UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-38112
ATHENEX, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware |
43-1985966 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
|
|
1001 Main Street, Suite 600 Buffalo, NY |
14203 |
(Address of principal executive offices) |
(Zip Code) |
(716) 427-2950
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
Common Stock, par value $0.001 per share |
|
ATNX |
|
The Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
|
☐ |
|
Accelerated filer |
|
☒ |
|
|
|
|
|
|
|
Non-accelerated filer |
|
☐ |
|
Smaller reporting company |
|
☒ |
|
|
|
|
|
|
|
Emerging growth company |
|
☐ |
|
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 22, 2022, the registrant had 121,608,388 shares of common stock, $0.001 par value per share, outstanding.
Table of Contents
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Page |
PART I. |
|
|
1 |
|
Item 1. |
|
|
1 |
|
|
|
|
1 |
|
|
|
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) |
|
2 |
|
|
Condensed Consolidated Statements of Stockholders’ Deficit (Unaudited) |
|
3 |
|
|
|
5 |
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited) |
|
6 |
Item 2. |
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
32 |
Item 3. |
|
|
50 |
|
Item 4. |
|
|
51 |
|
PART II. |
|
|
52 |
|
Item 1. |
|
|
52 |
|
Item 1A. |
|
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52 |
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Item 2. |
|
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53 |
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Item 3. |
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53 |
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Item 4. |
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54 |
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Item 5. |
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54 |
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Item 6. |
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54 |
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56 |
|||
i
PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
ATHENEX, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
(In thousands, except share and per share data)
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2022 |
|
|
2021 |
|
||
Assets |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
22,139 |
|
|
$ |
35,202 |
|
Restricted cash |
|
|
13,825 |
|
|
|
16,500 |
|
Short-term investments |
|
|
1,189 |
|
|
|
10,207 |
|
Accounts receivable, net of chargebacks and other deductions of $26,662 and |
|
|
33,824 |
|
|
|
26,286 |
|
Inventories |
|
|
37,851 |
|
|
|
27,049 |
|
Prepaid expenses and other current assets |
|
|
3,975 |
|
|
|
5,321 |
|
Discontinued operations, current portion |
|
|
4,943 |
|
|
|
12,831 |
|
Total current assets |
|
|
117,746 |
|
|
|
133,396 |
|
Property and equipment, net |
|
|
4,194 |
|
|
|
5,181 |
|
Intangible assets, net |
|
|
72,472 |
|
|
|
71,896 |
|
Operating lease right-of-use assets, net |
|
|
4,885 |
|
|
|
5,509 |
|
Other assets |
|
|
991 |
|
|
|
1,087 |
|
Discontinued operations, non-current portion |
|
|
21,599 |
|
|
|
50,379 |
|
Total assets |
|
$ |
221,887 |
|
|
$ |
267,448 |
|
Liabilities and stockholders' equity |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
21,397 |
|
|
$ |
14,519 |
|
Accrued expenses |
|
|
39,285 |
|
|
|
23,892 |
|
Current portion of operating lease liabilities |
|
|
2,077 |
|
|
|
2,393 |
|
Current portion of long-term debt and finance lease obligations |
|
|
23,738 |
|
|
|
46,096 |
|
Discontinued operations, current portion |
|
|
3,674 |
|
|
|
9,147 |
|
Total current liabilities |
|
|
90,171 |
|
|
|
96,047 |
|
Long-term liabilities: |
|
|
|
|
|
|
||
Long-term operating lease liabilities |
|
|
3,898 |
|
|
|
4,411 |
|
Long-term debt and finance lease obligations |
|
|
22,226 |
|
|
|
95,607 |
|
Royalty financing liability |
|
|
75,006 |
|
|
|
— |
|
Deferred tax liabilities |
|
|
1,751 |
|
|
|
1,751 |
|
Contingent consideration |
|
|
24,129 |
|
|
|
24,076 |
|
Other long-term liabilities |
|
|
2,689 |
|
|
|
3,046 |
|
Discontinued operations, non-current portion |
|
|
7,490 |
|
|
|
8,058 |
|
Total liabilities |
|
|
227,360 |
|
|
|
232,996 |
|
|
|
|
|
|
|
|||
Stockholders' equity: |
|
|
|
|
|
|
||
Common stock, par value $0.001 per share, 250,000,000 shares authorized at June 30, |
|
|
119 |
|
|
|
111 |
|
Additional paid-in capital |
|
|
980,819 |
|
|
|
972,404 |
|
Accumulated other comprehensive income (loss) |
|
|
1,471 |
|
|
|
(487 |
) |
Accumulated deficit |
|
|
(962,989 |
) |
|
|
(913,412 |
) |
Less: treasury stock, at cost; 1,672,920 shares at June 30, 2022 and |
|
|
(7,485 |
) |
|
|
(7,485 |
) |
Total Athenex, Inc. stockholders' equity |
|
|
11,935 |
|
|
|
51,131 |
|
Non-controlling interests |
|
|
(17,408 |
) |
|
|
(16,679 |
) |
Total stockholders' (deficit) equity |
|
|
(5,473 |
) |
|
|
34,452 |
|
Total liabilities and stockholders' (deficit) equity |
|
$ |
221,887 |
|
|
$ |
267,448 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
ATHENEX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
(In thousands, except share and per share data)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product sales, net |
|
$ |
25,786 |
|
|
$ |
20,394 |
|
|
$ |
54,154 |
|
|
$ |
38,881 |
|
License and other revenue |
|
|
5,730 |
|
|
|
304 |
|
|
|
6,504 |
|
|
|
20,969 |
|
Total revenue |
|
|
31,516 |
|
|
|
20,698 |
|
|
|
60,658 |
|
|
|
59,850 |
|
Cost of sales |
|
|
23,092 |
|
|
|
19,117 |
|
|
|
45,613 |
|
|
|
34,158 |
|
Gross Profit |
|
|
8,424 |
|
|
|
1,581 |
|
|
|
15,045 |
|
|
|
25,692 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development expenses |
|
|
13,094 |
|
|
|
20,646 |
|
|
|
27,179 |
|
|
|
42,390 |
|
Selling, general, and administrative expenses |
|
|
17,172 |
|
|
|
17,641 |
|
|
|
30,979 |
|
|
|
36,840 |
|
Total operating expenses |
|
|
30,266 |
|
|
|
38,287 |
|
|
|
58,158 |
|
|
|
79,230 |
|
Operating loss |
|
|
(21,842 |
) |
|
|
(36,706 |
) |
|
|
(43,113 |
) |
|
|
(53,538 |
) |
Interest income |
|
|
46 |
|
|
|
32 |
|
|
|
122 |
|
|
|
61 |
|
Interest expense |
|
|
4,307 |
|
|
|
5,608 |
|
|
|
8,820 |
|
|
|
10,538 |
|
(Gain) loss on partial extinguishment of debt |
|
|
(2,051 |
) |
|
|
— |
|
|
|
1,450 |
|
|
|
— |
|
Loss before income tax expense |
|
|
(24,052 |
) |
|
|
(42,282 |
) |
|
|
(53,261 |
) |
|
|
(64,015 |
) |
Income tax expense (benefit) |
|
|
(19 |
) |
|
|
(11,035 |
) |
|
|
8 |
|
|
|
(10,881 |
) |
Net loss from continuing operations |
|
|
(24,033 |
) |
|
|
(31,247 |
) |
|
|
(53,269 |
) |
|
|
(53,134 |
) |
Loss (gain) from discontinued operations (Note 4) |
|
|
8,341 |
|
|
|
3,368 |
|
|
|
(2,963 |
) |
|
|
7,084 |
|
Net loss |
|
|
(32,374 |
) |
|
|
(34,615 |
) |
|
|
(50,306 |
) |
|
|
(60,218 |
) |
Less: net loss attributable to non-controlling interests |
|
|
(217 |
) |
|
|
(341 |
) |
|
|
(729 |
) |
|
|
(894 |
) |
Net loss attributable to Athenex, Inc. |
|
$ |
(32,157 |
) |
|
$ |
(34,274 |
) |
|
$ |
(49,577 |
) |
|
$ |
(59,324 |
) |
Unrealized gain (loss) on investment, net of income taxes |
|
|
443 |
|
|
|
(19 |
) |
|
|
470 |
|
|
|
(3 |
) |
Foreign currency translation adjustment, net of income taxes |
|
|
953 |
|
|
|
(263 |
) |
|
|
1,488 |
|
|
|
14 |
|
Comprehensive loss |
|
$ |
(30,761 |
) |
|
$ |
(34,556 |
) |
|
$ |
(47,619 |
) |
|
$ |
(59,313 |
) |
Basic and diluted loss per Athenex, Inc. common share (Note 15): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss from continuing operations |
|
$ |
(0.21 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.47 |
) |
|
$ |
(0.53 |
) |
Net (loss) gain from discontinued operations |
|
|
(0.07 |
) |
|
|
(0.03 |
) |
|
|
0.03 |
|
|
|
(0.07 |
) |
Net loss per share attributable to Athenex, Inc. common |
|
$ |
(0.28 |
) |
|
$ |
(0.33 |
) |
|
$ |
(0.44 |
) |
|
$ |
(0.60 |
) |
Weighted-average shares used in computing net loss per share |
|
|
113,006,158 |
|
|
|
103,370,268 |
|
|
|
111,762,029 |
|
|
|
98,427,561 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
ATHENEX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Deficit
(unaudited)
(In thousands, except share data)
|
|
Common Stock |
|
|
Additional |
|
|
|
|
|
Accumulated |
|
|
Treasury Stock |
|
|
Total |
|
|
Non- |
|
|
Total |
|
||||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
paid-in |
|
|
Accumulated |
|
|
comprehensive |
|
|
Shares |
|
|
Amount |
|
|
stockholders' |
|
|
controlling |
|
|
stockholders' |
|
||||||||||
Balance at January 1, 2021 |
|
|
95,066,195 |
|
|
$ |
95 |
|
|
$ |
901,864 |
|
|
$ |
(713,644 |
) |
|
$ |
(1,134 |
) |
|
|
(1,672,920 |
) |
|
$ |
(7,406 |
) |
|
$ |
179,775 |
|
|
$ |
(14,427 |
) |
|
$ |
165,348 |
|
Stock-based compensation cost |
|
|
— |
|
|
|
— |
|
|
|
2,205 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,205 |
|
|
|
— |
|
|
|
2,205 |
|
Restricted stock expense |
|
|
— |
|
|
|
— |
|
|
|
29 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
29 |
|
|
|
— |
|
|
|
29 |
|
Stock options exercised |
|
|
119,425 |
|
|
|
— |
|
|
|
852 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
852 |
|
|
|
— |
|
|
|
852 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(25,050 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(25,050 |
) |
|
|
(553 |
) |
|
|
(25,603 |
) |
Other comprehensive income, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
293 |
|
|
|
— |
|
|
|
— |
|
|
|
293 |
|
|
|
— |
|
|
|
293 |
|
Balance at March 31, 2021 (unaudited) |
|
|
95,185,620 |
|
|
|
95 |
|
|
|
904,950 |
|
|
|
(738,694 |
) |
|
|
(841 |
) |
|
|
(1,672,920 |
) |
|
|
(7,406 |
) |
|
|
158,104 |
|
|
|
(14,980 |
) |
|
|
143,124 |
|
Sale of common stock |
|
|
33,373 |
|
|
|
— |
|
|
|
133 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
133 |
|
|
|
— |
|
|
|
133 |
|
Issuance of common stock in connection with acquisition of Kuur and settlement of transaction incentive liability assumed |
|
|
15,601,667 |
|
|
|
16 |
|
|
|
58,412 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
58,428 |
|
|
|
— |
|
|
|
58,428 |
|
Stock-based compensation cost |
|
|
— |
|
|
|
— |
|
|
|
2,387 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,387 |
|
|
|
— |
|
|
|
2,387 |
|
Restricted stock expense |
|
|
— |
|
|
|
— |
|
|
|
57 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
57 |
|
|
|
— |
|
|
|
57 |
|
Stock options exercised |
|
|
160,000 |
|
|
|
— |
|
|
|
727 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
727 |
|
|
|
— |
|
|
|
727 |
|
Treasury stock repurchase |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(79 |
) |
|
|
(79 |
) |
|
|
— |
|
|
|
(79 |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(34,274 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(34,274 |
) |
|
|
(341 |
) |
|
|
(34,615 |
) |
Other comprehensive loss, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(282 |
) |
|
|
— |
|
|
|
— |
|
|
|
(282 |
) |
|
|
— |
|
|
|
(282 |
) |
Balance at June 30, 2021 (unaudited) |
|
|
110,980,660 |
|
|
$ |
111 |
|
|
$ |
966,666 |
|
|
$ |
(772,968 |
) |
|
$ |
(1,123 |
) |
|
|
(1,672,920 |
) |
|
$ |
(7,485 |
) |
|
$ |
185,201 |
|
|
$ |
(15,321 |
) |
|
$ |
169,880 |
|
|
|
Common Stock |
|
|
Additional |
|
|
|
|
|
Accumulated |
|
|
Treasury Stock |
|
|
Total |
|
|
Non- |
|
|
Total |
|
||||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
paid-in |
|
|
Accumulated |
|
|
comprehensive |
|
|
Shares |
|
|
Amount |
|
|
stockholders' |
|
|
controlling |
|
|
stockholders' |
|
||||||||||
Balance at January 1, 2022 |
|
|
111,802,968 |
|
|
$ |
111 |
|
|
$ |
972,404 |
|
|
$ |
(913,412 |
) |
|
$ |
(487 |
) |
|
|
(1,672,920 |
) |
|
$ |
(7,485 |
) |
|
$ |
51,131 |
|
|
$ |
(16,679 |
) |
|
$ |
34,452 |
|
Sale of common stock through ATM, net of costs of $52 |
|
|
1,646,026 |
|
|
|
2 |
|
|
|
1,693 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,695 |
|
|
|
— |
|
|
|
1,695 |
|
Stock-based compensation cost |
|
|
— |
|
|
|
— |
|
|
|
1,623 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,623 |
|
|
|
— |
|
|
|
1,623 |
|
Restricted stock expense |
|
|
— |
|
|
|
— |
|
|
|
251 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
251 |
|
|
|
— |
|
|
|
251 |
|
Issuance of warrant |
|
|
— |
|
|
|
— |
|
|
|
148 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
148 |
|
|
|
— |
|
|
|
148 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(17,420 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(17,420 |
) |
|
|
(512 |
) |
|
|
(17,932 |
) |
Other comprehensive income, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
562 |
|
|
|
— |
|
|
|
— |
|
|
|
562 |
|
|
|
— |
|
|
|
562 |
|
Balance at March 31, 2022 (unaudited) |
|
|
113,448,994 |
|
|
|
113 |
|
|
|
976,119 |
|
|
|
(930,832 |
) |
|
|
75 |
|
|
|
(1,672,920 |
) |
|
|
(7,485 |
) |
|
|
37,990 |
|
|
|
(17,191 |
) |
|
|
20,799 |
|
Sale of common stock through ATM, net of costs of $86 |
|
|
5,501,866 |
|
|
|
5 |
|
|
|
2,775 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|||||||||||