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Athenex: The CRL Is Devastating

Mar. 09, 2021 6:44 AM ETAthenex, Inc. (ATNXQ) Stock47 Comments


  • Athenex received a CRL from the FDA for its lead asset Oraxol.
  • The CRL will require them to conduct a new phase 3 trial in the US.
  • This is a major setback for ATNX.
  • Looking for more investing ideas like this one? Get them exclusively at The Total Pharma Tracker. Learn More »

Athenex (ATNX) went down from $12 to $4 levels after the FDA issued a CRL to the NDA for their lead asset Oraxol for metastatic breast cancer. I covered the science in a recent article. Although I said mostly positive things about ATNX, I did not like the stock enough to recommend it to my subscribers. Neither did I add it to my top 10 list, a list of my highest conviction buys that TPT subscribers have exclusive access to. I have a bias against companies that are ex-US and ex-EU because I think standards are less rigorously maintained in those “ex” geographies. That may not always be the case, but given the FDA’s wording of the CRL in this case, it appears they too think like I do. Athenex is a China origin company, and it seeks approval for its drug in the US, for an American population of patients, but all 45 sites for its phase 3 study were located in 10 South American countries, including Columbia, Guatemala and Honduras.

So it is quite interesting to hear what the FDA says, using diplomatic language, but whose meaning is clear enough:

The FDA recommended that Athenex conduct a new adequate and well-conducted clinical trial in a patient population with metastatic breast cancer representative of the population in the U.S.

If you read between the lines and note the keywords “adequate” and “well-conducted” and add those to the stuff about “US population,” you can probably figure out that the FDA means this: conduct a trial in the US, or in the EU, otherwise we cannot be certain that the trial is either adequate or well-conducted. That seems to be the reading I am getting here.

This reading of the situation adequately explains the gripe seen in the following statement from

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This article was written by

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Comments (47)

bluescorpion0 profile picture
worth a gamble at a buck? the car-nk ipsc seems really interesting. Like what $fate is doing I presume?
I agree with some of the comments here that the "bias" in this article isn't well articulated. If you have some data to share on "less rigorous maintained" "standards" then share it with us otherwise your "opinion" on those standards is worthless. The bigger issue with foreign companies is governance but it seems like ATNX is based in the US so again, if you have some specific grievance to articulate you should actually say it rather than express some vague discomfort. Plenty of people have issues with Tesla's governance and they don't go ... "eh, I don't know how I feel about these brash American companies with their flashy statements" and use that to justify avoiding it as an investment because of an anti-American bias. Your words are meaningless here if you don't provide at least anecdotal documentation.

Also, as far as US based trials go, paclitaxel isn't exactly some new rocket science in medicine. The mechanism behind oral paclitaxel goes back at least 17 years based on a very cursory search. So it seems like a very fine gripe to suggest that neutropenia, bias, and/or a lack of American trial participants is the problem. It's blatantly obvious that the FDA has bias given the centralized authority that some of their leaders exert on decision making and their history of questionable and rushed approvals (followed by fatalities, lawsuits, and medical disaster).

The market is already filled with organ-destroying immunotherapy drugs that very clearly reflect an acceptance of the risk/reward for approving those drugs because the alternative outcome is lower ORR and higher mortality. So it's almost comical when they're acting like they need to have more stringent data guidelines for a drug that they know will be approved when it's pretty obvious that the extra hoops are certainly related to bias within the FDA.

From a pricing perspective ATNX is now fairly cheap and their pipeline remains promising. Even with some projected dilution it doesn't seem unreasonable to get an easy 2-3X return over the next few years with average volatility, aka good risk/reward. When TBRA had a 2b trial failure the market crushed them and anyone with half a brain would've made a killing when Allergan shortly after bought them for $1.7 B (i.e. 2700+% gain) so it's always comedy to me when so-called experts try to backtrack on good stocks that are underperforming when they are cheap and try to bandwagon on overpriced stocks when they are expensive. It's no wonder why you have so many losers in a market where it is so easy to make money if you have even an inkling of what happens when a good company is trading at a daily RSI of under 20.
Funny, fda signed off on the trial as per company statement in 2018. In addition, it seems reduction in more severe side effects in myopathy should largely out weigh neutropenia which can be managed. OS is far far better than control and should have taken away any doubt whether this treatment is viable or not. FDA could have convened an adcom if it was in doubt whether safety outweighs clinical benefit (e.g. like what happened to kpti in the past). FDA could have also solved the safety concern with labelling (blackbox warning) or a mandatory p4). It seems to me something is off at the fda or is it just the sheer incompetence of the case manager? In any case I expect atnx to appeal the decision in first instance and take it to court if needed. They have little too lose, the fda everything.
great article, been following you for a while. How do you think these results effect ODT? much appreciated.
Article suggests this failed drug is their only asset yet the company has $144M in annual revenue. Unlike Biotech startups, this one appears to have an OK revenue stream. And market cap is about 3x earnings, not a crazy number for such a stock. What am I missing?
What I don't understand is why the FDA didnt let ATNX know that a non us trial wouldn't be sufficient. From what I read, they were complimentary of the how the trial was developed. How was this not an issue from the start?
Avisol Capital Partners profile picture
@Ioliva1 The FDA hasnt actually said that even now. It has used much more diplomatic language. However, I am sure the FDA thought a company would know this. If you are targeting American patients, do a trial in America. Pretty basic thumb rule. Sometimes there are exceptions. But no guarantees.
@Avisol Capital Partners ir.athenex.com/...

Atnx did get positive feedback on the design.
Once again, it's not always wise to take SA authors at face value:
"I have a bias against companies that are ex-US and ex-EU "
"Athenex is a China origin company"

from what I've now found, it's in (and always has been?) Buffalo. I don't know of any Buffalo in China. they have bought up manufacturing plants there, but what USofA (or EU, for all that) pharma hasn't. so that objection is a shibboleth.

the South American trial, yeah, that's material.
Avisol Capital Partners profile picture
@cucumberbatch Their Buffalo HQ started in 2015, located at rented space in Coventus. Their LLC was registered in 2003 in Delaware. Much of their original leadership have been schooled in either PRC or nearby. Their lead asset Orascovery came from Hanmi in 2012, predating their US HQ. Their China based Polymed license also predates their US HQ. They have extensive networking in and around China. I am not going to court with this, I am simply doing due diligence for investing. The facts above, coupled with their ex-US trial locations, do not offer confidence.

In my free articles, I provide the same facts as I do in my service. However, my conclusions are more elaborate there, because it is a paid service and I am paid for my opinion. My free opinions do not contradict those on the service. I clearly rated myself Neutral on ATNX. I used low conviction language like "may" and "could be." If, despite that, somebody bought ATNX based on my article, all I can say is, thats why we have a paid service.
Nice assessment... thank you!
I read an article about the company and it seemed like an interesting speculation. However, as we all realize, speculations often don't work out, and it looks like this may be one of those that doesn't.
I am guessing the FDA and the author think anything not made or done in the US or Europe is iffy. Yet one can argue 95% of what the world uses are not made in Europe or US. Plain bias and Racist undertone.
Avisol Capital Partners profile picture
@Blackpower The author thinks that if a medicine is being made for Americans, it should be tested on Americans. Basic Clinical Trials 101.
@Avisol Capital Partners This your statements is even worse and Maybe shows a lack or awareness. If all countries require that medicine be tested on their country before they can approve, I can only imagine how many trials will need to be done. Your statement is just dumb.
Avisol Capital Partners profile picture
@Blackpower All countries require medicines undergo clinical trials in their own countries, before approval. Especially for a developed country like the US, there is no excuse for not running trials in the US. Who is going to approve a drug based on its RCT in Columbia? That sort of trick is only done for cost cutting, or worse. The FDA thinks - worse. I tend to agree.

And best to use decent language if you want a discussion with me. I am not a psychiatrist and do not have time for "behavioural modification."
I invested in this dud based on your recommendation and lost 8 grand. Your recommendation was very strong and you used convincing arguments but I should have used my own judgement
Avisol Capital Partners profile picture
@Max Zar I feel bad about that, but I never recommend a stock on the free site unless I have already recommended it to my subscribers. I never recommended ATNX to them this time on TPT. I wasn't convinced. I gave it a neutral rating on the free site. Make sure to join TPT if you want the actual recommendations, or ask me directly and I will respond if I have time, and always do your own DD. Good luck.
@Max Zar This may sound like bullying, but this author has a really terrible recommendation record. The worst I've seen. Brainstorm, Nabriva, Athenex, Sesen, Chiasma and on and on. They always seem to be on the wrong side of the equation, often just at the worst possible time. It's to the point now where I get scared if they are bullish on something I hold.
@OldManLogan CLVS included. But wait he will name one stock that went to $100. They all write articles on many stocks with the knowledge that at least 1 will do well. Then point to that as thier record of being good.
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