On January 7, 2022, the Company entered into a definitive agreement (the “Dunkirk Agreement”) with ImmunityBio, Inc. (the "Dunkirk Buyer") whereby the Company agreed to sell to the Dunkirk Buyer its leasehold interest in a manufacturing facility in Dunkirk, New York (the “Dunkirk Facility”) and certain other related assets, as described below, in exchange for reimbursement of certain expenditures that the Company made in the Dunkirk Facility totaling $40.0 million. The transaction closed on February 14, 2022 and was subject to approval from the Company's lender, Oaktree. The provisions of this approval included prepayment of the senior secured loans, as described in Note 11 - Debt and Lease Obligations. The Dunkirk Buyer has agreed to manufacture 503B products for the Company on mutually agreed upon commercial terms.

In addition to the leasehold interest in the Dunkirk Facility, the Dunkirk Buyer purchased the Company’s interests in certain leased manufacturing equipment and personal property, and owned personal property and inventory at the Dunkirk Facility, along with the Company’s rights in and obligations under its agreements relating to the Dunkirk Facility with Empire State Development ("ESD"), Fort Schuyler Management Corporation ("FSMC"), and County of Chautauqua Industrial Development Agency ("CCIDA") and other parties (collectively, the "Dunkirk Operations"). The Dunkirk Buyer assumed all capital expenditure and hiring obligations of the Company related to the Dunkirk Operations pursuant to the Company’s existing agreements with ESD and FSMC. The Company did not assign any of its rights to its corporate headquarters in Buffalo, New York, under the Dunkirk Agreement and retained all of its rights and obligations with respect to its corporate headquarters.

As of June 30, 2022, the Dunkirk Operations met all conditions required to be classified as discontinued operations. Therefore, the operating results of the Dunkirk Operations are reported as gain (loss) from discontinued operations in the accompanying consolidated statements of operations and comprehensive loss. The assets and liabilities related to the Dunkirk Operations are reported as assets and liabilities of discontinued operations in the accompanying balance sheets as of June 30, 2022 and December 31, 2021. These assets are recorded at the lesser of cost or fair value less cost to sell. The Dunkirk Operations have historically been included within the Global Supply Chain Platform on the Company's consolidated financial statements.

Additionally, on July 7, 2022, the Company entered into an Equity Purchase Agreement with TiHe Capital (Beijing) Co. Ltd. (the "API Buyer") pursuant to which the Company agreed to sell 100% of the equity interests in Chongqing Taihao Pharmaceutical Co., Ltd. and Athenex Pharmaceuticals (Chongqing) Limited (the “Equity Interests”) for RMB124.4 million, or approximately $19 million (“EPA Purchase Price”). The Equity Interests primarily represent the Company’s ownership of its active pharmaceutical ingredient (“API”) manufacturing business in China, including the right to operate the Taihao API facility in Chongqing, China, and its lease for the Sintaho API facility in Chongqing, China, with Chongqing Maliu Riverside Development and Investment Co., LTD (“CQ”), (collectively "China API Operations"). At the closing of this transaction (“Closing Date”) the Buyer will pay at least 70% of the EPA Purchase Price to the Company in cash. The remainder of the EPA Purchase Price will be paid in cash, with 20% of the EPA Purchase Price to be paid within three months after the Closing Date and the remaining balance of the EPA Purchase Price to be paid within six months after the Closing Date. On the Closing Date, the Company and the Buyer are expected to enter into a supply agreement and an agreement granting the Buyer the right of first negotiation for certain of the Company’s products in China. The deal is subject to customary closing conditions, including obtaining certain regulatory approvals in China. Refer to Note 19 - Subsequent Events for additional information.

As of June 30, 2022, the China API Operations met all conditions required to be classified as discontinued operations. Therefore, the operating results of the China API Operations are reported within loss (gain) from discontinued operations in the accompanying consolidated statements of operations and comprehensive loss. The assets and liabilities related to the China API Operations are reported as assets and liabilities of discontinued operations in the accompanying balance sheets as of June 30, 2022 and December 31, 2021. These assets are recorded at the lesser of cost or fair value less cost to sell. The China API Operations have historically been included within the Global Supply Chain Platform on the Company's consolidated financial statements.

The following table presents the financial results of the discontinued operations (in thousands):


	Three Months Ended June 30,						Six months ended June 30,
	2022			2021			2022			2021
Discontinued Dunkirk operations:
Selling, general, and administrative expenses	$	—		$	(2,425	)	$	(1,927	)	$	(3,808	)
Gain on sale of discontinued operations		—			—			14,464			—
(Loss) gain from discontinued Dunkirk operations		—			(2,425	)		12,537			(3,808	)
Discontinued China API operations:
Revenue	$	424		$	1,225		$	1,007		$	3,098
Cost of sales		(7,343	)		(546	)		(8,118	)		(1,910	)
Research and development expenses		(157	)		(481	)		(613	)		(1,807	)
Selling, general, and administrative expenses		(1,540	)		(1,165	)		(2,669	)		(2,703	)
Other income		280			24			832			46
Interest expense		(5	)		—			(13	)		—
Loss from discontinued China API operations	$	(8,341	)	$	(943	)	$	(9,574	)	$	(3,276	)
(Loss) gain from discontinued operations	$	(8,341	)	$	(3,368	)	$	2,963		$	(7,084	)

The Dunkirk operations selling, general, and administrative costs during the periods presented was comprised primarily of compensation and consultant expenses, as well as operating expenses needed to prepare the facility.

The gain on sale of the Dunkirk discontinued operation was the result of the $40.0 million cash proceeds from the sale, less the net book value of assets and liabilities transferred to the Dunkirk Buyer, including property and equipment of $27.1 million, accounts payable and accrued expenses of $1.3 million and current and long-term finance lease obligations of $0.2 million.

The revenue and cost of sales of the China API discontinued operation arose from the sales of API. Cost of sales of the China API discontinued operation includes a write-off of excess and obsolete inventory of $7.1 million for the three and six months ended June 30, 2022. Research and development costs of the China API discontinued operation represent development of API manufacturing methods and API product development for the Company's Orascovery platform. Other income of the China API discontinued operation includes the sale of pilot product which was previously developed at the facility and included within research and development expense.

The consolidated statements of cash flows include cash flows related to the discontinued operations due to the Company's centralized treasury and cash management processes. The following table presents additional cash flow information for the discontinued operations (in thousands):


	Six months ended June 30,
	2022			2021
Supplemental information for discontinued Dunkirk operations:
Depreciation expense	$	185		$	29
Cash paid for capital expenditures		(1,949	)		(7,185	)
Repayment of finance lease obligations		(7	)		(85	)
Supplemental information for discontinued China API operations:
Depreciation expense	$	30		$	348
Impairment of PPE		230			—
Write-off of inventory		7,120			—
Cash paid for capital expenditures		(327	)		(2,783	)
Proceeds from issuance of debt		—			783
Repayment of long-term debt		(785	)		(783	)

The following table presents the aggregate carrying amounts of the classes of assets and liabilities of discontinued operations (in thousands):


	June 30,		December 31,
	2022		2021
Discontinued Dunkirk operations:
Prepaid expenses and other current assets	$	—	$	1,280
Property and equipment, net		—		26,848
Discontinued China API operations:
Accounts receivable		362		351
Inventories		2,204		7,636
Prepaid expenses and other current assets		2,393		3,564
Property and equipment, net		21,120		22,797
Operating lease right-of-use assets, net		463		734
Total assets attributable to discontinued operations	$	26,542	$	63,210
Discontinued Dunkirk operations:
Accounts payable	$	—	$	3,763
Accrued expenses		—		1,198
Current portion of finance lease obligation		—		101
Long-term finance lease obligation		—		126
Discontinued China API operations:
Accounts payable	$	2,725	$	2,223
Accrued expenses		716		561
Current portion of operating lease liabilities		233		516
Current portion of long-term debt		—		785
Long-term debt and lease obligations		7,490		7,932
Total liabilities attributable to discontinued operations	$	11,164	$	17,205