On July 28, 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 second quarter ended June 30, 2022 (Press release, Athenex, JUL 28, 2022, View Source [SID1234617059]).
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"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) (Free ASGCT Whitepaper) 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 1×108 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 (Free ASCO Whitepaper) 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: 3×108 cells/m2; DL6: 1×109 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:
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