8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 7, 2020

 

 

ATHENEX, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   001-38112   43-1985966

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

1001 Main Street, Suite 600, Buffalo, New York   14203
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (716) 427-2950

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of each class

  

Trading Symbol(s)

  

Name of each exchange on which registered

Common Stock, par value $0.001 per share    ATNX    The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

   Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02

Results of Operations and Financial Condition.

On May 7, 2020, Athenex, Inc. (the “Company”) issued a press release to report financial results for the quarter ended March 31, 2020. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities under such section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit
No.

  

Description

99.1    Press release issued by the Company on May 7, 2020


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    ATHENEX, INC.
Date: May 7, 2020    

/s/ Randoll Sze

      Name:   Randoll Sze
      Title:   Chief Financial Officer
EX-99.1

Exhibit 99.1

Athenex, Inc. Reports First Quarter Ended March 31, 2020 Financial Results and Provides

Corporate Update

Regulatory filings for tirbanibulin ointment for actinic keratosis submitted to both FDA and EMA

Oral Paclitaxel NDA submission is on track

2020 product sales guidance re-affirmed

Conference call & webcast today at 8:00am Eastern Time

BUFFALO, N.Y., May 7, 2020 — Athenex, Inc. (NASDAQ: ATNX), a global biopharmaceutical company dedicated to the discovery, development and commercialization of novel therapies for the treatment of cancer and related conditions, today announced its financial results and business highlights for the first quarter ended March 31, 2020.

“We successfully advanced our two lead product candidates towards regulatory submission. The regulatory applications for tirbanibulin have been filed and accepted in both the U.S. and E.U., and the NDA for Oral Paclitaxel is on track to be submitted soon,” stated Dr. Johnson Lau, Chairman and Chief Executive Officer of Athenex. “Both products have strong clinical data packages, a reflection of the very capable execution by our R&D and clinical teams. The commercial launches of these products, if approved, will be transformative for Athenex.”

“We are continuing with our pre-commercial activities for Oral Paclitaxel, many of which can be completed virtually, to ensure we are well positioned for commercial launch,” continued Dr. Lau. “Our team remains committed to advancing our innovative medicines, particularly Oral Paclitaxel, which we believe could be very valuable for both patients and physicians in the current environment. Our operational plans remain on track. We will continue to operate in this evolving situation with the COVID-19 pandemic and will make adjustments as necessary to ensure business continuity.”

First Quarter 2020 and Recent Business Highlights:

Clinical Programs:

Tirbanibulin ointment for actinic keratosis (AK)

 

   

A New Drug Application (NDA) for tirbanibulin ointment for actinic keratosis was filed with the U.S. Food and Drug Administration (FDA), and the Prescription Drug User Fee Act (PDUFA) target action date has been set as December 30, 2020. Additionally, the FDA has communicated that it is not currently planning on holding an advisory committee to discuss the application.

 

   

A Marketing Authorization Application (MAA) has been submitted to the European Medicines Agency (EMA) by our partner Almirall and validated.

Oral Paclitaxel for Metastatic Breast Cancer

 

   

The Company participated in a constructive meeting with the FDA, as scheduled, to discuss the clinical section of the NDA for Oral Paclitaxel for the treatment of metastatic breast cancer, and is on track to submit the NDA.

Commercial Business:

 

   

Athenex Pharmaceutical Division (APD) currently markets a total of 32 products with 59 SKUs.

 

   

Athenex Pharma Solutions (APS) currently markets 5 products with 17 SKUs.

 

   

Goal is to launch 7 products in 2020, including a major 503B product.


Financial Results for the First Quarter Ended March 31, 2020

Revenue from product sales were $18.5 million, a decrease of $6.6 million or 26% for the three months ended March 31, 2020, from $25.2 million for the three months ended March 31, 2019. This decrease was primarily attributable to a decrease in API and 503B product sales of $3.8 million and $3.4 million, respectively, due to the suspension of the Company’s API plant and the discontinued vasopressin sales. These decreases were partially offset by an increase in specialty product revenue of $0.9 million with the launch and sales of two new products.

The Company recognized $28.3 million in license revenue for the three months ended March 31, 2020, pursuant to the license agreement entered into with Xiangxue in December 2019.

Cost of sales for the three months ended March 31, 2020 totaled $19.6 million, a decrease of $0.3 million, or 2%, as compared to $19.9 million for the three months ended March 31, 2019. The Company continued to incur fixed costs at the API plant and APS facility despite decreased production at these locations.

Research and development expenses for the three months ended March 31, 2020 totaled $17.2 million, a decrease of $7.3 million, or 30%, as compared to $24.5 million for the three months ended March 31, 2019. This was primarily due to a decrease in licensing fees and costs attributable to preclinical and clinical operations. The decrease in these R&D expenses was partially offset by an increase of $1.3 million in compensation expense and regulatory costs in connection with our NDA preparations.

SG&A expenses for the three months ended March 31, 2020 totaled $25.7 million, an increase of $10.5 million, or 70%, as compared to $15.2 million for the three months ended March 31, 2019. This was primarily due to an increase of $7.6 million related to the costs of preparing to commercialize our proprietary drugs, if approved, and an increase of $2.9 million of general administrative expense, including professional service fees and other operating expenses.

As a result of the foregoing, operating loss for the three months ended March 31, 2020 was $15.6 million, compared to $34.3 million in the same period last year.

Net loss attributable to Athenex for the three months ended March 31, 2020 was $19.4 million, or ($0.24) per diluted share, compared to a net loss of $35.2 million, or ($0.53) per diluted share, in the same period last year. Net loss attributable to Athenex for the three months ended March 31, 2020 was impacted by foreign tax withholding in relation to license revenue recognized in the period.

At March 31, 2020, the Company had cash, cash equivalents and short-term investments of $113.7 million, which included $8.7 million funded by New York State for the construction of the Dunkirk facility for which the Company has recorded a corresponding liability, compared to cash, cash equivalents and short-term investments of $160.8 million at December 31, 2019. The March 31, 2020 balance did not include the $30 million payment the Company is due to receive from Xiangxue Pharmaceutical, as part of our expanded partnership under the license agreement entered into in December 2019. Based on the current operating plan, we expect that our cash, cash equivalents and short-term investments as of March 31, 2020, together with cash to be generated from our operating activities, including the license payment from our China partner, Xiangxue Pharmaceutical, will enable us to fund our operations into the first quarter of 2021.

Outlook and Upcoming Milestones:

 

   

An abstract for the ongoing Phase 2 study of Oral Paclitaxel in angiosarcoma has been accepted for presentation in a poster discussion session at the American Society of Clinical Oncology’s (ASCO) upcoming ASCO20 Virtual Scientific Program, which will be held from May 29 to May 31, 2020.

 

   

FDA acceptance of the NDA for Oral Paclitaxel for metastatic breast cancer.

 

   

PDUFA date of December 30, 2020 for tirbanibulin ointment for actinic keratosis.


Financial Guidance:

The Company expects 2020 year-over-year product sales growth to be in the mid-single digits, from $80.5 million reported in 2019. The product sales guidance for 2020 has taken into account the discontinuation of vasopressin sales and the suspension of operations at the Taihao API plant in 2019, which had meaningful contributions in 2019. In light of the current COVID-19 pandemic, the Company has sold and may continue to sell products that are used to treat COVID-19 patients. The Company currently does not view these revenues as recurring in nature and will provide an update at the appropriate time.

Conference Call and Webcast Information:

The Company will host a conference call and live audio webcast today, Thursday, May 7, 2020, at 8:00am Eastern Time to discuss the financial results and provide a business update.

To participate in the call, dial 800-479-1004 (domestic) or 929-477-0324 (international) fifteen minutes before the conference call begins and reference the conference passcode 7976288. The live conference call and replay can also be accessed via audio webcast here http://public.viavid.com/index.php?id=139326 and on the Investor Relations section of the Company’s website, located at http://ir.athenex.com/.

About Athenex, Inc.

Founded in 2003, Athenex, Inc. is a global clinical stage biopharmaceutical company dedicated to becoming a leader in the discovery, development and commercialization of next generation drugs for the treatment of cancer. Athenex is organized around three platforms, including an Oncology Innovation Platform, a Commercial Platform and a Global Supply Chain Platform. The Company’s current clinical pipeline is derived from four different platform technologies: (1) Orascovery, based on P-glycoprotein inhibitor, (2) Src kinase inhibition, (3) T-cell receptor-engineered T-cells (TCR-T), and (4) Arginine deprivation therapy. Athenex’s employees worldwide are dedicated to improving the lives of cancer patients by creating more active and tolerable treatments. Athenex has offices in Buffalo and Clarence, New York; Cranford, New Jersey; Houston, Texas; Chicago, Illinois; Hong Kong; Taipei, Taiwan; multiple locations in Chongqing, China; Manchester, UK; Guatemala City, Guatemala and Buenos Aires, Argentina. For more information, please visit www.athenex.com.

Forward-Looking Statements

Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements. These forward-looking statements are typically identified by terms such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “foresee,” “goal,” “guidance,” “intend,” “likely,” “may,” “plan,” “potential,” “predict,” “preliminary,” “probable,” “project,” “promising,” “seek,” “should,” “will,” “would,” and similar expressions. Actual results might differ materially from those explicit or implicit in the forward-looking statements. Important factors that could cause actual results to differ materially include: the development stage of our primary clinical candidates and related risks involved in drug development, clinical trials, regulation, manufacturing and commercialization; our reliance on third parties for success in certain areas of Athenex’s business; our history of operating losses and need to raise additional capital to continue as a going concern; risks and uncertainties related to the COVID-19 pandemic and its potential impact on our operations, cash flow and financial condition; our ability to integrate CIDAL’s assets into our existing operations; competition; intellectual property risks; risks relating to doing business internationally and in China; the uncertainty of when, if at all, we will be able to resume full API production operations in Chongqing; and the other risk factors set forth from time to time in our SEC filings, copies of which are available for free in the Investor Relations section of our website at http://ir.athenex.com/phoenix.zhtml?c=254495&p=irol-sec or upon request from our Investor Relations Department. All information provided in this release is as of the date hereof and we assume no obligation and do not intend to update these forward-looking statements, except as required by law.


CONTACTS

Investor Relations:

Tim McCarthy

Managing Director, LifeSci Advisors, LLC

Direct: 212-915-2564

Athenex, Inc.:

Randoll Sze

Chief Financial Officer

Email: RandollSze@athenex.com

Jacqueline Li

Corporate Development and Investor Relations

Email: JacquelineLi@athenex.com


ATHENEX, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)

(In thousands)

 

     March 31,     December 31,  
     2020     2019  

Balance sheet data:

    

Cash and cash equivalents

   $ 71,983     $ 127,674  

Short-term investments

     41,721       33,139  

Goodwill

     38,480       38,513  

Working capital*

     141,104       159,398  

Total assets

     297,787       309,932  

Long-term debt

     53,767       53,246  

Total liabilities

     139,551       134,077  

Non-controlling interests

     (12,659     (12,370

Total stockholders’ equity

   $ 158,236     $ 175,855  

 

*

working capital: total current assets less total current liabilities.


ATHENEX, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(In thousands, except share and per share data)

 

     Three Months Ended March 31,  
     2020     2019  
     (in thousands)     (in thousands)  

Revenue

    

Product sales, net

   $ 18,547     $ 25,163  

License fees and other revenue

     28,388       144  
  

 

 

   

 

 

 

Total revenue

     46,935       25,307  
  

 

 

   

 

 

 

Cost of sales

     (19,572     (19,902

Research and development expenses

     (17,192     (24,475

Selling, general, and administrative expenses

     (25,748     (15,188

Interest income

     413       283  

Interest expense

     (1,673     (1,755

Income tax expense

     (2,881     (500
  

 

 

   

 

 

 

Net loss

     (19,718     (36,230
  

 

 

   

 

 

 

Less: net loss attributable to non-controlling interests

     (289     (997
  

 

 

   

 

 

 

Net loss attributable to Athenex, Inc.

   $ (19,429   $ (35,233
  

 

 

   

 

 

 

Net loss per share attributable to Athenex, Inc. common stockholders, basic and diluted

   $ (0.24   $ (0.53
  

 

 

   

 

 

 

Weighted-average shares used in computing net loss per share attributable to Athenex, Inc. common stockholders, basic and diluted

     81,539,548       67,011,432  
  

 

 

   

 

 

 


ATHENEX, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)

(In thousands)

 

     Three Months Ended March 31,  
     2020     2019  
     (in thousands)  

Net cash used in operating activities

   $ (45,545   $ (32,971

Net cash (used in) provided by investing activities

     (10,451     52,198  

Net cash provided by financing activities

     732       976  

Net effect of foreign exchange rate changes

     (427     1,006  
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (55,691     21,209  
  

 

 

   

 

 

 

Cash and cash equivalents, at beginning of period

     127,674       49,794  
  

 

 

   

 

 

 

Cash and cash equivalents, at end of period

   $ 71,983     $ 71,003