Athenex Inc. (Nasdaq: ATNX) - Buy Recommendation - $17.50 PT

The 25-day quiet period for the Athenex Inc. (Nasdaq: ATNX) IPO is scheduled to expire on July 10, 2017. Beginning on July 11, 2017, the company's underwriters will be allowed to conduct analyses, release reports and make recommendations.

The underwriters are likely to release positive reports, causing at least a temporary increase in the stock's value. We recommend that investors purchase shares in advance of the quiet period expiration in order to take advantage of the potential price increase.

Business overview: Biopharmaceutical company focused on cancer therapies

Athenex Inc. is a biopharmaceutical company that is focused on developing new treatments for cancer by using two primary platforms, including Orascovery and Src kinase inhibitors. The company also has a contract manufacturing arm that is growing.

Founded in 2003, it is based in Buffalo, New York. Its product candidates are primarily focused on the treatment of skin and breast cancers.

Since its inception, it has received more than $250 million in private financing and has an aggregate of $375 million in private-public partnerships. 

Management team highlights

The chairman of the board since the company's inception in 2003 and the chief executive officer since 2011, Dr. Johnson Lau, has substantial leadership experience in business management and science.

He previously oversaw Ribapharm Inc.'s IPO in 2002 while serving as its CEO and chairman. He has held numerous executive roles at other biopharmaceutical companies and has contributed more than 200 scholarly articles to peer-reviewed journals. Dr. Lau graduated with his medical degree and medical doctorate from the University of Hong Kong and is a fellow of the Royal College of Physicians. 

Jeffrey Yordon has served as the chief operating officer of Athenex since Feb. 2017 and joined the company as its president in April 2016. Yordon has held numerous executive roles in the pharmaceutical industry over the past 46 years.

He previously founded and served as the CEO and chairman of Sagent Pharmaceuticals from 2007 until 2016. Yordon has a Bachelor of Science in political science from Northern Illinois University. 

Financials overview

For the year that ended on Dec. 31, 2016, the company reported $19,364,000 in product sales and total revenues of $20,551,000. For the year that ended on Dec. 31, 2015, the company reported $12,816,000 in product sales and total revenues of $13,944,000. Athenex reported net losses of $85,747,000 and $50,708,000 in 2016 and 2015, respectively. 

Athenex priced its shares at $11, which was the low end of its marketed range of $11 to $13. ATNX has performed well since its IPO in early trading and was most recently trading at $16 per share at market close on June 30, 2017. The company's underwriters exercised their over-allottment options in full during the IPO. 

Conclusion: New Chance To Buy In

Athenex has performed well in early trading since its market debut. It has demonstrated growing revenues, and its underwriters chose to exercise their over-allotment options in full.

We believe that the underwriters are likely to release detailed positive recommendations and analyses when the quiet period expires, resulting in at least a temporary price boost.

We recommend that investors purchase shares of Athenex before the quiet period expiration to take advantage of the potential increase in the share price; ideally, our firm has found a window of (-5,+2) days for such plays.