ATHENEX, INC. (ATNX) SPO
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|Company Name||ATHENEX, INC.|
|Company Address||1001 MAIN STREET
BUFFALO, NY 14203
|CEO||Johnson Y.N. Lau|
|Employees (as of 11/30/2017)||476|
|State of Inc||DE|
|Fiscal Year End||12/31|
|Exchange||NASDAQ Global Select|
|Shares Over Alloted||0|
|Shareholder Shares Offered||--|
|Lockup Period (days)||180|
|Quiet Period Expiration||3/6/2018|
We estimate that our net proceeds from the sale of shares of our common stock in this offering will be approximately $61.2 million, or $70.5 million if the underwriters fully exercise their option to purchase additional shares, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. The principal purpose of this offering is to further increase our financial flexibility. We currently expect to use the net proceeds from this offering as follows: • approximately $30.0 million for clinical development and regulatory activities for clinical products developed from our Orascovery platform; • approximately $10.0 million for clinical development and regulatory activities for clinical products developed from our Src Kinase Inhibition platform; • approximately $10.0 million for other clinical and pre-clinical research and development activities; and • the remainder for working capital, capital expenditures and general corporate purposes. We may use a portion of the net proceeds of this offering for the acquisition or licensing, as the case may be, of additional technologies, other assets or businesses, or for other strategic investments or opportunities, although we have no definitive understandings, agreements or commitments to do so as of the date hereof. Our expected use of the net proceeds from this offering is based upon our present plans and business condition. Based on those current plans and assumptions, we do not expect that the net proceeds from this offering, combined with our current operating capital, will be sufficient to enable us to complete all necessary development or commercially launch our current drug candidates. As of the date of this prospectus, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the completion of this offering or the amounts that we will actually spend on the uses set forth above. The amounts and timing of our actual use of proceeds will vary depending on numerous factors. As a result, management will retain broad discretion over the allocation of the net proceeds from this offering, and investors will be relying on the judgment of our management regarding the application of the net proceeds. Pending the use of the net proceeds of this offering, we intend to invest the net proceeds in high-quality, short-term interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.
The biopharmaceutical industry and the oncology subsector are characterized by rapid evolution of technologies, fierce competition and strong defense of intellectual property. Any product candidates that we successfully develop and commercialize will have to compete with existing therapies and new therapies that may become available in the future. While we believe that our product candidates, platforms and scientific expertise in the field of biotechnology and oncology provide us with competitive advantages, a wide variety of institutions, including large biopharmaceutical companies, specialty biotechnology companies, academic research departments and public and private research institutions, are actively developing potentially competitive products and technologies. We face substantial competition from biotechnology and biopharmaceutical companies developing oncology products. These competitors generally fall within the following categories: Oral administration: Taxol, Abraxane, Cynviloq, Camptosar, Onivyde, Taxotere and Hycamtin; Src Kinase inhibitors: Picato and Temodar. Many of our competitors, either alone or with strategic partners, have substantially greater financial, technical and human resources than we do. Accordingly, our competitors may be more successful than us in obtaining approval for treatments and achieving widespread market acceptance, rendering our treatments obsolete or non-competitive.Accelerated merger and acquisition activity in the biotechnology and biopharmaceutical industries may result in even more resources being concentrated among a smaller number of our competitors. These companies also compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical study sites and patient registration for clinical studies, acquiring technologies complementary to, or necessary for, our programs and for sales in the API business. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Our commercial opportunity could be substantially limited in the event that our competitors develop and commercialize products that are more effective, safer, less toxic, more convenient or less expensive than our comparable products. In geographies that are critical to our commercial success, competitors may also obtain regulatory approvals before us, resulting in our competitors building a strong market position in advance of our products’ entry. We believe the factors determining the success of our programs will be the efficacy, safety and convenience of our product candidates and our access to supply of API.
We are a global biopharmaceutical company dedicated to the discovery, development and commercialization of novel therapies for the treatment of cancer. Our mission is to improve the lives of cancer patients by creating more effective, safer and tolerable treatments. We have generated our
clinical product candidates through our Orascovery and Src Kinase Inhibition research platforms, which are based on our understanding of human absorption biology and novel approaches to inhibiting kinase activity, respectively. We believe that our ability to overcome the challenges of oral delivery of chemotherapy and limitations associated with IV delivery, via our P-gp inhibitor, offers significant potential benefits to patient outcomes by allowing patients to stay on therapy longer and extending the potential opportunities to combine with other agents, including targeted therapies and immunotherapies that would otherwise be too toxic in combination with IV chemotherapy. We have assembled a leadership team and have established operations in the U.S. and China across the pharmaceutical value chain to execute our mission to become a global leader in bringing innovative cancer treatments to the market and improve health outcomes. Orascovery platform Our Orascovery platform is based on the novel oral P-glycoprotein, or P-gp, pump inhibitor molecule HM30181A. The P-gp pump is a plasma membrane protein on the cells of the gut which forms a localized drug transport system and limits effective oral absorption of known and widely used P-gp substrate cancer chemotherapeutic drugs such as paclitaxel, irinotecan and docetaxel, thus restricting current usage to intravenous, or IV, administration. IV chemotherapies’ adverse events are due in part to sharp increases in the blood concentration levels of the chemotherapeutic drugs, and infusion-related reactions caused in part by dilution agents used to facilitate IV administration. Although clinical trial results with IV chemotherapy have shown that the dose-limiting side effects are associated with treatment efficacy, these adverse events have limited the duration of treatment with this route of administration. Through sequential co-administration of HM30181A and oral paclitaxel (together, Oraxol), we are able to facilitate oral absorption of paclitaxel at therapeutic blood levels by blocking the P-gp pump. We believe oral administration of paclitaxel reduces blood concentration level fluctuations and eliminates infusion-related reactions related to IV administration, improving patient tolerability and allowing for longer dosing durations to improve efficacy. We expect to conduct the second interim analysis of the Phase III trials in Oraxol in breast cancer in the middle of 2018. Further, in January 2018 we completed the first cohort of patients in our Phase 1b clinical trial in gastric cancer of Oraxol in combination with ramucirumab, which showed encouraging early results. In addition to Oraxol, we are advancing four other drug product candidates in this platform, Oratecan (HM30181A and oral irinotecan), Oradoxel (HM30181A and oral docetaxel), Oratopo (HM30181A and oral topotecan) and HM30181A and oral eribulin to target solid tumors. We expect to obtain data from the Phase 1 clinical study for Oratecan and Oradoxel in the middle of 2018 and initiate clinical trials for Oratopo in the first half of 2018. Src Kinase Inhibition platform Src Kinase, a tyrosine kinase protein involved in regulating cell growth, is strongly implicated with blocking metastasis. Defects in Src Kinase are implicated in a number of cancers, and inhibiting this protein may limit the growth or proliferation of cancerous cell types. The Src Kinase Inhibition platform refers to novel small molecule compounds that have multiple mechanisms of action, including the inhibition of the activity of Src Kinase and the inhibition of tubulin polymerization during cell division. We believe the combination of these mechanisms of action provide a broader range of anti-cancer activity as compared to either mechanism of action alone. Our key clinical product candidates in this platform are KX-01 ointment for pre-cancerous lesions and KX-02 for glioblastoma multiforme, or GBM. In December 2017, we entered into a license agreement with Almirall, S.A. and Aqua Pharmaceuticals LLC, its U.S. subsidiary, together referred to as Almirall, pursuant to which we granted to Almirall an exclusive, sublicensable license of certain of our intellectual property for the development and commercialization of topical products containing KX-01 for the treatment of AK in the United States and substantially all European countries. In addition to our existing portfolio of clinical candidates, our research and development teams are evaluating additional applications of our novel technology platforms. For example, our novel Cytochrome P450, or CYP, and P-gp dual inhibitor technology could lead to the discovery of new drug candidates. --- Commercial Platform Global Supply Chain Platform In advance of the launch of our proprietary product candidates in the U.S., our commercial team has begun to market oncology and oncology symptom-related products to fund our infrastructure build-out. We believe it is important to minimize supply chain disruptions for high potency oncology active pharmaceutical ingredients. We have thus internalized key components of the supply chain that we believe are integral to minimizing the associated risks. Our Global Supply Chain Platform manufactures active pharmaceutical ingredients, or API, for use internally in our research and development, clinical studies, and for sale to pharmaceutical customers globally. Our Global Supply Chain Platform includes Polymed Therapeutics, Inc. and Chongqing Taihao Pharmaceutical Co Ltd, collectively Polymed. Our Commercial Platform, which includes Athenex Pharmaceutical Division, or APD, and Athenex Pharma Solutions, or APS, currently markets nine API produced by our Global Supply Chain Platform in the specialty and generic market segment in the U.S., 14 products by APD, and six products subject to Section 503B of the Federal Food, Drug and Cosmetic Act, or FDCA, through our outsourcing facility. Our Commercial Platform is expected to launch an additional thirteen products in the first half of 2018, including eight products by APD and five products by APS. Our product sales of API totaled $9.2 million, $15.3 million and $10.4 million in the years ended December 31, 2015 and 2016 and the nine months ended September 30, 2017, respectively. Our specialty products, which includes medical testing kits, launched in March 2017 and sales reached a total of $9.3 million for the nine months ended September 30, 2017. Our leadership team has been carefully assembled to capture the global commercial market opportunities in novel drug development. Our executive officers are seasoned leaders with complementary skill sets across global pharmaceutical research and development, operations, supply chain and manufacturing, capital markets and mergers and acquisitions. We believe this characteristic is unique for a U.S.-based company and we believe we will continue to be able to utilize this strength to create long term value for cancer patients, our employees and our shareholders. Our team is excited about the prospects of creating new paradigms in the treatment of cancer in developed markets and also driving our product candidates to emerging markets where patient access to treatments has historically been limited. Based in Buffalo, New York, we were formed in 2003 and have been funded from inception from over $250 million in private financings, $64.2 million in our initial public offering and public-private partnerships with an estimated aggregate value of $375 million to be funded following the achievement of certain milestones. We have organized our business model into three segments: Oncology Innovation Platform, Commercial Platform and Global Supply Chain Platform—with operations in both the U.S. and China. --- We were originally formed under the laws of the state of Delaware in November 2003 under the name Kinex Pharmaceuticals, LLC. In December 2012, we converted from a limited liability company to a Delaware corporation, Kinex Pharmaceuticals, Inc. In August 2015, we amended and restated our certificate of incorporation to change our name to Athenex, Inc. Our principal executive offices are located at 1001 Main Street, Suite 600, Buffalo, NY 14203, and our telephone number is (716) 427-2950. Our website address is www.athenex.com.
|Auditor||Deloitte & Touche LLP|
|Company Counsel||Simpson Thacher & Bartlett LLP|
|Lead Underwriter||Deutsche Bank Securities Inc.|
|Lead Underwriter||RBC Capital Markets, LLC|
|Transfer Agent||Computershare Trust Company, N.A.|
|Transfer Agent||Computershare Trust Company, N.A.,|
|Underwriter||Ladenburg Thalmann & Co. Inc.|
|Underwriter||Laidlaw & Company (UK) Ltd.|
|Underwriter||Needham & Company, LLC|
|Underwriter Counsel||Latham & Watkins LLP|
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