Pyxis Oncology M&A Spotlight Signals Potential Growth Amidst Competitive ADC Landscape: Analyst

RBC Capital Markets has initiated coverage on Pyxis Oncology Inc PYXS with an Outperform rating and a price target of $7.

Last month, Pyxis Oncology acquired Apexigen Inc., focused on discovering and developing antibody therapeutics for oncology, in an all-stock transaction valued at approximately $10.7 million. 

The combined company is positioned at the forefront of ADC innovation with a platform.

Analysts Leonid Timashev and Brian Abrahams note Pyxis Oncology's diverse oncology assets, incorporating a proven ADC platform from Pfizer Inc PFE and I/O assets that have shown promising clinical results, providing numerous prospects for stock appreciation, especially as additional clinical data emerges to solidify the potential of their primary assets and pinpoint market opportunities. 

However, RBC recognizes the risks tied to novel targets, the challenging competition within the ADC domain, and potential toxicities related to AUR-0101. 

But, given the recent spotlight on this therapeutic area and its potential to attract M&A interest, there's a strong case for pursuing this strategy and target.

Most recently, Pfizer agreed to acquire Seagen Inc SGEN, a player in the ADC space, in a $43 billion deal to gain access to its targeted cancer therapies.

Given that the stock is currently trading below cash value, the RBC analysts write that the market is undervaluing the sound scientific reasoning behind Pyxis Oncology's chosen targets and the potential of its antibody platform.

Price Action: PYXS shares are down 1.51% at $2.29 on the last check Tuesday.