Pyxis Oncology: Data Arriving Later Than Expected, But May Be Worth The Wait (NASDAQ:PYXS)

Pyxis Oncology (NASDAQ:PYXS) is developing antibodies and antibody-drug conjugates (ADCs) for various tumor types. When I wrote about the company in September 2023, I rated it a buy as the name was trading below cash and had the potential to run up into preliminary data from a phase 1 trial of its antibody, PYX-106, which was expected in late 2023. Preliminary data were also expected from a phase 1 trial of PYXS’s ADC, PYX201, in early 2024. This article takes a look at where PYXS stands now, with data not due this half, the stock now trading above cash, and the trend down in March, I instead find myself rating it a hold.

PYX-201: More Delays Than Data

With Q2’23 earnings in August 2023, PYXS noted an upcoming milestone of preliminary data from a phase 1 trial PYX-201 in early 2024.

Report preliminary data, including biomarker results and early signs of potential clinical activity from PYX-201-101​​, early 2024

One of PYXS’s “Upcoming Milestones” August 11, 2023, press release.

With Q3’23 earnings in November 2023, the company noted a potential upcoming milestone for PYX-201 of “preliminary phase 1 data and PK/PD results,” in H1’24. At that time, patients were being dosed in the fifth cohort (3.6 mg/kg every three weeks). Pharmacokinetic (PK) data would include information on absorption, distribution, metabolism and excretion of the drug. Pharmacodynamic (PD) data could include things like changes to tumors seen on biopsy (more immune cells in a tumor, or similar). That’s speculation on my part though, because we really still haven’t seen any detailed PK data or PD data from the trial.

… Moreover, based on data from Pfizer’s HER2 ADC previously under development with the same linker and payload and our preclinical experiments, we believe that at 3.6 mg/kg and above, we are approaching biologically active dose levels…

Lara Sullivan, President and CEO of PYXS, November 7, 2023.

With full year 2024 earnings in March 2024, PYXS provided an update on PYX-201, noting initial data was expected from a phase 1 trial in the fall of 2024. A shift from early 2024, to H1’24, to fall 2024 isn’t ideal, but PYXS did report some additional information on the progress of the study. As of March 2024, PYXS now notes the phase 1 trial of PYX-201 has dosed 37 patients in six cohorts.

The company also noted that 54% of patients had experienced grade 2 treatment-emergent adverse events, with 6% experiencing grade 3 events. That certainly sounds acceptable so far if the drug has anti-tumor efficacy to offer, but of course it is possible that higher doses have greater toxicity, but are needed to see sufficient efficacy. PYXS further noted among solid tumor types it is focusing on head and neck squamous cell carcinoma, non-small cell lung cancer (NSCLC), ovarian cancer and pancreatic ductal adenocarcinoma. The decision to focus on those types is based on data suggesting expression of the target (extra-domain B of fibronectin) in those cancers, the amount of stromal tissue in those cancers (fibronectin is part of the stromal tissue) but also unmet need, among other factors.

I have seen antibodies dosed in clinical trials in the range of 10-20mg/kg, although this is less common with ADCs. Nonetheless, Gilead’s (GILD) sacituzumab govitecan (Trodelvy) was dosed at 8 mg/kg to 18 mg/kg on days 1 and 8 of 21-day cycles, before using the 10 mg/kg dose for further work. Unlike PYX-201, Trodelvy isn’t based on an auristatin payload, so the comparison is pretty weak. Other ADCs reach the maximum tolerated dose, or select a recommended phase 2 dose, well before that level. Overall I wouldn’t write PYX-201 off, even if there have been delays.

PYX-106

PYX-106 is PYXS’ anti-Siglec-15 antibody. The company’s recent guidance for results from its phase 1 study is H2’24. If I were to guess, since the company has guided for PYX-201 phase 1 data in fall 2024, the more broader guidance of H2’24 could even see results in late December 2024 (winter). The company noted with full year earnings in March 2024, that 21 subjects had been dosed and cohort 5 (8 mg/kg every two weeks) was fully enrolled.

While there isn’t any data from PYXS’ anti-Siglec-15 antibody yet, I previously mentioned NextCure’s (NXTC) own anti-Siglec-15 antibody, NC318, on which NXTC itself had ceased development but where a trial run by Yale was ongoing.

That Yale trial of NC318, with or without pembrolizumab, in NSCLC patients refractory to anti-PD-1 axis drugs, showed some signs of NC318 activity (see abstract 15.07). In nine monotherapy patients (800 mg NC318 a week), seven were evaluable with one achieving a partial response. In 18 patients treated with the combination of NC318 (400 mg every 2 weeks) and pembrolizumab, there were three PRs. It should be noted that one of these three PRs in the combination arm came from a patient that had pseudo-progression of their tumor, but was also considered to have a best response of a partial response via immune-related response criteria. I consider the application of those criteria reasonable here since pseudo-progression can be seen with immuno-oncology agents. NXTC also put out a press release discussing the positive results.

Yale’s work on NC318 continues, with a primary completion date of June 2025 listed on the clinicaltrials.gov entry, with more patients being enrolled, including an increase in the dose of NC318 in the combination arm to 800 mg weekly. Also, the clinicaltrials.gov listing suggests there will be an arm of the study that enrolls patients who haven’t yet been treated with an anti-PD-1 axis drug.

Since the data from the Yale trial of NC318 was from September 2023, the idea that there might be an update a year on, in September 2024, from the trial is certainly reasonable, if not sooner. PYXS investors then should keep an eye out for news there, as further activity of NXTC’s NC318 in NSCLC bodes well for PYXS’ efforts with PYX-106. Indeed with Q3’23 earnings in November, PYXS noted it would steer PYX-106 towards NSCLC.

PYX-106: Phase 1 trial now focusing on NSCLC and other tumor types. Following analyses of data from a competing anti-Siglec-15 clinical trial and a review of internally generated preclinical results, Pyxis Oncology has decided to focus on enrolling additional patients with specific tumor types, including non-small cell lung cancer, in its ongoing Phase 1 trial.

PYXS comments, November 7, 2023, press release.

The idea that PYXS might also have some preclinical data, which suggests NSCLC could be a good indication to target with anti-Siglec-15 drugs, is encouraging.

Financial Overview

On March 21, 2024, PYXS reported full year 2023 earnings. PYXS reported a net loss of $73.8M in 2024, with R&D expenses for the year of $49.6M and G&A expenses of $32.6M. PYXS finished 2024 with $119.3M in cash, cash equivalents, and short-term investments. The company also had a further $1.5M in restricted cash, as of December 31, 2023. PYXS conducted a private placement in February 2024, raising gross proceeds of $50M and also raised $10.8M using its at-the-market facility. A Form S-3 for the securities sold in the private placement was filed with the SEC on March 27. That would bring pro forma cash to ~$180M. Net cash used in operating activities was $70.7M in 2023, and at that rate PYXS could thus carry on for about 2.5 years, or until mid-2026. That being said PYXS announced a 40% headcount reduction, among other measures to reduce expenses, with Q3’23 earnings, and as such the 2023 rate of burn might be higher than we see in 2024. Indeed with full year earnings, PYXS noted it expects its cash to last into H2’26.

Subsequent to reporting full year earnings, on March 27, PYXS reported it had sold the rights to its royalties from Beovu and another drug, both of which Pyxis acquired from Apexigen in 2023, to Novartis (NVS) for $8M. There are also three other antibodies discovered using Apexigen’s technology that PYXS believes it can earn payments from, meaning Apexigen’s antibodies could serve as a source of more funds in the future.

There were 58,133,375 shares of PYXS common stock outstanding as of March 20, 2024, giving it a market cap of $244.2M ($4.20 per share). As of December 31, 2023, there were 5,982,464 stock options outstanding with a weighted average exercise price of $7.31. There were also a further 3,631,431 unvested and unsettled restricted stock units, as of December 31, 2023. There were also 1,003,191 common stock warrants outstanding as of December 31, 2023, although the nearest to the money had an exercise price of $8.12 per share and ~640K of them had an exercise price of $66.67 per share. Lastly, in connection with the private placement conducted in February 2024, 1,611,215 pre-funded warrants were issued (although some of these could already be reflected in the March 20 share count, were they exercised). Notably the March 20 share count may reflect the exercise of some of the above potentially dilutive securities. Indeed the increase in share count between year-end 2023 and March 20, 2024, is over 13M shares, which can’t be accounted entirely for by the February 2024 private placement of ~10.5M shares and pre-funded warrants.

Conclusions, Rating And Risks

PYXS ran up in late 2023 and early 2024, while the news of a $50M private placement announcement on February 27, 2024, was met with a rally, the stock reached a high in early March, and has been trending down since. The most recent leg down came following earnings.

I don’t think PYXS will be heading back to the lows of late 2023, since it has more cash now, allowing it to give its work on PYX-201 and PYX-106 all the chance it needs to succeed. The delays with actually reporting any data beyond dose escalation progress, enrollment numbers, and a bit of safety data, have likely not helped the stock. I wouldn’t be surprised to see the name trade sideways until we potentially see a run-up into data in H2’24 and fall 2024. The name is also no longer trading below cash, as it was at the time of my article in September. I thus rate PYXS a hold right now, as I don’t see a major catalyst in Q2’24. I don’t think a run-up would start too early as the guidance given for reporting data makes me think data would be more like Q4’24 or at best late Q3’24, but that is my speculation.

The risks of holding PYXS are several fold, a few of which I’ll mention here. Notably, there have been delays so far, so they could come again, causing the stock to fall.

Secondly, PYXS has other drugs in its pipeline like sotigalimab, but has paused development of the drug. If the company decides to continue further work but the market isn’t impressed, the stock could fall as the company would be seen by some as burning cash on an asset that previously was sitting on the sidelines.

Lastly, if further updates from the Yale trial of NC318 aren’t as positive, PYXS could trade down as sentiment around anti-Siglec-15 antibodies softens.

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.