On March 16, 2022 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 a corporate and financial update for the fourth quarter and full year ended December 31, 2021 (Press release, Athenex, MAR 16, 2022, View Source [SID1234610163]).
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"We are pleased to announce our new vision for the future of Athenex, by deploying our resources and harnessing our expertise toward the advancement of our promising cell therapy programs. The encouraging data that we have generated so far, along with our belief that cell therapy is driving the next major innovation cycle in cancer treatment, give us confidence in our new strategy," said Johnson Lau, Chief Executive Officer of Athenex. "We are taking action to swiftly redirect our resources and have begun executing on cost savings measures to right-size the company and support our transformation to a lean, focused cell therapy company."
Corporate Developments
Key Program and Business Updates
Focus R&D resources on developing cell therapy programs
Discontinue oral discovery program apart from oral paclitaxel
Reducing operating expenses: With the objective of extending its cash runway, the Company is implementing cost cutting initiatives and workforce reduction to lower operating expenses by over 50%
Plan to monetize non-core assets consistent with new focus and strategy of company
Key Anticipated Milestones
Update on ANCHOR data previously presented at ASH (Free ASH Whitepaper) in 2021 at ASTCT on April 23-26, 2022
Update from KUR-501, our autologous program in pediatric neuroblastoma at the American Society of Gene & Cell Therapy (ASGCT) (Free ASGCT Whitepaper) annual meeting on May 16-19, 2022
Preclinical data presentation of allogeneic GPC3 CAR-NKT cell program in liver cancer at ASCO (Free ASCO Whitepaper) on June 3-7, 2022
Expand CD19 CAR-NKT ANCHOR study to a multi-center study under the newly allowed IND
Data update from KUR-502 at American Society of Hematology (ASH) (Free ASH Whitepaper) on December 10-13, 2022
Potential regulatory update from MHRA for Oral Paclitaxel in metastatic breast cancer (mBC) in UK
Data from I-SPY 2 trial of Oral Paclitaxel in combination with dostarlimab in neoadjuvant breast cancer expected in 2H22
IND filing for KUR-503, our allogeneic CAR-NKT program in liver cancer in 1H23
Fourth Quarter 2021 and Recent Business Highlights
Clinical Programs
Cell Therapy
Observed ORR of 80% with 3 CRs and 1 PR out of 5 evaluable patients in data presented from Phase 1 ANCHOR trial of KUR-502 in relapsed/refractory CD19-positive leukemia and lymphoma at the American Society of Hematology (ASH) (Free ASH Whitepaper) Meeting in December.
Announced agreement with the National Cancer Institute (NCI) to license TCRs targeting KRAS, TP53, and EGFR to combine with our allogeneic platform for application in solid tumors
Received IND clearance from the FDA to expand Phase 1 ANCHOR study of KUR-502 to up to 12 clinical sites
Orascovery
Initiated the expansion portion of Phase 1/2 trial of Oral Paclitaxel in combination with pembrolizumab in (Non-small Cell Lung Cancer) NSCLC
Commercial Update
Klisyri (tirbanibulin)
Commercial Partner Almirall reported 3% market share the U.S. and expects gains to continue
Over 2,000 HCPs have prescribed Klisyri since its launch, and it has access to over 70 million covered lives within the commercial space
Almirall expects Medicare Part D coverage in 2022
Specialty Pharmaceutical Business
Athenex Pharmaceutical Division (APD) currently markets a total of 29 products with 54 SKUs.
Athenex Pharma Solutions (APS) currently markets 5 products with 16 SKUs
Fourth Quarter and Full Year 2021 Financial Highlights
Revenues from product sales increased to $23.5 million for the three months ended December 31, 2021, from $21.8 million for the three months ended December 31, 2020, an increase of $1.7 million or 8%. Product sales for the full year 2021 were $92.3 million, down from $105.3 million in 2020, which represents a 12% decrease. This decrease was primarily attributable to non-recurring COVID-related sales in 2020 and international supply chain disruptions caused by COVID-19.
License fees and other revenue for three months and year ended December 31, 2021 were $1.5 million and $27.9 million, respectively, compared to $28.0 thousand and $39.1 million, respectively, for the same periods in 2020.
Cost of sales for the three months ended December 31, 2021 totaled $20.7 million, an increase of $2.4 million, or 13%, as compared to $18.3 million for the three months ended December 31, 2020. Cost of sales totaled $82.4 million for the full year in 2021, a decrease of 14% as compared to $95.4 million for the full year in 2020. The decrease in our cost of specialty product sales was in-line with the decrease in revenue partially offset by corresponding increases in 503B, Contract Manufacturing, and API product sales.
R&D expenses totaled $18.3 million for the three months ended December 31, 2021, in-line with expenses for the three months ended December 31, 2020. R&D expenses totaled $80.2 million for the full year in 2021, an increase of 6% as compared to $75.9 million for the full year in 2020. This increase is primarily due to an increase in costs related to Oral Paclitaxel, drug licensing costs, and cell therapy costs.
SG&A expenses totaled $13.4 million for the three months ended December 31, 2021, a decrease of 57% as compared to $31.4 million for the three months ended December 31, 2020. SG&A expenses totaled $72.6 million for the full year in 2021, a decrease of 22%, as compared to $92.9 million for the full year in 2020. This was primarily due to a $24.8 million decrease of costs for preparing to commercialize Oral Paclitaxel as significant pre-launch activities occurred in 2020 and slowed upon receipt of the Complete Response Letter in February 2021, offset by increased operating costs, professional fees and compensation expense.
The Company recorded impairment of $69.4 million, including goodwill impairment of $67.7 million, during the year ended December 31, 2021, based on the results of a quantitative goodwill impairment test for our reporting units.
Interest expense totaled $5.1 million and $4.4 million for the three months ended December 31, 2021 and 2020, respectively. Interest expense for the year ended December 31, 2021 totaled $20.7 million, an increase of $9.5 million, as compared to $11.2 million for the year ended December 31, 2020, primarily due to increased borrowings. Interest expense in the current period was incurred from the Senior Credit Agreement with Oaktree, while interest expense in the prior period was primarily incurred from debt under a former credit agreement with Perceptive Advisors LLC and its affiliates.
Income tax benefit (expense) for the three months ended December 31, 2021 amounted to ($15.0) thousand, compared to income tax expense of ($8.0) thousand for the same period in 2020. Income tax benefit totaled $10.6 million and income tax expense totaled ($4.1) million for the full year in 2021 and 2020, respectively. The income tax benefit in the current year is primarily the result of 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 in-process research and development. This taxable temporary difference is considered a source of taxable income to support the realization of deferred tax assets from the acquirer which resulted in a reversal of our valuation allowance. The income tax expense in the prior year was primarily attributable to foreign income tax withholdings on our revenue earned under our out-license arrangements.
Net loss attributable to Athenex for the three months and year ended December 31, 2021 were $104.4 million and $199.8 million, respectively, or ($0.95) and ($1.92) per diluted share, respectively, as compared to a net loss of $49.5 million and $146.2 million, or ($0.53) and ($1.72) per diluted share, for the same periods in 2020.
For further details on the Company’s financial results, including the results for the full year ended December 31, 2021, refer to the Form 10K filed with the SEC.
2022 Financial Guidance
Athenex’s product sales in 2021 amounted to $92.3 million, which represents 9% growth over the prior-year period, excluding one-time international sales of $21.0 million relating to the COVID pandemic. The Company expects 2022 year-over-year product sales growth to be in the range of 15-20%. While the Company does not give quarterly guidance, product sales are expected to increase throughout the year, as new products are launched.
Cash Conservation Update
As of December 31, 2021, the company had cash and cash equivalents of $35.2 million, restricted cash of $16.5 million, and short-term investments of $10.2 million, for a total of $61.9 million. The Company is implementing cost saving programs and monetizing non-core assets, resulting in plans to extend cash runway in 2022.
Conference Call and Webcast Information
Athenex will host a conference call and live audio webcast today, Wednesday, March 16, 2022, at 4:30 p.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:
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 View Source