Over the last week, PERCEPTIVE ADVISORS LLC ran by Joseph Edelman, has been loading up on shares. Joseph Edelman is CEO and portfolio manager of Perceptive Advisors, a New York-based hedge fund firm with $5 billion under management. Edelman founded Perceptive Advisors in 1999 and focuses on investing in biotechnology stocks. In 2018, Edelman’s main Perceptive Life Sciences hedge fund lost money for only the third time since inception. Since December 19, 2019, Edelman has bought about $10 million worth of ATNX stock in the $13.78 to $14.39 area.
On December 16, 2019, Athenex, Inc. (Nasdaq: ATNX) announced that it has expanded its strategic partnership with Chinese drug company, Guangzhou Xiangxue Pharmaceutical Co., Ltd. (“Xiangxue”), to exclusively develop and commercialize Athenex’s oncology product candidates Oral Paclitaxel (both the capsule and the tablet formulations), Oral Irinotecan, as well as Tirbanibulin (KX2-391, also known as KX-01) Ointment, including for the treatment of actinic keratosis (AK) in the Territory.
Under the terms of the license agreement, subject to the satisfaction of certain conditions, Athenex will receive an upfront payment of $30 million. Athenex will also be eligible to receive development, sales and other milestone payments up to $170 million, and tiered royalties ranging from the sub-teen to low twenties based on annual net sales of licensed products in the Territory and a percentage of sublicensing revenue. The total deal size is potentially $200 million, excluding the royalty payments.
The agreement provides for joint decision making through a Joint Steering Committee with respect to the development and commercialization of the licensed products in the Territory. Athenex and Xiangxue will jointly lead the clinical development programs with Athenex to coordinate the global drug development efforts while Xiangxue will oversee commercialization activities in the Territory.
Mr. YongHui Wang, Chairman and CEO of Xiangxue, said, “We are thrilled about this strategic partnership extension with Athenex in China which complements our successful collaboration on KX2-361 (also known as KX-02) for brain tumors (including glioblastoma multiforme) and TCR-T immunotherapy. Our collaboration has been highly rewarding, and we have also witnessed Athenex’s strong execution track record, in terms of research and development as well as business expansion. The oral paclitaxel and encequidar data are extremely exciting, with clear benefits on tumor response, improved survival and less neuropathy. We believe the results pave the way for oral irinotecan to follow its success. The promising tirbanibulin data have also shown significant clinical benefits to patients with AK in two randomized, controlled clinical studies. Our assessment is that there is compelling market potential for oral paclitaxel and encequidar in China, and that tirbanibulin ointment will address an underserved market in AK.”
“This extended strategic partnership, together with KX2-361, expands our novel drug portfolio into a strong pipeline consisting of two Phase 3 product candidates with positive clinical trial results, one product candidate with proof-of-concept data that is ready to advance to Phase 2, and one Phase 1 product candidate,” continued Mr. YongHui Wang. “We expect the partnership will enable us to lead these innovative therapies into commercialization and position us to further tap into one of the largest and most promising healthcare markets worldwide. We will be expanding our marketing and sales capacity to allow us to maximize the potential of these exciting opportunities.”
Dr. Johnson Lau, Chief Executive Officer and Chairman of Athenex, stated, “We are pleased with the extension on the strategic partnership with Xiangxue, and their confidence in our clinical data. We believe this serves as an important validation of our science and product portfolio. We have selected Xiangxue as our partner based on our long term productive collaboration, and because their commitment to develop this portfolio is aligned with our global strategy. Xiangxue also plans to expand its marketing and sales infrastructure to focus on China to capture the full potential of these products. We look forward to leading the global clinical development of these advanced clinical stage products with the ultimate goals of serving patients and addressing the attractive market opportunities that exist in China.”
The Orascovery platform was initially developed by Hanmi Pharmaceuticals and licensed exclusively to Athenex for all major worldwide territories except Korea, which is retained by Hanmi.
On December 13, 2019, Athenex announced results from a pivotal Phase III clinical trial showed oral paclitaxel and encequidar had superior response and survival with much lower incidence and severity of neuropathy compared to IV paclitaxel in the treatment of metastatic breast cancer. CMO Rudolf Kwan commented, “Oral paclitaxel and encequidar is the first oral taxane to demonstrate in a Phase III study statistically significant improvement in response rate and median overall survival compared to IV paclitaxel, in the treatment of metastatic breast cancer while associated with a much lower incidence and severity of neuropathy. We believe these data suggest the potential for oral paclitaxel and encequidar to provide an important advance in the management of patients with metastatic breast cancer.”
On December 13, 2019, RBC Capital analyst Kennen MacKay noted that SABCS released the previously press-embargoed abstract for Athenex’s phase 3 Oraxol data, stating that the about 11 month median OS benefit with 50%+ ORR in metastatic breast cancer “surpasses our best case assumptions.” Neuropathy has been a major focus at the meeting and he sees Oraxol “as a clear winner,” though he expects Oraxol’s overall safety profile will also be an investor focus in this afternoon’s presentation given that rates of grade 3+ neutropenia and grade 3+ GI-toxicity were both numerically higher per the initial top-line press release. MacKay kept an Outperform rating on the stock.
On December 6, 2019, SunTrust analyst Robyn Karnauskas initiated coverage of Athenex with a Buy rating and $28 price target. The analyst notes that the company’s “lead oral chemotherapy” platform could be a “better option” for some breast cancer patients. Karnauskas is also positive on the company’s experienced large pharma management and claims that Athenex can improve older products with their “chemistry, formulation, and know-how”. The analyst adds that her projections are “conservative” in modeling only 10% and 15% penetration into certain markets for oral docetaxel and irinotecan, with “full credit” adding about $92 per share to her price target.