Athenex – Financial Situation

Ahead of this week’s earnings, Viceroy provide an insight of what’s to come.


Athenex Inc. v. Azar – Summary

November 4, 2019 – This report provides a deep dive on Athenex’s significant revenue declines and capital over-commitment that investors can expect in the coming months. We believe revenues from the second half of 2019 will fall ~40% against the first half of 2019.

  • Athenex best seller, Vasopressin, has been pulled due to FDA ruling brought about by a lawsuit against Athenex by its largest customer, AmerisourceBergen.
  • COO Jeffrey Yordon is on record as stating the Vasopressin ban “did not come unexpected”.
  • Almirall licensing payments in 2018 were non-recurring, and 2019 milestones appear to have been delayed as Almirall redefine Athenex deliverables.
  • Per management’s guidance, we expect product sales revenue to fall approximately 40% in the second half of 2019 against the first half of 2019.
  • Athenex have not only committed >US$1.5b expenditure at their Dunkirk site across the next ten years but are also on the hook for excess development costs for the facility, whose floorplan has expanded by 28% on-the-fly and falling significantly behind schedule.
  • Athenex’s new China-funded plant must also generate unrealistic revenues of almost US$1b within 5 years of opening, despite turning over only $160m across the last 5 years combined.
  • Athenex must also pay RMB 10b in taxes over 10 years at its China Site, according to project commitments. Strangely, Athenex’s own tax projections do not meet the required sum from these commitments by over 30%.
  • To manage its cash burning commitments to major facilities and accelerated R&D, Athenex has issued dilutive equity, and incredulously borrowed US$50m from major investor, Perceptive, at a punitive rate of 11%.

Considering the quantum of issues Viceroy have highlighted, it is alarming to shareholders that Athenex have not addressed a single point of our work. Opting instead to simply state we have published “inaccurate information”. Other commentators have begun to back-test our work[1].
Where are the inaccuracies, Athenex?

We have already highlighted management’s involvement in Sino Forest, GCL Silicon/Poly, Suntech, Chelsea Therapeutics, the world’s largest illegal taxol smuggling operation, and now LyphoMed, Gensia and Sagent. It is mind blowing that Athenex investors would continue to associate with any one of these farces, let alone a collection such as this.

Viceroy reiterate our view that Oraxol is obsolete in the modern medicine, and that Athenex will be effectively bankrupt by mid-2020 with no profitable operations given management’s overenthusiastic spending habits.

Viceroy remain short Athenex, and are in the process of obtaining a compiled, detailed report by industry specialists pertaining to Oraxol and its inability to be commercialized.

In considering the above, Viceroy estimate that Athenex’s risks of a highly discounted and dilutive capital raise is all but guaranteed.

Author: Viceroy Research

A group of individuals that see the world differently.

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