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[Just filed. Developing story.] May 14, 2023 – Athenex, Inc. and five affiliated debtors (NASDAQ: ATNX*, together “Athenex” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case No. 23-90295 (Judge David R Jones). The Debtors, "a global biopharmaceutical company dedicated to the discovery, development, and commercialization of novel therapies for the treatment of cancer and related conditions," are represented by Michael D. Warner of Pachulski Stang Ziehl & Jones LLP. Further Board authorized appointments include: (i) MERU, LLC (“MERU”) to provide certain financial advisory and transaction advisory services (with MERU's Nicholas Campbell to serve as CRO) and (ii) Epiq Corporate Restructuring, LLC as claims agent.
* On April 27, 2023, Athenex received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of the Company’s common stock over the previous 30 consecutive business days and its number of publicly held shares, the Company no longer met Nasdaq Listing Rule 5450(b)(3)(C), which requires listed companies to maintain a minimum market value of publicly held shares of at least $15 million. That notice triggered a 180-day delisting clock.
The Debtors’ lead petition notes between 200 and 1,000 creditors; estimated assets between $100.0mn and $500.0mn; and estimated liabilities between $100.0mn and $500.0mn (NB: the Debtors 2022 10-K notes assets of $204.1mn and liabilities of $228.2mn as at December 31, 2022). Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) Ingen us Pharmaceuticals ($8.1mn trade debt claim), (ii) Chon gqing Sintaho Pharmaceutical ($6.8mn trade debt claim) and (iii) Baylor College of Medicine ($6.3mn trade debt claim). Deloitte & Touche LLP, Cooley LLP, Arnold & Porter LLP, and Ernst & Young LLP all get caught in the unsecured creditors net with $100k(plus) professional services claims.
Petition Date Highlights
- Buffalo, NY-Based Biopharmaceutical Files for Bankruptcy with @$230.0mn of Debt
- Cites Adverse Response from FDA as to Oral Paclitaxel Product Candidate, Challenging Biotech Markets and Difficult Economic Environment
- Had Received Default Notices from Senior Lender Oaktree
- Will Pursue Expedite Sale Process (No Details as to Any Prepetion Marketing Efforts) Followed by Wind Down
Filing Date Press Release
In a press release announcing the filing, Athenex stated that: “it has reached agreement with its lenders to move forward with an expedited sales process of the Company’s assets across its primary businesses: Athenex Pharmaceutical Division ('APD'), Orascovery, and Cell Therapy….[The Chapter 11 filings]…will enable the Company to divest its assets and wind down the Athenex platform in an orderly fashion, while seeking to maximize value for its stakeholders. The Company anticipates concluding the expedited sales process by July 1, 2023, with the Chapter 11 cases continuing thereafter to resolve claims.
Athenex Pharma Solutions ('APS'), which includes the Company’s manufacturing facility in Clarence, New York, is expected to continue its operations for at least the next 90 days, to provide commercial supply of tirbanibulin ointment. In addition, APD is continuing to operate in the ordinary course and fill customer orders with the ample inventory it has on hand."
The Debtors CEO Dr. Johnson Lau, added: “Unfortunately, our oral paclitaxel product candidate received a complete response letter from the U.S. Food and Drug Administration**, and this significant regulatory setback, coupled with challenging biotech markets and the difficult economic environment, put tremendous pressure on our ability to continue to fund our businesses."
*The Debtors 2022 10-K noted as to the FDA letter: "In February 2021, the Company received a Complete Response Letter ('CRL') from the U.S. Food and Drug Administration ('FDA') regarding the Company’s New Drug Application ('NDA') for oral paclitaxel and encequidar ('Oral Paclitaxel') for the treatment of metastatic breast cancer ('mBC'), indicating that the application is not ready for approval in its present form….In October 2021, after careful consideration of the FDA’s feedback, the Company determined to redeploy its resources to focus on the cell therapy platform and ongoing studies of Oral Paclitaxel."
The Debtors' boad minues note that authority to enter into ("DIP") financing arrangements but do not reference any specific DIP. The press release suggests that the Debtors may be hoping to go without DIP financing and rely on cash collateral, with the press release noting, "Athenex has also reached an agreement with its secured lenders [led by Oaktree which sent the Debtors notices of default on March 7 and March 13, 2023] subject to court approval, for the consensual use of cash collateral, which will enable the Company to, among other things, satisfy certain obligations to its vendors for authorized goods received and services rendered after the filing."
Goals of the Chapter 11 Filing
The Debtors' filing date press release notes "an expedited sales process"…with Athenex "looking divest its assets and wind down the Athenex platform in an orderly fashion, while seeking to maximize value for its stakeholders."
About the Debtors
According to the Debtors: “Founded in 2003, Athenex, Inc. is a clinical-stage biopharmaceutical company dedicated to becoming a leader in the discovery, development, and commercialization of next-generation cell therapy products for the treatment of cancer. The Company’s mission is to become a leader in bringing innovative cancer treatments to the market and to improve patient health outcomes. In pursuit of this mission, Athenex leverages years of experience in research and development, clinical trials, regulatory standards, and manufacturing. The Company is focused on its innovative Cell Therapy platform, based on natural killer T (“NKT”) cells.“
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