On May 14, 2018 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 2018 (Press release, Athenex, MAY 14, 2018, View Source;p=RssLanding&cat=news&id=2348822 [SID1234526557]).
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Dr. Johnson Lau, Athenex’s Chief Executive Officer, stated, "Our strong performance in the first quarter of 2018 reflects the continued positive momentum generated by our clinical programs and commercial efforts in our first year as a public company. In addition to the positive feedback from the FDA on the Phase III Clinical Study design for Oraxol, our rapid patient recruitment rate for our KX2-391 Ointment Phase III clinical trials is encouraging and puts us on track to announce topline data for these studies in the third quarter of 2018. Additionally, our landmark strategic partnership with Almirall and our commercial platform allowed us to generate record revenues during the first quarter, thus reinforcing our confidence in achieving our revenue guidance for 2018."
Dr. Lau continued, "In addition to these first quarter highlights, we recently announced the FDA has granted us Orphan Drug Designation for Oraxol for the treatment of angiosarcoma, a rare form of malignant blood vessel cancer. This further validates the strategy for the development of Oraxol and is a testament to the quality of our global team. As we move in to the balance of 2018, we are very excited by the multitude of growth opportunities across our platform and look forward to achieving the milestones in our business that will create value for all of our stakeholders."
First Quarter 2018 and Recent Business Highlights:
Clinical Platforms:
Orascovery:
Received Orphan Drug Designation from the US FDA for Oraxol in angiosarcoma, a rare form of malignant blood vessel cancer
Met and exceeded enrollment target for Oraxol Phase III Clinical Trial in metastatic breast cancer and announced positive feedback from the FDA regarding the trial design;
Obtained IND approval for Oraxol from the Chinese FDA to begin clinical trials in China;
Completed the first cohort of patients in its Phase 1b clinical trial of Oraxol (oral paclitaxel) plus CYRAMZA (ramucirumab) in gastric cancer patients who failed previous chemotherapies;
Src Kinase Inhibition
Completed patient enrollment for both Phase III clinical studies of KX2-391 Ointment for actinic keratosis indications months ahead of schedule; and
Phase II clinical study data for KX2-391 Ointment for the treatment of actinic keratosis was presented at the American Academy of Dermatology Annual Meeting (abstract ID 6134).
Commercial Business:
Launched 8 new products during the first quarter;
Athenex Pharmaceutical Division ("APD") currently markets 19 products in the U.S. with 32 SKUs; and
Athenex Pharma Solutions ("APS"), our 503(b) outsourced facility, currently markets 5 products with 23 SKUs.
First Quarter 2018 Financial Results:
Revenue for the three months ended March 31, 2018 was $37.8 million, an increase of $33.2 million, as compared to $4.6 million for the three months ended March 31, 2017. The increase was primarily attributable to $25.0 million in upfront license fees related to the collaboration agreement with Almirall, S.A., $8.6 million specialty products sold through our Commercial Platform, and $0.4 million in the sales of our 503B products. This was offset by decreases in other out-licensing fees of $0.5 million, contract manufacturing revenue of $0.2 million and API and medical device sales of $0.1 million.
Cost of product sales for the three months ended March 31, 2018 totaled $11.3 million, an increase of $8.5 million, as compared to $2.8 million for the three months ended March 31, 2017. This was primarily due to the increase of $7.2 million cost of product sales from the recently launched specialty products and $1.3 million cost of product sales from 503B and API products. The decrease in gross profit was primarily due to the impact of the costs incurred for the scale-up of production for new products in our 503B outsourcing facility.
Research and development expenses for the three months ended March 31, 2018 totaled $21.3 million, a decrease of $5.1 million, as compared to $26.4 million for the three months ended March 31, 2017. This was primarily due to $14.4 million decreased of drug licensing fees to Hanmi and Gland and offset by $6.9 million increase of clinical study costs for Phase III trials of Oraxol and KX-01 Ointment, $1.0 million increase of compensation expenses, $0.9 million increase of product development and supplies related to 503B products and $0.5 million increase in preclinical studies and API R&D expenses.
Selling, general and administrative expenses for the three months ended March 31, 2018, totaled $13.1 million, an increase of $3.3 million, as compared to $9.8 million for the three months ended March 31, 2017. The increase was primarily due to a $1.4 million increase of compensation expenses, $1.4 million increase of office expenses and professional fees and a $0.5 million increase of sales and marketing costs related to the launch of our proprietary products.
For the three months ended March 31, 2018, the Company incurred a net loss of $7.3 million compared to a net loss of $41.0 million a year ago.
Cash and cash equivalents and short-term investments totaled $106.5 million as of March 31, 2018, compared to $51.0 million as of December 31, 2017. This increase was due to an underwritten public offering of 4,765,000 shares of common stock in the first quarter of 2018, pursuant to which the Company raised net proceeds of $68.1 million, net of underwriting discounts, commissions and offering expenses and an upfront license fee payment of $30 million from Almirall. The Company believes that its existing cash and cash equivalents and short-term investments will be sufficient to fund current operating plans through approximately early-2019.
Outlook and Upcoming Milestones:
Clinical Platforms:
The enrollment of patients for Oraxol Phase III Clinical Trial is on target for the Company to be able to conduct a second interim analysis in the Oraxol KX-ORAX-001 Phase III clinical trial in the third quarter of 2018.
Expect topline data for Phase III KX2-391 Ointment studies to be available in the third quarter of 2018.
Commercial Business:
Full-year 2018 revenue in the range of $100 million to $125 million, inclusive of licensing-fee revenue associated with the partnership agreement with Almirall.
Corporate Updates:
Expect Dunkirk facility construction to be completed by the first quarter of 2019.
Conference Call and Webcast Information:
The Company will host a conference call and audio webcast on Monday, May 14, 2018 at 9:00 a.m. Eastern Time. To participate in the call, dial (855) 227-0567 (domestic) or (612) 979-9912 (international) fifteen minutes before the conference call begins and reference the conference passcode 9093904. A replay will be available approximately one hour after the recording through Monday, May 21, 2018 and can be accessed by dialing (855) 859-2056. The live conference call and replay can also be accessed via audio webcast at the Investor Relations section of the Company’s website, located at www.athenex.com. An archive will be available at this website until June 14, 2018.