UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.03 | Bankruptcy or Receivership. |
On May 14, 2023 (the “Petition Date”), Athenex, Inc. (the “Company”) together with certain of its subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (the “Code”) with the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). On the Petition Date, the Debtors filed a motion with the Bankruptcy Court seeking to jointly administer the Chapter 11 cases under the caption “In re: Athenex, Inc., et al.” (Case No. 23-90295) (the “Chapter 11 Case”).
The Debtors expect to continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the provisions of the Code and the orders of the Bankruptcy Court. Also on the Petition Date, the Debtors filed with the Bankruptcy Court motions seeking a variety of “first day” customary relief intended to enable the Company to continue its ordinary course operations and to facilitate an orderly wind down of its operations. The Company intends to sell substantially all of its assets during the Chapter 11 Case pursuant to a competitive bidding and auction process. The Company cannot be certain that holders of the Company’s common stock will receive any payment or other distribution for those shares following the Chapter 11 Case.
Also on May 14, 2023, the Company issued a press release in connection with the filing of the Chapter 11 Case. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.
Item 2.04 | Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement. |
The filing of the Chapter 11 Case constituted an event of default that accelerated the Company’s obligations under certain agreements relating to direct financial obligations of the Company, including:
• | the senior secured loan agreement dated as of June 19, 2020, as amended from time to time, with Oaktree Fund Administration, LLC, as administrative agent, and the lenders party thereto (the “Senior Credit Agreement”), with respect to an aggregate outstanding principal amount of approximately $41.875 million, together with accrued interest and all applicable fees and other financial obligations under the Senior Credit Agreement; and |
• | the revenue interest purchase agreement, dated as of June 21, 2022, between the Company and ATNX SPV, LLC, on the one hand, and affiliates of Sagard Healthcare Partners and funds managed by Oaktree Capital Management, L.P., on the other hand. |
The filing of the Chapter 11 Case automatically stayed most actions against the Debtors. Subject to certain exceptions under the Code, the filing of the Debtors’ Chapter 11 Case also automatically stayed the continuation of most legal proceedings or the filing of other actions against or on behalf of the Debtors or their properties to recover on, collect or secure a claim arising prior to the Petition Date or to exercise control over properties of the Debtors’ bankruptcy estates, unless and until the Bankruptcy Court modifies or lifts the automatic stay as to any such claim.
Item 2.05 | Costs Associated with Exit or Disposal Activities. |
On May 9, 2023, the Company’s board of directors (“Board”) authorized the termination of approximately 140 employees, or approximately 67% of the Company’s current employees, effective May 12, 2023 and restructured the Company’s operations to maintain a transition team of approximately 68 employees to continue operations in connection with the Chapter 11 Case. The Company recorded a one-time charge of approximately $1.3 million related to the reduction in its workforce, consisting primarily of one-time severance payments upon termination of the employees.
Item 3.01 | Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing. |
On May 16, 2023, the Company received written notice from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, as a result of the Chapter 11 Case and in accordance with Nasdaq Listing Rules 5101, 5110(b), and IM-5101-1, the Nasdaq staff determined that the Company’s common stock will be delisted from Nasdaq. The Company does not intend to appeal this determination. Trading of the Company’s common stock will be suspended at the opening of business on May 25, 2023.
Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On May 9, 2023, the Board terminated Salary Deduction and Stock Purchase Agreements between the Company and certain of its directors and executive officers effective immediately.
On May 12, 2023, the Board appointed Joe Annoni to serve as the Company’s Assistant Chief Restructuring Officer in addition to his duties as Chief Financial Officer. Also on May 12, 2023, the Company increased the base salary of its Chief Financial Officer, Joe Annoni, from $288,750 to $360,000 and reduced the base salary of Daniel Lang from $325,000 per year to $162,500 per year. These salary adjustments take effect immediately.
Cautionary Note Regarding the Company’s Common Stock
The Company cautions that trading in the Company’s common stock during the pendency of the Chapter 11 Case is highly speculative and poses substantial risks. Trading prices for the Company’s common stock may bear little or no relationship to the actual recovery, if any, by holders of the Company’s common stock in the Chapter 11 Case. Accordingly, the Company urges extreme caution with respect to existing and future investments in its common stock.
Cautionary Note Regarding Forward-Looking Statements
Except for historical information, information in this Current Report on Form 8-K and the exhibit hereto consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and assumptions that are difficult to predict. Words such as “expect,” “intend,” “may,” “seek,” and similar expressions, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. Actual results might differ materially from those explicit or implicit in the forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions including: risks inherent in the bankruptcy process, including the Company’s ability to obtain approval from the Bankruptcy Court for motions or other requests made throughout the course of the Chapter 11 Case; the Company’s liquidity and financial position; the effects of the Chapter 11 Case on the Company’s operations; the Company’s ability to continue to operate its business during the pendency of the Chapter 11 Case, and the availability of operating capital during the Chapter 11 Case; the Company’s ability to maintain relationships with partners, suppliers, customers, employees, regulatory authorities and other third parties; the length of time that the Company will operate under Chapter 11 protection; objections to the Company’s restructuring or liquidation process, third-party motions, or other pleadings filed that could protract the Chapter 11 Case; and Bankruptcy Court rulings in the Chapter 11 Case and the outcome of the Chapter 11 Case, in general. You should not rely upon forward-looking statements as predictions of future events. The Company undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this Current Report on Form 8-K to conform these statements to actual results or to changes in its expectations, except as required by law.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
Exhibit No. |
Description | |
99.1 | Press release dated May 14, 2023 | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ATHENEX, INC. | ||||||
Date: May 22, 2023 | /s/ Joe Annoni | |||||
Name: | Joe Annoni | |||||
Title: | Chief Financial Officer |
Exhibit 99.1
Athenex, Inc. Reaches Agreement With Lenders to Pursue Expedited Sales Process
To Best Facilitate, Company Voluntarily Files Chapter 11 Proceedings
Company Has Sufficient Resources to Support Athenex Pharma Solutions Operations and Fulfill APD Customer Orders During Process
BUFFALO, N.Y., May 14, 2023 Athenex, Inc., (NASDAQ: ATNX) (Athenex or the Company), a global biopharmaceutical company dedicated to the discovery, development, and commercialization of novel therapies for the treatment of cancer and related conditions, today announced that, following an ongoing strategic review, it has reached agreement with its lenders to move forward with an expedited sales process of the Companys assets across its primary businesses: Athenex Pharmaceutical Division (APD), Orascovery, and Cell Therapy.
To best facilitate this process, Athenex and certain of its subsidiaries filed voluntary proceedings under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas. This will enable the Company to divest its assets and wind down the Athenex platform in an orderly fashion, while seeking to maximize value for its stakeholders. The Company anticipates concluding the expedited sales process by July 1, 2023, with the Chapter 11 cases continuing thereafter to resolve claims.
Athenex has also reached an agreement with its secured lenders, subject to court approval, for the consensual use of cash collateral, which will enable the Company to, among other things, satisfy certain obligations to its vendors for authorized goods received and services rendered after the filing. Athenex Pharma Solutions (APS), which includes the Companys manufacturing facility in Clarence, New York, is expected to continue its operations for at least the next 90 days, to provide commercial supply of tirbanibulin ointment. In addition, APD is continuing to operate in the ordinary course and fill customer orders with the ample inventory it has on hand.
Dr. Johnson Lau, Chief Executive Officer of Athenex, on behalf of the management team and the Athenex Board of Directors, said, Throughout our history, we have sought to become a leader in bringing innovative cancer treatments to the market and improving patient health outcomes. Our team was successful in bringing tirbanibulin, through regulatory approvals, to the U.S. market and a number of EU countries, as well as Taiwan. Unfortunately, our oral paclitaxel product candidate received a complete response letter from the U.S. Food and Drug Administration, and this significant regulatory setback, coupled with challenging biotech markets and the difficult economic environment, put tremendous pressure on our ability to continue to fund our businesses.
Over the past two years, we made considerable progress in refocusing our business around our promising NKT cell therapy platform, monetizing non-core assets to improve our balance sheet and extending our cash runway, paying down $108 million of debt, and undertaking a comprehensive review of strategic alternatives to create value for our stakeholders. While we explored every viable avenue to avoid this outcome, an orderly sales process represents the best path forward at this time.
Our goal remains to identify purchasers who will continue development of the important drug candidates for which we have established a good foundation, and to bring them to market on behalf of medical practitioners and, most importantly, for patients. We are incredibly thankful to our team for their dedication to Athenex and will look to support our colleagues through this transition period.
Additional information regarding Athenexs Chapter 11 filing is available at https://dm.epiq11.com/athenex; by calling the Companys claims agent, Epiq, at 888-601-3094 (toll-free) or +1 503-433-8501 (international); or by sending an email to Athenex@epiqglobal.com.
Pachulski Stang Ziehl & Jones LLP is acting as Athenexs legal counsel. MERU is serving as its financial advisor and Cassel Salpeter & Co., LLC as its investment banker.
About Athenex, Inc.
Founded in 2003, Athenex, Inc. is a clinical-stage biopharmaceutical company dedicated to becoming a leader in the discovery, development, and commercialization of next-generation cell therapy products for the treatment of cancer. The Companys mission is to become a leader in bringing innovative cancer treatments to the market and to improve patient health outcomes. In pursuit of this mission, Athenex leverages years of experience in research and development, clinical trials, regulatory standards, and manufacturing. The Company is focused on its innovative Cell Therapy platform, based on natural killer T (NKT) cells. For more information, please visit www.athenex.com.
Forward-Looking Statements
Except for historical information, information in this press release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and assumptions that are difficult to predict. Words such as anticipate, could, expect, may, seek, will, and similar expressions, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. Actual results might differ materially from those explicit or implicit in the forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions including: risks inherent in the bankruptcy process, including the Companys ability to obtain approval from the Bankruptcy Court for motions or other requests made throughout the course of the Chapter 11 proceedings; the Companys liquidity and financial position; the effects of the Chapter 11 proceedings on the Companys operations; the Companys ability to continue to operate its business during the pendency of the Chapter 11 proceedings, and the availability of operating capital during the Chapter 11 proceedings; the Companys ability to maintain relationships with partners, suppliers, customers, employees, regulatory authorities and other third parties; the length of time that the Company will operate under Chapter 11 protection; objections to the Companys restructuring or liquidation process, third-party motions, or other pleadings filed that could protract the Chapter 11 proceedings; and Bankruptcy Court rulings in the Chapter 11 proceedings and the outcome of the Chapter 11 proceedings, in general. You should not rely upon forward-looking statements as predictions of future events. The Company undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this press release to conform these statements to actual results or to changes in its expectations, except as required by law.
Investor Contacts
IR@athenex.com
716.427.2952
Media Contacts
Daniel Yunger / Wendi Kopsick
Kekst CNC
AthenexMediaInquiries@kekstcnc.com
Document and Entity Information |
May 09, 2023 |
---|---|
Cover [Abstract] | |
Entity Address, Country | US |
Amendment Flag | false |
Entity Central Index Key | 0001300699 |
Document Type | 8-K |
Document Period End Date | May 09, 2023 |
Entity Registrant Name | ATHENEX, INC. |
Entity Incorporation State Country Code | DE |
Entity File Number | 001-38112 |
Entity Tax Identification Number | 43-1985966 |
Entity Address, Address Line One | 1001 Main Street |
Entity Address, Address Line Two | Suite 600 |
Entity Address, City or Town | Buffalo |
Entity Address, State or Province | NY |
Entity Address, Postal Zip Code | 14203 |
City Area Code | (716) |
Local Phone Number | 427-2950 |
Written Communications | false |
Soliciting Material | false |
Pre Commencement Tender Offer | false |
Pre Commencement Issuer Tender Offer | false |
Security 12b Title | Common Stock, par value $0.001 per share |
Trading Symbol | ATNX |
Security Exchange Name | NASDAQ |
Entity Emerging Growth Company | false |
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