Athenex – No Integrity

Athenex management’s proliferation for fraud precedes them.


October 24, 2019 – Viceroy expose more managerial ties to established frauds, and address Athenex’s response to our previous work, which addresses absolutely nothing. Management’s response underestimates how many improprieties are recorded in the public domain – we have yet to scratch the tip of the iceberg.

  • The company’s response to Viceroy’s research is a further slap in the face to investors: the company has failed to address a single issue highlighted in any of our reports.
    • Athenex’s two-paragraph rebuttal to Viceroy’s reports indicates management refuse to address any improprieties we have uncovered…to date. We believe Athenex will have a tough time explaining to shareholders why their flagship drug is commercially unviable, justifying abusive related party transactions, and explaining why facility pictures are blatantly photoshopped.
  • Athenex’s rebuttal state that management “take pride” in its integrity. This is hilarious given management’s track record of overseeing blatant frauds.
  • In case Sino Forest and Suntech weren’t enough, Viceroy now reveals direct ties between Athenex directors and more established frauds, responsible for evaporating billions of dollars of shareholder capital: GCL Poly/Silicon, China Lumena.
  • Several individuals involved with Zhang’s previous shady ventures are now embedded in the Athenex organization including the Audit committee.
    • Viceroy reveal Athenex Audit Committee member, John Koh, was also a director of Mandra, alongside Songyi Zhang, with direct fiduciary obligation to oversee Sino Forest.
  • Zhang was previously a director of China Lumena, which was found to have significantly fabricated its revenues. In addition to this, a subsidiary that had fabricated ~90% of its revenues was sold to China Lumena by Zhang through several of his investment vehicles.
  • Zhang was also previously at GCL Silicon where he effectively front-ran an acquisition of that company by GCL-Poly Energy in concert with Zuo Gongshan, the CEO of the latter. This netted Zhang a share in US$200m cash, US$350m in secured notes and a 5% stake in GCL-Poly.
  • SinoPhyto solutions, the side-hustle of Athenex Chief Medical Officer Rudolf Min-Fun Kwan and CEO/Chairman Johnson Lau purports to be a seller of traditional Chinese medicines. However, the company’s New Jersey certificate indicates it is an investment company. SinoPhyto has only received one shipment. We question the true purpose of this entity.

Athenex – Where there’s smoke…

Athenex’s revenue generating business is a house of cards, muddled with further ties to large scale frauds, fabricated management credentials, and photoshopped offices.


October 23, 2019 – This follow up report focuses specifically on Athenex’s Polymed subsidiary, which accounts for a large portion of Athenex’s revenues and capital expenditure:

  • Our investigations have found ties between Polymed and its management team’s ties to the largest taxol smuggling ring in history Hande Yunnan, resulting in 50 arrests and 32 imprisonments. Major perpetrators and shareholders of this scheme now work for Athenex.
  • Polymed appears to continue sourcing its taxol from Hande Yunnan, despite the fact that our investigations show Hande Yunnan no longer produce taxol.
  • Further inspection of Polymed’s management show inconsistencies in prior executive roles, specifically of William Zuo. Zuo was also the US liaison of bringing smuggled taxol to the USA.
  • A deep dive into Chinese regulatory notes from the Ministry of Emergency Management, coupled with Polymed’s history of objectionable site inspections by Chinese regulators and the FDA, lead us to believe that Polymed’s manufacturing facility suspension was anything but voluntary. In any event, Athenex’s manufacturing facility does not manufacture anything.
  • Viceroy dismantles photoshopped Polymed advertisements for its facilities and expose chemical manufacturing facilities we believe are non-existent or outsourced.

Viceroy remains short Athenex with high conviction. The quantum of red flags uncovered within the business and management team surpass any other company we have previously analyzed purely within data sourced from the public domain.

We reiterate our target price of $2.83, now representing a 75% downside, and will continue to keep investors informed through further reporting.

We conclude that Athenex exists to abuse capital markets and enrich its management through related party transactions and licensing deals, rather than bring revolutionary drugs into the market. This activity is masqueraded through overpromise in both its flagship drug, Oraxol, and its purported “supply-chain” businesses, such as Polymed.

Athenex is a perfect storm of investor deception, insider enrichment and clinical trial risks. Investors should demand a full investigation of the issues discussed within this report: we are confident there is more to this story given how much was available purely through the public domain.

Athenex’s operational and R&D cash-burn rate is over US$100m a year – the company would be lucky to survive until HY 2020 without needing a further cash injection from investors. Even if Athenex scrapped its R&D completely, the company’s revenue streams operate at a substantial loss.

Accordingly, we believe our valuation of $2.83 is optimistic, and will be realized in the short term. We do not see a future for the company in its current state. Viceroy’s preliminary report on Athenex can be found in the below link:

Athenex – Too little, too late

Poorly designed clinical study for flagship drug outdated since 2005. Meanwhile, Directors siphon large amounts of cash from shareholders.


October 22, 2019 – Viceroy Research is short Athenex, Inc. (NASDAQ: ATNX). Our research has found significant causes for concern in the company’s operations, management and clinical trial design. Our research, paired with discussions with industry specialists, leads us to believe Oraxol is obsolete in modern world medicine. We conclude that Athenex exists to abuse capital markets and enrich its management through related party transactions and licensing deals, rather than bring revolutionary drugs into the market.

Viceroy value ATNX stock at US$2.83 – a 71% downside –the sum of its tangible book value and 1x valuation on its licensing & consulting revenue streams, for the year ending June 30, 2019. With ATNX’s questionable license acquisitions and management’s precedent for overstated top line figures in previous ventures: this is optimistic.

Management – A Company of Rogues

  • Several members of Athenex’s management team have a history of what appears to be either gross incompetence in fiduciary duties or clever mismanagement in infamous frauds internationally, collectively resulting in billions of dollars of write-offs including Sino Forest and Suntech.
  • ATNX directors have also acted as sellers and drop-shippers to rip off Athenex shareholders with margin-stealing exercises through their investment entity: Avalon Global. Cash has consistently exited the business via similar related party deals.
  • Breaches in corporate governance principles: Athenex directors screwed investors by purchasing CDE for themselves and flipping it to Athenex for a 262% profit in 6 weeks. The company failed to report the circumstances of the transaction in any meaningful way.
  • In a separate instance, Directors pocketed a 3,300% profitby flipping an “anti-cancer mechanism” license to Athenex for US$5m, for which they paid just US$150,000 just 6 months earlier.
  • Directors award themselves millions of dollars’ worth of stock at no cost through the issuance of promissory notes that are cancelled on a time-vested basis.
  • Athenex directorshave an uncanny ability to avoid any disclosure or reference to their involvement in historical fraud or related party deals. It’s Viceroy’s view that if investors were aware, they would not have bought $ATNX in the first place. 
  • Athenex’s CFO J. Nick Riehle left unexpectedly for a “planned” retirement, just 10 months after joining the company but is now seeking work as a consultant.

Oraxol – Flagship or Shipwreck?

Athenex has been reliant on the marketed prospect of Oraxol in order to obtain access to capital, having received going concern qualifications from Deloitte since 2016 and current yearly cash-burn rates of ~$100m. The company has raised ~US$360m in equity and US$80m in debt since 2017. Even if R&D costs are removed from the equation, Athenex’s licensing and consulting segments are operationally loss-making.

  • After consultation with industry specialists and oncologists, Viceroy believes Athenex’s flagship paclitaxel drug, Oraxol, cannot compete with the current standard of care available in the USA.
  • Oraxol’s clinical trial’s control dosing regimen of IV paclitaxel as monotherapy is an outdated treatment schedule dating from the 1990’s.
  • Oraxol’s marketed quality of life improvements are redundant. Patients will still require IV /treatment post-treatment, alongside complications from oral treatment.
  • Oraxol’s side effects appear more severe than those of the current US standard of care, Abraxane, and may require hospitalization due to their life-threatening nature. Reported adverse effects grade 4 neutropenia, grade 3 vomiting and unspecified GI complications were more severe than IV paclitaxel intake.
  • None of Oraxol’s clinical trials have included a US patient component. While the FDA does allow data overseas trials, these results are treated with much higher scrutiny. Viceroy believe ATNX studies are being conducted in South America due to a lower local standard of care: US patients could not be enticed to trial a drug against an outdated active control regimen.
  • Athenex’s Orascovery program – key to its marketed value proposition – was purchased for just US$7.5m upfront in 2011 after its previous owner experienced decade-long development delays with little headway into development. The Orascovery platform is busted.
  • Through consultation with experts, we believe Athenex’s pursuit of the 505b(2) pathway for Oraxol will be hampered by the fact that its paclitaxel delivery mechanism, HM30181A, has never been approved by the FDA. The FDA may require Athenex to pursue a further NDA for HM30181A.
  • Viceroy have identified what we believe to be Intellectual Property Theft from UK company Immunocore. XLifeSc’s flagship technology (in which ATNX put $35m upfront) may already be owned by GSK and further along the development pipeline: GSK’s solution is currently undergoing phase 2 trials in the US.


Athenex’s operational and R&D cash-burn rate is over US$100m a year – the company would be lucky to survive until HY 2020 without needing a further cash injection from investors. Even if Athenex scrapped its R&D completely, the company’s revenue streams operate at a substantial loss.

Accordingly, we believe our valuation of $2.83 is optimistic, and will be realized in the short term. We do not see a future for the company in its current state.

Pareteum – The Hal Turner Options Appreciation Club

July 17, 2019 – We ask investors today to consider what Viceroy believes is an excessive enrichment by Pareteum’s Executive Chairman and Principal Executive Officer’s share ownership and compensation:

  • Reflect a low level of confidence in the company given Hal’s immediate offering of 2,000,000 shares as part of the 2018 Long-Term Incentive Plan
  • Show the acquisition of Artilium helped Turner vest and sell shares in Pareteum at an accelerated rate, despite no clear reason for this vesting, save for an convenient amendment in the terms.

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Pareteum – Related party share incentive schemes

July 2, 2019 – Pareteum yesterday announced that its Q2 2019 performance will exceed analysts expectations on Revenue and Adjusted EBITDA will beat consensus. This press release is laughable in light of Viceroy and Aurelius’ exploration of Pareteum’s “customers”, who are financially unable to fulfil the multi-million dollar contracts announced by management.

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Pareteum can record as much revenue on paper as they like from their “customers”, however this will not improve the Company’s dire cash position and ballooning payables balance.

We challenge Pareteum to transparency through the provision end-of-quarter receivables, payables, and cash balances to its stakeholders.

This report further explores Pareteum and Iran sanctions.


Ebix – FOIA response confirms enforcement investigation

July 1, 2019 – SEC withholds FOIA documentation as it could reasonably be expected to interfere with enforcement activities, and disclose identities of confidential sources and whistleblowers.

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On December 11, 2018, Viceroy released our preliminary report on Ebix Inc. (NASDAQ:EBIX), within which we reported on numerous historical and potential ongoing regulatory investigations into the Company and its conduct internationally. You can find our report here:

On June 20, 2019, the SEC responded to a Freedom of Information Act document request, within which the SEC has withheld requests pursuant to 5 U.S.C. § 552 (b) (3), (6), (7)(A), (7)(C) and/or (7)(D).

This document mirrors responses from the SEC’s Office of FOIA Services relating to MiMedx. Upon our dissemination of this report, the Company subsequently admitted to investigations by the SEC, DOJ and VA, amongst potentially numerous other acronyms.

Pareteum – The Sound of Silence

June 27, 2019 – Viceroy issues response to Pareteum’s statement on “Short Seller Attacks”

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Pareteum can continue to categorically deny “short seller attacks”. This will not bring substance to contracts, magically collect skyrocketing receivables, or explain related party transactions.

Viceroy stands by our research.