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
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, 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
Overview
We are a preclinical oncology company focused on developing an arsenal of next-generation therapeutics to target difficult-to-treat cancers and improve quality of life for patients. We develop our product candidates with the objective to directly 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 of novel antibody drug conjugates, or ADCs, product candidates and monoclonal antibody, or mAb, preclinical discovery programs that we are developing as monotherapies and in combination with other therapies.
We take a holistic view of attacking the key drivers of tumor growth and progression within the tumor microenvironment, or TME, including targeting of tumor antigens and modulating the innate and adaptive immune response. The TME is an immunosuppressive environment consisting of cancer cells and stroma, which includes the blood vessels, immune cells, fibroblasts, signaling molecules, and the extracellular matrix that surrounds the tumor. The TME plays multiple roles in tumor formation, progression and metastasis as well as anti-tumor immune activity. We are developing our ADC product candidates and mAb preclinical discovery programs to precisely target key modulators of the adaptive and innate immune system within the TME for difficult-to-treat solid and hematologic tumors.
Our ADCs utilize next-generation technologies that, based on observations from
preclinical studies, may allow for increased stability and a reduced off target
side-effect profile. We in-licensed two ADC programs in
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Our current pipeline is summarized below.
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PYX-201
Our ADC PYX-201 is an investigational, novel ADC consisting of an Immunoglobulin G1, or IgG1, anti-fibronectin Extradomain-B, or EDB, mAb conjugated to auristatin via a site-specific cathepsin B-cleavable linker. Fibronectin is a glycoprotein found in the extracellular matrix. Fibronectin EDB regulates blood vessel morphogenesis, which provides the tumor access to nutrition and oxygen, a means to remove waste, and a pathway for metastasizing cells. EDB 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 addition, we observed that the treatment of preclinical syngeneic tumor models with PYX-201 resulting in T cell infiltration, which is a hallmark of immunogenic cell death, or ICD, and enhanced infiltration of T cells into the TME, enabling synergistic activity in combination with a checkpoint inhibitor.
We plan to initially develop ADC PYX-201 for the treatment of non-small cell lung cancer, or NSCLC, breast cancer and other solid tumors. We licensed worldwide rights to PYX-201, built on the FACT platform, from Pfizer. We anticipate submitting an IND by mid-2022.
PYX-202
Our ADC PYX-202 is an investigational, novel ADC consisting of an IgG1 anti-Delta-like 1 homolog, or DLK1, mAb conjugated to monomethyl auristatin, or MMAE via a site-specific plasma- stable ß-glucuronide linker. DLK1 is a transmembrane protein normally expressed in embryonic tissues but highly restricted in healthy adult tissues. DLK1 becomes re-expressed in certain solid tumor malignancies. PYX-202 is designed to use the microtubule-disrupting MMAE payload, which is utilized in three currently marketed ADCs providing clinical support that the payload has anti-tumor effect potential. We have observed significant anti-tumor activity as measured by durable tumor regression in preclinical small cell lung cancer, or SCLC, PDX models, as well as in a human cell line-based, or CDX, mouse model of cancer.
Our development plan for ADC PYX-202 is initially targeted at the treatment of
SCLC, soft tissue sarcoma, or STS, and other solid tumors. We licensed worldwide
rights to PYX-202, excluding
PYX-203
PYX-203 is an investigational ADC consisting of an IgG1 anti-CD123 mAb dimeric antibody conjugated to a novel cyclopropylpyrroloindoline, or CPI dimer payload via a site-specific plasma-stable, cleavable linker. CD123, or IL-3Ra, is a cell surface antigen highly expressed on leukemic stem cells and leukemic blasts in acute myeloid leukemia, or AML. PYX-203, utilizes a novel DNA-damaging toxin, CPI, and we have observed significant anti-tumor activity as measured by the reduction in the frequency of the leukemic cells in the blood and bone marrow in nine disseminated preclinical AML models. We licensed worldwide rights to PYX-203 built on the FACT platform. We expect to submit an IND by 2023.
In addition to the programs identified above, we are conducting research and development activities on various targets, leveraging our expertise in monoclonal antibodies and understanding of immuno-oncology. Our preclinical discovery programs are novel antibody programs intended to enhance the anti-tumor activity of natural killer, or NK cells, and T cells and to overcome immunosuppressive activity of tumor resident myeloid cells such as tumor associated macrophages, or TAMs, and myeloid derived suppressor cells, or MDSCs.
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Since our inception, we have focused substantially all our resources on organizing and staffing our company, business planning, raising capital, conducting research and development activities, filing and prosecuting patent applications, identifying potential product candidates and undertaking preclinical studies and a clinical trial. We do not have any products approved for sale and have not generated any revenue from product sales or from any other sources. To date, we have funded our operations with proceeds from sales of convertible preferred stock and our recent IPO. Our ability to generate any product revenue, and in particular to generate product revenue sufficient to achieve profitability, will depend on the successful development and eventual commercialization of one or more of our product candidates.
We have incurred significant operating losses since our inception. As of
In
COVID-19 Business Update
We are monitoring the potential impact of the COVID-19 pandemic on our business
and consolidated financial statements. To date, we have not experienced material
business disruptions. We are following, and will continue to follow,
recommendations from the
Licensing and Collaboration Agreements
License Agreement with Pfizer, Inc.
In
Pursuant to the Pfizer License Agreement, we incurred a combined
License Agreement with the
In
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In partial consideration for the license from the University, we issued to the
University 311,076 shares (48,919 shares post reverse stock split) of our Common
Stock in 2020. Pursuant to the University License Agreement, we are obligated to
pay to the University an annual maintenance fee of
The Voxall Joint Venture with
In
Voxall granted to both Pyxis and Alloy 50% of the voting membership units of
Voxall in exchange for certain initial contributions. Our initial contribution
included
In connection with the formation of Voxall, we entered into a three year research collaboration with Alloy and Voxall to identify and select certain biological targets and create development candidate antibodies directed to those targets for further preclinical development, clinical development and commercialization. Under the collaboration agreement, the parties will conduct research under a mutually agreed research plan and budget for up to six research programs focused on mutually selected targets. Each of us and Alloy will provide research support for the collaboration through separate services agreements with Voxall, which services will be paid in the form of promissory notes issued by Voxall. Voxall will own all intellectual property arising from the collaboration, subject to certain exceptions for intellectual property relating to Alloy's ATX-Gx™ platform.
If a development candidate antibody under a research program meets certain mutually agreed selection criteria, we will have the exclusive option to obtain an exclusive license from Voxall to further develop and commercialize all the development candidate antibodies discovered under that research program. We may in-license one research program on certain pre-agreed financial terms. For all other in-licensed research programs, we will be obligated to pay fair market value as determined by a third party valuation. Any research program that we do not in-license may be licensed by Voxall to a third party.
Agreements with LegoChem Biosciences, Inc.
In
Pursuant to the LegoChem License Agreement, we paid an upfront fee of
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In
Components of Our Results of Operations
Operating Expenses
Research and Development Expenses
Research and development expenses consist of costs incurred for our research activities, including our discovery efforts, and the development of our programs. These expenses include:
? employee-related expenses, including salaries, payroll taxes, related benefits and stock-based compensation expense for employees engaged in research and development activities; ? expenses incurred in connection with our product candidates and the development of research programs, including expenses incurred under agreements with third parties, such as consultants, contractors, contract manufacturing organizations, or CMOs, and contract research organizations, or CROs; ? cost incurred for laboratory supplies and research materials; and ? facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance.
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.
Our direct external research and development expenses consist of costs that include fees, reimbursed materials and other costs paid to consultants, contractors, CMOs and CROs in connection with our preclinical and clinical activities. We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities expenses, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple programs and our platform and, as such, are not separately classified.
Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. 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, for our personnel in executive, business development, legal, finance and accounting, human resources and other administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters; professional fees paid for accounting, auditing, consulting, and tax services; insurance costs; travel expenses; and facility costs not otherwise included in research and development expenses.
We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our programs and platform.
Other Income (Expense)
Interest income consists of interest earned on our invested cash and cash equivalent balances. We expect our interest income will increase as we invest the cash received from the net proceeds from our IPO.
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The change in fair value of derivative liability represents the increase in the fair value of the derivative liability recorded as a result of an Opt-in, Investment and Additional Consideration Agreement with LegoChem, or the "Opt-In Agreement".
Loss from
In
Results of Operations
Comparison of the Three Months Ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended September 30, 2021 2020 Change Operating expenses: Research and development$ 7,849 $ 2,425 $ 5,424 General and administrative 3,772 767 3,005 Total operating expenses: 11,621 3,192 8,429 Loss from operations (11,621 ) (3,192 ) (8,429 ) Other income (expense): Interest income 6 1 5
Change in fair value of derivative liability (2,560 ) - (2,560 ) Total other income (expense)
(2,554 ) 1 (2,555 ) Net loss and comprehensive loss$ (14,175 ) $ (3,191 ) $ (10,984 )
Research and Development Expenses
The following table summarizes our research and development expenses for the
three months ended
Three Months Ended September 30, 2021 2020 Change
Research and development program expenses
1,141 703 438 Other research and development expenses 1,013 454 559
Total research and development expenses
Research and development expenses increased by
General and Administrative Expenses
The following table summarizes our general and administrative expenses for the
three months ended
Three Months Ended September 30, 2021 2020 Change Personnel-related expenses including stock-based compensation$ 1,318 $ 311 $ 1,007 Professional and consultant fees 1,938 377 1,561 Facilities, fees and other related costs 516 79 437
Total general and administrative expenses
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General and administrative expenses increased by
Other Income (Expense)
Interest income for the three months ended
Other expense consists of change in fair value of the derivative liability of
Comparison of the Nine Months Ended
The following table summarizes our results of operations for the nine months
ended
Nine Months Ended September 30, 2021 2020 Change Operating expenses: Research and development$ 43,828 $ 5,909 $ 37,919 General and administrative 9,463 2,406 7,057 Total operating expenses: 53,291 8,315 44,976 Loss from operations (53,291 ) (8,315 ) (44,976 ) Other income (expense): Interest income 16 66 (50 ) Service fee income from related party 181 - 181 Change in fair value of derivative liability (5,821 ) - (5,821 ) Total other income (expense) (5,624 ) 66 (5,690 ) Loss from equity method investment in joint venture (231 ) - (231 ) Net loss and comprehensive loss$ (59,146 ) $ (8,249 ) $ (50,897 )
Research and Development Expenses
The following table summarizes our research and development expenses for the
nine months ended
Nine Months Ended September 30, 2021 2020 Change
Research and development program expenses
4,158 1,797 2,361 Other research and development expenses 2,041 1,035 1,006
Total research and development expenses
Research and development expenses increased by
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General and Administrative Expenses
The following table summarizes our general and administrative expenses for the
nine months ended
Nine Months Ended September 30, 2021 2020 Change Personnel-related expenses including stock-based compensation$ 4,378 $ 805 $ 3,573 Professional and consultant fees 4,194 1,226 2,968 Facilities, fees and other related costs 891 375 516
Total general and administrative expenses
General and administrative expenses increased by
Other Income (Expense)
Interest income for the nine months ended
Other expense consists of change in fair value of the derivative liability of
Liquidity and Capital Resources
Overview
We had cash of
In
We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials for our product candidates in development. The timing and amount of our funding requirements will depend on many factors, including:
the manufacture of product candidates, completion of our IND enabling studies and initiation of Phase 1 clinical trials for PYX-201, PYX-202 and PYX-203;
? the timing and progress of our other preclinical and clinical development activities; ? the number and scope of other preclinical and clinical programs we decide to pursue; ? the progress of the development efforts of parties with whom we have entered or may in the future enter into in-licensing, collaborations and research and development agreements; ? the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing licensure; ? our ability to maintain our current licenses and research and development programs and to establish new collaboration arrangements; ? the costs involved in prosecuting, maintaining and enforcing patent and other intellectual property rights; ? any delays or interruptions, including due to the COVID-19 pandemic, that we experience in our preclinical studies, future clinical trials and/or supply chain; ? the cost and timing of regulatory licenses; and ? our efforts to hire additional clinical, regulatory, scientific, operational, financial and management personnel; and 24
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?
incur insurance, legal and other regulatory compliance expenses to operate as a public company.
Until such time, if ever, we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions, engaging in acquisition, merger or collaboration transactions, selling or licensing our assets, making capital expenditures, redeeming our stock, making certain investments or declaring dividends.
If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Cash Flows
The following table provides information regarding our cash flows for the periods presented (in thousands):
Nine Months EndedSeptember 30, 2021 2020
Net cash used in operating activities
(590 ) (1,483 ) Net cash provided by financing activities 149,144 34 Operating Activities
During the nine months ended
During the nine months ended
Investing Activities
During the nine months ended
Financing Activities
During the nine months ended
Outlook
Based on the net proceeds from our IPO of approximately
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Contractual Obligations and Commitments
We lease our operating facility in
On
During 2020 and 2021, we entered into a few licensing and related agreements in the normal course of business. In accordance with the agreements, we are obligated to pay, among other items, future contingent payments, royalties, and sublicensing revenue in the future, as applicable. We have not included potential future payments due under these licensing and collaboration agreements in a table of contractual obligations because the payment obligations under this agreement are contingent upon future events.
Pursuant to the Pfizer License Agreement, we are obligated to pay future
contingent payments and royalties, including up to an aggregate of
Pursuant to the LegoChem License Agreement, we are obligated to pay up to an
aggregate of
Pursuant to the University License Agreement with the
We also enter into contracts in the normal course of business with CMOs, CROs and other third parties for preclinical studies. These contracts do not contain minimum purchase commitments and are cancelable by us upon prior written notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-cancelable obligations of our service providers, up to the date of cancellation. These payments are not included in the table of contractual obligations above as the amount and timing of such payments are not known.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined in the rules and regulations of the
Critical Accounting Policies and Significant Judgments and Estimates
Our condensed consolidated financial statements and the related notes thereto
included elsewhere in this Quarterly Report on Form 10-Q are prepared in
accordance with
There have been no significant changes to our critical accounting policies and estimates as compared to those described in "Note 2 - Summary of Significant Accounting Policies" to our audited financial statements set forth in our Final Prospectus.
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Recently Issued Accounting Pronouncements
See Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
Other Company Information
The Jumpstart Our Business Startups Act of 2012 permits an "emerging growth
company" such as us to take advantage of an extended transition period to comply
with new or revised accounting standards. We have elected not to "opt out" of
such extended transition period, which means that when a standard is issued or
revised and it has different application dates for public or private companies,
we can adopt the new or revised standard at the time private companies adopt the
new or revised standard and may do so until such time that we either (i)
irrevocably elect to "opt out" of such extended transition period or (ii) no
longer qualify as an emerging growth company. We may choose to early adopt any
new or revised accounting standards whenever such early adoption is permitted
for private companies. We will continue to remain an "emerging growth company"
until the earliest of the following: (1) the last day of the fiscal year
following the fifth anniversary of the date of the completion of our IPO; (2)
the last day of the fiscal year in which our total annual gross revenue is equal
to or more than
We are also a "smaller reporting company," and may continue to be a smaller
reporting company for as long as either(i) the market value of our shares held
by non-affiliates is less than
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