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State licensing delays Athenex opening

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A lack of licensing approvals from New York state is pushing back the start of manufacturing at the new Athenex plant in Dunkirk.

Jeff Yordon, Athenex chief operating officer, told investor analysts during a recent conference call that the Dunkirk plant is expected to play a key role in the Athenex Pharmaceutical Division, which markets 33 products, and Athenex Pharma Solution, which markets five products.

“Construction of our facility in Dunkirk, New York, is essentially complete,” Yordon said. “We have now completely installed the Class 2 vault that will eventually allow us to manufacture narcotics. Two large lyophilizers have been delivered in the facility, and we expect the isolator vial filling line to be delivered in February of 2022. We have built eight dedicated days for the expanded 503B business. We had originally planned to commence manufacturing there in (the fourth quarter of) 2021. However, there were some delays in securing state licenses. We are now actively going through the licensing process in New York and then with the seven largest states. Therefore, it’s likely going to be well into 2022 before we can fully take advantage of this new capacity. The revenues at EPS remain robust, and we are selling essentially every unit we can manufacture at attractive margins.”

The company reported a loss of $36.1 million in its third quarter with revenues of $32.3 million. Full-year product sales are expected to decline between 6% and 12% year-over-year. As of September 30, 2021, Athenex had cash and cash equivalents of $73.6 million, restricted cash of $16.5 million and short-term investments of $14.9 million for a total of $105 million.

That has led to Athenex officials looking for ways to extend their cash runway beyond the fourth quarter of 2022 while trying at the same time to open its Dunkirk manufacturing facility that could help the company bring in more revenue. The company started cutting costs earlier this year after federal approvals delayed bringing oral paclitaxel, one of Athenex’s key new products, to market.

“Our current projected cash run-rate is through fourth quarter 2022,” Lau said. “We will look for additional measures to further extend the runway. We will continue considering very carefully our priorities and overall strategy as well as how to optimize the use of our resources while pursuing initiatives to unlock value for the long-term. We do not believe the full value of our assets is appreciated by the marketplace. This includes the oncology-focused small molecule Orascovery platform, our cell therapy business, the growing royalty and milestone stream we are generating from Klisyri, and our specialty pharma business, which includes significant property, plant and equipment assets. Our mission continues to be a biotech focused company working to serve patients in the health care community. We remain focused on advancing the portions of our pipeline that we believe could transform standard of care and will continue to explore options to increase the overall value of our business.”

Third-quarter revenues were $32.3 million. Steve Adams, Athenex chief accounting officer, told analysts operating expenses for the third quarter of 2021 were 3% higher than they were in 2020, totaling $22.8 million. Part of the reason for the higher operating costs was associated with getting the Dunkirk plant up and running.

“This was primarily due to increases in operating costs, including insurance, IT costs, professional fees, compensation-related costs and site preparation costs relating to the manufacturing facility in Dunkirk, New York, as well as the change in fair value of contingent consideration,” Adams said.

One of the casualties of the company’s cost-cutting is further efforts to gain Food and Drug Administration approval for oral paclitaxel. In February, the FDA wrote in a complete response letter that it had concerns over the safety of oral paclitaxel, a breast cancer treatment that has shown promising effectiveness and clinical revelance when used in combination with encequidar. The FDA letter sent Athenex’s stock prices plummeting and prompted Athenex officials to have a follow-up meeting in October with the FDA to see if the government’s concerns could be addressed.

They could, at least, not without a lengthy and costly new trial.

“After careful consideration, we determined that another large, randomized control study for the metastatic breast cancer indication would not be an optimal use of time or resources,” said Dr. Johnson Lau, Athenex CEO. “Instead, we intend to prioritize the other ongoing studies of oral paclitaxel, which have shown encouraging results, in particular, the combination of anti-PD-1 and oral paclitaxel for patients with non-small-cell lung cancer, who had previously failed at anti-PD-1 monotherapy and the other programs in our pipeline. Ultimately, our goals are to serve patients and maximize value for our shareholders. We will however continue to explore paths to approval for oral paclitaxel in regions outside the U.S.”

One of those paths is the Innovative Licensing and Assess Pathway, a United Kingdom process that can get treatments to market faster. Lau told investor analysts that encequidar in combination with oral anti-cancer medicines have been accepted into the first stage of the program.Doing so could help the company financially while providing breast cancer patients with another alternative treatment.

“Oral paclitaxel is a breast cancer treatment which has shown promising effectiveness and clinical revelance when used in combination with encequidar,” Lau said. “When the federal Food and Drug Administration wrote in a complete response letter in February that concerns regarding safety of the drug because it could lead to low white blood cell counts in the blood as well as concerns about the way Athenex officials structured the oral paclitaxel clinical trial. The FDA letter sent Athenex’s stock prices plummeting and company officials searching for a way to get oral paclitaxel to market safely — both to help those with breast cancer and bring Athenex to profitability.”

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