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SEC Filings

ATHENEX, INC. filed this Form 10-Q on 05/09/2019
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Vasopressin (Generic version of Vasostrict®)

On August 13, 2018, Athenex Pharma Solutions and Athenex Pharmaceutical Division, LLC, our wholly-owned subsidiaries, filed a complaint for declaratory judgment against Par Pharmaceuticals, Inc., Par Sterile Products, LLC and Endo Par Innovation Company, LLC (together, Par) in the United States District Court for the Western District of New York (the Court), seeking a declaratory judgment from the Court that our compounded vasopressin drug products in ready-to-use form do not infringe on patents that Par has with respect to its Vasostrict® product and that Par’s patents are invalid. On October 22, 2018, Par filed a motion to dismiss the complaint on the basis that the Court does not have subject matter jurisdiction. Athenex has opposed Par’s motion and that motion is fully briefed and currently pending. Par has not filed a claim for infringement of its patents in this suit but if Par’s motion to dismiss Athenex’s patent suit is denied and the declaratory action proceeds, Par could proceed to lodge a counterclaim for patent infringement. If such an infringement claim were brought and the Court ruled for Par, Athenex could be enjoined from further production of compounded vasopressin within in the United States and sale of compounded vasopressin in or from the United States and for payment of damages to Par for U.S. manufacture or sale of compounded vasopressin that has already taken place, which could have a material adverse effect on our business.

In addition, on August 13, 2018, Athenex Pharma Solutions, LLC and Athenex Pharmaceutical Division, LLC filed a motion to intervene and seek the dismissal of Par’s complaint against the FDA and certain governmental officials in the United States District Court for the District of Columbia. Par has sought declaratory and injunctive relief against the FDA and certain governmental officials that: (i) vasopressin be delisted from Category 1 of the FDA’s list of bulk drug substances under evaluation pursuant to Section 503B of the Federal Food, Drug and Cosmetic Act (FDCA), (ii) the expansion of the FDA’s enforcement discretion to Category 1 substances, be enjoined; and (iii) that the FDA be enjoined from authorizing the compounding of vasopressin under Section 503B of the FDCA.  Our motion to intervene was granted.  Par filed a preliminary injunction motion and we and the FDA filed motions for judgment on the pleadings.  This action is currently stayed.  On March 4, 2019, the FDA published in the Federal Register its final decision not to include vasopressin on the list of bulk drug substances for which there is a clinical need.  Also, on March 4, 2019, Athenex, Inc., APS, and APD filed a complaint against the FDA seeking to vacate its decision. In this case, the FDA has represented to the Court that “until the Court issues a decision on the merits of this action, the FDA will not initiate enforcement action against Athenex based solely on Athenex’s use of the bulk drug substance vasopressin to compound drugs and distribute those drugs” and the Court has incorporated the FDA’s representation into its published order. Because of the Court’s order, Athenex will continue to produce and distribute compounded vasopressin during the period that the case is pending and will reevaluate its position after the Court issues its decision on the merits of Athenex’s lawsuit. The Court is expected to issue its opinion during the second or third quarter of 2019. On August 14, 2018, the Company began selling compounded vasopressin injection in ready-to-use premix IV bags. If the Company is unsuccessful in obtaining the relief it seeks in its lawsuit against the FDA, or there is an adverse final determination that Par’s patent is valid and infringed, the Company would have to abandon this revenue-generating line of business; such events could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.


16. Subsequent Events

On May 3, 2019, the Company entered into a share purchase agreement (the “Share Purchase Agreement”) with Perceptive Life Sciences Master Fund, Ltd., venBio Select Fund LLC, OrbiMed Partners Master Fund Limited, and The Biotech Growth Trust PLC (collectively, the “Investors”), pursuant to which the Company agreed to sell an aggregate of 10 million shares of its common stock to the Investors at a purchase price of $10.00 per share for aggregate gross proceeds of $100 million (the “Private Placement”). The Private Placement closed on May 7, 2019.

Pursuant to the Share Purchase Agreement, the Company agreed to enter into a registration rights agreement (the “Registration Rights Agreement”) with the Investors at the closing of the Private Placement. Under the Registration Rights Agreement, the Company agreed to register for resale the shares of common stock the Investors purchased in the offering under the Securities Act of 1933, as amended (the “Securities Act”). Pursuant to the Registration Rights Agreement, the Company will prepare and file a registration statement with the Securities and Exchange Commission within 90 days of the closing date of the Private Placement and agreed to use its best efforts to have the registration statement declared effective as soon as practicable. For each month the Company is unable to meet its obligations to have the registration statement declared effective, it will be obligated to pay each Investor an amount in cash equal to one percent of the aggregate purchase price paid by that Investor pursuant to the Share Purchase Agreement, provided that in no event will the total payment to that Investor exceed 25% of its aggregate purchase price. In addition, subject to certain limitations, following the signing of the Registration Rights Agreement, the Investors will have piggyback registration rights if no registration statement registering the shares sold in the Private Placement is effective and the Company is otherwise filing a registration statement under the Securities Act for the sale of its securities for its own account or for the account of any of its stockholders.