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.

Pareteum – Executive Overview

June 27, 2019 – This report unveils troubling data Viceroy Research has encountered while conducting background checks on Pareteum’s management team.

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“David Hess and David John join Pareteum as we are rocketing towards our growth goals as a global technology” company…Hiring talent to expand our North America presence and connect into Latin America is the obvious step in acquiring new customers and new revenue that will ensure we exceed our targets”
– Hal Turner, CEO

David John, Vice-President Pareteum, was hired by Hal Turner with apparent pride in October 2018, and cited as Managing Director, CALA for Pareteum Corp.

Viceroy have double checked multiple sources to confirm David John’s full name is, in fact, David John Fondots.

There appears to be a very good reason why Mr Fondots has omitted his last name from his public-facing corporate profile

Pareteum – The Wild West of Telecoms

June 25, 2019 – Pareteum (NASDAQ:TEUM) provides services to Mobile Virtual Network Operators (MVNOs), who sell data/minutes to users and purchase data/minutes from telecom network operators. Recently Pareteum has been subject to criticism from other short sellers. Given the discourse, Viceroy believe it is prudent that we also share our findings.

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  • Further to recent research reports, Pareteum has a history of promotional press releases of customer wins. A deeper investigation into these customers show much larger number are insignificant, and the companies behind them appear in no way capable of fulfilling the contract values advertised by Pareteum.
  • Two of Pareteum’s customer wins appear to be undisclosed related parties tied to Pareteum consultant Dinesh “Danny” Patel.
  • One of Pareteum’s announced customer wins is a company under a historic investigation and charged with significant VAT evasion fraud. Information on this is easily available, leading us to believe that Pareteum was aware of the company’s issues while announcing the customer win.
  • Pareteum appears to be in breach of US sanctions against Iran through its provision of services to Iranian MVNO Amin SMC. Amin SMC appears to be chaired by Hamid Reza Amirinia, an individual suspected of breaching sanctions with an Iranian government mandate to launder money for the regime.
  • Several entities on the domain are small companies or have no web presence whatsoever, leading us to believe that they are Pareteum customers who are unable to pay or have no operations.
  • Pareteum’s 36-month contractual backlog measurement is not an accurate predictor of future profits. An analysis of the company’s backlog and management comments shows it should have reported 73.10% more revenue in Q1 2019 than it did. Management appears to be inflating this figure to hype up the share price and reassure investors.
  • Pareteum’s management has a history of dishonest reporting. Notably, CFO Ted O’Donnell who was sued by former employer AudioEye for fabricating US$8.1m worth of revenue over 3 quarters which was found to have no supporting documentation. This was an overstatement of revenues in the period of more than 3,000%.
  • Pareteum’s rapid-fire announcement of customer wins mirrors its announcements regarding cryptocurrency in 2017, which were put to an abrupt halt when a response to an SEC letter revealed TEUM had made no revenue, nor planned to do so, from cryptocurrency.
  • Pareteum has made an US$3.7m loan to Yonder Media Mobile, an early stage MVNO operated by serial failure entrepreneur Adam Kidron. Kidron has burned at least US$100m in his enterprises, having already cratered the Yonder brand with a music streaming service which collapsed in 2017.
  • A breakdown of Pareteum’s revenues, cash flows and receivables show the majority of its revenue from sources other than Vodafone and acquired businesses iPass and Artilium appears to be uncollectable. Accordingly, we believe total revenue is overstated by 42%, corroborating our findings regarding Pareteum’s customers.

We are as yet unable to quantify the impact of the company’s apparent breach of sanctions against Iran and have not assigned a discount. We have reported this apparent breach to the relevant federal authorities.

A token valuation on an EV/Revenue basis presents a 44% – 76% downside for Pareteum’s share price (State Current Price), with the more severe scenario more probable. However, based on the numerous subjective issues highlighted in this report and the dependence of the valuation on our already-conservative revenue adjustment, we cannot fully quantify the downside, which we believe to be significant.