On May 9, 2019 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, reported its financial results and business highlights for the first quarter ended March 31, 2019 (Press release, Athenex, MAY 9, 2019, View Source [SID1234536004]).
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"In the first quarter of 2019 we continued to make progress across our all our technology platforms and business units as we execute on our corporate strategy to build a global oncology company delivering more effective, safer and tolerable treatments for cancer patients," stated Dr. Johnson Lau, Chief Executive Officer and Chairman of Athenex. "Most notably, we recently reported promising preliminary data from our ongoing pilot study of Oraxol in angiosarcoma, which included three complete responses from the first seven patients to receive at least six weeks of Oraxol monotherapy, all of whom showed visible improvements in the angiosarcoma lesions within one to two weeks. We believe the high response rate and strong safety profile further support the rationale that oral paclitaxel can potentially achieve a more desirable pharmacokinetic profile and a better clinical outcome, giving us greater confidence in our all of our Oraxol clinical programs."
Dr. Lau continued, "Having achieved target enrollment in our Phase III trial of Oraxol in metastatic breast cancer we look forward to announcing top line results in August. Preparations are underway for regulatory filings for our partnered product KX2-391 in actinic keratosis. We are also working to build out our commercial and manufacturing infrastructure and develop our corporate brand in advance of anticipated proprietary product launches. Finally, we have added to our Board of Directors with four key appointments."
"We have also strengthened our balance sheet, with a private placement equity offering, completed on May 7, 2019, in which we raised gross proceeds of $100 million. We are very grateful for the support from the three leading healthcare investment firms who participated in this transaction," concluded Dr. Lau.
First Quarter 2019 and Recent Business Highlights:
Clinical Programs:
Presented positive Phase 3 data on KX2-391 in actinic keratosis (AK) at the American Academy of Dermatology (AAD) annual meeting. Both Phase 3 studies are nearing completion of the one-year follow-up of patients who had complete responses and the final top-line data will be discussed with the FDA at an upcoming pre-NDA meeting.
Oraxol Phase III studies in metastatic breast cancer: Achieved target enrollment of more than 360 patients. Topline results are expected to be available in August 2019.
Announced Investigational New Drug (IND) allowance by China’s National Medical Products Administration (NMPA) to begin registrational related clinical studies in China of TAEST16001 injection in patients with solid tumors
TAEST16001 is a cancer immunotherapy product candidate based on Athenex’s T-cell receptor Affinity Enhanced Specific T-cell (TAEST) technology
TEAST technology is being developed by Axis Therapeutics, a joint venture between Athenex and Xiangxue Life Sciences (XLifeSc)
Reported promising clinical results from a clinical study of Oraxol in cutaneous angiosarcoma. Preliminary data show rapid, visible response to Oraxol monotherapy in the first seven subjects, including three complete responses.
Presented preclinical data on Oraxol in the treatment of angiosarcoma at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) annual meeting on April 3, 2019
Announced acceptance of four abstracts for presentation at the 2019 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting. Abstract topics include:
Oraxol program in metastatic breast cancer, including information about ongoing Phase III trial and about Phase II trial in Taiwan (two abstracts)
Preliminary results from Oratecan Phase I study
Preclinical proof of concept data on Arginine Deprivation Therapy platform
Corporate Announcements:
Appointed new members to the Board of Directors:
John Moore Vierling, MD, FACP, FAASLD, AGAF, tenured Professor of Medicine and Surgery at the Baylor College of Medicine
Stephanie Davis, Senior Client Partner at Korn Ferry
Jordan S. Kanfer, Managing Director, Convertible and Equity Research at Opti Capital Management
John Koh, an independent director of NSL Ltd.; Mapletree Industrial Trust, a Singapore listed REIT; Kris Energy; and Aurora Mobile Limited (JG)
Commercial Business:
Athenex Pharmaceutical Division ("APD") currently markets a total of 29 products with 54 SKUs
Athenex Pharma Solutions ("APS") currently markets 6 products in total with 16 SKUs
Financial Results for the First Quarter Ended March 31, 2019
Athenex is on track to achieve its revenue guidance on products sales issued in March 2019. Product sales for the three months ended March 31, 2019 were $25.2 million, compared with $12.6 million for the three months ended March 31, 2018, an increase of $12.6 million or approximately 100%. The increase was attributable to a $6.0 million increase in specialty product sales, a $5.0 million increase in 503B product sales driven significantly by Vasopressin, and a $2.1 million increase in API product sales.
Total revenue for the three months ended March 31, 2019 was $25.3 million, a decrease of $12.5 million, or 33%, as compared to $37.8 million for the three months ended March 31, 2018. The decrease was primarily due to a decrease in licensing revenue of $25.0 million. This decrease was offset by the increases in product sales described above.
Cost of sales for the three months ended March 31, 2019 totaled $19.9 million, an increase of $8.6 million, or 76%, as compared to $11.3 million for the three months ended March 31, 2018. This was primarily due to the increase of $6.2 million cost of sales from the specialty products and $2.4 million cost of sales from 503B and API products. The decrease in gross profit and gross margin was primarily due to the absence of licensing revenue in the interim period.
Research and development expenses for the three months ended March 31, 2019 were $24.5 million as compared to $21.3 million for the three months ended March 31, 2018. This was primarily due to an increase in licensing fees and preclinical development activities.
Selling, general and administrative expenses for the three months ended March 31, 2019 were $15.2 million as compared to $13.1 million for the three months ended March 31, 2018. This was primarily due to an increase of $2.6 million related to the pre-launch costs of the Company’s proprietary drugs, offset by a decrease of $0.5 million in general administrative expenses.
Net loss attributable to Athenex for the three months ended March 31, 2019 was $35.2 million, or $0.53 per diluted share, compared to a net loss of $7.3 million, or $0.12 per diluted share, in the same period last year.
At March 31, 2019, the Company had cash, cash equivalents and short-term investments aggregating $71.3 million, compared to $107.4 million at December 31, 2018. Based on the current operating plan, the Company expects that its cash, cash equivalents and short-term investments as of March 31, 2019, together with proceeds it has recently raised from the private placement and cash to be generated from operating activities, will enable it to fund its operating expenses and capital expenditure requirements through at least the next twelve months.
On May 7, 2019, the Company closed a private placement agreement 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 aggregate gross proceeds of $100 million to Athenex, before deducting offering expenses.
Outlook and Upcoming Milestones:
Presentations at the 2019 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting
Expect to file an IND for Pegtomarginase by mid-2019
Top line results from Phase 3 trial of Oraxol in metastatic breast cancer, August 2019
Expect to conduct a pre-IND meeting with the U.S. FDA for TAEST16001 injection product under the TCR-T immunotherapy program
Financial Guidance:
The company provides revenue guidance for product sales only. The revenue guidance excludes license and collaboration fees. Athenex reaffirms the product sales guidance issued in March 2019. Athenex is forecasting that product sales in 2019 will increase by between 25% and 30% year-over-year from $56.4 million in 2018.
Conference Call and Webcast Information:
The Company will host a conference call and live audio webcast today, Thursday, May 9, 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 13689379. The live conference call and replay can also be accessed via audio webcast at View Source and on the Investor Relations section of the Company’s website, located at View Source, under "Events and Presentations."