Pyxis Oncology Inc

We are a clinical stage company focused on defeating difficult-to-treat cancers. We are efficiently building next generation therapeutics that hold the potential for mono and combination therapies. We develop our product candidates with the objective to 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 that includes antibody-drug conjugates, or ADC, product candidates, and immuno-oncology, or IO, product candidates. Our ADC and IO programs employ novel and emerging strategies to target a broad range of solid tumors resistant to current standards of care.

Our pipeline is balanced across programs with an emphasis on solid tumors. We in-licensed two ADC programs in March 2021 from Pfizer and one IO program from Biosion in March 2022. Additionally, upon the acquisition of Apexigen Inc., or Apexigen, in August 2023, we added another IO program to our pipeline. We have additional preclinical monoclonal antibody, or mAb, discovery programs derived from the work at the laboratory of Dr. Thomas Gajewski. We retain full worldwide development and commercialization rights to all our product candidates, with the exception of PYX-106 in Greater China (mainland China, Hong Kong, Macau and Taiwan).

Our clinical development pipeline focused on multiple difficult-to-treat tumors is displayed below:

Our Clinical Program Portfolio

PYX-201

Our lead ADC product candidate is PYX-201, an investigational, novel ADC consisting of human Immunoglobulin G1, or IgG1, site-specifically conjugated with a next generation auristatin derivative via proteases-cleavable linker. PYX-201 is an ADC that uniquely targets Extradomain-B Fibronectin, or EDB+FN, in the tumor stroma. EDB+FN regulates blood vessel morphogenesis, which provides the tumor access to nutrition and oxygen, a means to remove waste, and a pathway for metastasizing cells.

We believe EDB+FN within the tumor stroma may be an ideal target to address in many cancers with high unmet need. The stroma plays a major role in the initiation, growth, survival, invasion and drug-resistance of solid tumors, yet few therapeutics specifically target tumor-associated stroma. By targeting EDB+FN and specifically attacking the stroma, our goal is to destabilize the barrier that protects, feeds and provides structure to the tumor in addition to killing tumor cells directly. EDB+FN 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 a dose-dependent manner. In addition, we observed that the treatment of preclinical syngeneic tumor models with PYX-201 resulted in enhanced T-cell infiltration into the tumor microenvironment, or TME, suggesting that PYX-201 may have caused immunogenic cell death, or ICD, and could potentially trigger downstream anti-tumor immune response.

In December 2022, we announced clearance of our investigational new drug application, or IND, by the U.S. Food and Drug Administration, or FDA, to initiate a Phase 1 clinical trial. During the first quarter of 2023, we announced dosing of the first subject in a Phase 1 trial of PYX-201, referred to as PYX-201-101. PYX-201-101 is an open-label, multicenter, dose-escalation trial designed to evaluate the safety, tolerability, pharmacokinetics, or PK, pharmacodynamics, or PD, and preliminary efficacy of PYX-201 and identify recommended doses for further study. Patients with relapsed or refractory solid tumors, including non-small cell lung cancer, or NSCLC, locally advanced/metastatic breast cancer, hormone receptor and human epidermal growth factor receptor 2 positive and negative, or HR+ HER- and HR- HER2+, breast cancers, triple negative breast cancer, or TNBC, ovarian cancer, thyroid cancer, pancreatic ductal adenocarcinoma, or PDAC, soft tissue sarcoma, or STS, hepatocellular carcinoma, or HCC, head and neck squamous cell carcinoma, or HNSCC, and kidney cancer are eligible to enroll in this study. In May 2023, the FDA granted Orphan Drug Designation, or ODD, for use of PYX-201 in the treatment of pancreatic cancer.

In the Phase 1 portion of the trial, the starting dose of PYX-201 was 0.3 mg/kg. The Dose Escalation Steering Committee, or DESC, approved escalating the dose after each cohort. PYX-201 is administered once every three weeks. Dose escalation follows the Bayesian Optimal Interval, or BOIN, design until the recommended Part 2 dose(s), or RP2D, is determined.

To date, 37 subjects in six cohorts have been dosed with PYX-201 in this Phase 1 trial. PYX-201 recently cleared the 21-day Dose Limiting Toxicity, or DLT, observation period for ten subjects in Cohort 6 at a dose of 5.4 mg/kg. The DESC met on March 19, 2024, and voted to escalate dosing into Cohort 7 at a dose of 8 mg/kg and we are now enrolling subjects in Cohort 7 at this dose. PYX-201 has been well tolerated to date, with no significant evidence of target mediated toxicities experienced by the 37 subjects enrolled and dosed to date. Approximately 54% of subjects have experienced grade 2, and 6% of subjects have experienced grade 3 treatment emergent adverse events, or TEAEs. No subjects have reported TEAEs leading to dosing delay or study drug discontinuation. We anticipate enrolling and dosing another 10-15 subjects at Cohort 7 with a dose of 8 mg/kg or future higher dose level cohorts, should PYX-201's profile continue to support further dose escalation.

The dose escalation and number of subjects enrolled and dosed to date with PYX-201 in the PYX-201-101 trial, for each cohort since initiating the trial in March 2023, are provided in Figure 1 below.

Figure 1

As we continue to analyze the data generated, we anticipate that the data from the dose finding studies will guide the selection for the RP2D for subsequent multi-dosing and potential combination studies. We believe the encouraging PYX-201 safety profile observed to date likely reflects the specificity of target expression within tumor tissue and the potential for a wider therapeutic index, or TI, given the novel mechanism of action within the TME. We anticipate reporting efficacy, safety, and PK/PD data from this Phase 1 clinical trial, in the fall of 2024. We also anticipate reporting pre-clinical insights along with the plan for the next phase of development at that time.

PYX-106

Our lead IO product candidate is PYX-106, an investigational, fully human IgG1 Siglec-15-targeting antibody designed to block Siglec-15 mediated suppression of T-cell proliferation and function. PYX-106 has high binding affinity to a unique epitope and high potency. Overall, by binding and blocking Siglec-15 activity on myeloid cells and tumors, our Siglec-15 targeting antibody is designed to enhance immune cell mediated tumor cell killing. We are developing this asset for the treatment of solid tumors and believe that PYX-106 has the potential to provide additional benefit to patients either alone or in combination with other therapies, including other immuno-therapies.

Preclinical studies provided us sufficient scientific rationale about the effect of blocking Siglec-15 in various animal models. PYX-106 was observed as well tolerated with no evidence of anti-drug antibodies. Further, PYX-106 was observed to have 7 days of half-life in monkeys in our preclinical studies. If the half-life of 7 days were observed in humans, it would allow for less frequent dosing, maintain exposure and target engagement.

In December 2022, we announced clearance of our IND by the FDA for PYX-106 to initiate a Phase 1 clinical trial. During the second quarter of 2023, we announced dosing of the first subject in a Phase 1 trial of PYX-106, referred to as PYX-106-101. PYX-106-101 is a first-in-human, Phase 1, multicenter, open-label dose escalation trial designed to evaluate the safety, tolerability, PK, PD, and preliminary efficacy of PYX-106 and identify recommended doses for further study. Patients with relapsed or refractory solid tumors, including non-small cell lung cancer without driver mutations/translocations, breast cancer, endometrial cancer, thyroid cancer, kidney cancer, cholangiocarcinoma, bladder cancer, colorectal cancer, and HNSCC are eligible to enroll in this study.

In the Phase 1 portion of the trial, the starting dose of PYX-106 was 0.5 mg/kg. The DESC approved escalating the dose after each cohort. We are currently dosing subjects in Cohort 5 at a dose of 8 mg/kg and Cohort 5 is fully enrolled. To date, 21 subjects have been dosed with PYX-106 in this Phase 1 trial. PYX-106 is administered once every two weeks. Dose escalation will follow the BOIN design until the RP2D is determined.

The dose escalation and number of subjects enrolled and dosed to date with PYX-106 in the PYX-106-101 trial, for each cohort since initiating the trial in May 2023, are provided in Figure 2 below.

Figure 2

PYX-107

On August 23, 2023, we completed the acquisition contemplated by that Agreement and Plan of Merger, or the Merger Agreement, by and among the Company, Ascent Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of the Company, or the Merger Sub, and Apexigen, a Delaware corporation and a clinical-stage biopharmaceutical company focused on discovering and developing innovative antibody therapeutics for oncology.

Pursuant to the Merger Agreement, Merger Sub merged with and into Apexigen, with Apexigen surviving as a wholly owned subsidiary of the Company, or the Merger. As consideration for the Merger, we delivered to Apexigen common stockholders 4,344,435 shares of our common stock and replaced stock options, restricted stock units and warrants to Apexigen’s former employees and warrant-holders, for an aggregate purchase price of $10.7 million.

The Merger expanded our existing pipeline with the addition of sotigalimab (now PYX-107), a CD40 agonist with demonstrated anti-cancer activity in patients who previously progressed on PD-(L)1 inhibitors. PYX-107 has been evaluated in more than 500 patients in clinical trials and demonstrated strong activity, including rapid, deep and durable responses and a favorable tolerability profile, across multiple difficult-to-treat tumor types. In a Phase II trial, PYX-107 in combination with nivolumab has demonstrated strong activity in melanoma patients who are refractory to anti-PD-(L)1, with a 15.2% partial response rate and a 30.3% stable disease rate along with a favorable tolerability profile. Opportunity to advance clinical development of PYX-107 will be further assessed as part of portfolio evaluation.

Our Technology Platforms

We are capitalizing on years of industry innovation and advancement in ADC platforms to develop and design our product candidates. Our PYX-201 product candidate was built utilizing the Flexible Antibody Conjugation Technology, or FACT Platform, initially licensed from Pfizer in December 2020, before securing an exclusive license to the FACT Platform in October 2022. The FACT Platform leverages over a decade of investment refining the technical components of ADCs to improve the clinical properties of ADCs. Using our expertise in site-specific antibody conjugation, we are developing next-generation ADCs with customized linker-payload combinations aimed at increasing stability and, consequently, a reduced off target side-effect profile potentially enhancing the TI.

The Merger enhanced our ADC capabilities with the addition of Apexigen’s antibody-discovery platform, or the APXiMAB Platform, to use with our FACT Platform to support and potentially accelerate our existing ADC initiatives and the combined company’s end-to-end capabilities to design and produce novel next-generation ADC candidates with improved potency, stability and tolerability.

The APXiMAB Platform was used to enable the discovery of multiple protein therapeutic product candidates against a variety of molecular targets, including targets that are difficult to generate antibodies with conventional antibody technologies. In addition to certain product candidates that we wholly own, several product candidates that were discovered through the use of the APXiMAB Platform are in clinical development by our licensees. The most advanced of these programs is Novartis’ Beovu® (brolucizumab-dbll) product, which received FDA approval in 2019 and is marketed in over 70 countries. Two other programs being developed by our licensees are in later-stage development; Simcere’s Phase 3 clinical trial of suvemcitug (BD0801) for injection combined with chemotherapy in patients with recurrent, platinum-resistant epithelial ovarian, fallopian tube or primary peritoneal cancer, which met the primary endpoints in January 2024, and Mabwell’s Phase 3 clinical trial of 9MW0211 in wet age-related macular degeneration, or AMD. Other than already approved programs (i.e. Novartis’ Beovu®) there is no guarantee that any of the other product candidates discovered using our APXiMAB Platform, whether developed by us or our licensees, will receive regulatory approval.

Our Team

Our company was founded in 2018, and launched operations in 2019, with a mission to defeat difficult-to-treat cancers. We have a highly qualified team with deep experience and proficiency in oncology research and development and plan to leverage our team’s decades of experience in drug development to bring a variety of innovative therapies through the clinic. The collective experience across our team spans the spectrum of both pharmaceuticals and biotechnology.

Our Strategy

Our goal is to improve the lives of patients with difficult-to-treat cancers by building a superior portfolio of biological products, including ADCs and monoclonal antibody immunotherapies.

Elements of our strategy to achieve our short and long-term goals include:

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Building a leading ADC oncology company with opportunistic development in IO. We believe our team, which brings deep scientific TME knowledge, functional biology expertise, expertise in ADC modality, and biologics development capabilities, position us to build a leading ADC focused oncology company with opportunistic development in IO.

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Progress our lead product candidates, PYX-201 and PYX-106, through clinical development. We expect preliminary data from the Phase 1 clinical trials of PYX-201 and PYX-106, including PK/PD data and early signs of potential clinical activity, in mid-2024 and the second half of 2024, respectively.

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Pursue a multi-modality approach to cancer therapy addressing various key components of the TME. Our approach is to leverage our capabilities to develop investigational products that target tumor cells and stromal components of the TME with ADCs as well as enhance effector cell function and overcome key mechanisms of immune-suppression with immunotherapeutic mAbs to improve response rates and/or deliver durable responses for more patients.

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Selectively forge alliances to enhance and expand our product pipeline to further leverage our intellectual property. We believe that the potential for single agent anti-tumor activity of our current and future products could be enhanced by incorporating potential collaborator technologies. We intend to selectively form alliances with partners to gain access to complementary technologies and expertise to develop and commercialize product candidates with increased potential for anti-tumor activity and the potential for a strong safety profile. We seek to further leverage our intellectual property portfolio through the formation of these alliances.

Unmet Need in Oncology

Despite the meaningful advances made in oncology with the approval of several new classes of drugs, there remains significant unmet medical need for novel treatments. According to the World Health Organization, cancer is the second leading cause of death globally, accounting for nearly 10 million deaths in 2020. The key limitations of existing oncology treatments include high toxicity, low or limited response rates, and relapse or recurrence.

Chemotherapy remains one of the most common treatments for cancer, often combined with surgery and radiotherapy depending on the stage and type of tumor. A major challenge in the development of cancer treatments has been the overall complexity and heterogeneity not only of solid tumors, but of their dynamic surrounding microenvironments. While recent advances in treatment approaches, such as targeting specific tumor mutations that contribute to carcinogenesis or redirecting a patient’s immune system to eliminate tumors, have begun to address these challenges, their focus has largely been on tumor cells. We believe that targeting the TME, which has been shown to play a key role in driving tumor progression, growth and multidrug resistance, represents a novel approach for addressing unmet needs in oncology. For example, while the development of immune checkpoint inhibitors has transformed the treatment paradigm for numerous cancers, many patients who respond to these therapies ultimately develop resistance and experience disease progression. Many features of the TME have been shown to influence response and resistance to immune checkpoint inhibitors and targeting the TME has potential to overcome these limitations. Our development efforts aim to leverage our deep understanding of the TME biology with the goal of designing and developing next-generation ADCs, with site-specific conjugation and customized linker-payload combinations, and immunotherapies that target key modulators of the adaptive and innate immune system found within the TME.

Overview of Antibody-Drug Conjugates

ADCs are a therapeutic class in which cytotoxic chemotherapy molecules are linked to a targeting mAb to effectively deliver the tumor killing effect into tumor lesions while limiting systemic toxicity. Systemic toxicity limits the efficacy of chemotherapy, a highly cytotoxic class of anti-tumor medicines. ADCs can significantly improve the therapeutic window of toxic payloads even more cytotoxic than traditional chemotherapies by targeting their delivery to tumorous cells and their local environment and sparing healthy tissue. ADCs achieve this level of precision by pairing payloads with monoclonal antibodies, proteins that can recognize their target antigens with great specificity. ADCs are an established and fast-growing class of biological products. To date, eleven ADCs have been approved by the FDA and are on the market.

Figure 3

Schematic representation of an ADC, highlighting the three key components; targeted antibody, linker, and payload or cytotoxic agent (dark blue: mAb heavy chain; pink: mAb light chain).

The clinical properties of ADCs are a function of three components (as show in Figure 3 above):

(1)

A monoclonal antibody that selectively targets a distinct antigen preferentially expressed on tumor cells or other cells in the TME;

(2)

A linker that joins together the antibody and the payload; and

(3)

A payload that can effectively kill the targeted cells and/or the TME.

Ideal ADC targets typically have highly tumor restricted expression to spare healthy tissues, are accessible to circulating antibodies, and have well-defined internalization kinetics or can be effectively bound within the TME. Once administered, an ADC will travel in the bloodstream until it encounters its target antigen and will subsequently release the toxic payload.

A measure of drug tolerability for ADCs is the preclinical TI, which is calculated from data to estimate the safety profile (refer to Figure 4). This measure is the preclinical ratio of the highest non-severely toxic dose, or HNSTD, in monkeys versus the minimal effective dose, or MED, in mouse tumor models. The TI is defined formulaically as HNSTD (mg/m2) in monkeys / mouse minimal tumor regression dose (mg/m2). As further illustrated in Figure 4 below, a wider TI is a key attribute of an ADC’s potential clinical success.

Figure 4

The TI is a measure to estimate the clinical tolerability profile of ADCs based upon the ratio of maximum tolerated dose, or MTD, in monkeys versus the MED in rodents from preclinical studies.

Key Areas of Innovation for Engineering the Next-Generation ADCs

Optimizing the Linker

The linker that joins the payload to the antibody should prevent the payload’s premature release while in circulation and ensure efficient release of the payload into the target cell(s) and/or the TME. There are two general classes of linkers:

(1)

Cleavable linkers are designed to conditionally unload cytotoxic agents within the tumor cell or TME in response to the presence of tumor-associated factors such as proteases or highly acidic conditions. Typically, cleavable linkers carry uncharged payloads, allowing the drug to diffuse out of the target cell to kill surrounding “bystander cells.” Bystander killing can also occur when the uncharged payload is unleashed within the TME.

(2)

Non-cleavable linkers remain intact upon internalization and rely on lysosomal degradation of the entire construct to achieve sufficient payload release. Non-cleavable ADCs typically release their payloads as charged catabolites, which traps the toxin within the cell where it was internalized. As a result, non-cleavable ADCs are naturally well suited to address cancers with a high and uniform expression of the target antigen since cells lacking the target antigen will not be directly affected.

We believe our toolbox of cleavable and non-cleavable linkers allows us to select the optimal linker tailored to each program. We select our linkers based on several factors, including but not limited to the level and distribution of the target antigen and rates of antigen turnover, internalization, lysosomal processing, and degradation. Our PYX-201 ADC product candidates use proteases-cleavable, valine citrulline linkers, which is optimized to improve stability in circulation and reduce free payload.

Site-Specific Conjugation

Site-specific conjugation chemistry enables the engineering of next-generation ADCs with predictable drug-to-antibody ratio, or DAR, with improved ADC PK observed preclinically. This improved PK results in minimizing premature payload release and less off-target toxicity and as a result improves the overall TI of the ADC.

DAR is defined as the number of payload moieties attached to each antibody, which typically range from zero to eight. Ideally, there is limited variability in DAR to allow for ADCs with predictable PK and more predictable efficacy. Variability in DAR and stability are primarily a consequence of the technology used to conjugate the linker to the antibody. The two conventional conjugation approaches employed in conventional ADC conjugation technology utilize either lysine residues or the interchain disulfides located on an antibody. These approaches result in a stochastic mixture of conjugates consisting of a heterogeneous pool of synthesized ADCs, as shown in Figure 5 below. Each bar in the graph consists of an ADC with the number of payloads indicated on the X-axis. Each one of these parts of the mixture of conjugates contributes to the efficacy and toxicity making it difficult to optimize for either property.

In addition to DAR, research has shown conjugate stability and the resulting rate of payload release can vary significantly between specific conjugation sites. Hence, conventional conjugation suffers from unpredictable and premature payload release outside of the tumor resulting in off target toxicities.

Together with our extensive toolbox of linkers, we believe our site-specific conjugation chemistry offers us the advantage of fine-tuning and optimizing the cleavage of the drug in the TME while limiting off-tumor release and allowing for predictable DAR distribution. Site-specific conjugation technologies have led to improved ADC predictability with narrow distribution of DAR to facilitate CMC manufacture and consistent potency (refer to Figure 5).

Figure 5

Depicted above is an illustrative example of DAR distribution for a DAR 4 ADC using different conjugation chemistries which highlights how our site-specific conjugation technology allows for linker/payload to be precisely conjugated, leading to more predictable DAR ADCs. This also improves CMC characteristics and enhances stability of ADCs to maximize tumor delivery of the payload.

The Selection of Cytotoxic Payload

The chemotherapeutic payload is a highly potent toxin that would otherwise carry devastating side effects as a systemically delivered monotherapy. There are several potential payloads, including antineoplastic auristatins, which act on microtubules to inhibit cell division, and alkylating or intercalating agents, which damage DNA.

While an ADC’s primary mode of action is to induce direct cell death through the payload, ADCs can exploit multiple avenues of anti-tumor action beyond direct cytotoxicity. For example, a growing area of interest is applying ADCs to induce ICD allowing for synergy with immunotherapy modalities including checkpoint inhibitors. Rapid cancer cell death caused by ADCs results in the release of damage-associated molecular patterns and tumor antigens, stimulating a tumor-specific immune response and recruitment of T cells into the TME. An emerging area of interest is utilizing ADCs to disrupt various aspects of the TME, such as angiogenesis or tumor-associated fibroblasts. Furthermore, certain payloads, such as auristatins, have been shown to engender the maturation and activation of dendritic cells, a critical compartment of the immune system responsible for initiating and regulating the innate and adaptive immune response.

Our ADC Product Candidate

PYX-201: Investigational Site-Specific ADC Targeting Onco-Fetal EDB+FN

Our lead ADC product candidate, PYX-201, is an investigational, novel ADC consisting of human IgG1, site-specifically conjugated with a next-generation auristatin derivative via proteases-cleavable linker. PYX-201 is an ADC that uniquely targets EDB+FN within the tumor stroma. PYX-201 is in the clinical development and being evaluated in an ongoing Phase 1 clinical studies in patients with relapsed or refractory solid tumors, including NSCLC, locally advanced/metastatic breast cancer, HR+ HER- and HR- HER2+ breast cancers, TNBC, ovarian cancer, thyroid cancer, PDAC, STS, HCC, HNSCC, and kidney cancer. We licensed worldwide rights to PYX-201, built on the FACT Platform, from Pfizer.

Rationale for Targeting EDB+FN within Tumor Stroma

The extracellular matrix, or ECM, is a complex network of structural proteins and molecules that support tissues and organs within the body. The ECM is comprised of multiple fibrous proteins and molecules with unique composition and that play an important role in cell development. The ECM in solid tumors is an important component of the TME.

The TME is comprised of tumor cells, extracellular matrix, tumor vasculature, cancer-associated fibroblasts, mesenchymal stromal cells and the surrounding blood vessels which support tumor growth. The tumor stroma provides a lifeline necessary for tumor growth in solid tumors. The tumor stroma plays a major role in the initiation, growth, survival, invasion and drug-resistance of solid tumors, yet few therapeutics specifically target tumor-associated stroma. The stroma also forms an effective barrier to entry for therapeutic agents such as chemotherapy. Therapies that target the stroma may provide a new therapeutic area for patients.

Fibronectin is a key component of the ECM and its downstream signaling pathways regulate cell adhesion, migration, differentiation, and wound healing. EDB+FN is an alternatively spliced form of fibronectin that occurs when ribonucleic acid, or RNA, is re-arranged to produce multiple variants of the same protein and accumulates around blood vessels within the tumor stroma. EDB+FN is typically only spliced during embryogenesis and is rarely found in healthy adult tissues. However, cancer cells take advantage of EDB+FN’s ability to promote neo-vasculature structures, which are critical to feeding and supporting the uncontrolled growth of a tumor. As a result, EDB+FN is highly expressed in many solid tumors and has low expression in normal adult tissue.

EDB+FN within tumor stroma meets our criteria of a highly desirable ADC target due to its strict preferential expression in tumor tissue and its role as a driver of the poor prognosis in the treatment of many cancers. Because of this high differential expression, we believe EDB+FN may be an ideal target to address in many cancers with high unmet need given that tumors with stromal barriers may be underserved by currently available therapies.

EDB+FN is overexpressed in a variety of cancers, including, but not limited to, cancers of the lung, breast, ovary, pancreas, head and neck, thyroid, and brain. In vitro studies have shown that down regulation of EDB+FN resulted in a significant reduction in cancer motility. Furthermore, EDB+FN expression is maintained in distal metastasis in human cancer.

EDB+FN protein expression is also upregulated in the stroma of many tumor types, as compared to normal adult tissue (refer to Figure 6).

Figure 6

IHC analyses show that EDB+FN protein is upregulated in tumor stroma and is highly expressed in many solid tumors, with low expression in normal adult tissue.

Mechanism of Action for PYX-201

PYX-201 was developed using the FACT Platform to produce an ADC designed to be highly stable and target a predictable DAR of four. The complementarity-determining regions, or CDRs, of the EDB antibody used in PYX-201, which is the part of the antibody responsible for binding to EDB, is well characterized and has been tested clinically in the form of a radio-conjugated antibody for tumor imaging—demonstrating a high degree of tumor-directed specificity. Furthermore, PYX-201 is designed to optimize linker stability to enable delivery of the next generation auristatin payload that can be cleaved, released in the stroma and penetrate through the tumor cell membrane to kill tumor cells directly without the need of cell surface antigen-mediated internalization of the ADC. Unlike conventional ADCs which bind to the tumor cell surface antigens, PYX-201 is designed to deliver the auristatin payload to the TME and released the free payload to kill tumor cells as well as the tumor stroma cells such as activated fibroblasts and vascular endothelial cells. The mechanism of action for PYX-201 is illustrated in Figure 7 below.

Figure 7

PYX-201 is designed to exhibit anti-tumor activity through three distinct modes of action,

Tumor killing activity: After binding to EDB+FN within the tumor stroma, proteases which are aberrantly overexpressed in and secreted by invasive and metastatic cancers, cleave the linker enabling the cell-permeable auristatin toxin to kill the tumor cells. Releasing the payload from the killed tumor cells may also confer added cytotoxicity via bystander activity.

Effect on tumor stroma: Releasing the payload extracellularly within the TME may also kill the activated fibroblasts, vascular endothelial cells and other tumor stroma cells leading reduction of stroma density and inhibition of tumor angiogenesis.

Immunogenic cell death: Lastly, auristatin has been shown in preclinical models to attract immune cells such as T cells into TME possibly through immunogenic cell death, which initiate an anti-tumor immune response.

Taken together, we believe that PYX-201 may generate a multi-pronged attack on difficult-to-treat cancers by killing cancer cells, reducing stroma density, inhibiting tumor angiogenesis and mobilizing an anti-tumor immune response (as illustrated in Figure 8 below).

Figure 8

PYX-201 is designed to bind EDB+FN in the surrounding stroma to kill tumor cells and the supporting infrastructure through direct payload-induced killing of tumor cells and triggering immune cell infiltration into TME based on data from preclinical models.

Preclinical Development

PYX-201 has shown promising preclinical results. In preclinical studies, we have observed strongin-vivo activity in NSCLC PDX and pancreatic PDX models, as well as EMT-6 syngeneic mouse breast cancer models. PDX mouse models are generated by grafting patient derived cells into immune deficient mice, whereas syngeneic mouse models are grafted with tumors derived from mice which allows the immune system to remain intact. While PDX models provide the most clinically translatable signals of efficacy in a preclinical setting, syngeneic models allow us to assess the ability of PYX- 201 to generate an immune response. These syngeneic models show that PYX-201 effectively localizes to cancers and can generate not only significant reductions in tumor burden but can also mobilize an anti-tumor immune response.

For example, in PDX models of NSCLC and pancreatic cancer, PYX-201 was intravenously administered four days apart for twelve days and a dose-dependent regression in tumor burden and a durable response at 3 mg/kg was observed (Figure 9).

Figure 9

PYX-201 has been shown to be highly active in PDX models of NSCLC and pancreatic cancer.

The anti-EDB human mAb used in PYX-201 is cross-reactive with mouse EDB+FN. As a result, in syngeneic tumor models conducted in immune competent mice, PYX-201 achieved a durable response with a single dose of 9 mg/kg (Figure 10). In preclinical studies, we observed increased infiltration in CD3 T cells and upregulation of PD-(L)1, which suggests that PYX-201 may be capable of inducing immunogenic cell death. Combining sub-optimal doses of PYX-201 with checkpoint therapy resulted in synergistic inhibition of tumor growth in the EMT-6 model. Consequently, we believe PYX-201 may synergize with checkpoint inhibitors, as shown in Figure 11. PYX-201 was also well-tolerated in our mouse models and toxicology studies conducted in rat and cynomolgus monkeys. In an exploratory toxicology study in cynomolgus monkeys the HNSTD was found to be greater than 12 mg/kg with three doses of PYX-201 administered every three weeks. There was no differential in body weight or food consumption detected and based on the types of toxicities observed (i.e., no fibrosis, neuropathology etc.), all toxicities are reversible, or are expected to be reversible. PYX-201 was observed to have a preclinical relevant TI of 16 (the HNSTD in monkeys was 144 mg/m2 and was 16 times greater than the dose required for a complete response in mice of 9 mg/m2), which we believe is promising based on our experience investigating the relative TI among different ADC constructs.

Figure 10

PYX-201 treatment in vivo of syngeneic cell-derived tumor models has been associated with enhanced T cell infiltration based on increased CD3 positivity. (CR: complete response; rcEDB: Reverse Chimeric EDB)

Figure 11

EDB vc0101 ADC combines with anti-PD-(L)1 to synergistically reduce tumor growth in EMT6 mouse syngeneic model.

In December 2022, we announced clearance of our IND, by the FDA, to initiate a Phase 1 clinical trial. During the first quarter of 2023, we announced dosing of the first subject in a Phase 1 trial of PYX-201, referred to as PYX-201-101. PYX-201-101 is an open-label, multicenter, dose-escalation trial. As illustrated below in Figure 12, the Phase 1 monotherapy dose escalation trial is designed to evaluate the safety, tolerability, pharmacokinetics, pharmacodynamics, and preliminary efficacy of PYX-201, to identify a biologically active doses for cohort expansion and identify recommended doses for further study. Patients with relapsed or refractory solid tumors, including NSCLC, locally advanced/metastatic breast cancer, HR- HER2-, HR+ HER- and HR- HER2+ breast cancers, TNBC, ovarian cancer, thyroid cancer, PDAC, STS, HCC, HNSCC, and kidney cancer are eligible to enroll in this study. We may also pursue the development of PYX-201 as a combination therapy with the standard of care as appropriate in future studies. For example, in NSCLC and breast cancer, where immunotherapy is widely used in both first- and second-line settings, we believe PYX-201 may provide a synergistic treatment benefit since the auristatin payload has been observed in preclinical studies to trigger hallmarks of immunogenic cell death. Information on this clinical trial is available on ClinicalTrials.gov (NCT05720117).

Figure 12

In the Phase 1 portion of the trial, the starting dose of PYX-201 was 0.3 mg/kg. The DESC approved escalating the dose after each cohort. PYX-201 is administered once every three weeks. Dose escalation follows the BOIN design until the RP2D is determined.

To date, 37 subjects in six cohorts have been dosed with PYX-201 in this Phase 1 trial. PYX-201 recently cleared the 21-day DLT observation period for ten subjects in Cohort 6 at a dose of 5.4 mg/kg. The DESC met on March 19, 2024, and voted to escalate dosing into Cohort 7 at a dose of 8 mg/kg and we are now enrolling subjects in Cohort 7 at this dose. PYX-201 has been well tolerated to date, with no significant evidence of target mediated toxicities experienced by the 37 subjects enrolled and dosed to date. Approximately 54% of subjects have experienced grade 2, and 6% of subjects have experienced grade 3 TEAEs. No subjects have reported TEAEs leading to dosing delay or study drug discontinuation. We anticipate enrolling and dosing another 10-15 subjects at Cohort 7 with a dose of 8 mg/kg or future higher dose level cohorts, should PYX-201's profile continue to support further dose escalation.

The dose escalation and number of subjects enrolled and dosed to date with PYX-201 in the PYX-201-101 trial, for each cohort since initiating the trial in March 2023, are provided in Figure 13 below.

Figure 13

As we continue to analyze the data generated, we anticipate that the data from the dose finding studies will guide the selection for the RP2D for subsequent multi-dosing and potential combination studies. We believe the encouraging PYX-201 safety profile observed to date likely reflects the specificity of target expression within tumor tissue and the potential for a wider TI given the novel mechanism of action within the TME. We anticipate reporting efficacy, safety, and PK/PD data from this Phase 1 clinical trial, in the fall of 2024. We also anticipate reporting pre-clinical insights along with the plan for the next phase of development at that time.

Immuno-Oncology Programs

Background on Current Immuno-Oncology Therapeutics

The advent of immuno-oncology therapeutics, particularly immune checkpoint inhibitors, has shifted the treatment paradigm for oncology. The immune system has the capability to recognize and eliminate cancer, but tumor cells take advantage of immune checkpoint pathways, which normally prevent autoimmunity, to suppress and evade immune effector cell activity. The first generation of drugs that interrupt these pathways, including PD-(L)1 and cytotoxic T-lymphocyte associated protein 4, or CTLA-4, inhibitors, has generated significant enthusiasm due to their ability to achieve durable responses in some patients. While these drugs provide significant therapeutic benefits for durable responders, response rates remain low for most patients, particularly for tumors with low levels of T-cells infiltrating the tumor. These non-inflamed (i.e., “cold”) tumors can suppress the adaptive immune response through a variety of mechanisms within the TME.

Immuno-Oncology Programs Overview

We have monoclonal antibody programs that address critical immunomodulatory pathways within the TME and are exploring additional potential targets.

PYX-106: Investigational IgG1 anti-Siglec-15 Targeting Antibody

PYX-106 is an investigational fully human IgG1 antibody that is designed to block Siglec-15 mediated suppression of T-cell proliferation and function. PYX-106 aims to address critically important tumor infiltrating immune cell populations, such as macrophages, T cells, and natural killer, or NK cells, which may play crucial roles in limiting tumor growth and metastasis. In addition to singling out specific cell types, we believe PYX-106 may also address mechanisms responsible for T cell exhaustion and the immunosuppressive effects of the TME on T and NK cells. We believe that our in-licensed anti-Siglec-15 mAb, PYX-106, has the potential to provide additional benefit to cancer patients either alone or in combination with other therapies, including other immuno-therapies. PYX-106 is in the clinical development and being evaluated in an ongoing Phase 1 clinical studies in multiple types of solid tumors, including non-small cell lung cancer without driver mutations/translocations, breast cancer, endometrial cancer, thyroid cancer, kidney cancer, cholangiocarcinoma, bladder cancer, colorectal cancer, and head and neck squamous cell carcinoma. We licensed worldwide rights other than in Greater China (mainland China, Hong Kong, Macau and Taiwan) to PYX-106 from Biosion.

Rationale for Targeting Siglec-15 and Mechanism of Action for our Siglec-15 targeting antibody

Siglec-15 is a member of the Siglec family (Sialic acid-binding ImmunoGlobulin Lectins), a distinct subgroup of immunoglobulin, or Ig, superfamily proteins involved in immune regulation. Siglecs recognize and bind to sialic acid on the surface of cells and this binding can affect cell signaling on immune cells. Siglec-15 is a single-pass type I membrane protein that has been shown to associate with the activating adaptor proteins DNAX activation protein (DAP)12 and DAP10 via its lysine residue in the transmembrane domain, implying that it functions as an activating signaling molecule. While Siglec-15 is minimally expressed on normal tissues, it is highly expressed on both tumor cells and M2 macrophages in the TME across multiple tumor types, including thyroid cancer, HNSCC, lung cancer, breast cancer and cholangiocarcinoma. The increased presence of highly immunosuppressive M2 macrophages within tumors leads to impaired T cell proliferation and function, causing a decreased anti-tumor immune response. Additionally, Siglec-15 may exacerbate this immunosuppressive effect by interacting with tumor associated myeloid cells to promote their survival and differentiation to drive a tumor-promoting environment. Interestingly, Siglec-15 appears to function independently from the PD-L1 pathway with expression observed not to be mutually exclusive across tumor types. Instead, expression of Siglec-15 and PD-(L)1 genes vary broadly within tumor types. While Siglec-15 and PD-L1 expression have been observed to be positively correlated in certain tumor types like NSCLC, head and neck, kidney and thyroid cancer, they are rarely observed co-expressed on the same cell. Therefore, we believe targeting Siglec-15 in the TME may offer a promising therapeutic option for patients less likely to respond to a PD-1/PD-(L)1 targeted therapy.

An overview of the role of Siglec-15 in regulating the immune system and driving anti-tumor immune dysfunction is depicted in Figure 14 below.

Figure 14

Source: Sun et al., Clin Cancer Res 2021; Wang et al., Nat Med 2019

Our Siglec-15 targeting antibody is a fully human monoclonal antibody and is engineered with high affinity to block Siglec-15 induced immune suppression and therefore restore T cell proliferation, function, and anti-tumor immunity in the TME. Overall, by binding and blocking Siglec-15 activity on myeloid cells and tumors, we believe our Siglec-15 targeting antibody is designed to enhance immune cell mediated tumor cell killing. PYX-106 has high binding affinity to a unique epitope and high potency. Given the broad tumor expression profile of Siglec-15, our Siglec-15 targeting antibody has the potential to treat multiple oncology indications including those where PD-1/PD-(L)1 directed cancer therapies are ineffective.

Expression data for Siglec-15 RNA in tissues where tumor expression was significantly higher than normal tissue expression are depicted in Figure 15. Of the indications tested, NSCLC, breast cancer, uterine cancer, thyroid cancer, kidney cancer, cholangiocarcinoma, bladder cancer, colorectal cancer, and sarcoma all show higher expression of Siglec-15 in tumor compared to normal samples. The low expression of Siglec-15 across the range of normal tissues tested suggests limited potential for effects in nontumor tissues of therapies targeting Siglec-15. Significantly higher expression in most tumor types indicates that patients with such tumors may respond to anti-Siglec-15 antibody treatment.

Figure 15

Siglec-15 RNA is broadly expressed across a range of solid tumors with overall lower expression observed in normal tissue.

Preclinical Development

Blocking Siglec-15 with an antibody such as PYX-106 may overcome the immunosuppressive TME and enhance the anti-tumor activity of other immune checkpoint inhibitors. We have conducted a preclinical study in various animal models to evaluate the effect of blocking Siglec-15 and our observed results provide sufficient scientific rationale in bothex vivo and in vivo studies. PYX-106 was observed as well tolerated in preclinical studies with no evidence of anti-drug antibodies.

In anin vivo mouse syngeneic tumor model, PYX-106 demonstrated significant inhibition of tumor growth when administered at 15 mg/kg twice weekly for 6 weeks compared to the control group. PYX-106 resulted in an approximately 60% decrease in tumor volume at doses of 5 mg/kg and 15 mg/kg, with the decrease reaching statistical significance in the later dose group. Moreover, the inhibition of tumor growth was not accompanied by any changes in behavior, body weight, or spleen weight within the mice.

In anex vivo study using normal human peripheral blood mononuclear cells, or PBMCs, which are blood cells that are considered critical components in the immune system, PYX-106 was able to reverse Siglec-15-mediated suppression of T cell proliferation and interferon-gamma, or IFN-γ, secretion. The numbers of CD4+ and CD8+ T cells and secretion of IFF-γ were increased substantially while the negative control antibody had no effect on the suppression of proliferation. The effects of a single concentration of anti-Siglec-15 antibodies on T-cell proliferation using PBMCs are shown in Figure 16. The addition of the anti-CD3 antibody led to proliferation of both CD4+ and CD8+ T cells, which was reduced by addition of Siglec-15. The addition of the negative control antibody had no effect on this suppression of proliferation. PYX-106 reversed this suppression. In our preclinical studies, PYX-106 was observed to have 7 days of half-life in monkeys. If the half-life of 7 days were observed in humans, then it would allow for less frequent dosing, maintain exposure and target engagement.

Figure 16

In an ex vivo assay using PBMCs, from normal healthy donors, PYX-106 reverses Siglec-15 mediated T cell suppression and upregulates IFN-γ release.

In December 2022, we announced clearance of our IND by the FDA for PYX-106 to initiate a Phase 1 clinical trial. During the first quarter of 2023, we began activating clinical trial sites and are currently enrolling and dosing patients in the Phase 1 trial, referred to as PYX-106-101. PYX-106-101 is a first-in-human, Phase 1, multicenter, open-label dose escalation trial designed to evaluate the safety, tolerability, pharmacokinetics, pharmacodynamics, and preliminary efficacy of PYX-106 in patients with relapsed or refractory solid tumors. This Phase 1 monotherapy dose escalation trial includes patients who have developed solid tumors and disease progression through standard therapy and patients for whom standard of care therapy that prolongs survival is unavailable or unsuitable. Patients with solid tumors including non-small cell lung cancer without driver mutations/translocations, breast cancer, endometrial cancer, thyroid cancer, kidney cancer, cholangiocarcinoma, bladder cancer, colorectal cancer, and HNSCC are eligible to enroll in this study.

Information on this clinical trial is available on ClinicalTrials.gov (NCT05718557).

Figure 17

In the Phase 1 portion of the trial, the starting dose of PYX-106 was 0.5 mg/kg. The DESC approved escalating the dose after each cohort. We are currently dosing subjects in Cohort 5 at a dose of 8 mg/kg and Cohort 5 is fully enrolled. To date, 21 subjects have been dosed with PYX-106 in the Phase 1 trial. PYX-106 is administered once every two weeks. Dose escalation will follow the BOIN design until the RP2D is determined.

The dose escalation and number of subjects enrolled and dosed to date with PYX-106 in the PYX-106-101 trial, for each cohort since initiating the trial in May 2023, are provided in Figure 18 below.

Figure 18

PYX-107: Humanized CD40 Agonist Antibody

On August 23, 2023, we completed the previously announced acquisition of Apexigen. The Merger expanded our existing pipeline with the addition of sotigalimab (now PYX-107), a CD40 agonist with demonstrated anti-cancer activity in patients who previously progressed on PD-(L)1 inhibitors.

Activation of CD40 initiates and amplifies a multi-cellular immune response, bringing different components of both the innate and adaptive arms of the immune system to work in concert and resulting in increased antigen presentation, maturation of DCs and activation of CD4+ and CD8+ T cells, NK cells and neutrophils to attack tumor cells.

PYX-107 is a CD40 agonist antibody designed to maximize its agonistic properties through:

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Unique epitope specificity to mimic the binding of CD40 ligand, or CD40L, to the CD40 receptor binding site for increased potency;

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An engineered Fc to increase binding to Fc gamma receptor 2B, or Fcg RIIB, to increase antibody cross-linking and antitumor potency; and

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An engineered FC to reduce binding to Fc gamma receptor 3a, or Fcg RIIIa, to eliminate antibody-dependent cell-mediated cytotoxicity, or ADCC, effects on CD40-expressing APCs.

We believe that PYX-107’s ability to stimulate both innate and adaptive immunity enhances tumor infiltration of immune and proinflammatory cells such as M1 macrophages and T cells and immune stimulatory cytokines such as interferon-g. Tumors with an inflamed phenotype tend to be more responsive to anti-cancer therapies. We therefore believe PYX-107 has potential applicability across a variety of tumor types with high unmet need and may combine well with and enhance the efficacy of other immuno-oncology agents, targeted therapeutics, chemotherapies, vaccines and radiation therapy to improve outcomes for patients.

PYX-107 is in Phase 2 clinical development for the treatment of solid tumors such as soft tissue sarcomas, esophageal and gastroesophageal junction, or GEJ, cancers and melanoma in combination with chemotherapy, radiation therapy and immunotherapy. The FDA has granted ODD for PYX-107 in the treatment of soft tissue carcinoma, esophageal and GEJ cancers, and PDAC.

To maximize the therapeutic potential of PYX-107, Apexigen initiated several Phase 2 trials across multiple important cancer indications, lines of therapy and combination settings, all of which we have the opportunity to advance. The clinical development of PYX-107 will be further assessed as part of portfolio evaluation.

The APX005M-009 Trial is a multi-center, investigator-sponsored Phase 2 clinical trial (NCT03719430) of PYXS-107 in combination with doxorubicin in patients with advanced soft tissue sarcoma. The trial completed enrollment of the originally planned 32 patients in January 2023. We observed a median progression-free survival, or mPFS, of 12.45 months (data as of September 27, 2022) in the evaluable patients (n=10) with advanced/unresectable or metastatic de-differentiated liposarcoma, or LPS. Based on the mPFS observed in these LPS patients, which is meaningfully higher than the historical mPFS of patients with LPS who are treated with standard-of-care doxorubicin alone, we and our collaborator, Columbia University, decided to expand the LPS cohort to enroll 10 additional patients with LPS to supplement the data we have observed and potentially inform a registration-enabling study in de-differentiated LPS. The primary endpoint for the study is objective response rate, with a secondary endpoint of progression free

The APX005M-002 Trial studies PYX-107 in combination with nivolumab, an anti-PD-1 antibody, in subjects with unresectable or metastatic melanoma that had progressive disease, or PD, during treatment with anti-PD-(L)1 therapy as one arm of a multi-indication trial. The study (NCT03123783) was a Phase 1-2 open-label dose escalation study. In the Phase 2 portion of the trial, which was completed in November 2020, 38 patients with anti-PD-(L)1 refractory metastatic melanoma were enrolled and evaluable for safety and 33 of these patients were evaluable for efficacy. Of the efficacy-evaluable patients, 14 (42%) had elevated levels of lactate dehydrogenase, or LDH, at baseline, a poor prognostic indicator of response to PD-(L)1 blockade therapy, seven (21%) had received two or more prior lines of therapy and eight (24%) had previously been treated with an anti-CTLA-4 antibody.

There were five partial responses, or PRs, in the trial for an overall response rate, or ORR, of 15.2% and ten patients with stable disease, or SD, (30.3%). The duration of response, or DoR, as determined in the trial ranged from 4.1+ to 24.7+ months, and was measured from the first documented PR to the earlier of the date of progression or the last imaging study prior to the end of the trial even if the patient was in an ongoing PR. Four of the responding patients remained in an ongoing PR at the completion of the trial, after which we ceased following and monitoring these patients for progression. The fifth responding patient developed an isolated brain lesion approximately nine months after stopping combination therapy (DoR of approximately 18.7 months), subsequently received radiation therapy for the brain lesion, and did not require any further local or systemic therapy through the end of the trial. The duration of SD was up to 14.0+ months and the majority of patients with SD had a duration of SD lasting longer than 3.5 months. These data suggest that treatment with PYX-107 in combination with nivolumab resulted in clinical benefits in PD-1 blockade refractory patients by achieving durable objective tumor responses and stable disease.

In the APX005M-002 Trial, we observed that the combination of PYX-107 and nivolumab could be administered to patients with anti-PD-(L)1 refractory melanoma repeatedly for greater than one year with an acceptable safety profile. The majority of adverse events, or AEs, considered related to PYX-107, nivolumab or the combination were transient and grade 1 or 2. The incidence of immune-related adverse events was low, and the AEs were similar in nature to those that have been reported with nivolumab alone. There were no reported cases of cytokine release syndrome.

The APX005M-006 Trial was a pilot Phase 2 clinical trial studying PYX-107 in combination with standard-of-care chemoradiation as a neoadjuvant treatment for patients with respectable esophageal or GEJ cancer (NCT03165994), which was completed in February 2024. Thirty-four patients were enrolled in the trial. The primary objective of the APX005M-006 Trial is to assess the efficacy of the combination, as measured by the pathologic complete response, or pCR, rate, and to further characterize the safety and feasibility of the combination in this setting.

APX005M-006 Trial showed that PYX-107 combined with neoadjuvant chemoradiation for esophageal and GEJ cancers was generally safe and well tolerated. The majority of patients treated in the trial had Grade 1-2 AEs. Six serious AEs considered at least possibly related to PYX-107 included cytokine release syndrome observed in three patients, nausea and vomiting in one patient, dysphagia in one patient and Guillain-Barre Syndrome in one patient. There were no patient withdrawals due to PYX-107 and no deaths related to the combination. As of July 2022, of the 29 evaluable patients, 11 (38%) patients had a pCR and 19 (66%) patients had a major pathological response, or mPR, with less than 10% of the residual tumor remaining after treatment. By histology, the pCR rate was 33% (8/24) in patients with adenocarcinoma and 60% (3/5) in patients with squamous cell carcinoma. The pCR rate was 41.2% for patients (n= 17) receiving four doses of PYX-107 versus 33.3% for patients (n= 12) receiving three doses. The R0 resection was achieved in 86% (25/29) of the patients and progressive disease was only 7%. Paired biomarker analysis collected before and one to two weeks following a single run-in dose of PYX-107 alone demonstrated significantly increased tumor infiltration of activated dendritic cells, monocytes and both CD8 and CD4 T cells compared to baseline. We believe that the observed immune/inflammatory response in the tumor demonstrates the ability of PYX-107 to change the tumor immune microenvironment from “cold” to “hot”, which we believe validates PYX-107’s mechanism of action.

Preclinical Programs Available for Partnership or Collaboration

We also have certain preclinical programs that we have chosen not to move into the clinic. The decision to pause these preclinical development efforts allowed us to refocus development efforts and resources towards clinical development of PYX-201 and PYX-106. We are seeking partnership opportunities for these program that maximizes potential value for patients and for our shareholders.

ADC Program

PYX-203 is an investigational ADC the targets and binds to the interleukin-3 receptor, also known as CD123, a rapidly internalizing target that is overexpressed in hematologic cancers by leukemic blasts and stem cells. After internalization, its highly potent cyclopropylpyrroloindoline, or CPI, payload is enzymatically released and trafficked to the nucleus, where it crosslinks DNA. CPI is engineered for enhanced tolerability and may allow PYX-203 to reach a broader patient population. CPI is resistant to drug efflux pumps and could confer superior cancer-killing activity. The antibody is also engineered to have a modified Fc region to mitigate off-tumor toxicity.

IO Programs

PYX-102 is an investigational immune-therapeutic that targets killer cell lectin-like receptor subfamily G member 1, or KLRG1, an inhibitory receptor expressed on T cells and NK cells. Its ligands, E- and N-cadherin are expressed in numerous solid cancers. By blocking KLRG1 signaling, PYX-102 may relieve immune inhibition in these tumors while rescuing KLRG1-mediated suppression of human CD8+ T cells. PYX-102 has significant potential as a monotherapy and in combination treatment strategies.

We also acquired certain preclinical programs, which were generated using the APXiMAB Platform, as part of the Merger. The development of these programs were previously paused by Apexigen.

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APX601: APX601 is a TNFR2 antagonist antibody designed to reverse immune suppression in the TME and unleash immune-mediated tumor killing activity through a unique mechanism of action. APX601 may deplete and inactivate TNFR2-expressing Tregs, reverse myeloid-mediated T cell suppression and directly kill TNFR2-expressing tumor cells. In preclinical models, APX601 has demonstrated anti-tumor activity and may have applicability for the treatment of multiple tumor indications of unmet medical need. The IND-enabling work for APX601 has been completed, prior to the Merger.

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APX701: APX701 is anovel anti-SIRPα antibody designed to enhance anti-tumor immunity by reactivating critical tumor clearance mechanisms within the TME currently at the pre-clinical stage.

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APX801: APX801 is an NK cell engager designed to specifically activate natural killer cells leading to effective killing of tumor cells currently at the pre-clinical stage.

Technology Platforms

FACT Platform

We are developing next-generation ADCs using customized linker-payload combinations that are novel and supported by the preclinical data and site-specific conjugation techniques derived from the FACT Platform. We believe that these payloads and linkers could be readily applied to any IgG1 antibodies using our site-specific conjugation techniques to efficiently develop novel product candidates. We believe that the site-specific conjugation techniques and ADC technology which underpin the FACT Platform enable us to develop next-generation ADCs with more favorable drug properties than traditional technologies based on preclinical studies.

We believe that the FACT Platform provides a toolkit of novel and validated payloads, cleavable and non-cleavable linkers, and a strong understanding of optimized conjugation sites. The FACT Platform provides the basis for our lead ADC product candidate, PYX-201 and will underpin our development of future ADCs that we believe are optimized for, and guided by the following design elements:

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ADC cytotoxicity. Target tumor cells require delivery of a certain threshold of payload molecules based on the payload’s biochemical properties to induce cell killing at specific dose levels. Our ADC programs are designed to provide anti-tumor cytotoxicity and, as applicable, immunogenic cell death based on data from preclinical models.

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Plasma stability and maintenance of the linker-payload. ADCs must be optimized for systemic circulation to prevent premature linker cleavage or release of the linker-payload construct in the blood plasma that can result in off-target toxicity. We are designing our ADC candidates to optimize for stability when in circulationin vivoto avoid premature cleavage and support maximal payload delivery to the target site.

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Efficient proteolytic cleavage of the linker for payload release. The timing and rate of linker cleavage is important for achieving optimal delivery and release of a specific payload at the target site. We believe that we have the capability to utilize both cleavable and non-cleavable linkers to achieve potential therapeutic effects that are optimized for individual payloads and targets.

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High target specificity. Our ADC programs are founded on the identification of promising tumor targets and developing highly specific antibodies against these tumor targets. We draw upon our empirical understanding of site-specific conjugation sites and linker-payload toolkit to select combinations that we believe are well-suited for individual targets.

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Defined and target specific DAR. Intrinsic to the FACT Platform and conjugation techniques is the development of products with a consistent DAR, which we believe may enable us to develop a product with optimized stability, tolerability, and cytotoxicity.

We believe that the FACT Platform conveys several distinct advantages and flexibility in the development of our ADC candidates, including the following:

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Improved anti-tumor activity in preclinical models with optimized conjugation sites for linker-payload combinations. The FACT Platform is designed to select for optimal conjugation sites that are specific to each linker-payload combination. We employ site-specific conjugation techniques to conserved regions found within the antibody backbones that do not affect antigen binding or other normal antibody functional properties, such as Fc binding when appropriate, which we believe makes our conjugation technology broadly applicable to a wide variety of IgG monoclonal antibodies. Leveraging our diverse toolkit of improved and novel payloads, cleavable and non-cleavable linkers, and deep understanding of optimized site-specific conjugation sites, we have developed payload and linker combinations that can readily be applied to other antibodies in the same class. For example, our auristatin analogues, a potent microtubule inhibitor, and CPI, a highly potent DNA-cross-linking agent, have site-specific conjugation engineering with several linkers alongside IgG1 antibodies. These payloads and linkers could be readily applied to other IgG1 antibodies to efficiently develop novel product candidates.

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Potential for improved TI and ADC stability. We believe that our site-specific conjugation technology has potential to mitigate off-target liabilities of ADCs contributing to an enhanced plasma stability and enhanced TI. As shown in Figure 19, applying the FACT Platform to a well-established antibody, NG-HER2-ADC, to generate a model ADC was observed to mitigate toxicity and increase the TI and PK exposure and half-life of the ADCin vivo. The rate of linker cleavage and release of the linker/payload construct has been observed to be heavily dependent on the conjugation location and we optimize our linkers for both specific targets and payloads. As a result, we believe the FACT Platform and our empirical understanding of optimal site-specific conjugation may allow us to generate candidates against a broad set of targets that result in superior cell killing.

Figure 19

Comparison of stability and exposure in cynomolgus monkeys of Pfizer’s NG-HER2-ADC using the same linker-payload and conjugation site chemistry as our PYX-201 ADC was observed to improve the stability and tolerability over conventional ADCs conjugated with the same linker-payload in preclinical studies (NG: next generation).

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Enhanced anti-tumor activity through bystander activity. As depicted in Figure 20 below, bystander activity occurs when payloads that are delivered to target cells diffuse into and kill neighboring cells in the TME and is of particular importance if the target is not uniformly expressed on all tumor cells. Bystander activity also has the potential to overcome resistance that may occur over time to treatment with ADCs, carrying non-bystander active payloads, as anti-tumor activity is not directly tied to antigen expression at the target site and destruction of a single target cell. We believe our toolkit of novel and validated payloads, linkers and site-specific conjugation techniques will allow us to further develop ADC candidates with bystander activity that may result in greater clinical activity, especially in cases with heterogeneous target expression.

Figure 20

The following table summarizes the potential advantages of our next-generation ADC platform that utilizes preclinically optimized payloads and site-specific conjugation compared to the currently approved ADCs using conventional conjugation:

APXiMAB Platform

The APXiMAB Platform was used to discover certain wholly owned product candidates and several programs for the development of product candidates that we have out-licensed. Our proprietary APXiMAB Platform is comprised of two primary components:

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Generation of hybridomas from rabbit B cells using fusion cell lines which enable us to reproducibly generate large numbers of rabbit monoclonal antibodies; and

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Humanization of these antibodies using our multi lineage guided, or MLG, humanization technology.

Rabbit antibodies offer:

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diverse epitope recognition to enable fit-for-purpose therapeutic antibody generation;

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the ability to recognize epitopes that are not immunogenic in other species, including small-size epitopes; and

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high affinity and specificity.

Hybridoma Technology

We have developed a fusion cell line capable of generating stable hybridoma clones, which enables generation of high quality rabbit-derived antibodies from hybridoma cell lines.

As depicted in Figure 21 below, our antibody generation process begins with immunization of rabbits from which B cells are isolated and fused to a rabbit myeloma cell line, generating hybridoma cells capable of stably producing rabbit antibodies. These antibodies are screened for desired properties such as affinity and specificity and evaluated in panels of biochemical and cellular assays.

Figure 21

The APXiMAB Platform Process

Proprietary MLG Humanization Technology

To facilitate drug development, we humanize these rabbit monoclonal antibodies using our proprietary MLG humanization technology. Antibodies generated in non-human species and given to people as drugs can induce the formation of antibodies that neutralize the antibody-drug or induce an undesirable immune response. These are often referred to as anti-drug antibodies or ADAs. Most therapeutic antibodies are therefore modified to have their sequences resemble human antibody sequences as much as possible in an attempt to avoid the development of ADAs.

In conventional humanization, sequences of antibodies derived from non-human species are altered to be closer to human antibody sequences by replacing the sequences of the antibody scaffold with that of human scaffolds. This creates a novel antibody in which the majority of the sequence comes from human antibody genes and the antigen-binding portions from the originating non-human species.

In our MLG humanization technology, we examine the antibody sequences generated in rabbits to better understand the importance of various residues both in the antigen-binding portions and the antibody scaffold. Residues that are highly conserved are preserved while other residues that are highly variable in the sequences of the rabbit antibodies are replaced with conservative amino acid substitutions found in human antibodies. Because our MLG technology enables humanization of antigen-binding regions, we believe that this process results in humanized antibodies that maintain the desired characteristics of the original rabbit antibody, including high affinity, while reducing immunogenicity.

Target Catalog and Discovery Efforts

We have a large proprietary target catalog that we have assembled through both our own discovery activities and through an exclusive license from the University of Chicago for the work on immunotherapy targets out of Dr. Thomas Gajewski’s laboratory. We are also building a large “cold” tumor target discovery database leveraging several human tumor databases.

The target catalog is based upon findings from an in vivo mouse model system which examined tumor tissue for functional and dysfunctional T cells based on the ability of the T cells to produce the cytokine IL-2. Furthermore, since 4-1BB and LAG3 positive T cells do not secrete IL-2, the CD8+ T cells were sorted based on cell surface marker expression i.e., 4-1BB and LAG3, which further defined functional or dysfunctional T cells. Gene expression analysis identified upregulated cell surface molecules in dysfunctional cells which included well established markers such as PD1, CTLA4, and TIM3 and many other novel targets were identified based on bioinformatics and deep biological rationale.

Our cold tumor target discovery database used RNA-seq transcriptome analysis of human tumor databases to identify potential novel targets involved in regulation of T cell function and/or infiltration leading to cold tumors. We have supplemented this database with additional resources which we continue to mine to identify additional novel targets for immunomodulation. These cold tumor targets are potentially dominant immune suppressors that are expressed across a variety of tumor associated cells, including immune cells, tumors cells, and stroma, offering the potential to uncover novel IO mechanisms and additional novel targets for our ADC platform.

While we have large opportunity to advance product candidates based on the target catalog, however, we have chosen not to conduct additional discovery efforts to refocus our development efforts and resources toward clinical development of PYX-201 and PYX-106.

Competition

The biotechnology and pharmaceutical industries, including the oncology subsector, are characterized by rapidly evolving technologies, intense competition, and strong defense of intellectual property and proprietary technologies. Any product candidates that we successfully commercialize may be competitive with currently marketed therapies and any new therapies commercialized in the future. While we believe our technology, drug development expertise, leadership team and strong scientific understanding of cancer targets and biology provides us with certain competitive advantages, we face potential competition from many sources, including major pharmaceutical companies, biotechnology companies, academic institutions, and other public and private research institutions.

Many companies are active across various stages of development in the oncology subsector and are marketing and developing products that employ similar ADC and immunotherapy approaches. As of October 2023, there were approximately 304 ADCs in clinical or preclinical development worldwide, of which the vast majority are being developed for the treatment of various cancer indications. Additionally, there are several large and small companies working on various immunotherapy approaches for treatment of cancer. Multiple companies are also involved in the development of ADC therapeutics and immunotherapies, including, but not limited to, AbbVie Inc., Abcure, Inc., ADC Therapeutics SA, Alligator Bioscience AB, Astellas Pharma, Inc., AstraZeneca plc, Celldex Therapeutics, Inc., Daiichi Sankyo Company, Ltd., Eucure Biopharma, a subsidiary of Biocytogen, Genentech, Inc., Gilead Sciences, Inc, GlaxoSmithKline, plc, Lyvgen Biopharma, Nextcure, Inc., Pfizer, Philogen S.p.A., and Rakuten Medical, Inc.

Our ADC and immunotherapy candidates may also face substantial competition from alternative therapeutic modalities, such as CAR-T therapies, bispecific antibodies, and small molecules that are being developed for the same cancer types that we are targeting with our pipeline candidates. These approaches could achieve regulatory approval before our product candidates or prove to be more effective, safer, or convey other advantages over any products resulting from our technology. In addition, we also face competition with respect to specific targets, including the target of our PYX-201 candidate, EDB, by Philogen S.p.A., and the target of our PYX-106 product candidate, BSI-060T, by Nextcure, Inc. In addition, each of Alligator Bioscience AB, Celldex Therapeutics, Inc., Lyvgen Biopharma, Eucure Biopharma, a subsidiary of Biocytogen, Hoffmann-La Roche AG, and AbbVie Inc. is developing CD40-based antibody product candidates for solid tumor oncology indications that are in clinical trials, typically in combination therapies. Other companies and institutions also have CD40-based product candidates in development, which may compete with PYX-107. Additionally, there is a wide array of activity in the development of immunotherapies for oncology which may be competitive with our preclinical discovery programs. Furthermore, if any of our product candidates are approved in oncology indications such as lung, hematological and other cancers, they may compete with existing approaches to treating cancer including surgery, radiation, and drug therapy, including conventional chemotherapy, biological products, and targeted drug small molecule therapies.

Our competitors may possess greater scientific, research and development capabilities, as well as greater financial, technical, manufacturing, marketing, sales and supply resources or experience than we do. These competitors may compete with us on the basis of establishing clinical trial sites and patient registration, recruiting and retaining qualified scientific and management personnel, and acquiring new technologies that may be complementary to, or necessary for, our programs. If we achieve regulatory approval, commercial opportunity for our product candidates may be dependent on the ability of our competitors to develop new products that may be more effective, safer, or less expensive than any products that we may develop. Our competitors may succeed in developing competing products before we do, obtaining marketing approval for products and gaining acceptance for such products in the same markets that we are targeting. Smaller or earlier-stage companies that seek collaborative arrangements with large and established companies, may prove to be significant competitors. In addition, our ability to compete may be affected by the availability of reimbursement from government and other third-party payors. Competitive factors affecting the success of our programs, if approved, will likely be based on their safety and effectiveness, the timing and scope of marketing approvals, the availability and cost of supply, the depth of marketing and sales capabilities, and reimbursement coverage, among other considerations.

Chemistry, Manufacturing and Controls

We believe the manufacturing of our ADCs and monoclonal antibodies requires considerable expertise, know-how, and resources. We do not own or operate and currently have no plans to establish any Current Good Manufacturing Practices, or cGMP, compliant manufacturing facilities. We currently rely, and expect to continue to rely, on external contract development manufacturing organization, or CDMOs, for the manufacture of product to support non-clinical and clinical testing, as well as for commercial manufacture if our product candidates receive marketing approval. Furthermore, the raw materials and intermediates for our product candidates may be sourced, in some cases, from a single-source supplier. As part of the manufacture and design process for our product candidates, we rely on internal scientific and manufacturing know-how and trade secrets and the know-how and trade secrets of third party manufacturers. We believe that this strategy allows us to maintain a more efficient infrastructure by eliminating the need for us to invest in our own manufacturing facilities, equipment and personnel while also enabling us to focus our expertise and resources on the development of our current product candidates. We maintain agreements with our CDMOs that include confidentiality and intellectual property provisions to protect our proprietary rights related to our product candidates. We have personnel with significant technical, manufacturing, analytical, quality, including cGMP and project management experience to oversee our CDMOs and to manage manufacturing and quality data and information for regulatory compliance purposes.

Commercialization Plans

If any of our product candidates achieves FDA approval, we intend to retain full commercialization rights for all our product candidates, including those obtained through exclusive collaboration agreements. We currently have no sales, marketing, or commercial product distribution capabilities. We intend to build our own specialized sales and marketing organization over time to support the commercialization of any approved product candidates. We may also pursue collaboration, co-promotion, distribution and/or other marketing arrangements with one or more third parties to commercialize our product candidates in markets the United States, potentially other regions. We may also pursue these arrangements for situations in which a larger sales and marketing organization is necessary to realize the full commercial value of any approved wholly owned or collaboration product candidates.

Licensing and Collaboration Agreements

License Agreement with Pfizer Inc.

In December 2020, we entered into a license agreement, as amended, or the Pfizer License Agreement, with Pfizer for worldwide development and commercialization rights to two of Pfizer’s proprietary ADC product candidates (now referred to as PYX-201 and PYX-203), as well as other ADC product candidates directed to the licensed targets. The initial exclusively licensed targets are extra domain B (EDB+FN) and CD123 and we have the option to expand the scope of our license to add other licensed targets. Pfizer also granted us a non-exclusive license to use Pfizer’s FACT Platform technology to develop and commercialize the licensed ADCs. In March 2021, we entered into an amendment to the Pfizer License Agreement to include additional know-how within the scope of our license. The Pfizer License Agreement, as amended, became effective for the Company in March 2021. Pursuant to the Pfizer License Agreement, we paid a combined $25.0 million for the license fee, consisting of an upfront fee of $5.0 million and issued 12,152,145 shares of Series B convertible preferred stock, which was converted into 1,911,015 shares of our common stock upon our initial public offering, or IPO, in October 2021, with a value of $20.0 million to Pfizer.

On October 6, 2022, we entered into an amended and restated license agreement, or the A&R License Agreement, with Pfizer, which amends and restates the Pfizer License Agreement. Pursuant to the A&R License Agreement, Pfizer granted us exclusive worldwide rights under Pfizer’s FACT Platform technology to develop and commercialize ADC product candidates directed to certain licensed targets, including PYX-201 and PYX-203, and products containing the ADC product candidates. Additional ADC targets may be licensed for a nominal upfront payment and milestones. In accordance with the terms of the A&R License Agreement, the Company issued 2,229,654 shares of its common stock to Pfizer in October 2022, paid $8.0 million to Pfizer in January 2023 and issued 1,811,594 shares of its common stock to Pfizer in March 2023.

We are also obligated to pay future contingent payments and royalties, including up to an aggregate of $665 million in milestones for the first four licensed ADCs. In addition, we are required to pay future contingent payments including development, regulatory and commercial milestones for ADCs for each additional licensed target beyond the first four licensed ADC targets developed and commercialized via the FACT Platform. Additionally, if ADC licensed products are launched, we will pay Pfizer tiered royalties on net sales of licensed products in varying royalty rates ranging from low single digits to mid-teens. Our royalty obligations apply on a licensed product-by-licensed product and country-by-country basis from first commercial sale until the latest to occur of: (1) 12 years from first commercial sale; (2) the expiration of all regulatory or data exclusivity; and (3) the expiration of the last valid claim of a licensed patent covering the licensed product in a country. We are also obligated to pay Pfizer a percentage of certain sublicensing revenue ranging from twenty percent to low-double digits based on the stage of development of the licensed product at the time of entering into the applicable sublicense.

Under the Pfizer License Agreement, we are obligated to use commercially reasonable efforts to nominate a clinical candidate within four years of a target becoming a licensed target. We are also required to use commercially reasonable efforts to develop and seek regulatory approval for at least one licensed product directed to each licensed target in the United States and at least one other major market country (France, Germany, Italy, Japan, Spain and the United Kingdom), and to commercialize any licensed product in each such country after receiving regulatory approval. We control prosecution and enforcement with respect to any exclusively licensed patents, and Pfizer has prosecution and enforcement rights if we elect not to exercise such rights.

The Pfizer License Agreement will remain in effect until the expiration of the last to expire royalty term, unless terminated in accordance with the following: (1) by either party for the other party’s material breach if such party fails to cure such breach within the specified cure period; (2) by either party upon certain insolvency events of the other party; or (3) prior to receipt of the first regulatory approval for a licensed product, by us for any reason upon 90 days’ prior written notice, or after receipt of the first regulatory approval for a licensed product, by us for any reason upon one year’s prior written notice.

License Agreement with the University of Chicago

In April 2020, we entered into a license agreement, or the University License Agreement, with the University of Chicago, or the University, to obtain an exclusive license under certain patents resulting from research performed, in-part, by our scientific founder, Dr. Thomas Gajewski, as well as a non-exclusive license to certain know-how and materials. Under the terms of the license, we have the exclusive global right to develop and commercialize products that are covered by a valid claim of a licensed patent, incorporate or use the licensed know-how and materials or are known to assess, modulate or utilize the activity of certain specified biological targets.

In partial consideration for the license from the University, we issued to the University 48,919 shares 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 $10,000 commencing on the third anniversary of the effective date, potential development and commercial milestones of up to an aggregate of $7.7 million as well as running royalties on net sales of licensed products at varying rates ranging from less than one percent to the low single digits, subject to a minimum annual royalty ranging from $1.0 million to $3.0 million during certain years following the first commercial sale of a licensed product. Our royalty obligations apply on a licensed product-by-licensed product and country-by-country basis until: (1) for licensed products covered by a valid claim of a licensed patent in a given country, the expiration of such valid claims; and (2) for all other licensed products, 10 years from the first commercial sale of a licensed product in a given country. We are also obligated to pay the University a percentage of certain sublicensing revenue ranging from low- to mid-teens based on the date of entering into the applicable sublicense.

Under the University License Agreement, we are obligated to use commercially reasonable efforts to develop and bring licensed products to market, meet certain preclinical and clinical development milestones by specific dates, and promote and sell licensed products after receipt of regulatory approval, subject to certain free and payment-based extensions. The University controls prosecution of the licensed patents at our cost and we have the first right to enforce the licensed patents subject to the University’s backup enforcement rights.

The University License Agreement will remain in effect on a licensed product-by-licensed product basis until the expiration of all royalty obligations with respect to a licensed product, unless terminated in accordance with the following: (1) by the University upon 30 days’ prior written notice for any uncured payment breaches or 90 days’ prior written notice for all other uncured breaches; (2) by the University upon certain insolvency events or dissolution by us or any affiliate; or (3) by us in full or with respect to a particular licensed product at the end of the calendar quarter following the calendar quarter when we provide written notice of termination.

The Voxall Joint Venture with Alloy Therapeutics, Inc.

In March 2021, we entered into definitive transaction agreements with Alloy Therapeutics, Inc., or Alloy, to finance and operate Voxall, a joint venture company formed in collaboration with Alloy to leverage Pyxis Oncology’s site-specific target catalog and Alloy’s ATX-Gx™ platform and antibody discovery services. Voxall granted to both Pyxis Oncology and Alloy 50% of the voting membership units of Voxall in exchange for certain initial contributions, including $50,000 from both Pyxis Oncology and Alloy, and certain intellectual property and services agreements to enable the collaboration.

In February 2024, the board of directors of Voxall, comprised of equal participation from Pyxis Oncology directors and Alloy, approved dissolution of the joint venture. The decision to dissolve was mutual and was not due to any disagreement between Pyxis Oncology and Alloy; instead, the decision came as a result of our corporate reorganization announced in November 2023, as we continue to align our resources and refocus our efforts on our progressing the clinical trials. Upon dissolution, Alloy retained rights to certain intellectual property and may develop and commercialize at its sole discretion. Any amounts owed by Voxall to either Pyxis Oncology or Alloy were discharged in their entirety without further liability upon the dissolution.

Agreements with LegoChem Biosciences, Inc.

In December 2020, we entered into a license agreement, or the LegoChem License Agreement, and an opt-in, investment and additional consideration agreement, or the Opt-In Agreement, with LegoChem Biosciences, Inc., or LegoChem. Pursuant to the LegoChem License Agreement, we obtained worldwide (other than Korea) development and commercialization rights for LCB67, an ADC product candidate targeting DLK-1, and products containing the licensed compound. We paid $9.0 million in March 2021 to LegoChem, which was recorded as research and development expenses. Additionally, we may purchase certain initial quantities of licensed products from LegoChem for an estimated cost of $7.0 million and are also obligated to make future contingent payments including development, regulatory and commercial milestones as well as running royalties on net sales of licensed products at varying rates. In the third quarter of the calendar year 2022, we stopped the continued development of LCB67, based on review and analysis of data from the toxicity studies, and anticipated clinical use and commercial prospects of anti-DLK1 ADC.

In addition, as part of the Opt-in Agreement, LegoChem exercised an option to pay $8.0 million to us, in exchange for the right to receive a milestone payment, or the Extra Milestone Payment, of $9.6 million upon the earliest to occur of certain events, including the date of pricing or offer of the first public offering of our common stock or if we are the subject of a change in control transaction. Upon our IPO in October 2021, the extra milestone payment event triggered, and we paid $9.6 million in January 2022 to LegoChem.

License Agreement with Biosion USA, Inc.

On March 28, 2022, we entered into a license agreement, or the Biosion License Agreement, with Biosion pursuant to which we obtained an exclusive, worldwide (other than Greater China (mainland China, Hong Kong, Macau and Taiwan)) license for development, manufacture and commercialization rights for BSI-060T, a Siglec-15 targeting antibody, an IO product candidate (now referred to as PYX-106), and products containing the licensed compound. Under the terms of the Biosion License Agreement, each party granted to the other party a right of first offer to obtain an exclusive license in the other party’s territory (Greater China for Biosion, and the rest of the world for Pyxis) to develop, manufacture and commercialize any bi-specific or multi-specific antibody any antibody-drug conjugate controlled by a party or its affiliate that inhibits, modulates or binds to Siglec-15 as an intended mechanism of action.

Pursuant to the Biosion License Agreement, we paid an upfront fee of $10 million and are obligated to pay future contingent payments including development, regulatory and commercial milestones up to an aggregate of $217.5 million in case of normal approval and $222.5 million in case of accelerated approval. Additionally, if products are launched, we will pay Biosion tiered royalties on net sales of licensed products in varying royalty rates ranging from low single digits to low teens. Our royalty obligations apply on a licensed product-by-licensed product and country-by-country basis from first commercial sale until the latest to occur of: (1) 12 years from first commercial sale; (2) the expiration of all regulatory or data exclusivity; and (3) the expiration of the last valid claim of a licensed patent covering the licensed product in a country. We are also obligated to pay Biosion a percentage of certain sublicensing revenue ranging from mid-double to low-double digits based on the stage of development of the licensed product at the time of entering into the applicable sublicense.

Under the Biosion License Agreement, we are obligated to use commercially reasonable efforts to clinically develop and seek regulatory approval for at least one licensed product in the licensed territory, and to commercialize such licensed product following receipt of regulatory approval. We control prosecution and enforcement with respect to the licensed patents in the licensed territory.

The Biosion License Agreement will remain in effect on a licensed product-by-licensed product and country-by-country basis until the expiration of the applicable royalty term, unless terminated in accordance with the following: (1) by either party for the other party’s material breach if such party fails to cure such breach within the specified cure period; (2) by either party upon certain insolvency events of the other party; (3) by us for scientific or safety reasons; (4) any time following completion of our first clinical trial for a licensed product, by us for convenience; or (5) by Biosion if we cease development and commercialization activities for licensed products for a specified period of time, subject to certain exceptions.

Out-License Relationships

In August 2023, we completed the acquisition of Apexigen contemplated by the Merger Agreement, with Apexigen surviving as a wholly owned subsidiary of the Company. Upon the Merger Agreement, we assumed all out-licensing agreements of Apexigen. The assumed agreements consist of licenses with several biopharmaceutical companies that are developing product candidates that were discovered using our APXiMAB platform, which has been important to prosecuting the full value of our platform. We believe the licenses for the programs for the development of product candidates we have helped generate demonstrate the productivity and utility of our platform and position us to receive meaningful royalty payments if those product candidates are approved and successfully commercialized.

Described below are the out-license relationships and the related agreements under which we may receive milestone or royalty payments.

Beovu and Novartis Antibody Candidate Discovery and Development Agreement

In March 2007, Epitomics (Apexigen’s predecessor), entered into an antibody candidate discovery and development agreement with ESBATech AG, or ESBA Tech, in March 2007, or the ESBATech Agreement. ESBATech was acquired by Alcon Research, Ltd. in 2009 and later merged with Novartis AG, or Novartis, in 2011.

Under the ESBATech Agreement, Apexigen provided antibodies discovered using the APXiMAB platform that target certain molecules to ESBATech. ESBATech used those antibodies to develop drug product candidates to two different drug targets. Under the ESBATech Agreement, Apexigen granted ESBATech a non-exclusive, irrevocable, worldwide, sublicensable, royalty-bearing and perpetual license to our rights in certain intellectual property to develop and commercialize those drug product candidates. Other than financial interests, Apexigen did not have any ownership or right in those drug product candidates or any intellectual property covering or enabling the manufacture, use or sale of those drug product candidates.

Novartis, the successor in interest to ESBATech, has successfully developed and commercialized one of those drug product candidates, brolucizumab-dbll, a single-chain antibody fragment, or scFv, targeting all of the isoforms of VEGF-A, which Novartis markets under the brand name Beovu®. Beovu was approved for commercial sale in October 2019, is approved for use in over 70 countries, and is indicated for the treatment of neovascular (wet) age-related macular degeneration and has received European Commission approval for use in the treatment of visual impairment due to diabetic macular edema. Novartis is also developing Beovu for additional uses in several Phase 3 clinical trials.

In or around January 2019, Novartis licensed another of the drug product candidates covered by the ESBATech Agreement, which was named LME636, to Oculis SA. Oculis renamed the drug candidate OCS-02. OCS-02 is a topical single-chain anti-TNF alpha antibody fragment. Oculis is in Phase 2 development of OCS-02 for the treatment of dry eye and uveitis.

Novartis and its predecessors have paid all upfront fees and milestone payments due under the ESBATech Agreement. The term of the ESBATech Agreement expired in March 2010; however, Novartis’ royalty payment obligations under the ESBATech Agreement survive indefinitely. Novartis was obligated to pay Apexigen, and is now obligated to pay us, a very low single-digit royalty on worldwide net sales of Beovu and OCS-02 for therapeutic uses by Novartis, its affiliates or licensees in perpetuity. However, despite the approval of Beovu for commercial sale in October 2019, Novartis disputed its obligation to pay royalties to Apexigen under the ESBATech Agreement and continues to pay such royalties under protest. Until December 31, 2023, we received $7.7 million of royalties on net sales of Beovu, which is disputed by Novartis.

Simcere License and Collaboration Agreement

In December 2008, Epitomics (Apexigen’s predecessor) and Jiangsu Simcere Pharmaceutical R&D Co., Ltd., or Simcere, entered into a license and collaboration agreement, or the Simcere Agreement, for the development and commercialization of suvemcitug (BD0801) for oncology in China. Suvemcitug is a humanized anti-VEGF rabbit monoclonal antibody molecule. Simcere is responsible for conducting the development and commercialization of suvemcitug in China at its cost. Under the terms of the Simcere Agreement, Apexigen had, and now we have, reserved the right to develop and commercialize suvemcitug outside of China at our discretion. If we develop and commercialize suvemcitug outside of China, we will share with Simcere costs incurred and revenue earned outside of China. Under the Simcere Agreement, Simcere has an exclusive, royalty-bearing license (without the right to sublicense) to Apexigen's rights in certain intellectual property to develop and commercialize suvemcitug in the field of oncology therapeutics in China.

Simcere granted Apexigen a non-exclusive, royalty-free, worldwide license (without the right to sublicense) to improvements derived from suvemcitug using the intellectual property licensed to Simcere for any purpose outside of China and for purposes outside of oncology therapeutics in China. Intellectual property created in the collaboration program with Simcere is jointly owned by Apexigen and Simcere. Simcere is obligated to pay milestone payments for achievement of certain clinical development milestones and low to high single-digit percentage royalties on net sales of suvemcitug in China until 15 years after the first commercial sale of suvemcitug. If we choose to commercialize suvemcitug outside of China, we will share with Simcere a mid-double-digit percentage of costs and revenue arising from the development and commercialization of suvemcitug outside of China. Unless earlier terminated, the Simcere Agreement continues until 15 years after the first commercial sale of suvemcitug. Either party may terminate the Simcere Agreement for the other party’s uncured material breach. Simcere may terminate the Simcere Agreement upon a decision by an appellate court in China that suvemcitug infringes a third party patent and such dispute cannot be resolved by settlement, licensing or other alternatives.

In January 2024, Simcere announced that the Phase 3 clinical trial of Suvemcitug for injection combined with chemotherapy in patients with recurrent, platinum-resistant epithelial ovarian, fallopian tube or primary peritoneal cancer met its primary endpoints of the progression-free survival. Simcere intends to submit a New Drug Application, or NDA, for Suvemcitug for injection in the treatment of platinum-resistant ovarian cancer to the National Medical Products Administration, or NMPA, of China in the near future.

T-Mab/Mabwell Agreement

In May 2008, Epitomics (Apexigen’s predecessor) and Jiangsu T-Mab Biotechnology Ltd., Co., or T-Mab, entered into a license, co-development and contract manufacture agreement, or the T-Mab Agreement, for the development and commercialization of therapeutic candidates in two therapeutic programs, each directed to a specified target for specified fields, including VEGF for the treatment of ocular diseases, in China. Mabwell (Shanghai) Bioscience Co., Ltd., or Mabwell, acquired T-Mab in 2015. Mabwell is responsible for conducting the development and commercialization of the therapeutic candidates in China. We may, at our discretion, develop and commercialize such therapeutic candidates outside of China, however, we must pay Mabwell a royalty on sales of such therapeutic candidates made outside of China if we do so.

Under the T-Mab Agreement, Apexigen granted Mabwell an exclusive, royalty-bearing, perpetual license (without the right to sublicense) to its rights in certain intellectual property that it licensed from Epitomics to develop and commercialize such therapeutic candidates. Mabwell is obligated to pay us a mid-single-digit percentage royalty on net sales of such therapeutic candidates in China. If we choose to commercialize such therapeutic candidates outside of China, we would be obligated to pay Mabwell a mid-single-digit percentage royalty on net sales of such therapeutic candidates outside of China that we sell directly to end users and a mid-single-digit percentage of revenue we receive as sublicense fees, milestone payments and royalties related to the sale of such therapeutic candidate. Each party’s obligations to pay royalties to the other party continue until 15 years after the first commercial sale of licensed product in each party’s respective territory. The term of the T-Mab Agreement expired in May 2013; however, Mabwell’s royalty payment obligations under the agreement survive expiration. The royalty term for 9MW0211, an anti-VEGF antibody licensed under the T-Mab Agreement, will begin with the first commercial sale in China and end a low two-digit number of years after such first commercial sale.

Mabwell is currently in Phase 3 development of 9MW0211.

Toray Sublicense Agreement

Under an agreement between Epitomics (Apexigen’s predecessor) and Toray Industries, Inc., or Toray, Epitomics provided Toray with antibodies created using the APXiMAB platform that target certain molecules to use in the development of its drug product candidates. In May 2012, Apexigen entered into a non-exclusive sublicense agreement with Toray, or the Toray Agreement, under which Apexigen granted Toray a non-exclusive, worldwide sublicense, with the right to grant further sublicenses, to develop and commercialize drug product candidates that Toray develops using those antibodies in the field of pharmaceutical products for human or veterinary use. Under the Toray Agreement, Toray paid an upfront fee, and agreed to pay certain development- and regulatory-related milestone payments and a low single-digit percentage royalty on net sales of licensed products by Toray or its affiliates. Toray is also obligated to pay us a mid-teens percentage of certain payments Toray receives from sublicensees under the Toray Agreement, which payments may limit Toray’s obligations to pay the milestone payments described above. Subject to certain termination rights, including Toray’s right to terminate the agreement for convenience upon 60 days’ prior written notice, the Toray Agreement continues on a product-by-product and country-by-country basis until 10 years after the first commercial sale of such product in such country. Upon expiration or early termination of the agreement, Toray’s sublicense and any further sublicenses granted by Toray will automatically terminate.

Toray is currently in Phase 2 development of TRK-950, an antibody licensed under the Toray Agreement.

Intellectual Property

Our intellectual property is critical to our business, and we strive to protect it, including by obtaining and maintaining patent protection in the United States and internationally for our product candidates, new therapeutic approaches and potential indications, and other inventions that are important to our business. We also rely on trade secrets and proprietary know-how to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.

Our patent portfolio includes patents and patent applications that are exclusively licensed from the University of Chicago, Pfizer, and Biosion, and patent and patient applications that are wholly owned by us. Our patent portfolio includes patents and patent applications that cover our product candidates PYX-201, PYX-203, PYX-106, PYX-107 and PYX-102 and the use of these candidates for therapeutic purposes in certain territories. Our proprietary technology has been developed primarily through internal development efforts and relationships with academic institutions, Pfizer, Biosion and contract research organizations.

For our product candidates, we will, in general, initially pursue patent protection covering compositions of matter and methods of use. Throughout the development of our product candidates, we seek to identify additional means of obtaining patent protection that would potentially enhance commercial success, including through additional methods of use, process of making, formulation and dosing regimen-related claims.

For all patent applications, we determine claiming strategy on a case-by-case basis. Advice of counsel and our business model and needs are always considered. We file patent applications containing claims for protection of useful applications of our proprietary technologies and any products, as well as new applications and/or uses we discover for existing technologies and products, assuming these are strategically valuable. We continuously reassess the number and type of patent applications, as well as the existing patent claims to ensure that maximum coverage and value are obtained for our processes and compositions, given existing patent office rules and regulations. Further, claims may be modified during patent prosecution to meet our intellectual property and business needs.

We recognize that the ability to obtain patent protection and the degree of such protection depends on a number of factors, including the extent of the prior art, the novelty and non-obviousness of the invention and the ability to satisfy the enablement requirement of the patent laws. The patent positions of immuno-oncology companies like ours are generally uncertain and involve complex legal, scientific and factual questions. In addition, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted or further altered even after patent issuance. Consequently, we may not obtain or maintain adequate patent protection for any of our future product candidates or for our platform technology. We cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient proprietary protection from competitors. Any patents that we hold may be challenged, circumvented or invalidated by third parties.

Regardless of the coverage we seek under our existing patent applications, there is always a risk that an alteration to the product or process may provide sufficient basis for a competitor to avoid infringement claims. In addition, the coverage claimed in a patent application can be significantly reduced before a patent is issued, and courts can reinterpret patent scope after issuance. Moreover, many jurisdictions, including the United States, permit third parties to challenge allowed or issued patents in administrative proceedings, which may result in further narrowing or even cancellation of patent claims. Moreover, we cannot provide any assurance that any patents will be issued from our pending or any future applications or that any current or future issued patents will adequately protect our products.

In total, our patent portfolio, including patents licensed from the University of Chicago, Pfizer and Biosion, and patents owned by us, comprises 31 different patent families, filed in various jurisdictions worldwide, including families directed to composition of matter for antibodies and antibody-drug conjugates, families directed towards the manufacture, use, and compositions of antibodies and antibody-drug conjugates generally, families directed towards methods of identifying patients for treatment with compositions of antibodies and antibody-drug conjugates and subsequently treating said patients, and families directed to methods of treating cancer and identifying potential targets. Our patent portfolio as of December 31, 2023, is outlined below.

Composition of Matter Patents

PYX-201 Anti-EDB Antibody-Drug Conjugate. We have exclusively licensed from Pfizer a patent family for antibodies and antibody-drug conjugates that bind to the extra domain B splice variant of fibronectin, that includes granted patents in Australia, China, Hong Kong, Japan, Russia, South Korea, and the United States, and pending applications in Australia, Brazil, Canada, China, Europe, Hong Kong, India, Israel, Japan, Mexico, Singapore, South Africa, and the United States that claim the composition of matter and certain methods of use with respect to PYX-201. The 20-year term of the patents in this family runs through 2037, absent any available patent term adjustments or extensions.

PYX-203 Anti-CD123 Antibody-Drug Conjugate. We have exclusively licensed from Pfizer a patent family for antibodies and antibody-drug conjugates that specifically bind to CD123, that includes granted patents in Canada, Colombia, India, Indonesia, Japan, Russia, Saudi Arabia, South Korea, Taiwan, and the United States, and pending applications in Australia, Brazil, Canada, China, Europe, Hong Kong, Israel, Malaysia, Mexico, New Zealand, Peru, Philippines, Singapore, South Africa, and the United States that claim the composition of matter and certain methods of use with respect to PYX-203. The 20-year term of the patents in this family runs through 2038, absent any available patent term adjustments or extensions.

PYX-106 Anti-Siglec-15 Antibody. We have exclusively licensed from Biosion USA, Inc. a patent family for monoclonal antibodies that specifically bind human Siglec15, that includes granted patents in Australia, China, Japan, and the United States, and pending applications in Australia, Brazil, Canada, Egypt, Europe, Hong Kong, India, Indonesia, Israel, Japan, Malaysia, Mexico, New Zealand, Philippines, Russia, Saudi Arabia, Singapore, South Africa, South Korea, United Arab Emirates, and the United States. The 20-year term of the patent in this family runs through 2041, absent any available patent term adjustments or extensions.

PYX-107A/B “Sotigalimab” CD40 Agonist Antibodies. Through our acquisition of Apexigen, Inc. we have acquired sole ownership of two patent families for high affinity CD40 agonist monoclonal antibodies and related compositions, which may be used in any of a variety of therapeutic methods for the treatment of cancer and other diseases. The first patent family includes granted patents in Australia, Belgium, Brazil, Canada, China, France, Germany, Great Britain, Hong Kong, India, Israel, Italy, Japan, Mexico, New Zealand, Russia, Singapore, South Africa, South Korea, Spain, Switzerland, and the United States, with pending applications in Europe and the United States. The 20-year term of this first patent family runs through 2032, absent any available patent term adjustments or extensions. The second patent family includes granted patents in Australia, Belgium, Canada, China, Denmark, France, Germany, Great Britain, Hong Kong, India, Ireland, Italy, Japan, Luxembourg, Macau, Mexico, Monaco, Netherlands, New Zealand, Norway, South Africa, South Korea, Spain, Sweden, Switzerland, and the United States, with pending applications in Canada, China, Europe, Japan and the United States. The 20-year term of this second patent family runs through 2033, absent any available patent term adjustments or extension.

APX-601 Anti-tnfr2 Antibodies and Methods of Use. Through our acquisition of Apexigen, Inc. we have acquired sole ownership of a patent family for anti-tumor necrosis factor receptor 2 (TNFR2) antibodies and related compositions, which may be used in any of a variety of therapeutic or diagnostic methods, including the treatment or diagnosis of oncological diseases, inflammatory and/or autoimmune diseases, that includes pending applications in Australia, Brazil, Canada, China, Eurasia, Europe, India, Israel, Japan, Mexico, New Zealand, Singapore, South Africa, South Korea, Taiwan, and the United States. The 20-year term of the patents in this family runs through 2040, absent any available patent term adjustments or extension.

Methods Patents Related to Compositions of Matter

PYX-107D Methods of Treating Cancer with CD-40 Agonists. Through our acquisition of Apexigen we have acquired sole ownership of a patent family for methods of identifying a sub-population of cancer patients amenable for a combination therapy with a CD40 agonist and one or more chemotherapy drugs and subsequently treating the sub-population of cancer patients with said combination therapy, that includes recently filed pending patent applications in Canada, China, Europe, Japan, and the United States. The 20-year term of the patents in this family runs through 2042, absent any available patent term adjustments or extension.

PYX-107F Biomarkers for CD40 Agonist Therapy. Through our acquisition of Apexigen we have acquired sole ownership of a patent family for biomarkers and other characteristics for predicting tumor responsiveness to CD40 agonist therapy in melanomas, and related kits, compositions, and methods of treating said melanomas, including PD-1 refractory melanomas, that includes a PCT application with a national phase entry deadline in the first half of 2024.

PYX-002 Site Specific Ligand-Payload Conjugates. We have sole ownership of a patent family for ligand-payload conjugates, and compositions and use thereof for treating diseases, disorders, or conditions, such as cancers, autoimmune diseases, or infectious diseases, that includes a PCT application with a national phase entry deadline in the second half of 2024.

ADC Patent Rights

Spliceostatin analogs. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family for compositions, methods of use, and/or methods of manufacture useful in antibody-drug conjugates generally, directed toward novel cytotoxic spliceostatin analogs and derivatives, that includes granted patents in Australia, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Great Britain, Hong Kong, India, Ireland, Italy, Japan, Mexico, Netherlands, Russia, South Korea, Spain, Sweden, Turkey, and the United States, and no pending applications. The 20-year term of the patents in this family runs through 2033, absent any available patent term adjustments or extensions.

Tubulysin analogs and methods for their preparation. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family for compositions, methods of use, and/or methods of manufacture useful in antibody-drug conjugates generally, directed toward cytotoxic tubulysin analogs and derivatives, that includes a granted patent in the United States, and no pending applications. The 20-year term of the patent in this family runs through 2037, absent any available patent term adjustments or extensions.

Heteroaryl Sulfone-based Conjugation Handles, Methods for Their Preparation, and Their Use in Synthesizing Antibody-Drug Conjugates. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family for compositions, methods of use, and/or methods of manufacture useful in antibody-drug conjugates generally, directed toward heteroaryl sulfone-based conjugation handles for use in synthesizing antibody-drug conjugates, that includes a granted patents in Canada and the United States, and pending applications in Europe and Japan. The 20-year term of the patents in this family runs through 2037, absent any available patent term adjustments or extensions.

Purification of Antibody-Drug Conjugates Using a Sodium Phosphate Gradient. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family for compositions, methods of use, and/or methods of manufacture useful in antibody-drug conjugates generally, directed toward methods of removing high molecular weight species, in particular aggregates, from antibody-drug conjugate preparations, by contacting preparations of the antibody-drug conjugate reaction mixture with a hydroxyapatite resin and selectively eluting the ADC from the resin using a gradient comprising sodium phosphate, that includes granted patents in France, Germany, Great Britain, Ireland, Italy, Spain, and the United States, and a pending application in the United States. The 20-year term of the patents in this family runs through 2036, absent any available patent term adjustments or extensions.

Bifunctional Cytotoxic Agents Containing the CTI Pharmacophore. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family for compositions, methods of use, and/or methods of manufacture useful in antibody-drug conjugates generally, directed toward bifunctional CTI-CTI and CBI-CTI dimers that can function as stand-alone drugs, payloads in ADCs, and linker-payload compounds useful in connection with the production or administration of such ADCs, that includes granted patents in Australia, Belgium, Canada, China, Denmark, Finland, France, Germany, Great Britian, Hong Kong, India, Ireland, Israel, Italy, Japan, Mexico, Netherlands, Norway, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Taiwan, Turkey, and the United States, and a pending application in Brazil. The 20-year term of the patents in this family runs through 2036, absent any available patent term adjustments or extensions.

Calicheamicin Derivatives and Antibody-Drug Conjugates Thereof. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family for compositions, methods of use, and/or methods of manufacture useful in antibody-drug conjugates generally, directed toward calicheamicin derivatives useful as payloads in antibody drug-conjugates, that includes granted patents in Canada and Japan, and pending applications in the United States and Europe. The 20-year term of the patents in this family runs through 2038, absent any available patent term adjustments or extensions.

Cysteine Engineered Antibody-Drug Conjugate. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family for compositions, methods of use, and/or methods of manufacture useful in antibody-drug conjugates generally, directed toward anti-CD33 antibody-drug conjugates with an engineered cysteine residue, that includes a granted patent in the United States, and no pending applications. The 20-year term of the patent in this family runs through 2038, absent any available patent term adjustments or extensions.

Platform Patent Rights (Pyxis Oncology Managed)

Antibodies Specific for Trop-2 and Their Uses. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family for compositions, methods of use, and/or methods of manufacture related to Pfizer’s FACT Platform, directed toward antibodies and antibodies conjugates specific for Trop-2 in treating cancer, that includes a granted patent in the United States, and no pending applications. The 20-year term of the patents in this family runs through 2032, absent any available patent term adjustments or extensions.

Engineered Polypeptide Conjugates Using Transglutaminase. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family for compositions, methods of use, and/or methods of manufacture related to Pfizer’s FACT Platform, directed toward engineered polypeptide conjugates comprising specific acyl donor glutamine-containing tags and amine donor agents, that includes granted patents in Canada, France, Germany, Great Britain, Ireland, Italy, Japan, Spain, and the United States, and a pending application in the United States. The 20-year term of the patents in this family runs through 2034, absent any available patent term adjustments or extensions.

Stability-Modulating Linkers For Use With Antibody-Drug Conjugates. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family for compositions, methods of use, and/or methods of manufacture related to Pfizer’s FACT Platform, directed toward stability-modulating linker components used to make these stability-modulated antibody-drug conjugates, that includes granted patents in Australia, Austria, Belgium, Brazil, Canada, China, Denmark, France, Germany, Great Britain, Hong Kong, Hungary, India, Ireland, Israel, Italy, Japan, Mexico, Netherlands, Poland, Russia, South Korea, Spain, Sweden, Switzerland, Turkey, and the United States, and pending applications in Mexico and the United States. The 20-year term of the patents in this family runs through 2035, absent any available patent term adjustments or extensions.

Synergistic Auristatin Combinations. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family for compositions, methods of use, and/or methods of manufacture related to Pfizer’s FACT Platform, directed toward combinations of an auristatin or an auristatin-based ADC with second active agents including PI3K/mTOR inhibitors, MEK inhibitors, taxanes, or other anti-cancer agents, that includes granted patents in the United States and Japan, and pending applications in Canada and Europe. The 20-year term of the patents in this family runs through 2035, absent any available patent term adjustments or extensions.

Capped and Uncapped Antibody Cysteines, and Their Use in Antibody-Drug Conjugation. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family for compositions, methods of use, and/or methods of manufacture related to Pfizer’s FACT Platform, directed toward antibody production process in which engineered unpaired cysteine residues are post-translationally modified and capped with particular chemical entities, which capped antibodies are well suited to further site-specific conjugation steps to form antibody-drug conjugates, that includes granted patents in Australia, Austria, Belgium, China, Denmark, France, Germany, Great Britain, Hong Kong, Hungary, India, Ireland, Israel, Italy, Japan, Mexico, Netherlands, Poland, Russia, South Korea, Spain, Sweden, Switzerland, Turkey, and the United States, and pending applications in Brazil, Canada, Europe, Russia, and the United States. The 20-year term of the patents in this family runs through 2036, absent any available patent term adjustments or extensions.

Large Scale Production Process for Capped and Un-capped Antibody Cysteines and Their Use in Therapeutic Protein Conjugation. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family for compositions, methods of use, and/or methods of manufacture related to Pfizer’s FACT Platform, directed toward optimizing production of selectively capped, and uncapped, cysteines on antibodies by manipulation of cell growth conditions, that includes granted patents in Canada, Japan, Russia, and South Korea, and pending applications in Australia, Brazil, Europe, Hong Kong, and the United States. The 20-year term of the patents in this family runs through 2038, absent any available patent term adjustments or extensions.

Platform Patent Rights (Pfizer Managed)

Cytotoxic Peptides and Antibody-Drug Conjugates Thereof. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family currently managed by Pfizer for compositions, methods of use, and/or methods of manufacture related to Pfizer’s FACT Platform, directed toward cytotoxic pentapeptides, to antibody-drug conjugates thereof, that includes granted patents in Argentina, Australia, Austria, Belgium, Bulgaria, Canada, China, Colombia, Czech Republic, Denmark, Finland, France, Germany, Great Britain, Greece, Hong Kong, Hungary, Iceland, Indonesia, Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Peru, Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Singapore, Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Turkey, and the United States, and pending applications in Brazil, India, Peru, and Venezuela. The 20-year term of the patents in this family runs through 2032, absent any available patent term adjustments or extensions.

Bifunctional Cytotoxic Agents. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family currently managed by Pfizer for compositions, methods of use, and/or methods of manufacture related to Pfizer’s FACT Platform, directed toward cytotoxic dimers comprising CBI-based and/or CPI-based sub-units, antibody-drug conjugates comprising such dimers, that includes granted patents in Australia, Austria, Belgium, Brazil, Bulgaria, Canada, China, Colombia, Czech Republic, Denmark, Finland, France, Germany, Great Britain, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Peru, Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Singapore, Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Turkey, and the United States, and pending applications in Argentina and Venezuela. The 20-year term of the patents in this family runs through 2035, absent any available patent term adjustments or extensions.

Antibodies and Antibody Fragments for Site-Specific Conjugation. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family currently managed by Pfizer for compositions, methods of use, and/or methods of manufacture related to Pfizer’s FACT Platform, directed toward polypeptides, antibodies, and antigen-binding fragments thereof, that comprise a substituted cysteine for site-specific conjugation, that includes granted patents in Australia, China, Colombia, Hong Kong, India, Japan, Malaysia, Russia, South Africa, South Korea, and Taiwan, and pending applications in Argentina, Brazil, Canada, Europe, Indonesia, Israel, Mexico, New Zealand, Peru, Philippines, Saudi Arabia, Singapore, the United States, and Venezuela. The 20-year term of the patents in this family runs through 2036, absent any available patent term adjustments or extensions.

Engineered Antibody Constant Regions for Site-Specific Conjugation and Methods and Uses Therefor. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family currently managed by Pfizer for compositions, methods of use, and/or methods of manufacture related to Pfizer’s FACT Platform, directed toward antibodies, and antigen-binding portions thereof, engineered to introduce amino acids for site-specific conjugation, that includes granted patents in Canada, France, Germany, Great Britain, Ireland, Italy, Japan, Spain, and the United States, and pending applications in Canada, Europe and Japan. The 20-year term of the patents in this family runs through 2032, absent any available patent term adjustments or extensions.

Engineered Polypeptide Conjugates and Methods for Making Thereof Using Transglutaminase. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family currently managed by Pfizer for compositions, methods of use, and/or methods of manufacture related to Pfizer’s FACT Platform, directed toward engineered polypeptide conjugates comprising acyl donor glutamine-containing tags and amine donor agents, that includes granted patents in Canada, Japan, and the United States, and a pending application in Europe. The 20-year term of the patents in this family runs through 2031, absent any available patent term adjustments or extensions.

Antibody-Drug Conjugates with High Drug Loading. We have exclusively licensed from Pfizer, subject to certain reservations, a patent family currently managed by Pfizer for compositions, methods of use, and/or methods of manufacture related to Pfizer’s FACT Platform, directed toward transglutaminase-mediated antibody-drug conjugates with high anti-body-drug ratio, that includes granted patents in Australia, Austria, Belgium, Bulgaria, Canada, China, Czech Republic, Denmark, Finland, France, Germany, Great Britain, Greece, Hong Kong, Hungary, India, Ireland, Israel, Italy, Japan, Luxembourg, Mexico, Netherlands, Poland, Portugal, Romania, Russia, Slovak Republic, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, and the United States, and pending applications in Brazil and South Korea. The 20-year term of the patents in this family runs through 2035, absent any available patent term adjustments or extensions.

Methods in Immuno-Oncology

Methods and Compositions Related to T-Cell Activity. We have exclusively licensed from the University of Chicago a patent family for methods for treating patients with immunotherapy based on the identification of the patient as having non-anergic T cells after measuring expression levels of various genes that includes granted patents in France, Germany, Great Britian, Italy, Spain, and the United States, and a pending application in the United States. The 20-year term for patents in this family runs through March 2034, absent any available patent term adjustments or extensions.

Beta-catenin Inhibitors in Cancer Immunotherapy. We have exclusively licensed from the University of Chicago a patent family for methods for treating solid tumor cancers that includes a granted patent and one pending application in the United States. The 20-year term for patents in this family runs through March 2036, absent any available patent term adjustments or extensions.

Dysfunctional Antigen-specific CD8+ T Cells in the Tumor Microenvironment. We have exclusively licensed from the University of Chicago a patent family for methods of treating cancer comprising administering an agent that specifically targets dysfunctional tumor antigen-specific CD8+T cells that includes pending applications in Canada, China, Europe, Japan, Hong Kong, and the United States. The 20-year term for patents in this family runs through January 2038, absent any available patent term adjustments or extensions.

Patent Term and Term Extensions

Individual patents have terms for varying periods depending on the date of filing of the patent application or the date of patent issuance and the legal term of patents in the countries in which they are obtained. Generally, utility patents issued for applications filed in the United States are granted a term of 20 years from the earliest effective filing date of a non-provisional patent application. In addition, in certain instances, the term of a U.S. patent can be extended to recapture a portion of the United States Patent and Trademark Office, or the USPTO, delay in issuing the patent as well as a portion of the term effectively lost as a result of the FDA regulatory review period. However, as to the FDA component, the restoration period cannot be longer than five years and the restoration period cannot extend the patent term beyond 14 years from FDA approval. In addition, only one patent applicable to an approved drug is eligible for the extension, and only those claims covering the approved drug, a method for using it, or a method of manufacturing may be extended. Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug. We will, in general, pursue available patent term extensions in the U.S. and in foreign jurisdictions that provide for patent term extensions, however, there is no guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment of whether such extensions should be granted, and if granted, the length of such extensions. All taxes, annuities or maintenance fees for a patent, as required by the USPTO and various foreign jurisdictions, must be timely paid in order for the patent to remain in force during this period of time.

The actual protection afforded by a patent may vary on a product-by-product basis, from country to country, and can depend upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions and the availability of legal remedies in a particular country and the validity and enforceability of the patent.

Our patents and patent applications may be subject to procedural or legal challenges by others. We may be unable to obtain, maintain and protect the intellectual property rights necessary to conduct our business, and we may be subject to claims that we infringe or otherwise violate the intellectual property rights of others, which could materially harm our business. For more information, see the section titled “Risk Factors—Risks Related to Our Intellectual Property.”

Trademarks and Know-How

In connection with the ongoing development and advancement of our product candidates in the United States and various international jurisdictions, we seek to create protection for our marks and enhance their value by pursuing trademarks where available and when appropriate. In addition to patent and trademark protection, we rely upon trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, using confidentiality agreements with our commercial partners, collaborators, employees and consultants and invention assignment agreements with our employees and selected consultants. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached, and our trade secrets and other proprietary information may be disclosed. We may not have adequate remedies for any breach and could lose our trade secrets and other proprietary information through such a breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting trade secrets, know-how and inventions.

Our commercial success will also depend in part on not infringing the proprietary rights of third parties. In addition, we have licensed rights under proprietary technologies of third parties to develop, manufacture and commercialize specific aspects of our future products and services. It is uncertain whether the issuance of any third-party patent would require us to alter our development or commercial strategies, alter our processes, obtain licenses or cease certain activities. The expiration of patents or patent applications licensed from third parties or our breach of any license agreements or failure to obtain a license to proprietary rights that we may require to develop or commercialize our future technology may have a material adverse impact on us. If third parties prepare and file patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference proceedings in the USPTO to determine priority of invention.

For more information regarding the risks related to our intellectual property, please see “Risk Factors—Risks Related to Our Intellectual Property.”

Government Regulation

The research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, recordkeeping, serialization and tracking, promotion, advertising, distribution and marketing, post-approval or licensure monitoring and reporting, and export and import, among other things, of our product candidates are extensively regulated by governmental authorities in the United States and other countries. In the United States, the FDA regulates biological products under the Federal Food, Drug, and Cosmetic Act, or the FDCA, and its implementing regulations, and the Public Health Service Act, or the PHSA, and its implementing regulations. Failure to comply with the applicable U.S. requirements may subject us to administrative or judicial sanctions, such as the FDA’s refusal to approve a Biologics License Application, or BLA, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions and/or criminal prosecution.

Preclinical Studies

Before testing any biologic product candidate in humans, the product candidate undergoes preclinical testing. Preclinical tests, also referred to as nonclinical studies, include laboratory evaluations of the product chemistry, pharmacology, toxicity and formulation, as well as animal studies to assess the pharmacokinetics, metabolism, bio-distribution, elimination and toxicity of the product candidate. The conduct of the pre-clinical tests and formulation of the compounds for testing must comply with federal regulations and requirements and certain preclinical trials must conform to the FDA’s Good Laboratory Practice requirements, or GLP.

The results of preclinical testing, manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, among other things, must be submitted to the FDA as part of an IND that must be reviewed and cleared by the FDA before clinical testing can begin. The IND will become effective 30 days after the FDA receives the application, unless the FDA raises concerns or questions related to the investigations in the application and places the trial on clinical hold. In this situation, the IND sponsor must resolve any outstanding FDA concerns before clinical trials can proceed. As a result, submission of an IND may or may not result in the FDA authorizing clinical trials to commence.

Clinical Trials

Clinical trials involve the administration of the biologic product candidate to healthy volunteers or patients under the supervision of qualified investigators in accordance with Good Clinical Practice, or GCP, requirements, which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial. Clinical trials are conducted under protocols detailing the objectives of the study, dosing procedures, inclusion and exclusion criteria, study procedures, parameters to be used in monitoring safety and the effectiveness criteria to be evaluated.

Further, the study protocol and informed consent information for patients in clinical trials must also be submitted to an Institutional Review Board, or IRB, for approval covering each institution at which the clinical trial will be conducted. The IRB will consider, among other things, rationale for conducting the trial, clinical trial design, participant informed consent, ethical factors, the safety and rights of human subjects and the possible liability of the institution. The FDA can temporarily or permanently halt a clinical trial at any time, or impose other sanctions, if it believes that the clinical trial is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial subjects. The IRB may also require the clinical trial at a particular site be halted, either temporarily or permanently, for failure to comply with GCP or the IRB’s requirements, or may impose other conditions.

Clinical trials typically involve a three-phase process; however, the phases may overlap or be combined:

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Phase 1 clinical trials typically are conducted in a small number of volunteers or patients to assess the early tolerability and safety profile, the pattern of drug absorption, distribution and metabolism, the mechanism of action in humans, and may include studies where investigational drugs are used as research to explore biological phenomena or disease processes;

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Phase 2 clinical trials typically are conducted in a limited patient population with a specific disease in order to assess appropriate dosages and dose regimens, expand evidence of the safety profile and evaluate preliminary efficacy; and

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Phase 3 clinical trials typically are larger scale, multicenter, well-controlled trials conducted on patients with a specific disease to generate enough data to statistically evaluate the efficacy and safety of the product, to establish the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug.

Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These clinical trials may be conducted to fulfill mandatory conditions of product approval or used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up. The mandatory studies are used to confirm clinical benefit in the case of drugs approved under the accelerated approval regulations or to provide additional clinical safety or efficacy data for “full” approvals. Failure to promptly conduct and complete mandatory Phase 4 clinical trials could result in withdrawal of approval for products approved under accelerated approval regulations.

A therapeutic product candidate being studied in clinical trials may be made available for treatment of individual patients, intermediate-size patient populations, or for widespread treatment use under an expanded access protocol, under certain circumstances. Pursuant to the 21st Century Cures Act, or Cures Act, which was signed into law in December 2016, the manufacturer of one or more investigational products for the diagnosis, monitoring, or treatment of one or more serious diseases or conditions is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for individual patient access to such investigational product.

Additionally, on May 30, 2018, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017 was signed into law. The law, among other things, provides a federal framework for certain patients to access certain investigational new drug products that have completed a Phase 1 clinical trial and that are undergoing investigation for FDA approval. Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA authorization under an FDA expanded access program; however, manufacturers are not obligated to provide investigational new drug products under the current federal right to try law.

Disclosure of Clinical Trial Information

Sponsors of certain clinical trials of FDA-regulated products are required to register and disclose certain clinical trial information. Information related to the product, patient population, phase of investigation, trial sites and investigators, and other aspects of the clinical trial are then made public as part of the registration. Sponsors are also obligated to disclose the results of their clinical trials after completion. Competitors may use this publicly available information to gain knowledge regarding the progress of development programs. Information for certain clinical trials also must be publicly disclosed within certain time limits on the clinical trial registry and results databank maintained by the National Institutes of Health, or NIH.

Expedited Development and Review Programs

The FDA has a number of programs intended to expedite the development and review of product candidates. These programs include Fast Track designation, Breakthrough Therapy designation, priority review designation, and accelerated approval. Fast Track designation is intended to expedite or facilitate the process for reviewing new biological products that meet certain criteria. Specifically, new biological products are eligible for Fast Track designation if they are intended to treat a serious or life-threatening condition and demonstrate the potential to address unmet medical needs for the condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor of a new biological product may request the FDA to designate the biological product as a Fast Track product at any time during the clinical development of the product. Unique to a Fast Track product, the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application. FDA may revoke the Fast Track designation if it believes that the designation is no longer supported by data emerging in the clinical trial process.

Under the Breakthrough Therapy program, products intended to treat a serious or life-threatening disease or condition may be eligible for Breakthrough Therapy designation, which includes eligibility for the benefits of the Fast Track program, when preliminary clinical evidence demonstrates that such product may have substantial improvement on one or more clinically significant endpoints over existing therapies. Additionally, FDA will seek to ensure the sponsor of a Breakthrough Therapy product receives timely advice and interactive communications to help the sponsor design and conduct a development program as efficiently as possible.

A product is eligible for Priority Review if it is intended to treat a serious condition and, if approved or licensed, it would provide a significant improvement in safety or effectiveness. FDA intends to take action on a priority review marketing application within six months of receipt, compared to 10 months of receipt for regular review submissions.

Additionally, a product may be eligible for accelerated approval if it is intended to treat a serious or life-threatening disease or condition and would provide meaningful therapeutic benefit over existing treatments. Accelerated approval may be granted on the basis of adequate and well-controlled clinical studies establishing that the product has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality and is reasonably likely to predict an effect on irreversible morbidity, mortality, or other clinical benefit. As a condition of approval, the FDA may require that a sponsor of a biological product receiving accelerated approval diligently perform adequate and well-controlled clinical studies demonstrating clinical benefit, and may require that these studies be underway prior to approval under the Food and Drug Omnibus Reform Act of 2022, or FDORA. In addition, the FDA requires as a condition for accelerated approval the submission of promotional materials in advance, which could adversely impact the timing of the commercial launch of the product. Fast Track designation, Breakthrough Therapy designation, priority review and accelerated approval do not change the standards for licensure but may expedite the review process.

Orphan Drugs

Under the Orphan Drug Act, the FDA may grant orphan drug designation to therapeutic candidates (drugs or biological products) intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the U.S. or more than 200,000 individuals in the U.S. and for which there is no reasonable expectation that the cost of developing and making available in the U.S. a therapeutic candidate for this type of disease or condition will be recovered from sales in the U.S. for that therapeutic candidate. Orphan drug designation must be requested before submitting a marketing application for the therapeutic candidate for that particular disease or condition. After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process. Among the other benefits of orphan drug designation are tax credits for certain research and an exemption from the BLA application fee. The FDA may revoke orphan drug designation, and if it does, it will publicly disclose that the product is no longer designated as an orphan drug.

If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including a full BLA, to market the same biological product for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the biological product was designated. Orphan drug exclusivity does not prevent the FDA from approving a different biological product for the same disease or condition, or the same biological product for a different disease or condition.

A designated orphan drug may not receive orphan drug exclusivity if it is licensed for a use that is broader than the indication for which it received orphan designation. In addition, exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

Additional controls for biologics

To help reduce the increased risk of the introduction of adventitious agents, the PHSA emphasizes the importance of manufacturing controls for products whose attributes cannot be precisely defined. The PHSA also provides authority to the FDA to immediately suspend biologics licenses in situations where there exists a danger to public health, to prepare or procure products in the event of shortages and critical public health needs, and to authorize the creation and enforcement of regulations to prevent the introduction or spread of communicable diseases within the United States.

After a BLA is approved, the product may also be subject to official lot release as a condition of approval. As part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution. If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing a summary of the lot manufacturing history and the results of all of the manufacturer’s tests performed on the lot.

The FDA may also perform certain confirmatory tests on lots of some products, such as viral vaccines, before allowing the manufacturer to release the lots for distribution. In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, potency, and effectiveness of biological products. As with drugs, after approval of a BLA, biologics manufacturers must address any safety issues that arise, are subject to recalls or a halt in manufacturing, and are subject to periodic inspection after approval.

FDA Review of BLAs

After completion of the required clinical testing, a BLA is prepared and submitted to the FDA. FDA approval of the BLA is required before marketing of the product may begin in the United States. The BLA must include the results of all preclinical, clinical and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture and controls. The cost of preparing and submitting a BLA is substantial. The submission of most BLAs is additionally subject to a substantial application user fee, currently $4,048,695 for BLAs requiring clinical data for fiscal year 2024, and the manufacturer and sponsor under an approved BLA are also subject to annual program fees, currently $416,734 for each prescription product. These fees are typically increased annually. Sponsors of applications for drugs granted Orphan Drug Designation are exempt from these user fees.

The FDA has 60 days from its receipt of a BLA to determine whether the application will be accepted for filing based on the Agency’s threshold determination that it is sufficiently complete to permit substantive review. The FDA may request additional information rather than accept a BLA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. If the application is accepted for review, the FDA reviews the application to determine, among other things, whether a product is safe and effective for its intended use and whether the manufacturing controls are adequate to assure and preserve the product's identity, strength, quality, and purity.

The FDA has agreed to certain performance goals in the review of BLAs to encourage timeliness. Applications for standard review biological products are meant to be reviewed within ten months; applications for priority review drugs are meant to be reviewed in six months. Priority review can be applied to biological products that the FDA determines offer major advances in treatment or provide a treatment where no adequate therapy exists. The review process for both standard and priority review may be extended by the FDA for three additional months (“major amendment”) to consider certain late-submitted information, or information intended to clarify information already provided in the submission.

The FDA is required to refer an application for a novel biological product to an advisory committee or explain why such referral was not made. An advisory committee is typically a panel that includes clinicians and other experts—for review, evaluation and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations.

Before approving a BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured. The FDA will not license the product unless compliance with cGMPs is satisfactory, and the application meets the appropriate standard. A BLA must include data that demonstrate that the biological product is safe, pure, and potent.

After the FDA evaluates the BLA and accompanying information and the manufacturing facilities, it issues either an approval letter or a complete response letter. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information, in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the BLA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

If the FDA approves a product, it may limit the approved indications for use for the product; require that contraindications, warnings or precautions be included in the product labeling; require that post-marketing studies, including Phase 4 clinical trials, be conducted to further assess the drug’s safety after licensure; require testing and surveillance programs to monitor the product after commercialization; or impose other conditions, including distribution restrictions or other risk management mechanisms, which can materially affect the potential market and profitability of the product. As a condition of BLA licensure, the FDA may require a risk evaluation and mitigation strategy, or REMS, to help ensure that the benefits of the biological product outweigh the potential risks. REMS can include medication guides, communication plans for healthcare professionals and elements to assure safe use, or ETASU. ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring and the use of patient registries. The requirement for a REMS can materially affect the potential market and profitability of the drug. Moreover, product licensure may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy. Once granted, product licenses may be withdrawn if compliance with regulatory standards is not maintained, or problems are identified following initial marketing.

The FDA may prevent or limit further marketing of a product based on the results of post-market studies or surveillance programs. Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval, as applicable, of a new BLA or supplement before the change can be implemented. A BLA supplement for a new indication typically requires similar non-clinical and CMC data to that in the original application, and the FDA uses the same procedures and actions in reviewing supplements as it does in reviewing BLAs.

Pediatric studies and exclusivity

Under the Pediatric Research Equity Act of 2003, a BLA or supplement thereto must contain data that are adequate to assess the safety and effectiveness of the biological product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. With enactment of the Food and Drug Administration Safety and Innovation Act of 2012, or FDASIA, sponsors must also submit pediatric study plans prior to the assessment data.

Those pediatric study plans must contain an outline of the proposed pediatric study or studies the applicant plans to conduct, including study objectives and design, any deferral or waiver requests, and other information required by regulation. The applicant, the FDA and the FDA’s internal review committee must then review the information submitted, consult with each other and agree upon a final plan. The FDA or the applicant may request an amendment to the plan at any time.

The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after licensure of the product for use in adults, or full or partial waivers from the pediatric data requirements. Additional requirements and procedures relating to deferral requests and requests for extension of deferrals are contained in FDASIA. Unless otherwise required by law or regulation, the pediatric data requirements do not apply to products with orphan designation.

Pediatric exclusivity is a type of non-patent marketing exclusivity in the United States and, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity. This six-month exclusivity may be granted if a BLA sponsor submits pediatric data that respond to a written request from the FDA for such data. The data do not need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted. If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection cover the product are extended by six months. This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another marketing application.

Post-Licensure FDA Requirements

Biological products manufactured or distributed pursuant to FDA licenses are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion with the product. After licensure, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and licensure. There also are continuing, annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data.

Often times, even after a biological product has been licensed by the FDA for sale, the FDA may require that certain post-licensure requirements be satisfied, including the conduct of additional clinical studies. If such post-approval requirements are not satisfied, the FDA may withdraw its licensure of the biological product. In addition, holders of a biological product license are required to report certain adverse reactions to the FDA, comply with certain requirements concerning advertising and promotional labeling for their products, and continue to have quality control and manufacturing procedures conform to cGMP after approval. In addition, biological product manufacturers and their subcontractors are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements and other aspects of regulatory compliance. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance.

Among the conditions for BLA licensure is the requirement that the manufacturing operations conform on an ongoing basis with cGMP. In complying with cGMP, we must expend time, money and effort in the areas of training, production and quality control within our own organization and at our contract manufacturing facilities. A successful inspection of the manufacturing facility by the FDA is usually a prerequisite for final licensure of a biological product. Following licensure of the BLA, we and our manufacturers will remain subject to periodic inspections by the FDA to assess continued compliance with cGMP requirements and the conditions of licensure. We will also face similar inspections coordinated by foreign regulatory authorities. The FDA periodically inspects the sponsor’s records related to safety reporting and/or manufacturing facilities; this latter effort includes assessment of compliance with cGMP. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.

Once licensure is granted, the FDA may withdraw licensure if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:

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Restrictions on the marketing or manufacturing of the product, including total or partial suspension of production, complete withdrawal of the product from the market or product recalls;

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Fines, warning letters or holds on post-licensure clinical trials;

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Refusal of the FDA to license pending BLAs or supplements, or suspension or revocation of product licensure;

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Product seizure or detention, or refusal to permit the import or export of products;

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Consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs;

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Mandated modification of promotional materials and labeling and the issuance of corrective information;

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The issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or

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Injunctions or the imposition of civil or criminal penalties.

The FDA closely regulates marketing, labeling, advertising and promotion of products that are placed on the market. Biological products may be promoted only for the licensed indications and in accordance with the provisions of the approved labeling. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability. Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties. Physicians may prescribe legally available products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products.

In addition, the distribution of prescription drug products, including most biological products that require a prescription, are subject to the Prescription Drug Marketing Act, or the PDMA, which regulates the distribution of drug samples at the federal level, and sets minimum standards for the registration and regulation of drug distributors by the states. Both the PDMA and state laws limit the distribution of prescription drug product samples and impose requirements to ensure accountability in distribution

Biosimilars and Reference Product Exclusivity

The Biologics Price Competition and Innovation Act of 2009, or BPCIA, created an abbreviated approval pathway for biological product candidates shown to be highly similar, or “biosimilar,” to or interchangeable with an FDA licensed reference biological product. Biosimilarity, which requires that a product is highly similar to the reference product notwithstanding minor differences in clinically inactive components, and that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can generally be shown through analytical studies, animal studies, and a clinical study or studies. Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the interchangeable biosimilar and the reference biological product may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biological product. A product shown to be biosimilar or interchangeable with an FDA-approved reference biological product may rely in part on the FDA’s previous determination of safety and effectiveness for the reference product for approval, which can potentially reduce the cost and time required to obtain approval to market the product. Complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose significant hurdles and have slowed implementation of the BPCIA by the FDA.

Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of reference product exclusivity, another company may obtain FDA licensure and market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law.

A biological product can also obtain pediatric market exclusivity in the United States. As stated above, pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.

The BPCIA is complex and continues to be interpreted and implemented by the FDA. In addition, there has been discussion of whether Congress should reduce the 12-year reference product exclusivity period. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. As a result, the ultimate implementation of the BPCIA is subject to significant uncertainty.

Patent term extension

In the United States, after BLA licensure, owners of relevant drug patents may apply for up to a five-year patent extension, which permits patent term restoration as compensation for the patent term lost during the FDA regulatory process. The allowable patent term extension is typically calculated as one-half the time between, the latter of the effective date of an IND and issue date of the patent for which extension is sought, and the submission date of a BLA, plus the time between BLA submission date and the BLA approval date up to a maximum of five years. The time can be shortened if the FDA determines that the applicant did not pursue licensure with due diligence. The total patent term after the extension may not exceed 14 years from the date of product licensure. Only one patent applicable to a licensed biological product is eligible for extension and only those claims covering the product, a method for using it, or a method for manufacturing it may be extended and the application for the extension must be submitted prior to the expiration of the patent in question. However, we may not be granted an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Some, but not all, foreign jurisdictions possess patent term extension or other additional patent exclusivity mechanisms that may be more or less stringent and comprehensive than those of the United States.

Other Federal and State Regulatory Requirements

Various federal, state and local laws, regulations, and recommendations relating to safe working conditions, laboratory practices, the experimental use of animals, the environment and the purchase, storage, movement, import, export, use, and disposal of hazardous or potentially hazardous substances, including radioactive compounds and infectious disease agents, used in connection with our research are applicable to our activities. They include, among others, the U.S. Atomic Energy Act, the Clean Air Act, the Clean Water Act, the Occupational Safety and Health Act, the National Environmental Policy Act, the Toxic Substances Control Act, and Resources Conservation and Recovery Act, national restrictions on technology transfer, import, export, and customs regulations, and other present and possible future local, state, or federal regulation.

Foreign Regulation

In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our product candidates to the extent we choose to sell any products outside of the United States. Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities and, if required, from independent ethics committees in foreign countries before we can commence clinical trials as well as regulatory approvals prior to marketing the product candidates in those countries. The approval processes vary from country to country and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country. As in the United States, post-approval regulatory requirements, such as those regarding product manufacture, marketing, or distribution would apply to any product that is approved outside the United States.

Other Healthcare Laws

Among others, the FDA, U.S. Department of Health and Human Services, or HHS, Office of Inspector General, the Centers for Medicare and Medicaid Services, or CMS, and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirements upon companies involved in the preclinical and clinical development, manufacture, marketing, and distribution of drugs such as those we are developing. These agencies and other federal, state, and local entities regulate, among other activities, the research and development, testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, sales, commercialization, marketing, advertising and promotion, distribution, post-approval monitoring and reporting, sampling, and export and import of our product candidates. Any drug candidates that we develop must be approved by the FDA before they may be legally marketed in the United States and by the appropriate foreign regulatory agency before they may be legally marketed in those foreign countries. Generally, our activities in other countries will be subject to regulation that is similar in nature and scope as that imposed in the United States, although there can be important differences. Additionally, some significant aspects of regulation in the European Union, or EU, are addressed in a centralized way, but country-specific regulation remains essential in many respects.

Although we do not currently have any products on the market, in addition to FDA restrictions on marketing of pharmaceutical products, we are also subject to healthcare statutory and regulatory requirements and enforcement by the U.S. federal and state governments. Pharmaceutical companies like us are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business. Such regulation may constrain the financial arrangements and relationships through which we research, develop, and, ultimately, sell, market, and distribute any products for which we obtain marketing approval. Such laws include, without limitation:

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The federal Anti-Kickback Statute, an intent-based criminal statute that prohibits, among other activities, persons and entities from knowingly and willfully soliciting, offering, paying, receiving, or providing any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order, or recommendation of, any item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as Medicare or Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. A conviction for violation of the federal Anti-Kickback Statute can result in criminal fines and/or imprisonment and requires mandatory exclusion from participation in federal health care programs. Exclusion may also be imposed if the government determines that an entity has committed acts that are prohibited by the federal Anti-Kickback Statute.

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The federal civil and criminal false claims laws, including the civil False Claims Act, or FCA, which prohibit individuals or entities from, among other activities, knowingly presenting, or causing to be presented, to the federal government claims for payment or approval that are false, fictitious, or fraudulent; knowingly making, using, or causing to be made or used, a false statement or record material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government; or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay money to the federal government. In addition, the government may assert that a claim that includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA. Moreover, pharmaceutical manufacturers can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent claims. The FCA also permits a private individual acting as a “whistleblower” to bringqui tamactions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery or settlement. FCA liability is potentially significant in the healthcare industry because the statute provides for treble damages and significant mandatory penalties per false or fraudulent claim or statement for violations. Criminal penalties, including imprisonment and criminal fines, are also possible for making or presenting a false, fictitious or fraudulent claim to the federal government.

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The federal civil monetary penalties laws, which prohibit, among other activities (1) arranging for or contracting with an individual or entity that is excluded from participation in federal healthcare programs to provide items or services reimbursable by a federal healthcare program, (2) failing to report and return a known overpayment, or (3) offering or transferring any remuneration to a Medicare or Medicaid beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of items or services reimbursable by Medicare or Medicaid, unless an exception applies.

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The federal criminal statutes enacted under the Health Insurance Portability and Accountability Act of 1996, or HIPAA, which impose criminal liability for knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program; knowingly and willfully embezzling or stealing from a healthcare benefit program; willfully preventing, obstructing, misleading, or delaying a criminal investigation of a healthcare offense; and knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items, or services. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

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The federal Physician Payments Sunshine Act, enacted as part of the Patient Protection and Affordable Care Act, which requires certain manufacturers of drugs, devices, biological products, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, among others, to track and report annually to CMS certain payments and other “transfers of value” provided to “covered recipients,” which include U.S.-licensed physicians (defined to include doctors, dentists, optometrists, podiatrists and licensed chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants, certified nurse midwives, and U.S. teaching hospitals, as well as tracking and reporting of certain ownership and investment interests held by U.S.-licensed physicians and their immediate family members.

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The FDCA and PHSA, which regulate licensure of biological products and prohibit the misbranding and adulteration of biological products.

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Analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply with respect to healthcare items or services reimbursed by non-governmental third-party payors and may be broader than their federal equivalents; state and foreign laws requiring pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and/or the relevant compliance guidance promulgated by the federal government or otherwise restricting payments that may be made to healthcare providers; state laws and regulations requiring drug manufacturer disclosures to state agencies and/or commercial purchasers with respect to certain price increases or imposing payment caps on certain pharmaceutical products deemed by the state to be “high cost”; state and foreign laws requiring drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers and restricting marketing practices or requiring disclosure of marketing expenditures and pricing information; and state and local laws that requiring registration of pharmaceutical sales representatives.

Violations of any of these laws or any other applicable laws or regulations may result in significant penalties, including, without limitation, administrative, civil, and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of operations, integrity oversight and reporting obligations to resolve allegations of noncompliance; exclusion from participation in federal and state healthcare programs, such as Medicare and Medicaid; and imprisonment. Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming and can divert a company’s attention from its business.

Coverage and Reimbursement

Sales of any pharmaceutical product depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement for such product by third-party payors. Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a payor-by-payor basis. These third-party payors are increasingly reducing coverage and reimbursement for healthcare items (including drugs) and services. Moreover, for products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs. Additionally, separate reimbursement for the product itself may or may not be available. Instead, the hospital or administering physician may be reimbursed only for providing the treatment or procedure in which our product is used.

In addition, the U.S. government, states, and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement, and requirements for substitution of lower-cost or generic products. Adoption of price controls and cost-containment measures and adoption of more restrictive policies in jurisdictions with existing controls and measures could further limit sales of any drug product. Decreases in third-party reimbursement for any drug product or a decision by a third-party payor not to cover a product could reduce physician usage and patient demand for the product and also have a material adverse effect on sales.

Moreover, as a condition of participating in, and having products covered under, certain federal healthcare programs, such as Medicare and Medicaid, we may become subject to federal laws and regulations that require pharmaceutical manufacturers to calculate and report certain pricing metrics to the government, including the Average Manufacturer Price, or AMP, and Best Price under the Medicaid Drug Rebate Program, the Medicare Average Sales Price, the 340B Ceiling Price, and Non-Federal AMP reported to the Department of Veteran Affairs, with respect to Medicaid, pay statutory rebates on utilization of manufacturers’ products by Medicaid beneficiaries, and with respect to Medicare, to pay rebates based on price increases greater than the rate of inflation. Judicial decisions may also affect the implementation of these programs. Compliance with these laws and regulations will require significant resources and may have a material adverse effect on our revenues.

Healthcare Reform

In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively the ACA, was enacted in the United States, which made a number of substantial changes in the way healthcare is financed by both governmental and private insurers. Among other ways in which it may affect our business, the ACA established a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in comparative clinical effectiveness research in an effort to coordinate and develop such research; implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other healthcare providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models; implemented the federal Physician Payments Sunshine Act; and expanded the eligibility criteria and rebates for Medicaid programs.

Since its enactment, there have been executive, judicial and legislative branch challenges to certain aspects of the ACA. For example, while Congress has not passed comprehensive repeal legislation, two bills affecting the implementation of certain taxes under the ACA have been signed into law, including the repeal, effective January 1, 2019, of the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” Additionally, on June 17, 2021, the U.S. Supreme Court dismissed a judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Court’s decision, President Biden had issued an executive order that instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, policies that create barriers to obtaining access to health insurance coverage through the ACA marketplaces. It is unclear how healthcare reform measures enacted by Congress or implemented by the Biden or a future administration or other efforts to challenge, repeal or replace the ACA, if any, will impact the ACA.

Other legislative changes have been proposed and adopted in the U.S. since the ACA was enacted. These changes include the Budget Control Act of 2011, which, among other changes, led to aggregate reductions in Medicare payments to providers of up to 2% per fiscal year that started in April 2013 and, due to subsequent legislation, will continue into through the first seven months of federal fiscal year 2032 (with the exception of a temporary suspension instituted during the COVID-19 pandemic that halted the sequestration from May 1, 2020 to March 31, 2022, and later reduced the reductions to 1% from April 1, 2022 until July 1, 2022). In addition, effective January 1, 2024, manufacturers’ Medicaid Drug Rebate Program rebate liability is no longer capped, potentially resulting in a manufacturer paying more in Medicaid Drug Rebate Program rebates than it receives on the sale of certain covered outpatient drugs.

Moreover, in August 2022, President Biden signed into law the Inflation Reduction Act of 2022, or the IRA, which implements substantial changes to the Medicare program, including drug pricing reforms and the creation of new Medicare inflation rebates. Namely, the IRA (1) imposes inflation rebates on drug manufacturers for products reimbursed under Medicare Parts B and D if the prices of those products increase faster than inflation; (2) implements changes to the Medicare Part D benefit that, beginning in 2025, will cap beneficiary annual out-of-pocket spending at $2,000, while imposing new discount obligations for pharmaceutical manufacturers; and, (3) beginning in 2026, establishes a “maximum fair price” for a fixed number of high expenditure pharmaceutical and biological products covered under Medicare Parts B and D following a price negotiation process with CMS. CMS has also taken steps to implement the IRA, including: on June 30, 2023, issuing guidance detailing the requirements and parameters of the first round of price negotiations, to take place during 2023 and 2024, for products subject to the “maximum fair price” provision that would become effective in 2026; on August 29, 2023, releasing the initial list of ten drugs subject to price negotiations; on November 17, 2023, releasing guidance outlining the methodology for identifying certain manufacturers eligible to participate in a phase-in period where discounts on applicable products will be lower than those required by the Medicare Part D Manufacturer Discount Program; and on December 14, 2023, releasing a list of 48 Medicare Part B products that had an adjusted coinsurance rate based on the inflationary rebate provisions of the IRA for the time period of January 1, 2024 to March 31, 2024. Judicial challenges to different portions of the IRA and its implementation continue. Although we cannot predict whether the IRA or any of its component parts will be overturned, repealed, replaced or amended, nor can we predict the likelihood, nature, or extent of other health reform initiatives that may arise from future legislation, administrative or other action, we expect these initiatives to increase pressure on drug pricing.

On February 2, 2022, the Biden Administration signaled its continued commitment to the Cancer Moonshot initiative, which was initially launched in 2016. In its announcement, the administration noted that its new goals under the initiative include addressing inequities in order to ensure broader access to cutting-edge cancer therapeutics and investing in a robust pipeline for new treatments. In alignment with President Biden’s Cancer Moonshot initiative, on June 27, 2023, the Center for Medical Innovation at CMS announced a new model, the Enhancing Oncology Model, that is designed to make higher-quality cancer care more affordable to both patients and Medicare. Additionally, on October 14, 2022, President Biden also issued an Executive Order on Lowering Prescription Drug Costs for Americans, which instructed the Secretary of the HHS to consider whether to select for testing by the CMS Innovation Center new health care payment and delivery models that would lower drug costs and promote access to innovative drug therapies for beneficiaries enrolled in the Medicare and Medicaid programs. Most recently, on February 14, 2023, the HHS issued a report in response to the October 14, 2022 Executive Order, which, among other things, selects three potential drug affordability and accessibility models to be tested by the CMS Innovation Center. Specifically, the report addresses: (1) a model that would allow Part D Sponsors to establish a “high-value drug list” setting the maximum co-payment amount for certain common generic drugs at $2; (2) a Medicaid-focused model that would establish a partnership between CMS, manufacturers, and state Medicaid agencies that would result in multi-state outcomes-based agreements or certain cell and gene therapy drugs; and (3) a model that would adjust Medicare Part B payment amounts for Accelerated Approval Program drugs to advance the developments of novel treatments.

Meanwhile, individual states in the U.S. have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures. In some cases, states have also encouraged importation of pharmaceutical and biological products from other countries and employed bulk purchasing. Legally mandated price controls on payment amounts by third-party payors or other restrictions could adversely affect our business prospects, financial condition, and results of operations. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our product candidates or put pressure on our product pricing.

We expect that additional state and federal healthcare reform and/or drug pricing measures will be adopted in the future, any of which could affect the pricing and/or availability of drug products, the amounts that federal and state governments and other third-party payors will pay for healthcare products and services, and/or our ability to generate revenue, attain or maintain profitability, or commercialize products for which we may receive regulatory approval in the future.

Data Privacy & Security

Numerous state, federal and foreign laws and regulations govern the collection, dissemination, use, access to, privacy and security of personal information (including health-related information). Such laws and regulations that could apply to our operations or the operations of our partners include health information privacy and security laws (e.g., HIPAA), federal and state consumer protection laws and regulations (e.g., Section 5 of the Federal Trade Commission Act), state privacy laws (e.g., the California Consumer Privacy Act, or CCPA, as modified by the California Consumer Privacy Rights Act, or CPRA; and other state comprehensive privacy laws), data breach notification laws, and the EU General Data Protection Regulation, or GDPR.

Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.

Employees and Human Capital Management

Our values of “Be Clever,” “Be of Service,” “Be Gutsy,” “Be Tenacious,” and “Be You,” are the foundation of our organization and drives our mission to improve the quality of life for patients and their families.

We believe that our continued success is directly due to the commitment, engagement and performance of our employees. We strive to attract and retain experienced operators, oncology experts, clinicians, and biopharma veterans with deep market knowledge and insights with an uncompromising vision of delivering solutions for patients. In order to achieve this, we provide an inclusive and empowering work environment, foster a culture built on diversity, equity and inclusion, reward performance and leadership skills, and by offering competitive compensation and benefits programs.

Employees

As of March 20, 2024, we had 50 full-time permanent employees. Of these employees, approximately 73% were engaged in research and development activities and 49% had advanced degrees including Ph.D., M.D., M.B.A., J.D. More than half of our workforce is comprised of women. None of our employees is represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good. In November 2023, we undertook a corporate reorganization, which included a headcount reduction of approximately 40%, to refocus our efforts to our progressing clinical trials. The corporate reorganization was completed in the fourth quarter of 2023.

Culture and Employee Engagement

We place a high value on the diversity of our team, including gender, background and expertise, to foster our culture of innovation. Our employees are guided by our Code of Conduct, which sets basic requirements for business conduct and serves as a foundation for our policies, procedures and guidelines, all of which provide additional guidance on expected employee behaviors.

Compensation, Benefits and Ongoing Professional Development

Drug development is a complex endeavor which requires deep expertise and experience across a broad array of disciplines. Biotechnology and pharmaceutical companies both large and small compete for a limited number of qualified applicants to fill specialized positions. As part of our total rewards philosophy, we offer competitive compensation and benefits to attract and retain top talent.

We are committed to fair and equitable treatment in our compensation and benefits for employees at all levels. We provide our employees with compensation packages that include competitive base salaries, incentive bonuses, and new hire and long-term incentive equity awards. We believe that providing employees with the opportunity to earn ownership interest in the company encourages employees to act in our long-term best interests, aligns the interests of our stockholders with our employees, and further strengthens the level of employee engagement. Employees can also participate in our Employee Share Purchase Plan, or ESPP, which provides our employees with an opportunity to purchase shares of our common stock at a discount.

Our total rewards offerings also include an array of programs to support our employees' financial well-being, including retirement savings programs with matching contributions for eligible employees, health and welfare benefits, and paid time off. We have also created a flexible work policy to allow our employees to work remotely. For our facility-dependent employees, including those needed to maintain our research and development activities, we implemented comprehensive safety protocols designed to ensure a healthy environment.

We also provide reimbursement and time for employees to attend professional development courses ranging from technical training, competency-based workshops, and leadership development programs. Direct managers also take an active role in identifying individualized development plans to assist their employees in realizing their full potential and creating opportunities for promotions and added responsibilities that enhance the engagement and retention of our workforce. We are committed to maintaining and increasing our investment in our workforce as we grow, including improvements in the way we hire, develop, motivate and retain employees.

Board of Directors Oversight

Our Board of Directors, or the Board, recognizes the critical importance of our team and the necessity to ensure a diverse, inclusive, and innovative work environment that is centered around a values-based culture. Our Board meets regularly with management to discuss issues impacting our employees, and to focus on ways to support our workforce. Our focus on culture comes from our Board and flows throughout our company. In evaluating our Chief Executive Officer and management team, significant emphasis is placed on their contributions to our overall culture.

Our Board’s Compensation Committee is responsible for reviewing with management our human resources activities, which include, among other things, matters relating to employee development, management and engagement, pay equity, and our demographics, diversity and inclusion.

Our Board’s Nominating and Corporate Governance Committee is responsible for developing and recommending to the Board any company program relating to corporate responsibility and sustainability, including environmental, social and governance matters.

Corporate Information

We were incorporated in the state of Delaware on June 11, 2018 and launched with our first employee and Series A funding in July 2019. Our principal executive offices are located at 321 Harrison Avenue, Boston, MA 02118, and our telephone number is (617) 221-9059. Our website address is www.pyxisoncology.com.

The information in, or that can be accessed through, our website is not a part of this Annual Report on Form 10-K. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 12(a) or 15(d) of the Exchange Act are available, free of charge, on or through our website as soon as reasonably practicable after such reports and amendments are electronically filed with or furnished to the SEC. The SEC maintains an Internet site that contains, reports, proxy and information statements and other information regarding our filings at sec.gov. The contents of these websites are not incorporated into this filing. Further, references to the URLs for these websites are intended to be inactive textual references only.