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 provided a corporate and financial update for the second
quarter ended June 30, 2022.
“Our team has made significant progress advancing our new
strategy this quarter. I am proud of our operational execution in
the first half of 2022 and pleased to say we are continuing this
momentum into the second half of the year,” said Dr. Johnson Lau,
Chief Executive Officer of Athenex. “By monetizing non‑core assets,
we have paid down a significant amount of our senior secured debt
and extended our cash runway. Athenex remains focused on advancing
our NKT cell therapy platform during this transformational period
and is highly encouraged by the clinical trial data to date
demonstrating the potential of CAR‑NKT cells to offer a more
durable, safe, and effective cell therapy option for patients with
advanced solid tumors or hematological malignancies.”
Second Quarter 2022 and Recent Business
Highlights
Business Updates
- APD/APS division delivered new product launches and generated
26% growth in product revenues during the second quarter of 2022
versus the prior year
- Announced sale of revenues from U.S. and European royalty and
milestone interests in Klisyri® (tirbanibulin) for a total
transaction value of $85 million in June
- Entered into an agreement in July to sell China API Business
for approximately $19 million
- Appointed Darrel P. Cohen, MD, PhD as new Chief Medical Officer
of Cell Therapy
- Entered a clinical collaboration with Merck to support the
expansion of the Phase 1 clinical trial to evaluate Oral Paclitaxel
plus KEYTRUDA® (pembrolizumab) in patients with non-small cell lung
cancer (NSCLC)
Clinical Programs
NKT Cell Therapy
- Presented early Phase 1 ANCHOR dose escalation data for
KUR-502, an allogeneic CD19 CAR-NKT therapy at the American Society
of Transplantation and Cellular Therapy (ASTCT)/Center for
International Blood & Marrow Transplant Research (CIBMTR)
Tandem Meetings in April 2022. Data demonstrated a 60% ORR and
6-month CR rate of 40% in 5 patients from the Non-Hodgkin’s
Lymphoma (NHL) cohort, including 1 ongoing CR at 34 weeks.
Encouraging response rates were observed at low doses, including 2
durable responses in patients who failed prior autologous CAR-T
cell therapy. KUR-502 remains well-tolerated without cytokine
release syndrome (CRS) in the NHL cohort, immune effector
cell-associated neurotoxicity syndrome (ICANS), or graft versus
host disease (GvHD).
- Presented early Phase 1 GINAKIT2 dose escalation data for
KUR-501, an autologous GD2 CAR-NKT cell therapy for
relapsed/refractory high-risk neuroblastoma at the American Society
of Gene & Cell Therapy (ASGCT) annual meeting in May 2022.
Study demonstrated expansion of CAR-NKT cells in all patients and
dose response, with 2 out of 3 responses observed at the 1x108
cells/m2 dose level, including a durable complete response lasting
at least 12 months. Analysis of results found that responses
correlated with CD62L+ NKT cell expression as well as CAR‑NKT cell
area under the curve (AUC). Treatment remains well-tolerated
without any dose-limiting toxicity, no ICANS, and 1 case of Grade 2
CRS.
- Presented pre-clinical data for KUR-503, an allogeneic GPC3
CAR-NKT cell therapy, at the ASCO Annual Meeting in June 2022.
Study demonstrated CAR-NKT cells overexpressing BATF3 enhanced NKT
cell proliferation, long-term tumor control, and survival compared
to IL-15 CAR-NKT cells.
- Made the strategic decision to deprioritize development of
AX-TCRT-001 and plan to close the Phase 1 open-label study of
TCRT-ESO-A2 autologous T cells expressing TCR specific for NY-ESO-1
in patients with advanced solid tumors.
Commercial Update
Specialty Pharmaceutical Business
- Athenex Pharmaceutical Division (APD) currently markets a total
of 31 products with 57 SKUs.
- Athenex Pharma Solutions (APS) currently markets 6 products
with 16 SKUs.
Key Anticipated Milestones
- Oral Paclitaxel:
- Phase 2 data from I-SPY 2 trial evaluating Oral Paclitaxel in
combination with dostarlimab in neoadjuvant breast cancer expected
in 2H 2022
- Regulatory interactions with UK MHRA for Oral Paclitaxel in
advanced breast cancer in UK remain on track with responses to
questions expected later this quarter
- KUR-501: autologous GD2 CAR-NKT cell therapy for
relapsed/refractory high-risk neuroblastoma
- Ongoing enrollment of additional patients in single-institution
Phase 1 dose escalation GINAKIT2 study at the 2 highest dose levels
(DL5: 3x108 cells/m2; DL6: 1x109 cells/m2)
- Next data update from the ongoing GINAKIT2 study expected in
2023
- KUR-502: allogeneic CD19 CAR-NKT cell therapy for
relapsed/refractory B-cell malignancies
- Ongoing multicenter expansion of Phase 1 dose escalation ANCHOR
study
- Next clinical trial data update from the ongoing ANCHOR study
anticipated in 4Q 2022 or 1Q 2023
- KUR-503: allogeneic GPC3 CAR-NKT cell therapy for
hepatocellular carcinoma
- IND filing for KUR-503 in GPC3-expressing hepatocellular
carcinoma planned in 2023
Second Quarter 2022 Financial
Highlights
Revenues from product sales increased to $25.8
million for the three months ended June 30, 2022, from $20.4
million for the three months ended June 30, 2021, an increase of
$5.4 million or 26%. This increase was primarily attributable to an
increase in APD specialty product sales, which increased by $4.2
million as the result of increases in shortage product sales and
product launches during 2022.
License fees and other
revenue for the three months ended June 30, 2022, was $5.7
million, compared to $0.3 million for the same period in 2021, an
increase of $5.4 million. This increase was primarily due to the
recognition of $5.0 million of license revenue pursuant to the 2017
Almirall License Agreement upon the commencement of a line
extension trial for Klisyri in the U.S.
Cost of sales for the three months ended June
30, 2022, totaled $23.1 million, an increase of $4.0 million, or
21%, as compared to $19.1 million for the three months ended June
30, 2021. The increase was primarily due to an increase of $1.3
million in cost of APD product sales and an increase of $2.7
million in cost of 503B product sales.
R&D expenses totaled $13.1 million for the
three months ended June 30, 2022, a decrease of $7.6 million, or
37%, as compared to $20.6 million for the three months ended June
30, 2021. This decrease was primarily due to a decrease in Oral
Paclitaxel product development and medical affairs costs, costs of
clinical and regulatory operations, compensation costs, and costs
of preclinical operations.
SG&A expenses totaled $17.2 million for the
three months ended June 30, 2022, a decrease of $0.5 million, or
3%, as compared to $17.6 million for the three months ended June
30, 2021. The decrease was primarily due to a $2.5 million decrease
of costs for preparing to commercialize Oral Paclitaxel as
significant pre-launch activities occurred in 2020 and a $0.2
million decrease in compensation related costs. These decreases
were partially offset by a $2.2 million increase in operating
costs.
Interest expense totaled $4.3 million and $5.6
million, respectively, for the three months ended June 30, 2022,
and 2021. Interest expense in both periods was incurred from the
Senior Credit Agreement with Oaktree, and the decrease in 2Q 2022
was due to principal repayments made to the Agreement.
Income tax benefit for the three months ended
June 30, 2022, amounted to less than $0.1 million, compared to an
$11.0 million benefit for the same period in 2021. The income tax
benefit in 2Q21 was the result of a taxable temporary difference
due to the deferred tax liability recognized for the indefinite
lived intangible assets acquired in connection with the acquisition
of Kuur’s IPR&D. We did not record a provision for U.S. federal
income taxes for the three months ended June 30, 2022, because we
expect to generate a loss for the year ending December 31,
2022.
Net loss attributable to Athenex for the three
months ended June 30, 2022, was $32.2 million, or ($0.28) per
diluted share, as compared to a net loss of $34.3 million, or
($0.33) per diluted share, for the same period in 2021.
For further details on the Company’s financial
results, including the results for the three months ended June 30,
2022, refer to the Form 10Q filed with the SEC.
2022 Financial Guidance
Athenex continues to expect product sales from continuing
operations growth to be in the range of 20-25% over the prior year
period.
Cash Conservation Update
As of June 30, 2022, the Company had cash and cash equivalents,
restricted cash, and short-term investments of $37.1 million.
The Company is implementing cost savings programs and monetizing
non-core assets, and as the Company completes such activities, the
Company plans to extend its cash runway into next year.
Conference Call and Webcast
Information
Athenex will host a conference call and live
audio webcast today, Thursday, July 28, 2022, at 8:00 a.m. Eastern
Time to discuss the financial results and provide a business
update.
To participate in the call, dial either the domestic or
international number fifteen minutes before the conference call
begins:
Domestic: |
1-855-327-6837 |
International: |
1-631-891-4304 |
Passcode: |
10019801 |
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 under “Events and Presentations”, located
at https://ir.athenex.com/investor-calendar.
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 cell therapy drugs for the
treatment of cancer. In pursuit of this mission,
Athenex leverages years of experience in research and
development, clinical trials, regulatory standards, and
manufacturing. The Company’s current clinical pipeline is derived
mainly from the following core technologies: (1) Cell therapy,
based on NKT cells and (2) Orascovery, based on a P-glycoprotein
inhibitor. Athenex’s employees worldwide are dedicated to
improving the lives of cancer patients by creating more active,
accessible, and tolerable treatments. 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,”
“continue,” “could,” “expect,” “intend,” “may,” “plan,”
“potential,” “strategy” “will,” 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: our ability to
complete the sale of our equity interests in our China
subsidiaries; our history of operating losses and the substantial
doubt about our ability to continue as a going concern; our
strategic pivot to focus on our cell therapy platform and our plan
to dispose of non-core assets; our ability to obtain financing to
fund operations, successfully redirect our resources and reduce our
operating expenses; our ability to refinance, extend or repay our
substantial indebtedness owed to our senior secured lender; the
development stage of our primary clinical candidates, including NKT
Cell Therapy and related risks involved in drug development,
clinical trials, regulation, uncertainties around regulatory
reviews and approvals; the preclinical and clinical results for
Athenex’s drug candidates, which may not support further
development of such drug candidates; the Company’s ability to
successfully demonstrate the safety and efficacy of its drug
candidates and gain approval of its drug candidates on a timely
basis, if at all; the uncertainty of ongoing legal proceedings;
risks related to our ability to successfully integrate the business
of Kuur Therapeutics into our existing businesses, including
uncertainties associated with maintaining relationships with
customers, vendors, and employees, as well as differences in
operations, cultures, and management philosophies that may delay
successful integration and our ability to support the added cost
burden of Kuur’s business; risks related to counterparty
performance, including our reliance on third parties for success in
certain areas of Athenex’s business; risks and uncertainties
inherent in litigation, including purported stockholder class
actions; the impact of the COVID-19 pandemic and other
macroeconomic factors, such as the war in Ukraine, and their
ongoing impact on our operations, supply chain, cash flow, and
financial condition; competition; intellectual property risks;
risks relating to doing business internationally and in China; the
risk of development, operational delays, production slowdowns or
stoppages or other interruptions at our manufacturing facility as
well as our ability to find alternative sources of supply to meet
our obligations and requirements; the risk that our common stock
will be delisted from the Nasdaq Global Market if we are unable to
regain compliance with its continued listing standards, 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.
Athenex Contacts
Investor Relations
Daniel Lang, MD Athenex, Inc.
E-mail: danlang@athenex.com
Caileigh Dougherty Athenex, Inc. E-mail:
cdougherty@athenex.com
ATHENEX, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In
thousands)(Unaudited)
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
Selected Balance sheet data: |
|
|
|
Cash, cash
equivalents, and restricted cash |
$ |
35,964 |
|
$ |
51,702 |
|
Short-term
investments |
|
1,189 |
|
|
10,207 |
|
Working
capital(1) |
|
27,575 |
|
|
37,349 |
|
Total assets
attibutable to discontinued operations |
|
26,542 |
|
|
63,210 |
|
Total assets |
|
221,887 |
|
|
267,448 |
|
Long-term debt |
|
51,939 |
|
|
148,507 |
|
Royalty financing
liability |
|
75,006 |
|
|
— |
|
Total liabilities
attibutable to discontinued operations |
|
11,164 |
|
|
17,205 |
|
Total
liabilities |
|
227,360 |
|
|
232,996 |
|
Non-controlling
interests |
|
(17,408 |
) |
|
(16,679 |
) |
Total stockholders'
(deficit) equity |
|
(5,473 |
) |
|
34,452 |
|
|
|
|
(1)working capital: total current assets less total current
liabilities |
ATHENEX, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS(In
thousands)(Unaudited)
|
Three Months ended June 30, |
|
Six Months ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
Revenue |
|
|
|
|
Product sales, net |
$ |
25,786 |
|
$ |
20,394 |
|
54,154 |
|
38,881 |
|
License and other revenue |
|
5,730 |
|
|
304 |
|
6,504 |
|
20,969 |
|
Total revenue |
|
31,516 |
|
|
20,698 |
|
60,658 |
|
59,850 |
|
Cost of sales |
|
(23,092 |
) |
|
(19,117 |
) |
(45,613 |
) |
(34,158 |
) |
Gross profit |
|
8,424 |
|
|
1,581 |
|
15,045 |
|
25,692 |
|
Research and development
expenses |
|
(13,094 |
) |
|
(20,646 |
) |
(27,179 |
) |
(42,390 |
) |
Selling, general, and
administrative expenses |
|
(17,172 |
) |
|
(17,641 |
) |
(30,979 |
) |
(36,840 |
) |
Interest income |
|
46 |
|
|
32 |
|
122 |
|
61 |
|
Interest expense |
|
(4,307 |
) |
|
(5,608 |
) |
(8,820 |
) |
(10,538 |
) |
Gain (loss) on partial
extinguishment of debt |
|
2,051 |
|
|
— |
|
(1,450 |
) |
— |
|
Income tax benefit (expense) |
|
19 |
|
|
11,035 |
|
(8 |
) |
10,881 |
|
Net loss from continuing
operations |
|
(24,033 |
) |
|
(31,247 |
) |
(53,269 |
) |
(53,134 |
) |
Gain (loss) from discontinued
operations |
|
(8,341 |
) |
|
(3,368 |
) |
2,963 |
|
(7,084 |
) |
Net loss |
|
(32,374 |
) |
|
(34,615 |
) |
(50,306 |
) |
(60,218 |
) |
Less: net loss attributable to
non-controlling interests |
|
(217 |
) |
|
(341 |
) |
(729 |
) |
(894 |
) |
Net loss attributable to Athenex,
Inc. |
|
(32,157 |
) |
|
(34,274 |
) |
(49,577 |
) |
(59,324 |
) |
Net loss per share attributable
to Athenex, Inc. common stockholders, basic and diluted |
|
(0.28 |
) |
|
(0.33 |
) |
(0.44 |
) |
(0.60 |
) |
Weighted-average shares used in
computing net loss per share attributable to Athenex, Inc. common
stockholders, basic and diluted |
|
113,006,158 |
|
|
103,370,268 |
|
111,762,029 |
|
98,427,561 |
|
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