenses and capital requirements through the second half of 2024, based on current plans and assumptions. It cautioned that spending or changes in plans could shorten the runway; additional funding may be needed for future development.
- The company expects significant losses and negative operating cash flows to continue and does not anticipate product revenue until candidates are developed and receive regulatory approval. No specific revenue, earnings or cash-burn guidance was provided.
- Key risks include the early, preclinical status of the pipeline; clinical, regulatory and manufacturing uncertainty; dependence on third-party manufacturers and service providers; competition; intellectual-property and licensing risks; and possible COVID-19 or supply-chain disruption. Management reported no material business disruption from COVID-19 to date.
- Operating lease: a Boston office and laboratory lease commenced in April 2022, with payments beginning December 2022 and continuing through 2032. Recorded lease liabilities were $15.7m; contractual fixed payments net of the tenant improvement allowance were approximately $29.0m.
- License agreements carry substantial contingent obligations if milestones or commercial sales are achieved: up to $660m of milestones under the Pfizer agreement for the first four ADCs, $217.5m–$222.5m under Biosion, and up to $284.5m under LegoChem. These are contingent, not current debt; the company reported no amounts due under the cited milestone and royalty arrangements at June 30.
- No material legal proceedings were reported. Management concluded disclosure controls and procedures were effective as of period-end.
Important facts for investors to verify
- Whether PYX-201 and PYX-106 IND submissions occurred on the stated second-half 2022 timeline, and whether regulators allowed trials to proceed.
- Whether cash burn and operating plans remain consistent with the projected runway through the second half of 2024, including the effect of the new lease and manufacturing spending.
- Progress and results of IND-enabling, toxicity and manufacturing work, particularly given the termination of PYX-202 and pause of PYX-203 and PYX-102.
- Potential future financing needs, dilution and the scale and terms of contingent license milestones, royalties and sublicensing obligations.