Athenex, Inc.

Third-quarter 2022 revenue was $33.5 million versus $31.4 million in the same period of 2021. Product sales revenue increased by $5 million, or 19% year over year. R&D expense was $9.2 million, down $8.5 million or 48%, and SG&A expense was $9.4 million, down $8.7 million or 48% from last year. Net loss attributable to Athenex was $19.7 million, or $0.14 per diluted share, versus $36.1 million, or $0.33 per diluted share a year ago. Cash used in operating activities and continuing operations was $15.7 million in the quarter, down 53% year over year, and cash, cash equivalents and restricted cash were $40.4 million at September 30, 2022. Management maintained product sales growth guidance of 20% to 25% and said operating expenses are tracking toward a 50% reduction versus last year.

Johnson Lau said the company is executing a strategic transformation into a pure-play NKT cell therapy business while still monetizing non-core assets to support the balance sheet. He highlighted the $30 million equity offering, the reduction in debt from $150 million at the end of last year to $47.5 million as of September 30, and the successful NASDAQ appeal extending compliance to March 14, 2023. His tone was confident and focused on value creation, with all options on the table for assets outside NKT cell therapy.

Joe Annoni emphasized that the company is delivering on its plan to divest non-core assets and reduce operating expenses. He said the pending China API sale should bring gross proceeds of approximately $18 million over the coming months, and he reiterated debt reduction from $150 million at the end of 2021 to $47.5 million at the end of September 2022, plus $30 million from the August equity offering. He also pointed to much lower cash burn, with cash used in operating activities and continuing operations at $15.7 million in Q3 and $52.5 million for the first nine months of 2022, and said margin pressure should improve as the company reduces transfer prices and profit-sharing with newer suppliers and partners.

Analysts pressed management on what would happen with oral paclitaxel if I-SPY 2 data are positive, and whether the specialty pharma business will be sold outright. Johnson Lau said all options are open for non-core assets and that the company will consider partnerships or other ways to unlock value once I-SPY 2 data are available, while also noting specialty pharma is a healthy, growing business with significant value. On NKT cell therapy, management declined to give incremental enrollment updates but said KUR-501 is moving into dose level five and seven, KUR-502 is expanding into a multicenter ANCHOR 2 study with 8 to 10 sites over time, and interim updates for both programs are expected in the first half of 2023.