SEC Filing - Athenex, Inc.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Small reporting company

Emerging growth company

View:

Download DOC

Download PDF

Download XLS

Download XBRL

atnx-10q_20200930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38112

ATHENEX, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	43-1985966
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

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

(716) 427-2950

(Registrant’s telephone number, including area code)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 30, 2020, the registrant had 93,339,242 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)	2
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43
PART II.	OTHER INFORMATION	44
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45
Signatures		46

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements.

ATHENEX, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)

(In thousands, except share and per share data)

	September 30,			December 31,
	2020			2019
Assets
Current assets:
Cash and cash equivalents	$	143,559		$	127,674
Restricted cash		13,750			—
Short-term investments		84,751			33,139
Accounts receivable, net of chargebacks and other deductions of $13,500 and $14,394, respectively, and provision for credit losses of $959 and $124, respectively		42,993			16,689
Inventories		29,605			32,630
Prepaid expenses and other current assets		9,547			20,794
Total current assets		324,205			230,926
Property and equipment, net		28,867			23,153
Goodwill		38,692			38,513
Intangible assets, net		9,556			8,522
Operating lease right-of-use assets, net		7,443			8,818
Other assets		877			—
Total assets	$	409,640		$	309,932
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	14,869		$	23,331
Accrued expenses		47,106			44,307
Current portion of operating lease liabilities		2,703			3,010
Current portion of long-term debt		1,874			880
Total current liabilities		66,552			71,528
Long-term liabilities:
Long-term operating lease liabilities		6,431			7,620
Long-term debt and finance lease obligations		121,740			52,366
Deferred tax liabilities		53			—
Other long-term liabilities		2,629			2,563
Total liabilities		197,405			134,077
Commitments and contingencies (See Note 16)
Stockholders' equity:
Common stock, par value $0.001 per share, 250,000,000 shares authorized at September 30, 2020 and December 31, 2019; 94,959,662 and 83,231,063 shares issued at September 30, 2020 and December 31, 2019, respectively; 93,286,742 and 81,558,143 shares outstanding at September 30, 2020 and December 31, 2019, respectively		95			83
Additional paid-in capital		898,250			763,648
Accumulated other comprehensive loss		(1,030	)		(635	)
Accumulated deficit		(664,151	)		(567,465	)
Less: treasury stock, at cost; 1,672,920 shares at September 30, 2020 and December 31, 2019		(7,406	)		(7,406	)
Total Athenex, Inc. stockholders' equity		225,758			188,225
Non-controlling interests		(13,523	)		(12,370	)
Total stockholders' equity		212,235			175,855
Total liabilities and stockholders' equity	$	409,640		$	309,932

The accompanying notes are an integral part of these condensed consolidated financial statements.

ATHENEX, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(In thousands, except share and per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Revenue:
Product sales, net	$	24,780		$	19,237		$	83,494		$	66,433
License and other revenue		10,696			127			39,089			435
Total revenue		35,476			19,364			122,583			66,868
Cost of sales		24,510			17,071			77,088			53,915
Gross Profit		10,966			2,293			45,495			12,953
Operating expenses:
Research and development expenses		18,390			19,588			57,597			62,570
Selling, general, and administrative expenses		22,220			16,283			65,454			48,640
Total operating expenses		40,610			35,871			123,051			111,210
Operating loss		(29,644	)		(33,578	)		(77,556	)		(98,257	)
Interest income		112			650			710			1,408
Interest expense		3,595			1,745			6,833			5,254
Loss on extinguishment of debt		3,048			—			10,278			—
Loss before income tax expense		(36,175	)		(34,673	)		(93,957	)		(102,103	)
Income tax expense		1,093			114			4,080			1,019
Net loss		(37,268	)		(34,787	)		(98,037	)		(103,122	)
Less: net loss attributable to non-controlling interests		(462	)		(29	)		(1,351	)		(1,100	)
Net loss attributable to Athenex, Inc.	$	(36,806	)	$	(34,758	)	$	(96,686	)	$	(102,022	)
Unrealized (loss) gain on investment, net of income taxes		(48	)		1			1			(79	)
Foreign currency translation adjustment, net of income taxes		85			(310	)		(396	)		312
Comprehensive loss	$	(36,769	)	$	(35,067	)	$	(97,081	)	$	(101,789	)
Net loss per share attributable to Athenex, Inc. common stockholders, basic and diluted (See Note 13)	$	(0.44	)	$	(0.45	)	$	(1.17	)	$	(1.41	)
Weighted-average shares used in computing net loss per share attributable to Athenex, Inc. common stockholders, basic and diluted (See Note 13)		83,712,060			77,297,555			82,314,802			72,552,248

The accompanying notes are an integral part of these condensed consolidated financial statements.

ATHENEX, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(In thousands, except share data)

	Common Stock				Additional					Accumulated other			Treasury Stock						Total Athenex, Inc.			Non-			Total
	Shares		Amount		paid-in capital		Accumulated deficit			comprehensive income (loss)			Shares			Amount			stockholders' equity			controlling interests			stockholders' equity
Balance at January 1, 2019		68,668,986	$	69	$	591,064	$	(443,716	)	$	(656	)		(1,672,920	)	$	(7,406	)	$	139,355		$	(10,586	)	$	128,769
Stock-based compensation cost		—		—		1,693		—			—			—			—			1,693			—			1,693
Stock options and warrants exercised		49,632		—		278		—			—			—			—			278			—			278
Net loss		—		—		—		(35,233	)		—			—			—			(35,233	)		(997	)		(36,230	)
Other comprehensive income, net of tax		—		—		—		—			1,071			—			—			1,071			—			1,071
Balance at March 31, 2019 (unaudited)		68,718,618		69		593,035		(478,949	)		415			(1,672,920	)		(7,406	)		107,164			(11,583	)		95,581
Sale of common stock, net of costs of $54		10,033,362		10		100,309		—			—			—			—			100,319			—			100,319
Stock-based compensation cost		92,723		—		3,382		—			—			—			—			3,382			—			3,382
Stock options exercised		92,442		—		559		—			—			—			—			559			—			559
Net loss		—		—		—		(32,031	)		—			—			—			(32,031	)		(74	)		(32,105	)
Other comprehensive loss, net of tax		—		—		—		—			(529	)		—			—			(529	)		—			(529	)
Balance at June 30, 2019 (unaudited)		78,937,145		79		697,285		(510,980	)		(114	)		(1,672,920	)		(7,406	)		178,864			(11,657	)		167,207
Stock-based compensation cost		130,000		—		2,148		—			—			—			—			2,148			—			2,148
Stock options exercised		75,160		—		567		—			—			—			—			567			—			567
Net loss		—		—		—		(34,758	)