On May 6, 2021 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 first quarter ended March 31, 2021 (Press release, Athenex, MAY 6, 2021, View Source [SID1234579376]).
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"We continue to work diligently with our advisers to analyze and respond to the complete response letter received from the FDA on oral paclitaxel plus encequidar (oral paclitaxel). We are collecting additional data and doing additional analyses in support of our application. We expect to have a type A meeting with the FDA before end of the second quarter." said Johnson Lau, CEO and Chairman of Athenex. "We remain committed to pursuing regulatory approval of oral paclitaxel and aim to bring this important product to market to benefit metastatic breast cancer patients. We hope to align with the FDA, work to resolve its concerns and reach agreement on the path forward required to obtain approval. In parallel, we continue our efforts to deepen our pipeline and are excited to add Kuur Therapeutics and its innovative allogeneic CAR-NKT technology to the Athenex platform."
First Quarter 2021 and Recent Business Highlights
Clinical Programs
Oral Paclitaxel for Metastatic Breast Cancer
Athenex received a Complete Response Letter (CRL) from the US Food & Drug Administration (FDA) for the New Drug Application (NDA) for oral paclitaxel in metastatic breast cancer on February 26, 2021.
Klisyri in actinic keratosis
Almirall, S.A. (BLM: ALM), Athenex’s U.S. partner, launched Klisyri in the U.S. on February 18, 2021, triggering a $20 million milestone payment from Almirall
In February 2021, the New England Journal of Medicine published Phase 3 trial results on the efficacy and safety of tirbanibulin ointment for the topical treatment of actinic keratosis of the face or scalp
Cell Therapy
Acquired Kuur Therapeutics (privately held), a leading developer of off-the-shelf CAR-NKT cell immunotherapies for the treatment of solid and hematological malignancies in May 2021
Athenex will pay $70 million upfront, comprised primarily of equity in Athenex common stock, to Kuur shareholders and certain of its former employees and directors
Additionally, Kuur shareholders and certain of its former employees and directors are eligible to receive up to $115 million of milestone payments, which Athenex may elect to pay in cash, additional Athenex common stock, or a combination of both
Acquisition provides an allogeneic NKT platform that can be applied to our high affinity TCR in solid tumors
High-affinity TCR-T in NY-ESO-1 to enter the clinic in a Phase 1 trial at Baylor in 1H 2021
Commercial Business
Product sales growth in the first quarter was primarily attributable to an increase in sales of 503B products
Athenex Pharmaceutical Division (APD) currently markets a total of 34 products with 61 SKUs
Athenex Pharma Solutions (APS) currently markets 6 products with 19 SKUs
Key Anticipated 2021 Milestones
Request a meeting with the FDA to discuss and align on next steps to obtain approval for oral paclitaxel in metastatic breast cancer
Begin expansion portion of the oral paclitaxel plus pembrolizumab Phase I trial into lung cancer and gastric cancer
Present oral paclitaxel plus pembrolizumab Phase I trial data at a medical conference
EMA approval of Klisyri in 2021
Present abstract on oral docetaxel in metastatic prostate cancer at ASCO (Free ASCO Whitepaper) 2021
Present abstract on oral paclitaxel plus encequidar in metastatic breast cancer at ASCO (Free ASCO Whitepaper) 2021
Expect TCR-T NY-ESO-1 IRB approval and to initiate Phase 1 trial enrollment in 1H 2021
Additional GINAKIT2 Phase I data to be presented at the American Society of Gene & Cell Therapy (ASGCT) (Free ASGCT Whitepaper) 24th Annual Meeting on May 14, 2021
Results from the I-SPY 2 trial of oral paclitaxel plus anti PD-1 expected in 2022
Clinical Data Presentations
American Society of Gene & Cell Therapy (ASGCT) (Free ASGCT Whitepaper) 2021
Natural Killer T Cells Expressing a GD2- CAR and IL-15 Are Safe and Can Induce Complete Remission in Children with Relapsed Neuroblastoma – A First-in-Human, Phase I Trial
Dr. Andrus Heczey is the principal investigator. The abstract and work were selected for presentation at this year’s Clinical Trials Spotlight Symposium at ASGCT (Free ASGCT Whitepaper) on May 14, 2021, at 11 am ET
American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) 2021
An open-label, pharmacokinetic study to determine the bioavailability, safety and tolerability of single dose oral docetaxel (Oradoxel) in metastatic prostate cancer (mPC) patients treated with IV docetaxel
Dr. Christopher Jackson is the primary author of the abstract, #5050, to be presented during the Genitourinary Cancer – Prostate, Testicular, and Penile, poster session
Confirmed tumor response by molecular subtype in patients with metastatic breast cancer: Sub-analysis from a phase 3 clinical study comparing oral paclitaxel and encequidar to IV paclitaxel
Dr. Gerardo Umanzor is the primary author of the abstract, #1073, to be presented during the Breast Cancer – Metastatic, poster session
An open-label, fixed-sequence study to evaluate the effect of encequidar (HM30181) an oral P-gp inhibitor, on the pharmacokinetics of dabigatran etexilate (a P-gp substrate) in healthy male volunteers
Dr. Christopher Jackson is the primary author of the abstract, #E15060, an online publication
The virtual scientific program of the ASCO (Free ASCO Whitepaper) will be held June 4-8, 2021
First Quarter 2021 Financial Highlights
Revenue from product sales increased to $20.4 million for the three months ended March 31, 2021, from $18.5 million for the three months ended March 31, 2020, an increase of $1.8 million or 10%. This increase was primarily attributable to an increase of $2.8 million in sales of 503B products. API product sales increased by $0.8 million, and contract manufacturing revenue from supply of Klisyri, to our partner Almirall, increased by $0.4 million due to the launch of the drug in February 2021. These increases were partially offset by a decrease of $2.3 million in APD sales.
License fees and other revenue decreased by $7.7 million, or 27%. For the three months ended March 31, 2021, we recorded $20.0 million of license revenue pursuant to the 2017 Almirall License Agreement upon the launch of Klisyri in the U.S., and $0.5 million related to the upfront fee pursuant to the Second Amendment to the 2011 PharmaEssentia License Agreement. For the three months ended March 31, 2020, we recognized $28.3 million in license revenue, net of $1.7 million value added tax ("VAT"), pursuant to the 2019 Xiangxue License Agreement.
Cost of sales for the three months ended March 31, 2021 totaled $16.4 million, a decrease of $3.2 million, or 16%, as compared to $19.6 million for the three months ended March 31, 2020. The decrease was primarily due to the royalty payment to Hanmi incurred in 2020 on the license revenue from Xiangxue. The decrease in cost of specialty product sales was in-line with the decrease in revenue.
R&D expenses for the three months ended March 31, 2021 totaled $23.1 million, an increase of $5.9 million, or 34%, as compared to $17.2 million for the three months ended March 31, 2020. This was primarily due to an increase in pre-launch product development costs, particularly in the first two months of 2021 prior to the receipt of the CRL, preclinical operations costs, drug licensing costs in relation to our specialty drug product in-licenses, and R&D related compensation expenses. The increase in these R&D expenses was partially offset by a decrease in clinical studies and patient costs on oral paclitaxel after completion of the Phase 3 studies and regulatory, API development, and 503B development costs.
SG&A expenses for the three months ended March 31, 2021, totaled $22.1 million, a decrease of $3.6 million, or 14%, as compared to $25.7 million for the three months ended March 31, 2020. This was primarily due to a decrease of $4.4 million related to the costs of preparing to commercialize oral paclitaxel as significant pre-launch activities occurred in 2020, and slowed upon receipt of the CRL in 2021. This was partially offset by an increase of $0.7 million of general and administrative costs related to increased hiring, professional fees, IT costs, and other operational costs.
Interest expense totaled $4.9 million and $1.7 million for the three months ended March 31, 2021, and 2020, respectively. Interest expense in the current period was incurred from the Senior Credit Agreement with Oaktree, while interest expense in the prior period was incurred from the debt with Perceptive.
Income tax expense for the three months ended March 31, 2021, was $0.2 million, compared to $2.9 million for the same period in 2020. The decrease was primarily attributable to foreign income tax withholdings on our revenue earned under our out-license arrangements in the prior year.
Net loss attributable to Athenex for the three months ended March 31, 2021, was $25.1 million or ($0.27) per diluted share, respectively, as compared to a net loss of $19.4 million or ($0.24) per diluted share, for the same period in 2020.
As of March 31, 2021, the Company had cash and cash equivalents of $48.0 million, restricted cash of $16.5 million, and short-term investments of $123.2 million.
Financial Guidance
In terms of product sales guidance, the Company is limiting financial guidance to only the existing product portfolio, which excludes any proprietary products, until meaningful sales data from the proprietary product, Klisyri, become available. In 2020, the Company recorded a significant amount of revenues from international customers as a result of the global pandemic. However, the Company does not see these revenues as recurring in nature. The Company continues to expand its product portfolio. The Company is affirming the guidance it provided on March 1, 2021, as it currently expects its product sales in 2021, excluding any royalties from Klisyri, to be in line with 2020 levels.
Cash Conservation Update
Given uncertainty stemming from the CRL for oral paclitaxel, the Company identified and adopted certain cash conservation measures. Considering these initial measures, and based on our current operating plan, we now expect that our cash and cash equivalents, restricted cash and short-term investments as of March 31, 2021, will enable us to meet our current operational liquidity needs and fund operations into 2H 2022.
Conference Call and Webcast Information
Athenex will host a conference call and live audio webcast today, Thursday, May 6, 2021, at 8:00 am 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: