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Stifel sets $10 target on Pyxis Oncology, cites unique approach

Published 07/08/2024, 22:46
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On Wednesday, Stifel initiated coverage on Pyxis Oncology Inc. (NASDAQ:PYXS) with a Buy rating and a price target of $10.00. The firm's research indicates strong potential for PYXS' first-in-concept non-internalizing ADC mechanism, which could be a game-changer in the treatment of solid tumors.

The technology behind this new therapy was in-licensed from Pfizer (NYSE:PFE) and is deemed to have a high likelihood of technical success. According to Stifel, the safety of the therapy has been substantially de-risked due to the selection of the tumor stroma-specific EDB target. This assertion is backed by extensive primate toxicology studies and a high human dosing potential compared to internalizing ADCs that use the same technology.

PYX-201, the therapy in question, is currently gearing up for phase 1 data release in fall 2024. It is expected to have broad applicability across various tumor types, including those that are difficult to treat. The optimism is also based on preclinical models, deliberate clinical amendments for tumor type enrichment, and management's disclosure of biologic activity.

In other recent news, Pyxis Oncology has seen substantial developments. The company's recent earnings and revenue results highlight the sale of royalty rights for Beovu® and another asset to Novartis (LON:0QLR) AG (SIX:NOVN) for $8 million. This strategic move aims to advance the development of the lead Antibody-Drug Conjugate (ADC) asset, PYX-201, currently under Phase 1 clinical studies.

The annual stockholders' meeting resulted in the election of board members and the ratification of Ernst & Young LLP as the independent auditor for the fiscal year ending December 31, 2024. The newly elected directors include Dr. Santhosh Palani, Mr. John Flavin, Dr. Lara Sullivan, and Dr. Jakob Dupont.

RBC Capital maintained its Outperform rating on Pyxis Oncology shares, focusing on the potential impact of the PYX-201 data readout in the second half of 2024. The firm's analysis suggests a favorable setup for the company's initial ADC data. Meanwhile, Jefferies initiated coverage on Pyxis Oncology shares with a Buy rating and a new price target of $10.00, recognizing the potential of the company's ADC platform, particularly the '201 linker and payload targeting tumor stroma.

InvestingPro Insights

As Pyxis Oncology Inc. (NASDAQ:PYXS) garners attention with its innovative ADC therapy, it's worth noting that the company holds more cash than debt on its balance sheet, indicating a stable financial position for ongoing research and development. This is crucial for a biotech firm where cash flow is vital for sustaining operations until profitability. Moreover, the company's liquid assets exceed short-term obligations, providing a cushion for near-term financial challenges.

However, it is important for investors to consider that PYXS is quickly burning through cash and analysts have revised their earnings downwards for the upcoming period. This could suggest that the market is anticipating a longer road to profitability and potential cash flow issues. Additionally, the stock has experienced volatility with a significant hit over the last week, yet it showed a strong return over the last month. These fluctuations underscore the importance of keeping an eye on the company's financial health and market performance.

On the financial metrics side, Pyxis Oncology's market cap stands at approximately $198.45 million, with a negative P/E ratio reflecting the company's current lack of profitability. The gross profit margin is notably high at 97.06%, but operating income margin is deeply negative, indicating substantial expenses relative to revenue. Investors should also be aware that the company does not pay dividends, which is typical for growth-focused biotech companies reinvesting earnings into research and development.

For those interested in a deeper dive into Pyxis Oncology's financials and future prospects, InvestingPro offers additional insights and tips. There are 9 more InvestingPro Tips available for PYXS, which can be explored for informed decision-making. Visit https://www.investing.com/pro/PYXS for a comprehensive analysis.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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