With Plans for U.S. and China Manufacturing Plants, Athenex Gears Up for $100 Million IPO

Published: May 16, 2017

With Plans for U.S. and China Manufacturing Plants, Athenex Gears Up for $100 Million IPO May 16, 2017
By Mark Terry, BioSpace.com Breaking News Staff

Buffalo, N.Y.-based Athenex, has filed with the U.S. Securities and Exchange Commission (SEC), announcing its plans for an initial public offering (IPO) worth $100 million.

It will trade under the symbol ATNX. The underwriters are Credit Suisse, JPMorgan and Deutsche Bank.

Athenex, formerly called Kinex, uses its Orascovery platform to develop oral formulations of infused and intravenously injected chemotherapy drugs. Its Src kinase inhibition research is another mechanism to treat cancer.

The filing indicates the IPO is for $100 million, although that is often viewed as a placemarker. The company has operations in the U.S. and China and has spent $195 million to date. Mandra Capital owns 16 percent of the company.

It’s owned by Song-Yi Zhang. Ma Huateng controls 9 percent and Johnson Lau owns 13 percent of the company. Lau is the chief executive officer.

John Carroll, writing for Endpoints News, says, “Lau, a former managing partner at Roth and a recognized antiviral specialist who once worked for Schering-Plough, was at the center of a colossal scrap way back in 2002 over a then record $260 million biotech IPO for a biotech company called Ribapharm. Ribapharm was created by ICN Pharmaceuticals and gifted with ribavirin, a longtime mainstay in hep C cocktails before the new generation of drugs came along.”

ICN was founded by the colorful Milan Panic. In addition to founding ICN and developing one of the first antiviral drugs, he is noted for being an American citizen who became the Prime Minister of the Federal Republic of Yugoslavia in July 1992. He later challenged Serbian President Slobodan Milosevic for the Serbian presidency, but lost to Milosevic.

Carroll writes, “ICN sold 20 percent of the company to the public, well below the range Lau shot for, then balked at spinning off the rest of the shares. Lau and his team got into a public brawl with ICN and then resigned en masse after telling reporters that the company was scheming to buy back the shares cheap.”

ICN eventually changed its name in 2003 to Valeant , the still controversial Canadian drug company.

In the SEC filing, Athenex wrote, “We believe that making paclitaxel or other cytotoxic drugs more tolerable will increase the dosage patients can take over time and, thereby, increase the efficacy of the drug.”

Athenex has two drugs in Phase III clinical trials.

Charles Lannon, one of the 99 investors that launched Athenex, told The Buffalo News, “That’s something that people are missing about Athenex. It is a multi-platform business, and that has provided stability. Athenex is not just about the drugs it is developing.”

At the end of 2016, Athenex had 391 employees and consultants located in Buffalo, as well as New Jersey, Texas, Hong Kong, Taiwan and China. It has raised approximately $500 million in capital.

Just last month, the state of New York provided $200 million to build a manufacturing plant for the company, which agreed to hire 450 people over the next five years. The Chinese government has committed to funding most of another facility in Chongqing, China. The New York facility will be 315,000 square feet and located in Dunkirk. Athenex pledged to spend $1.52 billion.

The proceeds from the IPO are planned to be spent accordingly: $28 million for Phase III trials of Oraxol for metastatic breast cancer; $12 million for additional clinical development and regulatory filings for the Orascovery platform; $20 million for Phase III trials of KX-01 ointment for actinic keratosis; $25 million for clinical and preclinical research and development; and working capital and expenditures.

Athenex has two drugs in Phase III clinical trials.

Charles Lannon, one of the 99 investors that launched Athenex, told The Buffalo News, “That’s something that people are missing about Athenex. It is a multi-platform business, and that has provided stability. Athenex is not just about the drugs it is developing.”

At the end of 2016, Athenex had 391 employees and consultants located in Buffalo, New Jersey, Texas, Hong Kong, Taiwan and China. It has raised approximately $500 million in capital.

Just last month, the state of New York provided $200 million to build a manufacturing plant for the company, which agreed to hire 450 people over the next five years. The Chinese government has committed to funding most of another facility in Chongqing, China. The New York facility will be 315,000 square feet located in Dunkirk, NY. Athenex pledged to spend $1.52 billion.

The proceeds from the IPO are planned to be spent accordingly: $28 million for Phase III trials of Oraxol for metastatic breast cancer; $12 million for additional clinical development and regulatory filings for the Orascovery platform; $20 million for Phase III trials of KX-01 ointment for actinic keratosis; $25 million for clinical and pre-clinical research and development; and working capital and expenditures.

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