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Business Segment, Geographic, and Concentration Risk Information
3 Months Ended
Mar. 31, 2020
Segment Reporting [Abstract]  
Business Segment, Geographic, and Concentration Risk Information

13. Business Segment, Geographic, and Concentration Risk Information

The Company has three operating segments, which are organized based mainly on the nature of the business activities performed and regulatory environments in which they operate. The Company also considers the types of products from which the reportable segments derive their revenue (only applicable to two reportable segments). Each operating segment has a segment manager who is held accountable for operations and has discrete financial information that is regularly reviewed by the Company’s chief operating decision-maker. Consequently, the Company has concluded each operating segment to be a reportable segment. The Company’s operating segments are as follows:   

Oncology Innovation Platform— This operating segment performs research and development on certain of the Company’s proprietary drugs, from the preclinical development of its chemical compounds, to the execution and analysis of its several clinical trials. It focuses specifically on Orascovery and Src Kinase Inhibition research platforms, and TCR-T Immunotherapy and Arginine Deprivation Therapy. This segment operates in the United States, Taiwan, Hong Kong, mainland China, the United Kingdom, and Latin America.

Global Supply Chain Platform— This operating segment includes APS and Polymed and the construction of the manufacturing facilities in Chongqing, China and Dunkirk, New York. APS is a contract manufacturing company that provides small to mid-scale cGMP manufacturing of clinical and commercial products for pharmaceutical and biotech companies and for use as internal supplies to the clinical studies and commercial development of the Company’s proprietary drugs. APS also performs microbiological and analytical testing for raw material and formulated products and has expanded to manufacture and sell pharmaceutical products under Section 503B of the Compounding Quality Act within the Federal Food, Drug & Cosmetic Act (“FDCA”). Polymed is primarily in the business of marketing and selling API in North America, Europe, and Asia from its locations in Texas and China. Polymed also develops new compounds and processing techniques, and recently completed construction of a new API manufacturing facility in Chongqing, China. The 440,000-square-foot facility is expected to commence operations in the second half of 2020. The Company has an existing API manufacturing facility in Chongqing, China, where operations were suspended as a result of the COVID-19 outbreak in China but resumed producing API in March in accordance with local regulatory guidance.

Commercial Platform— This operating segment includes APD and Athenex Oncology, which focus on the manufacturing, distribution, and sales of specialty pharmaceuticals and the pre-launch commercial activities for the Company’s proprietary drugs, respectively. This segment provides services and products to external customers based mainly in the United States.

The Company’s Oncology Innovation Platform segment operates and holds long-lived assets located in the United States, Taiwan, Hong Kong, mainland China, the United Kingdom, and Latin America. The Global Supply Chain Platform segment operates and holds long-lived assets located in the United States and China. The Commercial Platform segment operates and holds long-lived assets located in the United States. For geographic segment reporting, product sales have been attributed to countries based on the location of the customer.

Segment information is as follows (in thousands):

 

 

 

Three Months

Ended March 31,

 

 

 

2020

 

 

2019

 

Total revenue:

 

 

 

 

 

 

 

 

Oncology Innovation Platform

 

$

28,387

 

 

$

144

 

Global Supply Chain Platform

 

 

3,714

 

 

 

11,339

 

Commercial Platform

 

 

15,542

 

 

 

14,675

 

Total revenue for reportable segments

 

 

47,643

 

 

 

26,158

 

Intersegment revenue

 

 

(708

)

 

 

(851

)

Total consolidated revenue

 

$

46,935

 

 

$

25,307

 

 

Intersegment revenue eliminated in the above table reflects sales from the Global Supply Chain Platform to the Oncology Innovation Platform.

 

 

 

Three Months

Ended March 31,

 

 

 

2020

 

 

2019

 

Total revenue by product group:

 

 

 

 

 

 

 

 

License fees

 

$

28,381

 

 

$

 

Commercial product sales

 

 

17,502

 

 

 

20,081

 

API sales

 

 

1,022

 

 

 

4,831

 

Contract manufacturing revenue

 

 

23

 

 

 

251

 

Other revenue

 

 

7

 

 

 

144

 

Total consolidated revenue

 

$

46,935

 

 

$

25,307

 

 

Intersegment revenue is recognized by the selling segment when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods or services. Upon consolidation, all intersegment revenue and related cost of sales are eliminated from the selling segment’s ledger.

 

 

 

Three Months

Ended March 31,

 

 

 

2020

 

 

2019

 

Net loss attributable to Athenex, Inc.:

 

 

 

 

 

 

 

 

Oncology Innovation Platform

 

$

(958

)

 

$

(27,603

)

Global Supply Chain Platform

 

 

(5,986

)

 

 

(767

)

Commercial Platform

 

 

(12,485

)

 

 

(6,863

)

Total consolidated net loss attributable to

   Athenex, Inc.

 

$

(19,429

)

 

$

(35,233

)

 

 

 

Three Months

Ended March 31,

 

 

 

2020

 

 

2019

 

Total depreciation and amortization:

 

 

 

 

 

 

 

 

Oncology Innovation Platform

 

$

175

 

 

$

189

 

Global Supply Chain Platform

 

 

496

 

 

 

311

 

Commercial Platform

 

 

415

 

 

 

379

 

Total consolidated depreciation and

   amortization

 

$

1,086

 

 

$

879

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Total assets:

 

 

 

 

 

 

 

 

Oncology Innovation Platform

 

$

156,358

 

 

$

194,183

 

Global Supply Chain Platform

 

 

81,930

 

 

 

63,598

 

Commercial Platform

 

 

59,499

 

 

 

52,151

 

Total consolidated assets

 

$

297,787

 

 

$

309,932

 

 

 

 

Three Months

Ended March 31,

 

 

 

2020

 

 

2019

 

Total revenue:

 

 

 

 

 

 

 

 

China

 

$

28,513

 

 

$

386

 

United States

 

 

17,522

 

 

 

20,335

 

India

 

 

 

 

 

777

 

Austria

 

 

 

 

 

2,173

 

United Kingdom

 

 

 

 

 

1,023

 

Other foreign countries

 

 

900

 

 

 

613

 

Total consolidated revenue

 

$

46,935

 

 

$

25,307

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Total property and equipment, net:

 

 

 

 

 

 

 

 

United States

 

$

12,467

 

 

$

11,486

 

China

 

 

12,149

 

 

 

11,667

 

Total consolidated property and equipment, net

 

$

24,616

 

 

$

23,153

 

 

Customer revenue and accounts receivable concentration amounted to the following for the identified periods. These customers relate to the Commercial Platform segment and the Global Supply Chain Platform segment.

 

 

 

Three Months

Ended March 31,

 

 

 

2020

 

 

2019

 

Percentage of total revenue by customer:

 

 

 

 

 

 

 

 

Customer A

 

 

60

%

 

 

0

%

Customer B

 

 

11

%

 

 

22

%

Customer C

 

 

9

%

 

 

21

%

Customer D

 

 

7

%

 

 

12

%

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Percentage of total accounts receivable by customer:

 

 

 

 

 

 

 

 

Customer A

 

 

58

%

 

 

0

%

Customer B

 

 

14

%

 

 

45

%

Customer C

 

 

13

%

 

 

31

%

Customer D

 

 

8

%

 

 

10

%