Hall of Shame

Health Care

Athenex Inc (ATNX US)

Year: 2019


Athenex, Inc. is an oncology pharmaceutical company focused on the development and commercialization of therapies for cancer diseases and supportive therapies. The Company's technology platform is organized into three categories, including Oral Absorption Platform, Src Kinase Inhibitors and Symptom Therapeutics. The Company offers Oraxol, an oral formulation of paclitaxel; Orateacan, an oral formulation of Irinotecan; Oradoxel, an oral formulation of Docetaxel, and an oral formulation of Topotecan for the treatment of various types of cancers. Its Src Kinase Inhibitors include KX-01 (KX2-391) and KX-02 (KX2-361) oncology drug candidates. The Company's Symptom Therapeutics include CQ-01, which is used for the treatment of burn pruritus and scars; CQ-R1, which is used for the treatment of an irradiation-induced dermatitis, and an intranasal Granisetron used for the treatment of chemotherapy-induced nausea/vomiting. It has manufacturing operations in China.

The Company started trading on the Nasdaq in June 2017 and raised US$75.90m. A further share offering raised another US$72.67M in January 2018.

October / November 2019 Over a period of about a month Viceroy Research published ten research reports on Athenex Inc.. Viceroy Research cited a litany of criticisms including the conviction that Oraxol was “obsolete in… modern medicine.” Other issues Viceroy had with Athenex: the company’s current commercial revenue would drop significantly (~40% 2H19 vs 1H19) because its bestselling drug (Vasopressin) had been pulled due to an FDA ruling; and ten-year cost commitments at its yet-to-be-operational development and production facilities in Dunkirk, NY ($1.52 billion of operational expenses) and Chongqing, China (~$1.4 billion in taxes). Viceroy had also taken issue with how Athenex had managed its balance sheet. The reports were as follows :

  1. Oct. 22, 2019 Athenex – Too little, too late; a 28 page report which Viceroy concluded that Athenex was a perfect storm of investor deception, insider enrichment and clinical trial risks. It also noted that several members of Athenex’s management team had 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, Suntech, GCL Silicon/Poly, and China Lumena.
  2. Oct. 23, Athenex – Where there’s smoke… ; a 17 page report that alleged that Athenex’s revenue generating business was a house of cards, muddled with further ties to large scale frauds, fabricated management credentials, and photoshopped offices.
  3. Oct. 24, Athenex – No Integrity; a 12 page report where Viceroy exposed more managerial ties to established frauds, and addressed Athenex’s response to Viceroy's previous work,
  4. Oct. 25, Athenex – Bonus Round;  a six page report which summarised Viceroy’s work over the week. Also covered data it had collated on Athenex’s dealing with the NY State Government to create jobs, spur investment and promote economic activity in the Buffalo NY Area.
  5. Oct. 28, Athenex – Rehash; a seven page report on how Athenex recycled press releases to pump investors. Viceroy released details of further conflicts with Athenex CROs.
  6. Oct. 29, Athenex – Unpopular Operating Officer; an eight page report on Athenex's COO. Viceroy said that while his resume appeared impressive, Athenex Chief Operating Officer Jeffrey Yordon had always been in the proximity of disaster, including two class action lawsuits.
  7. Nov. 4, Athenex – Financial Situation; an eight page report where Viceroy provided a deep dive on Athenex’s significant revenue declines and capital over-commitment that investors could expect in the coming months. It believed revenues from the second half of 2019 would fall ~40% against the first half of 2019.
  8. Nov. 7, Athenex – Q3 Financials Brief; a two page report that covered falling revenues, stalled operations, flat R&D.
  9. Nov 13, Athenex – Independent Oraxol Review; a ten page report - Independent biotech consultants, commissioned to report on Oraxol clinical data, of belief Athenex would not receive NDA.
  10. Nov. 20, Athenex – Big trouble in little Chongqing; a 35 page report covering Athenex’s new completed API plant which was not located in the Chongqing International Bio-City, and was still heavily under construction.

October 24, 2019 Athenex management elected not to address Viceroy’s damning appraisal point by point but rather labeling it unfounded, inaccurate, and misleading.


Athenex: Shareholder Update, 24 Oct 2019
Athenex: Annual Report YE Dec. 2019
Athenex: Annual Report YE Dec. 2018
Athenex: Annual Report YE Dec. 2017
SEC: Athenex Filings
Newswire: Athenex News

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