Buffalo drug company Athenex trying to work with major creditor as cash gets tight

Buffalo biopharmaceutical company Athenex Inc. was once seen as one of the great hopes for Western New York’s life sciences industry.

Athenex appears to be just trying to hold on.

In reporting its fourth-quarter results Monday, Athenex revealed that its cash and cash equivalents fell to $36.7 million at the end of 2022, down from $51.7 million a year earlier. Further, the company is implementing more cost-savings programs with plans to sell assets and raise capital to keep it from running out of cash this year.

In addition, Athenex is in danger of defaulting on some of its borrowings. On March 7 and March 13, Athenex received notice of alleged defaults from major lender Oaktree relating to the company’s senior credit agreement.

Athenex said it has responded to Oaktree and disputes the alleged defaults, but it has not reached a mutual agreement with Oaktree.

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If Oaktree were to try to call in the debt, Athenex said it doesn’t have enough cash to pay it back.

“If Oaktree accelerates the maturity of the indebtedness under the senior credit agreement, we do not have sufficient capital available to pay the amounts due on a timely basis, if at all, and there is no guarantee that we would be able to repay, refinance or restructure the payments due under the senior credit agreement,” Athenex said.

In terms of operating results, Athenex did report higher revenue last year as compared to 2021. 

The company reported total revenue of about $103 million in 2022, up from just over $95 million a year earlier. 

But its net loss from continuing operations last year totaled about $99 million, which was an improvement from a net loss of about $160 million in 2021.

Exiting the 503B sterile compounding business will affect “some of the employees” at the company’s compounding facility in Newstead, said Dr. Daniel Lang, president of Athenex Cell Therapy. He did not respond to a follow-up question about how many employees are affected.

“We made significant progress in monetizing company assets during the year, in line with our planned strategy,” Athenex CEO Dr. Johnson Lau said in a statement. “In 2023, we are pursuing a broader range of strategic alternatives while remaining focused on improving our balance sheet as we continue to advance our promising clinical development programs.”

The company on Monday reported progress in some of its clinical development programs.

But one of its trials on an investigational cell therapy for relapsed/refractory high-risk neuroblastoma was put on hold by the U.S. Food and Drug Administration after the death of a young heavily pretreated male patient.

Athenex noted that Baylor College of Medicine, which is the investigational new drug application holder, is devising a safety-risk mitigation plan to reopen the clinical trial, though no assurances can be provided that the FDA hold will be lifted. 

In reporting its results Monday, Athenex said its management would not host a conference call, as it typically does, but instead would provide updates when appropriate. 

In late morning trading, Athenex stock was trading at $1.45 a share, down about 17% from Friday’s closing price.

Jon Harris can be reached at 716-849-3482 or jharris@buffnews.com. Follow him on Twitter at @ByJonHarris.

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