| Item 1.01 | Entry into a Material Definitive Agreement. |
As previously disclosed, on May 14, 2023, Athenex, Inc. (the “Company”) together with certain of its subsidiaries (collectively, the “Debtors”) filed voluntary petitions (collectively, the “Chapter 11 Case”) 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 June 6, 2023, the Company and Athenex R&D LLC, one of the Debtors and a subsidiary of the Company, entered into an asset purchase agreement (“Orascovery Agreement”) with C-Mer Specialty Group Limited (“C-Mer”), pursuant to which C-Mer agreed to purchase the Debtor’s assets used in the Company’s small molecule, or Orascovery, business (the “Orascovery Assets”) subject to the terms and conditions contained in the Orascovery Agreement. Under the Orascovery Agreement, C-Mer agreed to serve as a “stalking horse bidder,” whereby the Orascovery Agreement served as a baseline by which other offers were measured in an open auction process conducted in accordance with the Code (the “Auction”). At Auction, no higher bids were received for the Orascovery Assets. On June 29, 2023, C-Mer assigned its rights and obligations under the Orascovery Agreement to Health Hope Pharma Limited (“Orascovery Buyer”). Under the Orascovery Agreement, the Orascovery Buyer paid a cash purchase price of $2.5 million for the Orascovery Assets at closing, with a milestone payment of $5.0 million to be promptly paid to Athenex R&D LLC after worldwide net sales of oral paclitaxel have reached $10.0 million. The sale of the Orascovery Assets was approved by the Bankruptcy Court on June 21, 2023 and closed on July 7, 2023.
On June 23, 2023, Athenex Pharmaceutical Division, LLC (“APD”), one of the Debtors and a subsidiary of the Company, entered into an asset purchase agreement (“APD Agreement”) with Sagent Pharmaceuticals (“Sagent”), pursuant to which Sagent agreed to purchase the assets used in APD’s business, excluding its cash, cash equivalents and accounts receivable, among other things (the “APD Assets”), subject to the terms and conditions contained in the APD Agreement. Sagent was the highest bidder at Auction and paid a cash purchase price of approximately $14.0 million for the APD Assets at closing. The sale of the APD Assets was approved by the Bankruptcy Court on June 27, 2023 and closed on June 30, 2023.
At Auction, Oaktree Strategic Credit Asset Holdings, LLC, and Oaktree Fund Administration, LLC (collectively, “Oaktree”) agreed to purchase APD’s cash, cash equivalents, accounts receivable, prepaid expenses, and books and records (the “APD AR”) under the terms of an asset purchase agreement between Oaktree and APD (the “Oaktree Agreement”). Oaktree placed a credit bid at Auction for $20.0 million, subject to adjustment pursuant to the Oaktree Agreement, meaning that the secured debt of the Debtors held by Oaktree would be offset by the amount of the bid. The sale of the APD AR was approved by the Bankruptcy Court on June 27, 2023 and is expected to close in the near future.
As of June 12, 2023, the Company, Athenex Pharma Solutions, LLC (“APS”), one of the Debtors and a subsidiary of the Company, Almirall, S.A. and Almirall LLC (together with Almirall, S.A., “Almirall”), Sagard Healthcare Royalty Partners, LP (“Sagard”) and Oaktree entered into a settlement agreement (the “Settlement Agreement”) with respect to the Revenue Interest Purchase Agreement, dated as of June 21, 2022 (the “RIPA”) between the Debtors, Sagard, and Oaktree. Under the RIPA and related agreements, APS was required to supply Almirall with tirbanibulin, the active pharmaceutical agreement in Klysiri. Under the settlement agreement, Almirall agreed to purchase, for up to $2.44 million, APS’s existing and future inventory of tirbanibulin and to reimburse APS for its expenses to operate for an additional three to four months to manufacture tirbanibulin. Following the effective date of the Settlement Agreement, the technical information and related intellectual property rights required to manufacture tirbanibulin will be licensed to Almirall, so that it may continue to produce tirbanibulin with a third-party supplier. The Debtors had owed this third-party supplier for tirbanibulin produced to fulfill the Debtors’ obligations under the RIPA. As part of the Settlement Agreement, Sagard will release $3.5 million from escrow from the conditions under the RIPA to satisfy the Debtors’ obligation to the third-party supplier. In addition, Sagard and Oaktree agreed to waive the obligations of the Debtors under the RIPA and release the Debtors from further obligations under the RIPA, which eliminated potentially significant claims against the Debtors. Finally, the Debtors agreed to transfer any and all of their equity interest in the special purpose vehicle created for the RIPA to Sagard and Oaktree.
The foregoing descriptions of the Orascovery Agreement, APD Agreement, Oaktree Agreement, and the Settlement Agreement do not purport to be complete and are qualified in their entirety by the full text of those agreements, copies of which have been filed with the Bankruptcy Court.
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