PYXS - Pyxis: Unique ADC Approach With A Catalyst In Late 2023

2023-06-15 08:20:40 ET

Summary

• An anti-EDB ADC, known as PYX-201 is being explored in a phase 1 study treating patients with breast, head and neck, lung and thyroid cancer.
• An anti-Siglec-15 drug, known as PYX-106, is being advanced in a phase 1 study treating patients with Bladder, Cholangio-carcinoma, Colorectal, and Kidney Cancer.
• Results from the phase 1 studies using PYX-106 and PYX-201 are expected in late 2023 and early 2024 respectively.
• Company believes that it has enough cash on hand to fund its operations into the 1st half of 2025.

Pyxis Oncology ( PYXS ) is a good speculative biotech play to look into. The reason why I state that is because even though it deploys antibody drug-conjugate [ADC] technology, it is taking a holistic anti-tumor approach. There are many steps in the process of this being a possibility, but in essence it is an ADC which is both internalized and non-internalized. The hope here is that by taking such an approach it can provide an even superior therapeutic index over conventional ADCs. This anti-EDB ADC is known as PYX-201 and is currently being explored in a phase 1 study treating patients with breast, head and neck, lung and thyroid cancer.

Then, there is alternate approach in the pipeline, one that involves immuno-oncology advancement. This is with respect to a drug by the name of PYX-106, which is being explored in a phase 1 study treating patients with bladder, cholangiocarcinoma, colorectal and kidney cancer. What makes this immuno-oncology drug unique is its ability to bind to siglec-15 on both tumor cells and macrophages in the microtumor environment. Not only that, but my belief is that PYX-106 could be a better drug for Pyxis to develop compared to PYX-201. Why is that? Well, it is because it could possibly take care of PD-1/PD-L1 non-responders.

In essence, since siglec-15 has limited overlap with the PD-1/PD-L1 proteins, it could go after cancer patients who don't respond to such therapies. Even though this biotech is highly speculative, the reason why I'm bringing it up is because results from these two phase 1 studies are expected in early 2024 and late 2023 respectively. One major item to note is that this biotech has licensed a lot of its clinical candidates in the pipeline, as I will explain below. PYX-106 was licensed from Biosion USA, Incorporated, while PYX-201 was licensed from Pfizer ( PFE ). Therefore, ultimately it will have to pay milestone payments and royalties on net sales, should any of the drugs eventually make it to market. It has even gone on to obtain a third asset targeting solid tumor types, which is known as Sotigalimab. The company got this drug though the acquisition of Apexigen. With three assets in play that are targeting the large solid tumor market, plus results from the phase 1 study using PYX-106 expected by late 2023, these are the reasons why I believe that PYXS stock is a good speculative biotech play to look into.

PYX-106 For The Treatment Of Patients With Solid Tumors

The first clinical candidate to go over in the pipeline would be the use of PYX-106, which is being explored in the phase 1 study to treat patients with various types of refractory solid tumors. That is, solid tumors where 1st-line treatment options are not available. Solid tumors are an abnormal mass of tissue that form, which can be malignant or non-malignant. I will state right now that the complete focus of this biotech company is to go after various types of solid tumors. Thus, the market opportunity here is going to be a large one. It is projected that the global solid tumor market will reach $532.42 billion by 2032 . It is of importance to note that the types of solid tumors Pyxis will use PYX-106 against are as follows:

• Non-small cell lung cancer
• Breast cancer
• Endometrial cancer
• Thyroid cancer
• Kidney cancer
• Cholangiocarcinoma
• Bladder cancer
• Colorectal cancer
• Head and Neck squamous cell carcinoma

These are the solid tumors types which are being explored in the ongoing phase 1 PYX-106-101 study , which is a dose escalation trial. The key function for this type of trial is to find the recommended phase 2 dose [RP2D] for the drug PYX-106. Why is this clinical trial important to mention? That's because dosing of this study was initiated in Q2 of 2023 and preliminary results from this study are expected to be released in late 2023. Thus, this sets up a huge catalyst opportunity for investors, because it will be the first look into whether or not PYX-106 is capable of being able to treat all these patients with solid tumors. Every other clinical candidate I will be going over below will involve a specific type of drug targeting patients with solid tumors.

As I stated in the beginning above, PYX-106 is not a wholly owned immuno-oncology product. This product was licensed from Biosion, Incorporated back on March 29, 2022 . In order for Pyxis to get its hands on PYX-106 it had to pay Biosion an upfront $10 million licensing fee. Then, it has to eventually pay out up to $222.5 million in milestone payments. One quick item to note, which is that this was licensed for everywhere globally except the Greater China region. That region will still belong to Biosion as part of this deal. Then, you have the typical royalty payments that will be needed to be paid out, should this immuno-oncology drug make it to market. The royalty payment isn't too bad either, because it will be in the single to low double-digit royalties on commercial sales. This isn't a bad deal, because the company gets its hand on a strong immuno-oncology candidate to move forward with.

Now, on to the reason why Pyxis Oncology might have done well to license the use of this immuno-oncology drug. It all boils down to PYX-106s' ability to target Siglec-15. Why is it important that such a drug targets this specific molecule? It is because Siglec-15 found on tumor cells and macrophages suppresses T-cell proliferation [increase in numbers] and function. Thus, if you can bind to and inhibit this function, then it might be possible for T-cells to do their job properly and destroy the cancerous cells in the solid tumor microenvironment. In essence, this is what the phase 1 PYX-106-101 study is doing. To see if PYX-106 is strong enough to produce the efficacy needed to help refractory solid tumor patients. However, first it must see that no dose produces any unwanted toxicity, which is why this early-stage study is being deployed as a dose finding study. That is, to find the right recommended phase 2 dose [RP2D]. Lastly, my logical reasoning on why I believe that PYX-106 has huge potential to specifically attempt to address the refractory solid tumor market. I believe it is because Siglec-15 and PD-L1 (checkpoint inhibitors) have limited overlap. With that said, this drug could be good for patients who take drugs like Keytruda or Opdivo [both PD-1/PD-L1 inhibitors] and don't respond to them.

PYX-201 For The Treatment Of Patients With Solid Tumors

The next clinical candidate to go over involves the use of PYX-201, which is also being developed for the treatment of patients with refractory solid tumors. The use of this drug is being explored in the phase 1 PYX-201-101 study . However, there is one major difference between this drug and the other one which I noted above, in that this one is an antibody-drug conjugate [ADC] instead. There are the typical ADCs which are deployed by many biotechs to treat patients with cancer, but PYX-201 makes use of the Flexible Antibody Conjugation Technology [FACT] platform. What does this mean? In essence, Pyxis can develop ADCs which are highly controlled and are able to deliver potent cytotoxic payloads at site-specific areas. This has the potential to provide these ADCs with an enhanced therapeutic index, while at the same time possibly reducing toxicity.

What makes PYX-201 unique is that it is a non-internalizing ADC, which binds to extradomain-B [EDB] fibronectin. Why is EDB fibronectin an important target? That's because patients with refractory solid tumors have more EDB fibronectin as part of the tumor. Even better, EDB fibronectin is largely expressed on these refractory solid tumors, but minimally expressed in normal adult tissues. As you can see here, PYX-201 as an ADC not only has the potential to have an enhanced therapeutic index, but at the same time could be more tolerable compared to other ADCs approved or not. Of course, like other ADCs, there is still a cytotoxic payload which is known as "auristatin" that is in place. Auristatin is released enzymatically only once binding is completed with EDB fibronectin on the tumor itself. Once this function is achieved, the payload specifically targets the cancer cells located on the tumor. Another important aspect to consider is that this drug also has potential to be combined with other immunotherapy drugs like a checkpoint inhibitor.

This phase 1 study, which is using PYX-201 for the treatment of patients with refractory solid tumors, had the first patient dosed back in Q1 of 2023. Thus, there also is a catalyst opportunity with respect to this clinical study. It is expected that results from this early-stage study, using this drug to treat solid tumor patients, will be released by early 2024. The types of solid tumors being targeted with the use of PYX-201 are as follows:

• Non-small cell lung cancer
• Hormone receptor positive breast cancer
• Ovarian cancer
• Thyroid cancer
• Pancreatic ductal adenocarcinoma
• Soft-tissue sarcoma
• hepatocellular carcinoma [liver cancer]
• Kidney cancer

This is another study which is still in the early part of clinical testing. That's because like the other phase 1 study above, this is also a dose-finding study as well. Meaning, that the goal of the study is to determine a recommended phase 2 dose [RP2D], which might be used in phase 2 clinical testing. Of course, that's if the preliminary safety/efficacy data warrants it being able to initiate the next stage of clinical testing, which would be a phase 2 study. Results from this phase 1 study, using PYX-201 for the treatment of patients with refractory solid tumors, are expected to be released in early 2024.

The thing is that PYX-201, like PYX-106, was not developed by Pyxis Oncology. This is another clinical candidate in the pipeline which was obtained through a licensing agreement. However, PYX-201 was licensed from Pfizer . Matter of fact, this licensing deal which was developed back in 2021, which also allowed Pyxis to obtain PYX-203 as well. I don't want to go too much into PYX-203 and the reason why is because it is currently paused in the pipeline. Why is that? That's because the company has limited cash, thus it is looking for a partner to continue advancement of this other asset. In essence, PYX-203 is an anti-CD123 ADC which has a potent DNA-damaging agent which is capable of being able to not only kill the cancer cells in question, but to also offer the possibility of being able to reduce drug resistance and disease relapse. Pfizer received an upfront payment in consideration for this licensing deal and is also eligible to receive development and sales-based milestone payments as well. In addition, Pfizer will be owed tiered royalties on potential sales should PYX-201 or PYX-203 reach the market. This is the typical deal, but being that Pyxis has a huge interest in ADCs, the deal also allowed it to obtain other ADC technologies from Pfizer like linkers and payloads.

Financials

According to the 10-Q SEC Filing , Pyxis Oncology had cash, cash equivalents and short-term investments of $149.3 million as of March 31, 2023. It should be good on cash for now and the reason why I say that is because it has already been able to deploy and use an ATM. Such an ATM was registered on the Form S-3 with the SEC back on November 1, 2022 . This was to issue for sale common stock, preferred stock, warrants, debt securities, rights and units of up to an aggregate $250 million. On November 14, 2022, this registration statement was declared effective, which included an ATM offering program for the sale of up to $125 million shares of common stock. On April 3rd and April 4th of 2023, it completed the sale of an aggregate of 1,001,208 shares of common stock under this ATM offering program, at an average price of $6.30 per share. This sale resulted in gross proceeds totaling $6.3 million. This biotech is in good shape and thus expects that it has enough cash on hand to fund its operations into the 1st half of 2025.

Risks To Business

There are several risks that traders and investors should be aware of before investing in this biotech. The first risk to consider would be with respect to the results which are going to be released from the phase 1 study, using PYX-106 for the treatment of patients with several types of solid tumors. Results from this study are expected to be released in late 2023. There is no assurance that these results will achieve positive safety/efficacy outcomes. A second risk to consider would be with respect to PYX-201, which is being advanced in a phase 1 study for the treatment of patients with solid tumors as well. There is no guarantee that this study will be successful either. These two risks bring up a third and final risk in that if these two trials don't succeed, then the only other advanced clinical asset [completed phase 2 testing] would be Sotigalimab, which is a CD40 agonist that has demonstrated safety/efficacy in difficult-to-treat tumors. This clinical candidate was obtained by Pyxis when it acquired Apexigen for $16 million . Besides obtaining Sotigalimab, it did also get its hands on new technology as well. That is, it got a hold of the APXiMAB platform for antibody generation. The reason for this acquisition is that Pyxis believes it could deploy this newly acquired antibody platform together with its FACT ADC toolkit of linkers, payloads and conjugation chemistries. It remains to be seen if it can truly combine such technology platforms together, but this might be another item that might create shareholder value.

Conclusion

The final conclusion is that Pyxis Oncology is a good speculative biotech play to look into. That's because there are three shots on goal in being able to target the large tumor market. It is projected that the global solid tumor market will reach $532.42 billion by 2032. It would be nice if PYX-106, PYX-201 or Sotigalimab are advanced towards this market opportunity, but all it needs is for one these three candidates to be successful to create shareholder value. What's even better is that there is no major risk of dilution in the near-term. Why is that? That's because with the strong balance sheet of $158 million in cash and short-term investments, it believes that it has enough cash to fund its operations into the 1st half of 2025. As I stated directly above, it did also acquire Apexigen for $16 million and with that it got its hands on the APXiMAB platform for antibody generation technology. In addition, it even got a phase 2 ready anti-CD40 asset, which was Sotigalimab. With three assets in play that are targeting the large solid tumor market, plus results from the phase 1 study using PYX-106 for solid tumors expected in late 2023, these are the reasons why I believe that Pyxis Oncology is a good speculative biotech play to look into.

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