Athenex, Inc. (NASDAQ: ATNX), a global biopharmaceutical company
dedicated to the discovery, development and commercialization of
novel therapies for the treatment of cancer, today announced its
financial results and business highlights for the second quarter of
2019.
“Athenex has continued to execute successfully across all of our
strategic objectives in our development programs as well as our
commercial operations and readiness,” stated Dr. Johnson Lau,
Chief Executive Officer and Chairman of Athenex. “We are
particularly excited about today’s announcement of success in our
Phase III study of oral paclitaxel and encequidar in metastatic
breast cancer. We believe the success of this program serves to
derisk our technology platform and provides further validation as
we continue advancing our other Orascovery candidates (including
docetaxel, cabazitaxel, irinotecan, topotecan and eribulin) and
combination therapies.”
Mr. Jeffrey Yordon, Chief Operating Officer of Athenex,
commented, “We have been building the commercial infrastructure in
manufacturing (active pharmaceutical ingredient and dosage-form),
logistics and marketing to support the potential launch of oral
paclitaxel and encequidar, which, based on the Phase III results
announced, we believe has significant potential. Athenex is in the
process of transforming from a clinical stage company to a fully
integrated, commercial organization focused on delivering
innovative cancer treatments that can improve patient outcomes.”
Second Quarter 2019 and Recent Business Highlights:
Clinical Programs:
Phase III study of oral paclitaxel and encequidar for metastatic
breast cancer
- Primary efficacy endpoint met in Phase III clinical trial of
oral paclitaxel and encequidar (Oral Paclitaxel) versus IV
paclitaxel in patients with metastatic breast cancer. Oral
Paclitaxel showed a statistically significant improvement compared
to IV paclitaxel with an ORR of 36% compared to 24% based on
intention-to-treat analysis (p = 0.01). Oral Paclitaxel also showed
statistically significant improvement compared to IV paclitaxel
based on other analyses on populations excluding non-evaluable
patients (which would give higher response rates), with p ≤ 0.01 in
all analyses.
- Results also showed that the proportion of confirmed responders
with a duration of response more than 150 days was 2.5 times higher
in Oral Paclitaxel versus IV paclitaxel.
- There were strong trends in progression-free survival (p =
0.077) and overall survival (p = 0.11) favoring Oral Paclitaxel
over IV paclitaxel.
- Neuropathy was less frequent with Oral Paclitaxel compared to
IV paclitaxel.
- Plan to request a pre-NDA meeting as soon as possible and
present data at a major upcoming scientific meeting.
Other
- Reported promising clinical results from a clinical study of
oral paclitaxel and encequidar in cutaneous angiosarcoma.
Preliminary data show rapid, visible response to oral paclitaxel
and encequidar monotherapy in the first seven subjects, including
three complete responses.
- Four posters featuring the Company’s products/technologies were
presented at the 2019 American Society of Clinical Oncology
(ASCO) Annual Meeting.
- Preliminary positive clinical activity signals observed in a
cohort of patients with psoriasis treated with tirbanibulin
ointment (formerly known as KX2-391) in a Phase I clinical
trial.
- The U.S. Food and Drug Administration (FDA) allowed the
Company’s Investigational New Drug (IND) application for the
clinical investigation of PT01 (Pegtomarginase) for the treatment
of patients with advanced malignancies.
Corporate Announcements:
- Launched new brand, Athenex Oncology, and corresponding
website, AthenexOncology.com, during the 2019 ASCO Annual
Meeting.
- Strategically expanded presence in Europe and Latin America to
grow the Company’s global clinical research and development
capacity and maximize the global potential of its pipeline.-
Formed a subsidiary in the U.K. and established offices
in Manchester. - Entered into a definitive
agreement to acquire certain assets of CIDAL Limited, a
contract research organization (CRO) with headquarters
in Guatemala and operations in various countries
in Latin America.
- Voluntarily suspended production activities at its active
pharmaceutical ingredient (API) plant in Chongqing (Taihao API
plant). This decision was made based on discussions with
the Department of Emergency Management of Chongqing (DEMC)
related to concerns raised about the location of our plant. The
DEMC has been evaluating the safety of all chemical and other
plants in the region after recent accidents at other plants. In the
meantime, the Company has been working on the build-out of the new
API plant in Chongqing, and the plant is expected to commence
operations in the first half of 2020.
Commercial Business:
- Athenex Pharmaceutical Division (APD) currently markets a total
of 30 products with 58 SKUs.
- Athenex Pharma Solutions (APS) currently markets 5 products in
total with 13 SKUs.
- Goal is to launch 9-12 products in 2019.
Financial Results for the Quarter Ended June 30,
2019
Product sales for the three months ended June 30, 2019 were
$22.0 million, compared with $11.5 million for the three months
ended June 30, 2018, an increase of $10.6 million or 92%. This
increase was primarily attributable to an increase in 503B revenue
of $6.0 million, an increase in specialty product revenue of $4.6
million, and an increase in API sales of $0.6 million.
Cost of sales for the three months ended June 30, 2019 totaled
$16.9 million, an increase of $7.5 million, or 79%, as compared to
$9.4 million for the three months ended June 30, 2018. This was
primarily due to an increase of $5.8 million in cost of sales from
the sale of specialty products and $1.7 million from 503B and API
products. Gross margin attributable to product sales increased from
17.7% in the three months ended June 30, 2018 to 23.1% in the three
months ended June 30, 2019, primarily as a result of change in
product mix.
Research and development expenses for the three months ended
June 30, 2019 were $18.5 million as compared to $26.6 million for
the three months ended June 30, 2018. This was primarily due to a
decrease in licensing fees, as well as expenses in relation to
clinical operations and product development. The decrease in these
R&D expenses was offset primarily by an increase of $1.1
million of preclinical development costs related to the arginase
and TCR-T platforms.
Selling, general and administrative expenses for the three
months ended June 30, 2019 were $17.2 million as compared to $12.8
million for the three months ended June 30, 2018. This was
primarily due to an increase of $3.7 million related to the costs
of preparing to commercialize our proprietary drugs, if approved,
and an increase of $1.3 million in general administrative expenses
including legal fees and other professional service fees, offset by
a decrease of $0.6 million in administrative related compensation
expense.
Net loss attributable to Athenex for the three months ended June
30, 2019 was $32.0 million, or $0.44 per diluted share, compared to
a net loss of $36.9 million, or $0.58 per diluted share, in the
same period last year.
On May 7, 2019, the Company closed a private placement
transaction in which it issued 10 million shares of common stock to
three institutional investors (Perceptive Advisors, Avoro
Capital Advisors (formerly known as venBio Select Advisor) and
OrbiMed) at a purchase price of $10.00 per share, for net
proceeds of approximately $99.9
million to Athenex.
The Company received a $20 million milestone payment from
Almirall S.A. during the second quarter of 2019 in connection with
the partnership on tirbanibulin and expects this payment to be
recorded as revenue in the second half of 2019.
At June 30, 2019, the Company had cash, cash equivalents,
restricted cash and short-term investments of $165.9 million,
compared to $107.4 million at December 31, 2018. Based on the
current operating plan, we expect that our cash, cash equivalents,
restricted cash and short-term investments as of June 30, 2019,
together with cash to be generated from our operating activities,
will enable us to fund our operations into the third quarter in
2020.
Financial Results for the Six Months Ended June 30,
2019
Product sales reached $47.2 million for the six months ended
June 30, 2019, compared with $24.1 million for the six months ended
June 30, 2018, an increase of $23.1 million or 96%.
Total revenue for the six months ended June 30, 2019 was $47.5
million, a decrease of $1.9 million, or 4%, as compared to $49.4
million for the six months ended June 30, 2018. The decrease was
primarily due to $25.0 million related to license milestone revenue
earned in the first quarter of 2018, and $1.1 million decrease in
medical device product sales and contract manufacturing revenue,
offset by a $24.3 million the increase in product sales, of which
$10.9 million was from the sales of 503B products, $10.5 million
was from sales of specialty products, and $2.8 million was from
API.
Cost of sales for the six months ended June 30, 2019 totaled
$36.8 million, an increase of $16.1 million, or 77%, as compared to
$20.8 million for the six months ended June 30, 2018. This was
primarily due to the increase of $12.0 million in cost of sales
from the sale of specialty products and $4.1 million in cost of
sales from 503B and API products. Gross margin attributable to
product sales increased from 13.7% in the six months ended June 30,
2018 to 21.9% in the six months ended June 30, 2019, primarily as a
result of change in product mix.
Research and development expenses for the six months ended June
30, 2019 were $43.0 million as compared to $47.9 million for the
six months ended June 30, 2018. This was primarily due to a
decrease in licensing fees, as well as expenses in relation to
clinical operations and product development. The decrease in these
R&D expenses was offset by an increase of $2.8 million of
preclinical development costs related to the arginase and TCR-T
platforms, and a $1.7 million increase of R&D related
compensation.
Selling, general and administrative expenses for the six months
ended June 30, 2019 were $32.4 million as compared to $25.9 million
for the six months ended June 30, 2018. This was primarily due to
an increase of $6.2 million related to the costs of preparing to
commercialize our proprietary drugs, if approved, and an increase
of $1.3 million of general administrative expenses including legal
fees and other professional service fees, offset by a decrease of
$1.3 million in administrative related compensation expense.
Net loss attributable to Athenex for the six months ended June
30, 2019 was $67.3 million, or $0.96 per diluted share, compared to
a net loss of $44.2 million, or $0.71 per diluted share, in the
same period last year.
Outlook and Upcoming Milestones:
- Intend to submit results from Phase III clinical trial of oral
paclitaxel and encequidar in metastatic breast cancer for
presentation at a major upcoming scientific meeting and for peer
review publication (Q4 2019 / H1 2020)
- Expect to request a pre-NDA meeting as soon as possible for
oral paclitaxel and encequidar in metastatic breast cancer (Q4
2019)
- Expect to file an NDA for tirbanibulin ointment in actinic
keratosis (Q1 2020)
Financial Guidance:
Athenex provides revenue guidance for product sales only. The
Company is raising its product sales guidance for 2019 and is now
forecasting that product sales this year will increase by between
30% and 35% year-over-year from $56.4 million in 2018 (versus
previous guidance of 25% – 30% annual growth). This new revenue
guidance has taken into account the court’s latest decision in the
Vasopressin proceeding and the suspension of operations at our
Taihao API plant. The revenue guidance excludes license and
collaboration fees.
Conference Call and Webcast Information:
The Company will host a conference call and live audio webcast
today, Wednesday, August 7, 2019, at 8:00am Eastern Time to discuss
the financial results and provide a business update.To participate
in the call, dial 877-407-0784 (domestic) or 201-689-8560
(international) fifteen minutes before the conference call begins
and reference the conference passcode 13691069. The live
conference call and replay can be accessed via audio webcast at
http://public.viavid.com/index.php?id=134662 and also 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 non-absorbed
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; and Manchester, U.K. For more
information, please visit www.athenex.com.
Forward-Looking StatementsExcept 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; our ability to
integrate CIDAL’s assets into our existing operations; competition;
intellectual property risks; risks relating to doing business in
China; the uncertainty of when, if at all, we will be able to
resume producing API in our Chongqing plant; 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.
CONTACTSInvestor Relations:Tim McCarthyManaging
Director, LifeSci Advisors, LLCTel: +1 716-427-2952Direct: +1
212-915-2564
Athenex, Inc.:Randoll SzeChief Financial OfficerEmail:
randollsze@athenex.com
Jacqueline LiCorporate Development and Investor RelationsEmail:
jacquelineli@athenex.com
ATHENEX, INC. AND
SUBSIDIARIESCondensed Consolidated Balance
Sheets(unaudited)(In thousands,
except share and per share data)
| |
June 30, |
|
December 31, |
|
|
|
2019 |
|
|
|
2018 |
|
| |
|
| Balance sheet
data: |
(in thousands) |
| Cash, cash equivalents, and
restricted cash |
$ |
122,198 |
|
|
$ |
49,794 |
|
| Short-term investments |
|
43,718 |
|
|
|
57,629 |
|
| Goodwill |
|
37,528 |
|
|
|
37,495 |
|
| Working capital * |
|
154,372 |
|
|
|
119,143 |
|
| Total assets |
|
322,273 |
|
|
|
231,095 |
|
| Long-term debt |
|
50,811 |
|
|
|
46,764 |
|
| Total liabilities |
|
155,066 |
|
|
|
102,326 |
|
| Non-controlling interests |
|
(11,657 |
) |
|
|
(10,586 |
) |
| Total stockholders'
equity |
$ |
167,207 |
|
|
$ |
128,769 |
|
| |
|
|
|
| *Working capital: total
current assets - total current liabilities |
|
|
|
| |
|
|
|
ATHENEX, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of
Operations and Comprehensive
Loss(unaudited)(In thousands,
except share and per share data)
| |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
| |
(in thousands) |
|
(in thousands) |
|
(in thousands) |
|
(in thousands) |
| Revenue |
|
|
|
|
|
|
|
|
Product sales, net |
$ |
22,033 |
|
|
$ |
11,471 |
|
|
$ |
47,196 |
|
|
$ |
24,076 |
|
|
License fees and consulting revenue |
|
105 |
|
|
|
91 |
|
|
|
210 |
|
|
|
25,182 |
|
|
Grant revenue |
|
59 |
|
|
|
3 |
|
|
|
98 |
|
|
|
143 |
|
|
Total revenue |
|
22,197 |
|
|
|
11,565 |
|
|
|
47,504 |
|
|
|
49,401 |
|
| Cost of sales |
|
(16,942 |
) |
|
|
(9,443 |
) |
|
|
(36,844 |
) |
|
|
(20,769 |
) |
| Gross profit |
|
5,255 |
|
|
|
2,122 |
|
|
|
10,660 |
|
|
|
28,632 |
|
| Research and development
expenses |
|
(18,507 |
) |
|
|
(26,572 |
) |
|
|
(42,982 |
) |
|
|
(47,875 |
) |
| Selling, general, and
administrative expenses |
|
(17,169 |
) |
|
|
(12,817 |
) |
|
|
(32,357 |
) |
|
|
(25,897 |
) |
| Interest (expense) income |
|
(1,279 |
) |
|
|
368 |
|
|
|
(2,751 |
) |
|
|
595 |
|
| Income tax (expense)
benefit |
|
(405 |
) |
|
|
(51 |
) |
|
|
(905 |
) |
|
|
256 |
|
| Net loss |
|
(32,105 |
) |
|
|
(36,950 |
) |
|
|
(68,335 |
) |
|
|
(44,289 |
) |
| Less: net loss attributable to
non-controlling interests |
|
(74 |
) |
|
|
(91 |
) |
|
|
(1,071 |
) |
|
|
(132 |
) |
| Net loss attributable to
Athenex, Inc. |
$ |
(32,031 |
) |
|
$ |
(36,859 |
) |
|
$ |
(67,264 |
) |
|
$ |
(44,157 |
) |
| Net loss per share
attributable to Athenex, Inc. common stockholders, basic and
diluted |
$ |
(0.44 |
) |
|
$ |
(0.58 |
) |
|
$ |
(0.96 |
) |
|
$ |
(0.71 |
) |
| Weighted-average shares used
in computing net loss per share attributable to Athenex, Inc.
common stockholders, basic and diluted |
|
73,114,392 |
|
|
|
63,310,219 |
|
|
|
70,079,771 |
|
|
|
62,487,328 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ATHENEX, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of
Cash Flows(unaudited)(In
thousands)
| |
Six Months Ended June 30, |
|
|
|
2019 |
|
|
|
2018 |
|
| |
|
| |
(in thousands) |
| Net cash used in operating
activities |
$ |
(37,773 |
) |
|
$ |
(38,029 |
) |
| Net cash provided by (used in)
investing activities |
|
4,764 |
|
|
|
(56,553 |
) |
| Net cash provided by financing
activities |
|
104,698 |
|
|
|
69,099 |
|
| Net effect of foreign exchange
rate changes |
|
715 |
|
|
|
267 |
|
| Net increase (decrease) in
cash and cash equivalents |
|
72,404 |
|
|
|
(25,216 |
) |
| Cash, cash equivalents, and
restricted cash at beginning of period |
|
49,794 |
|
|
|
39,284 |
|
| Cash, cash equivalents, and
restricted cash at end of period |
$ |
122,198 |
|
|
$ |
14,068 |
|
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