Grenke – An Update

September 18, 2020 – Dear BaFin,

Wolfgang Grenke issued a tepid and intentionally opaque response to Viceroy’s accusations of undisclosed related parties yesterday.

The statement asserts that the supervisory board was aware of these undisclosed related parties and off-balance sheet trading entities since their inception, about 10 years ago.

Viceroy believes that the proper course of action following Wolfgang Grenke’s incriminating statement is for the supervisory board to:

– Reject their knowledge of Wolfgang’s invested interest in CTP, and remove him from the board; or
– Resign

Wolfgang Grenke’s obscurely mistakes IFRS interpretations of control, and astonishingly asserts that Grenke had direct involvement in even the beneficial ownership structure of these subsidiaries. KPMG must now take action to ensure all these off-balance sheet trading entities are properly accounted for in Grenke’s financial statements – past, present, and future.

Grenke – Selective Blindness

Viceroy’s quick take on Grenke’s responses – and their omissions – so far.

September 16, 2020 – Viceroy Research is short Grenke AG (XTRA: GLJ).

You can find our original report published on Sep 15, 2020 in the following link:

Grenke – For Your Fraud Financing Needs

Grenke have made scattered responses to the press and via a press release. As fascinating and incriminating as the responses have been, it is the lack of response to key issues that are of greater concern to Grenke investors.

Grenke – For Your Fraud Financing Needs

Viceroy puts the spotlight on Grenke’s chicanery; swindling small businesses, laundering money for criminals, & accounting fraud.

September 14, 2020 – Viceroy Research is short Grenke AG (XTRA: GLJ).

Grenke’s global expansion through the purchase of dozens of undisclosed related party franchises is a fraudulent scheme perpetrated on a mass scale, designed to either hide fake cash or siphon off millions of euros to undisclosed related parties, or both.

Grenke’s banking division has been a conduit for the proceeds of crime and money laundering, and could face the loss of its banking license.

Grenke’s leasing model facilitates and encourages rampant fraud from resellers, resulting in bad debt, protracted legal disputes and the defrauding of small businesses, the government, and charities. Legitimate leasing of small ticket tech is becoming increasingly redundant, in outdated and fast diminishing business segments.

Viceroy Research believes Grenke AG’s stock is uninvestable due to blatant accounting fraud, including dozens of undisclosed related party transactions, and the complete lack of internal controls, right down to individual due diligence on customers.

Grenke’s bonds are hovering above junk territory due to capital adequacy stemming from its banking business, which we believe is hiding fake cash, and is actively used to launder money for binary options scams, crypto scams, and fraudulent unregulated trading platform.

Sorrento’s Predatory Propaganda

May 20, 2020 – Sorrento Therapeutics’ announcement of Covid-19 “cure” follows management’s long history of unsuccessfully tailgating fads while squandering hundreds of millions in fresh investment capital.

Sorrento Therapeutics – 20 May 2020

Viceroy Research are short Sorrento Therapeutics (NASDAQ:SRNE) – a biotech company with wild claims it has basically found the cure for SARS-Cov-2 (Covid-19) amid a history of apparent stock pumping by its management team and transaction advisors. We believe Sorrento deliberately rides the pandemic wave for the sole purpose of pumping its stock price, with a propaganda machine to match.

Amid these COVID-19-related announcements, Sorrento have executed a new share sale prospectus for $250m of shares at VWAP to capitalize on the destruction of the pandemic. This will be the single largest value deal for sale agent Alliance Global Partners (AGP). AGP has uncanny propensity to flood capital markets with garbage.

Sorrento has virtually no revenue and has burnt through over $420m of cash over the last 3 years at an increasing rate. Sorrento has failed to significantly monetise any of its assets and seems to exist solely to raise billions in capital from equity and debt markets. Their development catalogue is extremely varied with several product stalled in clinical testing or R&D.

Part of this cash burn and asset stripping has been called into question in the past from major shareholder Wildcat Capital Management.

Given Sorrento’s lengthy history of false promises and bad company, Viceroy doubts management can coerce investors into burning cash once more, and the company will fizzle out of existence.

Athenex – Big trouble in little Chongqing

Not only is the factory in the wrong place, it’s not built yet

REPORT DOWNLOAD LINK

November 20, 2019 – On the ground investigation of Athenex’s Chongqing factory show that the Athenex’s new API plant is not located in the Chongqing International Bio-City, and is still heavily under construction. This deception extends to Chinese press releases.

The site visits were conducted on the week ending November 15, 2019, several months after the announcement of its “completion” by Athenex.

  • The factory is not located in the Chongqing International Bio-City development, but some 25 miles away near Maliuzui toll station.
  • The building has no sealed road access nor car parking facilities; we were unable to ascertain whether basic utilities had been connected but this seems unlikely.
  • Everyone within the facility is still wearing hardhats, and the site is still full of heavy machinery, including cranes. Equipment has yet to be installed – company statements about validation testing in Q4 2019 are false.

ATNX site

The announcement by Athenex on September 23, 2019 claiming the facility to be complete and in the midst of a validation batch paints a pretty picture, which is completely false.

To be clear: there is no completed API Facility. This fraud mirrors the various sham businesses Athenex’s directors have orchestrated in the past.

On November 19, 2019 Athenex announced the title of their presentation at the San Antonio Breast Cancer Symposium. This is a blatant strategy to pump the price of their stock by changing the title of the presentation which has had no change in content to the one announced on September 23, 2019 (ironically, the same date Athenex’s Chongqing plant was allegedly “completed”), which was submitted in June 2019.

In summary:

  1. Abstracts were due by July 8, 2019.
  2. Athenex’s abstract title was announced on September 23, 2019
  3. Athenex changed their abstract title on November 19, 2019
  4. Athenex is not presenting in the Ongoing Clinical Trials category, and therefore cannot have had new information since July 8, 2019.

Athenex’s SABCS presentation is the same as the one announced on September 23. RBC analyst Kennen MacKay’s reiteration of an outperform on a “SABCS win” sounds ridiculous considering that this is the same data that prompted such an unremarkable title 2 months earlier caused the collapse of the stock.

Of course, when Athenex originally announced the presentation, the issues we highlighted in our reports had not yet been brought to light.

We continue to believe investors are being duped by Athenex management through virtually identical charades orchestrated at their previous failed ventures, such as Sino Forest.

We have annexed an extended summary of all of Viceroy’s findings, and all of our pictures of Athenex’s actual, unfinished, API plant.

Athenex – Independent Oraxol Review

Independent biotech consultants commissioned to report on Oraxol clinical data of belief Athenex will not receive New Drug Application from FDA.

REPORT DOWNLOAD LINK

November 13, 2019 – Viceroy commissioned a report from a highly reputable, independent biotech consulting firm into the prospective New Drug Application (NDA) approval for Oraxol. We have appended the report in its entirety for our readers.

  • Consistent with previous expert opinions we have received in relation to Oraxol, this report concludes that “Oraxol will likely not secure approval following Athenex NDA submission in 1Q 2020.”
  • Experts refute management claims in Q3 earnings call that “FDA previously provided positive feedback to Athenex that it would accept the results of this one pivotal trial for license application in the U.S. if the primary endpoint is met”, noting that there must also be an acceptable benefit/risk profile.
  • Our Experts note that the treatment regiment for the IV Paclitaxel control group is a high-dose, three week regiment. This regimen has tested as inferior to the low-dose, weekly treatment. This would have created a much higher threshold for Oraxol’s primary endpoint.
    • It’s noteworthy that oral paclitaxel competitors, such as Daewa Pharmaceutical Co., have not shied away from this low-dose, weekly regimen as a higher threshold control.
  • Differing outcomes in safety profile of Oraxol, when compared to IV paclitaxel, “is likely due to the delivery mechanism and formulation which includes the novel, unapproved PGP inhibitor HM30181A”. Our consultants believe this may prompt further studies into the Oraxol delivery method, consistent with our prior reporting about adverse effects.
  • The report also highlights issues in relation to the rarity of the FDA approving drugs with no USA clinical patient data. This presents a greater question mark for Athenex, who have already announced plans to commercialize this in the USA.
  • Experts have noted Athenex’s absence in providing any detail relating to Oraxol’s adverse effects, in particular those effects which are inconsistent with IV paclitaxel, such as GI complications.
  • Viceroy elected to file all our findings to the SEC, FDA and New York Governor due to the highly irregular corporate governance and business practices committed by the company. We note the company have failed to address or deny one issue, despite repeated requests to identify one single falsity.

We await Athenex’s San Antonio presentation, which we believe will provide more granular detail.

Viceroy remain short Athenex and maintain our price target of $2.83.
Athenex management continue to ignore our reports or address any of the issues we have highlighted.

Athenex – 2019 Q3 Financials Brief

Falling revenues, stalled operations, flat R&D.

DOWNLOAD BRIEF

November 7, 2019 – This report is a brief on Athenex’s Q3 results announcement. Viceroy will provide a further, more in depth update upon the release of Athenex’s 10-Q.

  • Athenex revenues continue to fall Q/Q, and has guided to do so in Q4, despite Athenex’s raised guidance. This is primarily due to higher than anticipated sales in Q1 & Q2 for Vasopressin, which has been pulled due to FDA ruling brought about by a lawsuit against Athenex by its largest customer, AmerisourceBergen.
  • Athenex COO, Jeffrey Yordon, states stated the FDA’s decision regarding Vasopressin “did not come unexpected”. Either this is a lie, or the Athenex had been consciously illegally selling as much Vasopressin as possible before the FDA undoubtedly came knocking.
  • Address of financials persists on using YOY figures to hide the fact that the company has suffered declining revenue in the last two quarters.
  • Q3 Update confirms API production is still suspended.
  • Cost of sales have conversely slightly increased Q/Q.
  • R&D expenditure is flat YOY, excluding one-time-costs, despite an increase in drugs in development. This suggests to us that Athenex have curbed spending.
  • As previously reported, 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. We are curious to see the cash burn in relation to this facility in Athenex’s 10-Q.
  • 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.
  • There has been no change to Athenex’s massive cash burn this year, with losses accelerating to $102m in the 9 months leading to Q3, 2019. To manage its cash burning commitments to major facilities and R&D, Athenex has issued dilutive equity, and incredulously borrowed US$50m from major investor, Perceptive, at a punitive rate of 11%.

Athenex management “stand behind the integrity of its management team and board” and will refuse to address us, according to Mr. Lau on this morning’s conference call. This is laughable considering half the board has evaporated billions in prior frauds.

We have already highlighted management’s involvement in Sino Forest, GCL Silicon/Poly, Suntech, Chelsea Therapeutics, the world’s largest illegal taxol smuggling operation, 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.

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 will provide a more updated brief upon the release of Athenex’s 10-Q.

Report 1: https://viceroyresearch.org/2019/10/22/athenex-too-little-too-late/

Report 2: https://viceroyresearch.org/2019/10/23/athenex-where-theres-smoke/

Report 3: https://viceroyresearch.org/2019/10/24/athenex-no-integrity/

Report 4: https://viceroyresearch.org/2019/10/25/athenex-bonus-round/

Report 5: https://viceroyresearch.org/2019/10/28/athenex-rehash/

Report 6: https://viceroyresearch.org/2019/10/29/athenex-unpopular-operating-officer/

Report 7: https://viceroyresearch.org/2019/11/04/athenex-financial-situation/

Other Coverage: https://seekingalpha.com/instablog/38002746-denniskneale/5369151-cancer-conflicts-interest

[1] Blog entry-Dennis Kneale:https://seekingalpha.com/instablog/38002746-denniskneale/5369151-cancer-conflicts-interest

Athenex – Financial Situation

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

REPORT DOWNLOAD LINK

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.

Athenex – Unpopular Operating Officer

While his resume appears impressive, Athenex Chief Operating Officer Jeffrey Yordon has always been in the proximity of disaster, including two class action lawsuits.

REPORT DOWNLOAD LINK

October 29, 2019 – As we move into the sixth installment of our coverage on Athenex, 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.

This report further exposes management’s ties to impropriety and provides a broader summary of Athenex’s management & director teams.

  • Yordon’s executive career started as President of LyphoMed, who’s CEO was sued by acquiring entity, Fujisawa Pharmaceutical.
    • Fujisawa claimed LyphoMed filed false information with the FDA in connection with thirty five ANDAs. Information was either misrepresented, destroyed or was not recorded where it concerned adverse test results.
    • LyphoMed’s CEO was none other than John Kapoor of Insys Therapeutics fame.
  • Yordon claims to have founded Gensia Pharmaceuticals, when the business was in fact acquired from Kedall Co. while Yordon was employed at Gensia’s topco.
    • Gensia’s share price collapsed upon flagship heart medication showing no statistical benefits.
  • While employed at American Pharmaceutical Partners, Yordon and other senior management were sued for making misleading statements about the prospects of an anti-cancer drug.
  • While director of Sagent, shareholders sued the company alleging that the board and its advisors failed to negotiate a fair deal for the company’s shareholders in a sale; agreeing to certain terms which only benefitted management.
    • Yordon was CEO at the time of the engagement of the company’s investment bankers and establishment of the board’s “strategic committee” to evaluate such decisions.

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 would continue to associate with any one  of these farces, let alone a collection such as this.

In light of all of the issues and questions Viceroy have highlighted, it is also alarming to shareholders that Athenex have not addressed a single point, opting instead to simply state we have published “inaccurate information”.

Where are the inaccuracies, Athenex?

Viceroy remain short Athenex.

A link to Viceroy’s previous reports are as follows:

Report 1: https://viceroyresearch.org/2019/10/22/athenex-too-little-too-late/

Report 2: https://viceroyresearch.org/2019/10/23/athenex-where-theres-smoke/

Report 3: https://viceroyresearch.org/2019/10/24/athenex-no-integrity/

Report 4: https://viceroyresearch.org/2019/10/25/athenex-bonus-round/

Report 5: https://viceroyresearch.org/2019/10/28/athenex-rehash/