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 third quarter of 2019.
“We continue to make strong progress across the board, bringing
us closer to our goal of becoming a fully integrated global pharma
company,” stated Dr. Johnson Lau, Chief Executive Officer and
Chairman of Athenex. “We have several major catalysts
upcoming, including two anticipated NDA submissions. We are also
scheduled to deliver an oral presentation to discuss the Phase III
data for Oral Paclitaxel in metastatic breast cancer at the San
Antonio Breast Cancer Symposium in December. We have been strategic
in building out and integrating our clinical and manufacturing
operations in order to maximize the commercial opportunities of our
rapidly advancing pipeline. We believe we are in a strong position
to develop multiple, potentially successful therapies in the
future.”
Mr. Jeffrey Yordon, Chief Operating Officer of Athenex,
commented, “We are continually optimizing our commercial
infrastructure, developing the market, and building awareness of
our Athenex Oncology brand in anticipation of commercial launch of
Oral Paclitaxel. We have finalized our staffing and organizational
plan, and intend to make additional key hires next year, including
medical science liaisons and regional sales leaders, with the full
sales team expected to come on board in the months leading up to
potential approval. In addition to late-stage pipeline progress, we
once again achieved strong revenue growth for our existing
commercial business. We plan to continue launching additional
products in the remainder of 2019 and into next year.”
Third Quarter 2019 and Recent Business
Highlights:
Clinical Programs:
Phase III Study of Oral Paclitaxel and Encequidar for Metastatic
Breast Cancer
- Study met primary endpoint showing statistically significant
improvement in overall response rate for oral paclitaxel and
encequidar (“Oral Paclitaxel”) compared to IV paclitaxel.
- Strong trend in progression-free survival (PFS) and overall
survival (OS) of Oral Paclitaxel compared to IV paclitaxel.
- Proportion of confirmed responders with duration of response
>150 days was 2.5 times higher for Oral Paclitaxel than IV
paclitaxel.
- Neuropathy was less frequent with Oral Paclitaxel compared to
IV paclitaxel.
- Planning to meet with the FDA and present data at SABCS.
Other Oral Paclitaxel Developments
- European Commission granted orphan designations for paclitaxel
and for encequidar for the treatment of soft tissue sarcoma.
- Presented three posters at European Society for Medical
Oncology Congress 2019 demonstrating the results from clinical
studies of Oral Paclitaxel for patients with a number of advanced
solid tumor types as well as in combination with ramucirumab, an
anti-VEGFR2 antibody therapy.
Tirbanibulin Ointment for Actinic Keratosis (AK)
- Partner Almirall announced a progress update on the program,
including AK recurrence rates in those patients who had complete
clearance at the primary evaluation endpoint on day 57 and who were
followed quarterly in the 12-month extension period.
- Athenex completed pre-NDA consultation with the FDA.
- Partner Almirall reiterated its expectations for launch of
tirbanibulin ointment in the US and Europe in Q1 2021 and Q2 2021,
respectively.
Phase I Clinical Study of KX2-361 Oral
- Partner Xiangxue Pharmaceutical initiated a Phase I study in
China. KX2-361 is the second compound derived from Athenex’s Src
kinase inhibition platform, for the treatment of glioblastoma
multiforme.
Corporate Announcements:
- Appointed Daniel Lang, MD, as President of Axis Therapeutics
Limited (Axis) and Senior Director of Corporate Development at
Athenex.
- Completed construction of new API (active pharmaceutical
ingredients) facility in Chongqing, China.
- The 440,000-square-foot facility is expected to commence
operations in the first half of 2020.
- The construction of the facility is part of Athenex’s strategy
for vertical integration to capture value across the supply
chain.
Commercial Business:
- Athenex Pharmaceutical Division (APD) currently markets a total
of 31 products with 59 SKUs.
- Athenex Pharma Solutions (APS) currently markets 5 products
with 13 SKUs.
- Goal is to launch 3-5 products in the remainder of 2019.
Financial Results for the Quarter Ended September 30,
2019Product sales for the three months ended September 30,
2019 were $19.2 million, compared with $13.3 million for the three
months ended September 30, 2018, an increase of $5.9 million or
45%. This increase was primarily attributable to an increase in
specialty product revenue and 503B revenue of $4.7 million and $2.5
million, respectively. The licensing fees and consulting revenue
recorded in the three months ended September 30, 2018 primarily
related to our tirbanibulin license agreement with Almirall.
Cost of sales for the three months ended September 30, 2019
totaled $17.1 million, an increase of $5.1 million, or 43%, as
compared to $12.0 million for the three months ended September 30,
2018. The increase in cost of sales was in line with the increase
in product sales.
Research and development expenses for the three months ended
September 30, 2019 were $19.6 million as compared to $51.2 million
for the three months ended September 30, 2018. This was
primarily due to a decrease in licensing fees, product development,
clinical operations, and R&D related compensation. The
licensing fee decrease mainly resulted from a $29.5 million
non-cash license fee related to the license of TCR-T technology in
connection with the establishment of Axis, recorded in the third
quarter of 2018 and which did not recur. The decrease in R&D
expenses was offset primarily by an increase in preclinical
development costs related to the Arginine Deprivation Therapy and
TCR-T Immunotherapy platforms.
Selling, general and administrative expenses for the three
months ended September 30, 2019 totaled $16.3 million, compared to
$11.5 million for the three months ended September 30, 2018. This
was primarily due to an increase in costs of preparing to
commercialize our proprietary drugs, if approved, and an increase
in general administrative expenses including legal fees and other
professional service fees. Administrative-related
compensation expense remained consistent with the prior year.
Net loss attributable to Athenex for the three months ended
September 30, 2019 was $34.8 million, or ($0.45) per diluted share,
compared to a net loss of $46.2 million, or ($0.70) per diluted
share, in the same period last year.
The Company received a $20 million milestone payment from
Almirall during the second quarter of 2019 in connection with the
partnership on tirbanibulin and expects this payment to be recorded
as revenue in the fourth quarter of 2019.
At September 30, 2019, the Company had cash, cash equivalents,
restricted cash and short-term investments of $129.2 million,
compared to $107.4 million at December 31, 2018. Based on the
current operating plan, we expect that our cash, cash equivalents,
and restricted cash as of September 30, 2019, together with cash to
be generated from our operating activities, will enable us to fund
our operations into the third quarter of 2020.
Financial Results for the Nine Months Ended September
30, 2019Product sales increased to $66.4 million for the
nine months ended September 30, 2019, from $37.4 million for the
nine months ended September 30, 2018.
Total revenue for the nine months ended September 30, 2019
decreased by $1.0 million, to $66.9 million, as compared to $67.8
million for the nine months ended September 30, 2018. The decrease
was primarily due to $30.0 million related to license milestone
revenue earned during 2018, and $2.3 million decrease in medical
device product sales and contract manufacturing revenue, offset by
a $15.2 million increase in specialty product sales, a $13.4
million increase in 503B sales, and a $2.7 million increase in
sales of API. Revenue from 503B and API sales is expected to
decline for the remainder of the year as we ceased sales of
vasopressin in August 2019 and suspended production of API in the
second quarter of 2019.
Cost of sales for the nine months ended September 30, 2019
totaled $53.9 million, an increase of $21.2 million, or 65%, as
compared to $32.7 million for the nine months ended September 30,
2018. This was primarily due to the increase of $16.9 million in
cost of sales from the sale of specialty products and $4.3 million
in cost of sales from 503B and API products. The increase in cost
of sales was lower than that in product sales, primarily as a
result of changes in our product portfolio.
Research and development expenses for the nine months ended
September 30, 2019 totaled $62.6 million, as compared to $99.1
million for the nine months ended September 30, 2018. This was
primarily due to a decrease in licensing fees, as well as expenses
in relation to clinical operations and product development,
partially offset by an increase in preclinical development costs
related to the Arginine Deprivation Therapy and TCR-T Immunotherapy
platforms, and an increase of R&D related compensation
expense.
Selling, general and administrative expenses for the nine months
ended September 30, 2019 totaled $48.6 million, as compared to
$37.4 million for the nine months ended September 30, 2018. This
was primarily due to an increase related to the costs of preparing
to commercialize our proprietary drugs, if approved, and an
increase in general administrative expenses including legal fees
and other professional service fees, partially offset by a decrease
of in administrative related compensation expense.
Net loss attributable to Athenex for the nine months ended
September 30, 2019 was $102.0 million, or ($1.41) per diluted
share, compared to a net loss of $90.3 million, or ($1.42) per
diluted share, in the same period last year.
Outlook and Upcoming Milestones:
- Oral presentation of Phase III results for Oral Paclitaxel at
the San Antonio Breast Cancer Symposium (December 13, 2019)
- Expect to submit an NDA for tirbanibulin ointment in actinic
keratosis (Q1 2020)
- Expect to submit an NDA for Oral Paclitaxel in metastatic
breast cancer (Q1 2020)
Raising Financial Guidance:Athenex provides
revenue guidance for product sales only. The Company is raising its
product sales guidance for the full year 2019 to an increase of 35%
to 40% year-over-year from $56.4 million in 2018, versus prior
guidance of 30% to 35% year-over-year. This new revenue guidance
has taken into account our discontinuation of vasopressin sales 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,
Thursday, November 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 13694941. The
live conference call and replay can also be accessed via audio
webcast here 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 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; Manchester, UK; Guatemala City,
Guatemala and Buenos Aires, Argentina. 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, LLCDirect: 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)
|
September 30, |
|
December 31, |
|
|
2019 |
|
|
|
2018 |
|
Balance sheet
data: |
(in thousands) |
Cash, cash equivalents, and
restricted cash |
$ |
86,905 |
|
|
$ |
49,794 |
|
Short-term investments |
|
42,273 |
|
|
|
57,629 |
|
Goodwill |
|
37,293 |
|
|
|
37,495 |
|
Working capital * |
|
123,573 |
|
|
|
119,143 |
|
Total assets |
|
287,595 |
|
|
|
231,095 |
|
Long-term debt |
|
53,639 |
|
|
|
46,764 |
|
Total liabilities |
|
152,769 |
|
|
|
102,326 |
|
Non-controlling interests |
|
(11,686 |
) |
|
|
(10,586 |
) |
Total stockholders'
equity |
$ |
134,826 |
|
|
$ |
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 September 30, |
|
Nine Months Ended September 30, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
(in thousands) |
|
(in thousands) |
|
(in thousands) |
|
(in thousands) |
Revenue |
|
|
|
|
|
|
|
|
Product sales, net |
|
$ |
19,237 |
|
|
$ |
13,309 |
|
|
$ |
66,433 |
|
|
$ |
37,385 |
|
License fees and consulting revenue |
|
|
115 |
|
|
|
5,096 |
|
|
|
325 |
|
|
|
30,278 |
|
Grant revenue |
|
|
12 |
|
|
|
23 |
|
|
|
110 |
|
|
|
166 |
|
Total revenue |
|
|
19,364 |
|
|
|
18,428 |
|
|
|
66,868 |
|
|
|
67,829 |
|
Cost of sales |
|
|
(17,071 |
) |
|
|
(11,965 |
) |
|
|
(53,915 |
) |
|
|
(32,734 |
) |
Research and development
expenses |
|
|
(19,588 |
) |
|
|
(51,202 |
) |
|
|
(62,570 |
) |
|
|
(99,077 |
) |
Selling, general, and
administrative expenses |
|
|
(16,283 |
) |
|
|
(11,493 |
) |
|
|
(48,640 |
) |
|
|
(37,390 |
) |
Interest income |
|
|
650 |
|
|
|
654 |
|
|
|
1,408 |
|
|
|
1,314 |
|
Interest expense |
|
|
(1,745 |
) |
|
|
(1,712 |
) |
|
|
(5,254 |
) |
|
|
(1,777 |
) |
Income tax (expense)
benefit |
|
|
(114 |
) |
|
|
30 |
|
|
|
(1,019 |
) |
|
|
286 |
|
Net loss |
|
|
(34,787 |
) |
|
|
(57,260 |
) |
|
|
(103,122 |
) |
|
|
(101,549 |
) |
Less: net loss attributable to
non-controlling interests |
|
|
(29 |
) |
|
|
(11,090 |
) |
|
|
(1,100 |
) |
|
|
(11,222 |
) |
Net loss attributable to
Athenex, Inc. |
|
$ |
(34,758 |
) |
|
$ |
(46,170 |
) |
|
$ |
(102,022 |
) |
|
$ |
(90,327 |
) |
Net loss per share
attributable to Athenex, Inc. common stockholders, basic and
diluted |
|
$ |
(0.45 |
) |
|
$ |
(0.70 |
) |
|
$ |
(1.41 |
) |
|
$ |
(1.42 |
) |
Weighted-average shares used
in computing net loss per share attributable to Athenex,
Inc. common stockholders, basic and diluted |
|
|
77,297,555 |
|
|
|
66,399,091 |
|
|
|
72,552,248 |
|
|
|
63,806,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ATHENEX, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of
Cash Flows(unaudited)(In
thousands)
|
Nine Months Ended September 30, |
|
|
2019 |
|
|
|
2018 |
|
|
(in thousands) |
Net cash used in operating activities |
$ |
(74,120 |
) |
|
$ |
(75,315 |
) |
Net cash provided by (used in) investing activities |
|
2,588 |
|
|
|
(81,125 |
) |
Net cash provided by financing activities |
|
108,051 |
|
|
|
168,364 |
|
Net effect of foreign exchange rate changes |
|
592 |
|
|
|
(100 |
) |
Net increase in cash and cash equivalents |
|
37,111 |
|
|
|
11,824 |
|
Cash, cash equivalents, and
restricted cash at beginning of period |
|
49,794 |
|
|
|
39,284 |
|
Cash, cash equivalents, and
restricted cash at end of period |
$ |
86,905 |
|
|
$ |
51,108 |
|
|
|
|
|
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