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Athenex, Inc. (NASDAQ:ATNX)
Q1 2020 Earnings Call
May 9, 2020, 8:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2020 Athenex Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to hand the conference over to Mr. Tim McCarthy of LifeSci Advisors. Sir, you may begin.

Timothy Cook -- Senior Vice President, Global Oncology

Good morning, and thank you for joining our conference call as we provide an update on Athenex's business as well as a review of financial results for the first quarter of 2020. The news release detailing the results crossed the wire earlier this morning and is available on the company's website. A replay of this call will also be archived on the company website. During the course of this conference call, the company will make projections or forward-looking statements regarding future events, including statements about financial, business and clinical milestones anticipated in fiscal year 2020 and beyond. We encourage you to review the company's past and future filings with the SEC, which identify specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements. You can find our SEC filings in the EDGAR database at www.sec.gov or in the Investor Relations section at our website at www.athenex.com.

This morning, we are joined by Dr. Johnson Lau, Chief Executive Officer; Mr. Jeff Yordon, Chief Operating Officer; Dr. Rudolf Kwan, Chief Medical Officer; Mr. Randoll Sze, Chief Financial Officer; and Mr. Tim Cook, Senior VP, Global Commercial Oncology, who will be available to answer questions after the prepared remarks.

With that, I'll turn the call over to Johnson for introductory comments.

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Thank you, Tim. Hello, and welcome. Let me start by saying that all of us at Athenex hope that everyone is staying safe and healthy during this difficult time. The COVID-19 pandemic has brought about some unprecedented challenges across the industry, across the globe, and it has had an impact on all companies. We have made continuous adjustments to handle the evolving circumstances with a goal of ensuring business continuity with minimal impact to our core operations, and at the same time, ensuring the safety and health of our employees, which we'll elaborate further today on this call.

I would also remark that the current situation has really highlighted the risk to cancer patients who need adequate and safe medical care in a disrupted COVID-19 environment. In fact, the pandemic has reinforced the advantages of oral treatments in this environment as it allow patients who are often immunocompromised to take cancer treatment in the safety of their own homes. The National Comprehensive Cancer Network, or NCCN, recently, issued guidelines that encourage switching cancer patients from infusion-based therapies to oral oncolytics, where there is an active version available in an oral formulation. Our Orascovery technology platform is, therefore, more relevant than ever, and we at Athenex are extremely motivated to bring our medicines to market in the hopes of improving treatment access and outcomes for cancer patients worldwide.

Turning now to recent developments in the first quarter and in recent weeks. Athenex has successfully advanced two lead candidates to the point of regulatory review. The NDA application for tirbanibulin in the U.S. and regulatory filing or MAA application in the EU have been filed and accepted. Additionally, oral paclitaxel's NDA is on track to be submitted soon. Having two NDA submissions so closely together is a major accomplishment for a company of our size. This accomplishment is a reflection of the capability and efforts of our preclinical, CMC, clinical and regulatory teams in a coordinated effort, who have clearly done a fantastic job.

The favorable timing of our trial completions and these regulatory reviews means that Athenex is well positioned to avoid some of the challenges of the COVID-19 pandemic facing other drug companies. There have been no interruptions on the regulatory submissions due to COVID-19, and we expect that our planned launch for our oral paclitaxel will be able to take place in a more normalized business environment. Our commercial team also continues to make excellent progress with key launch readiness activities.

Our strategy at Athenex has been to build a vertically integrated company, and we have been investing in our supply chain and commercial team well in advance of our initial launches. Our goal is to establish oral paclitaxel as the chemotherapy of choice in metastatic breast cancer. Feedback from key opinion leaders on the clinical data as well as market research have been positive and reinforced our conviction that our products has exactly the right clinical attributes to make this goal a reality. Mr. Tim Cook will provide more details later on during this call. Our supply chain is robust and fully ready to support the planned launches of the two NDA products. Our team has lined up secondary and, sometimes, tertiary sources of drug API in other materials. Our team's experience and extensive titrations have been instrumental in minimizing interruptions to our supply chain due to COVID-19. Our existing API plant in China has resumed operations and construction at the new API plant in China as well as our Dunkirk facility is continuing.

Currently, our operational plans remain on track. We recognize that uncertainty may persist, and we are continuing to adjust according to the evolving situation. Nevertheless, we are confident in our capabilities and the calculations we have made to build a resilient business as we continue to execute on our long-term strategy.

I will now turn the call over to our Chief Medical Officer, Dr. Rudolf Kwan, to provide an overview of our clinical programs. Rudolf?

Rudolf Kwan -- Chief Medical Officer

Thank you, Johnson. In early March, we announced that the FDA has accepted the filing of our U.S. NDA application for tirbanibulin in actinic keratosis. This marks an important milestone for Athenex as the company's first NDA filing. The NDA review is on track, and we are pleased to report that the manufacturing facilities have already been inspected by the FDA. The FDA provided a PDUFA date of December 30, 2020, and indicated that it does not currently plan on holding an advisory committee. This is a great achievement for all teams involved, speaking to the robustness of the data and the timeliness of the submission.

The EMA has also validated the regulatory submission by our partner, Almirall, in Europe. This filing was based on a strong data package generated by the team at Athenex. We are excited that our partner, Almirall, is actively preparing for the potential commercial launch of tirbanibulin ointment for AK in both the U.S. and Europe. Our NDA submission for oral paclitaxel is imminent. We had a productive FDA meeting in early April, where we discussed our clinical package. We have been in active dialogue with the agency, and this meeting represent one of the final steps as we prepare for submission. We will provide an update on the FDA's official response when the submission becomes available. In our meeting with the FDA, the agency also provided us with guidance on further assessment of survival endpoints, and we will communicate further when it's appropriate. In addition to the strong clinical data seen in the Phase III study of Oraxol in metastatic breast cancer, we have several ongoing studies of oral paclitaxel in additional indications, including combinations.

Our next update will be on our Phase II open-label study of oral paclitaxel in angiosarcoma, which has been accepted for a poster discussion session at ASCO in May. As a reminder, we reported positive early data from this trial in 2019. We have been pleased with the interest in this trial and with the range of recruitment given that angiosarcoma is a rare cancer. There is a clear unmet need in this disease, and we look forward to providing an update at ASCO. COVID-19 has impacted clinical trials industrywide, and the majority of noncorporate studies have been interrupted to a variable extent. We, like other companies, have taken the necessary steps and are following local guidelines to protect patient's health and local healthcare providers. We continue to adjust to the evolving situation, and we'll provide updates as appropriate.

Our immediate focus remains the submission of the oral paclitaxel NDA and to achieve regulatory approvals for both oral paclitaxel and tirbanibulin. We are fortunate to have completed all the Phase III studies for these submissions, considering the current environment and do not currently anticipate any COVID-related delays to the regulatory processes. We believe we have some important practice-changing medicines and look forward to advancing our innovative product candidates in the pipeline. In closing, the work performed by the clinical team has gotten us to the point of having two NDA submissions so close together, which is a major accomplishment and very fortunate position to be in. I would like to take this time to thank my team for their contributions in achieving this.

I'll now turn to Tim Cook to discuss the commercial opportunities that these programs represent. Tim?

Timothy Cook -- Senior Vice President, Global Oncology

Thank you, Rudolf, and good morning, everyone. This is an important time for Athenex. We are busy finalizing preparations for a successful launch of oral paclitaxel. Building on the strength of our clinical data presented at San Antonio, we feel we are well positioned to achieve our strategic goal of becoming the preferred chemotherapy in metastatic breast cancer. This is an important first step in establishing our leadership in oncology. Oral paclitaxel is an exciting drug that has the potential to be practice changing. We have shown in our Phase III study a superior response rate and also survival benefit as well as lower neuropathy. Our team is excited about the clinical results, and are further driven by the encouraging feedback from most of the U.S. clinical experts that we spoke to, who have reviewed the clinical data.

The market opportunity is compelling. Our market research shows that oral paclitaxel will be prescribed mostly for breast cancer patients who are hormone positive, HER2-negative or who are triple negative. This represents approximately 70,000 patients annually in the U.S. We also know that in metastatic breast cancer, chemotherapy is used mostly after CDK4/6s and endocrine therapy, and single-agent chemotherapy is preferred. So we are very enthusiastic about commercial prospects. Last year, we established our Athenex Oncology brand. The latest market research conducted in March indicates that 61% of oncologists are now aware of Athenex Oncology. There is also awareness around oral paclitaxel, with 74% of physicians having some level of knowledge about the product candidate. Of these, the majority of physicians are now attributing greater clinical benefit versus IV paclitaxel or capecitabine. This finding is important because it validates our conviction that we are on track to becoming the preferred chemotherapy in metastatic breast cancer.

As Johnson mentioned, we believe that our Orascovery technology platform is now more relevant than ever, and we know, for example, that the COVID pandemic has increased both physician and patient interest in oral oncolytic agents that don't require travel to an infusion center. Our research tells us that there has been a 15% increase across the board in the use of oral agents to treat cancer. We believe that this awareness could be a favorable tailwind, not only to our pending launch of oral paclitaxel in breast cancer, but also to the other oncology indications and our other pipeline products that utilize the Orascovery platform. At this point, the profile of oral paclitaxel has been very well characterized. We are working closely with the clinical team to prioritize the life cycle plan, including evaluating future indications, both monotherapy and combination treatment. So there are many promising opportunities that we plan to capitalize on with the goal to maximize the value and potential of this drug.

This company remains on track with previously planned prelaunch activities. And as a result of the connectivity that's possible in today's business environment as well as our strong relationships with the oncology community and with our various stakeholders, we are able to conduct most of this work in the virtual world. We are rounding out our medical science base on team and recently hired our team leader. We still plan to onboard our oral paclitaxel sales team in the second half of the year and are confident we'll have an experienced and prepared group in place in advance of launch. We will then supplement this group with another 25 hires approximately three to six months post launch. We have converged on our specialty pharmacy distribution model and selected our specialty pharmacy providers. We believe that this distribution strategy will allow us to more closely interact with patients receiving treatment and ensure better drug accessibility and compliance. So to summarize, we feel very good about our progress and where the company is in terms of commercial preparedness. We've been able to get to this point as a result of the harmony and partnership that exists between the R&D, clinical and commercial teams as we work together to maximize the success of oral paclitaxel and subsequent oncology pipeline products.

I'll now turn the call over to Jeff.

Jeffrey M. Yordon -- Chief Operating Officer President,Athenex Pharmaceutical Division

Thank you, Tim. I'm going to talk about two areas today: our manufacturing supply chain for oral paclitaxel as well as our specialty pharma and compounding business. Let me begin by saying that those of you who have been following Athenex will appreciate that our strategy from the very beginning is to build an oncology company that is vertically integrated. We have been working diligently to make sure the necessary commercial and manufacturing elements are in place well in advance of our proprietary product launches. We've been doing this with the ultimate goal of capturing maximum value for our shareholders. But very importantly, it also means that our business model is resilient and we're better prepared to deal with unexpected events. I believe this has put us in a stronger position to handle the challenges that have resulted from COVID-19.

With regard to the supply chain for oral paclitaxel, we have established a backup plan for every part of this chain, providing the necessary support and flexibility for a seamless launch. Our Polymed facility in Chongqing resumed operations in March to supply the API for our clinical and regulatory uses. We are building inventory that will allow us to have an adequate amount of commercial supply at the time of launch and are continuing to enhance our manufacturing processes. Our facility in Dunkirk, New York, is now substantially complete. The interior and exterior are finished. We have ordered some of the equipment that will be used to fill this out. We expect to manufacture our injectable and 503B products and eventually our proprietary products for commercial sale at this facility.

Turning to our 503B and spec pharma business, we have recently been able to adjust our product mix in order to produce pharmaceuticals used to treat patients who have been hospitalized for COVID-19. As a result of the pandemic, there has been a dramatic increase in the hospital demand for certain essential products, and we have the existing capabilities to manufacture many of these. We are now supplying several products that are being used by hospitals in treatment of COVID patients. These include azithromycin, midazolam and piperacillin/tazobactam. Athenex Pharmaceutical Division currently markets 32 products with 59 SKUs and the Athenex Pharma Solutions markets five products and 17 SKUs. We will continue to introduce new products this year. Of note, recently, we have seen a trend in some of our customers moving to our online portal which allows them to order directly from us. The benefits to us will be reduced fees and, therefore, lower costs and shorter payment terms.

Let me turn the call over to Randoll to discuss the company's financials.

Randoll Sze -- Chief Financial Officer

Thank you, Jeff. Revenue from product sales was $18.5 million in the quarter ended March 31, 2020 compared with $25.2 million for the comparable period in 2019. This decrease was primarily attributable to decreases in API and 503B product sales of $3.8 million and $3.4 million, respectively, due to the suspension of our API facility and discontinued vasopressin sales. These decreases were offset by an increase in specialty product revenue associated with the launch and sales of new two new products. In the first quarter, we recognized $28.3 million in licensing revenue, which was related to the license agreement entered into with Xiangxue in December 2019. Cost of sales for the first quarter 2020 totaled $19.6 million as compared to $19.9 million for the first quarter 2019. R&D expenses for the first quarter totaled $17.2 million, a decrease of approximately 30% as compared to the $24.5 million reported in the comparable period 2019. This was primarily due to a decrease in licensing fees and costs attributable to preclinical and clinical operations.

SG&A expenses for the first quarter were $25.7 million compared with $15.2 million for the first quarter of 2019. This was primarily due to the spending of $7.6 million to prepare to commercialize our proprietary drugs, if approved, and an increase of $2.9 million of general administrative expenses, including professional service fees and other operating expenses. As a result of the foregoing, operating loss for the first quarter in 2020 were $15.6 million compared with $34.3 million in the same period last year. Net loss attributable to Athenex was $19.4 million or $0.24 per share in Q1 2020 compared with $35.2 million or $0.53 in Q1 2019. I do want to highlight that there are taxes payable in relation to our license revenue from our China partner that were recognized in the first quarter. This payable had an impact on our net earnings. Cash, cash equivalents and short-term investments totaled $113.7 million at March 31. And note that this balance included $8.7 million funded by New York State for the construction of the Dunkirk facility but did not include a $30 million payment we're due to receive from our partner in China, Xiangxue Pharmaceutical, as part of the expanded license agreement.

In terms of product sales guidance, we affirm that, we expect 2020 year-over-year product sales growth to be in the mid-single digits from $80.5 million in 2019. Our product sales guidance for 2020 has taken into account our discontinuation of vasopressin sales and the suspension of operations at our Taihao API plant in 2019, which had meaningful contributions last year. We would like to note that in light of the current COVID-19 pandemic, we have sold and may continue to sell products that are used to treat COVID-19 patients. We currently do not view these revenues as recurring in nature, and we'll provide an update at the appropriate time. And based on our current operating plan, we expect our cash, cash equivalents and short-term investments as of March 31, 2020, together with cash to be generated from our operating activities, will enable us to fund our operations into Q1 2021. In our cash flow forecast, we have accounted for license payments from Xiangxue Pharmaceuticals, our partner in China, which are expected to contribute meaningful cash inflows in 2020. For more details on our financial results, I will encourage you to read our Form 10-Q to be filed with the SEC. I will now turn the call back to Johnson for closing remarks.

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Thank you, Randoll. Our mission at Athenex is to be a leader in oncology, and we continue to make progress on novel fronts to drive our future success. We have generated very positive clinical data that we believe will result in oral paclitaxel and tirbanibulin establishing new standards of care in their respective indications. And with proof-of-concept now established for our Orascovery program, there is an opportunity to repeat our early success across the broader pipeline. Athenex has strong fundamentals. I'm confident that the experience and focus of our team as well as the robustness of our organization even in times of crisis will enable us to continue executing according to plan and to deal with any challenges. I'm looking forward to a remarkable year ahead for our company.

We will now open the call for questions. Operator?

Questions and Answers:

Operator

[Operator Instructions] And now we'll take our first question from Robyn Karnauskas from SunTrust Robinson Humphrey. Your line is open. Please go ahead.

Minh Vong -- SunTrust Robinson Humphrey -- Analyst

Sorry. Hi, everyone. This is Minh on for Robyn. Congrats on the quarter and congrats on very positive FDA meeting. Just three really quick questions. On the first one, given the NCCN guidelines to switch patients from IV to oral, have you seen any requests for oral paclitaxel during COVID-19? And then the second one, just getting to Tim's survey, can you provide a little more color on how large the survey was? I guess, how many physicians you guys surveyed? And any sort of inclusion criteria, like such as whether the physicians have to use chemo prior before getting surveyed or if they had any familiarity with using oral chemo? And then, I guess, I'll save the third one for after?

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Okay. For the first question with regard to requests during COVID-19, Rudolf, do you want to give an update?

Rudolf Kwan -- Chief Medical Officer

Yes. Thank you, Johnson. Yes, we do have received request, and we are dealing with it, and obviously, that depends on the regulation in the institution and in the country we're talking about. So yes, we have these requests. I'll turn to Tim for answering survey question. Tim?

Timothy Cook -- Senior Vice President, Global Oncology

Yes. The survey number was approximately 200 physicians, oncologists. And to qualify for the survey, they had to be actively treating metastatic breast cancer patients. So we feel that the information was highly pertinent and very relevant to current practice.

Minh Vong -- SunTrust Robinson Humphrey -- Analyst

Great. And the last one really because that's. Rudolf, I know you had mentioned you're not going to talk about whether the overall survival guidelines have been accepted or not, but can you just provide a little color on what the FDA is waiting for and what they're looking to discuss in making that decision? And whether the digital powering in the trial would impact their decision at all, whether to include overall survival in the wave or not?

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Rudolf?

Rudolf Kwan -- Chief Medical Officer

Thank you, Minh. As we all know, the study, the pivotal study for oral paclitaxel was designed for superiority over IV paclitaxel based on overall response rate. So we were extremely happy that the results came up very positively.

Along with it, we look at the consistency in survival, and we were very, very happy that the outcome even at an ongoing analysis show consistency in the survival with the overall response rate, especially in the overall survival. So this overall survival from the ongoing analysis obviously was discussed with the FDA, and they basically inform us that, certainly, survival will be part of the risk-benefit assessment. And they gave us guidance how to continue with this ongoing analysis of the survival, especially the overall survival. So as we indicate, once at the appropriate time, we'll communicate the results of this update.

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Okay, thank you so much everyone and congrats again on the quarter.

Rudolf Kwan -- Chief Medical Officer

Thank you.

Operator

And now we take our next question from Kennen MacKay from RBC Capital Markets. Your line is also go ahead.

Kennen MacKay -- RBC Capital Markets -- Analyst

Hi, thanks for taking my question and Congrats on the progress. Wondering, relating to your last final meeting with the FDA, if you had received the minutes from that meeting. And if that was what is maybe sort of gating the NDA submission for Oraxol? And if not, just hoping to understand what is sort of gating the final NDA submission here?

Rudolf Kwan -- Chief Medical Officer

Kennen, Rudolf here. Yes, indeed, the meeting was very constructive, and we did receive the meeting minutes, and the submission is on track based on the feedback the FDA provide to us.

Kennen MacKay -- RBC Capital Markets -- Analyst

And then maybe shifting to angiosarcoma. Obviously, these data are going to be presented at a really prestigious meeting coming up. Wondering sort of what the path forward is there. This is obviously an investigator-sponsored trial. Is there sort of a pathway or a blueprint toward a registration-enabling trial there? And have you talked about that with the FDA yet? Congrats again.

Rudolf Kwan -- Chief Medical Officer

Kennen, the angiosarcoma represent a very interesting disease with high unmet medical need. Bear in mind, this is an ultra-rare indication, also in a very elderly population, which does not tolerate most chemotherapy, whether it be IV or oral. So we are very happy that the early results we've articulated previously, such as a very active agent and very tolerable by this elderly population, we have been very happy that the recruitment in the studies is indeed very rapid. So you will hear additional new data I would say a fair amount of new data in the ASCO presentation late in May. And as we keep saying, the results of these data are really encouraging to us, and we expect to talk to the FDA regarding the approval pathway for this indication.

Kennen MacKay -- RBC Capital Markets -- Analyst

Thank you very much and thank you.

Operator

And now we take our next question from Chad Messer from Needham & Company. Your line is open. Please go ahead.

Chad Messer -- Needham & Company -- Analyst

Right. Good morning, thanks for taking my question. Obviously very excited for Oraxol. But tirbanibulin is actually even closer at hand. I was wondering if you could just sort of take us through what you can about Almirall, about their preparedness. I know they're a commercial company, and they're already out there in the market with products. But can you just remind us of what capabilities they have in the U.S., in Europe to put forward for marketing your product?

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Sure. Almirall has been a good partner, and we have continuous dialogue with them through both the Joint Steering Committee for both clinical development as well as for marketing. And they are on track with regard to launching the product according to the schedule. Specifically, during their conference call, they indicated that they will be ready to launch the product in U.S. in the first quarter of 2021 and in Europe in second quarter of 2021. And then all preparations are in progress. In the U.S., they have more than 100 employees in this field. And then in Europe, they are one of the largest derma company in Europe. So all these are information that are also available in their results and earnings call and their website.

Chad Messer -- Needham & Company -- Analyst

Okay. Great. And your comments on oral chemotherapy being even more relevant in these current times are well taken. When can we expect updates on some of the other pipeline products? It's been, I think, since the last ASCO that we got some updates on oral irinotecan. When can we expect more on that and the docetaxel program as well?

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Sure, Rudolf?

Rudolf Kwan -- Chief Medical Officer

Yes, Chad. The programs are all active, and we are moving along full speed. Obviously, with COVID-19, there has been a variable impact. Depending on the site and depending on the patient population, we will be able to articulate those results as we go along. Suffice it to say, the preparation, the ongoing studies are still ongoing, which is a very good sign when you're going for MTD, that tells you something. The second piece is of course that we are actively ready to start off with the next phase once the COVID-19 impact on some of the sites we currently have are ready. So be ready to hear the additional risk information as we are ready to release them going forward.

Chad Messer -- Needham & Company -- Analyst

All right. Great. I look forward to that and, of course, look forward to hearing good news on the Oraxol program. Thank you.

Operator

[Operator Instructions] And now we take our next question from Kevin DeGeeter from Oppenheimer.Your line is open. Please go ahead.

Kevin DeGeeter -- Oppenheimer -- Analyst

Hey, thanks for taking my questions. Tim, I really appreciate the granularity on how you are thinking about launch preparation and early expansion post launch. Can you just walk us through the thought exercise of if we were experiencing a COVID-19 flare-up or increase in infection rates that resulted in restrictions on travel or reduction in travel, what part of that launch plan really would be adjusted in a material way? And which portions of it are kind of central to the longer-term mission and you would argue should continue to receive full investment?

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Tim?

Timothy Cook -- Senior Vice President, Global Oncology

Thanks, Johnson, and thank you for your question. We are scenario planning for a variety of situations, including a highly restricted environment like we're currently in. So we're prepared to launch in multiple environments, including a restricted one. Early last year, we began shifting a lot of our work over to the virtual world. We did that because we felt it was more efficient and it reduced cost. So we've been able to continue all of our work virtually unimpacted because of the work we did last year in moving things to the virtual world.

And so if we are in a situation where COVID is still very relevant, we would move up most of our efforts to that digital virtual space, and we've already actually started putting in infrastructure to allow us to engage our customers in the real-world setting through to that virtual space through our CRM, customer relationship management, process. So we are very engaged in preparing for multiple scenarios. It's an unprecedented environment. We're also learning and watching the companies that are launching drugs right now, and we feel like we can learn from them and watch how they are launching in this very unprecedented environment. So again, we are prepared for the various scenarios. And hopefully, for all of this, we return to a more normal environment. But in the case that it's restricted, we're ready. We've already begun to put those infrastructures in place.

Kevin DeGeeter -- Oppenheimer -- Analyst

Extremely helpful. And then please talk, Yiu-Nam.

Yiu-Nam Lau -- Chairman & Chief Executive Officer

I also want to add a comment that we did receive multiple calls from key opinion leaders with regard to the fact that in this environment, a lot of hospitals are encouraging patients not to go to the hospitals or clinics. And in fact, they adhered to the fact that if oral paclitaxel is available, that will be very, very good for all patients and also for practicing oncologists. And these are all very important feedback for Tim's team to consider.

Kevin DeGeeter -- Oppenheimer -- Analyst

Great. Extremely helpful. And then as a follow-up question, a bit of a housekeeping item. There was significant sequential decline in R&D. Can you provide just a little bit more granularity as to, was that driven largely from the sort of roll-off of certain expenses from the Phase III oral paclitaxel program for metastatic breast cancer? Or more for preclinical or early stage programs that you may have either been forced to, due to COVID, restricting the spending on or chosen to for other reasons?

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Let me answer the question expressly. Our spending are mainly focused on making sure we complete all the studies on time, making sure all the data are complete. There were most of the spending were on completing the post clinical studies, on the regulatory filings and regulatory expenses and also that even NDA submission based on the process that we'll have to pay FDA a couple a few million dollars just for the submission. So most of the expenses were for to support the critical studies and also the regulatory clinical programs. The earlier-stage programs are also advancing. We are still supporting them. But then the COVID-19 situation, it slows down the earlier clinical programs a little bit, and I will provide an update when we have more data available.

Kevin DeGeeter -- Oppenheimer -- Analyst

Thanks so much. Thanks for taking my questions.

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Thank you.

Operator

And now we take our next question from Yale Jen from Laidlaw. Your line is open. Please go ahead.

Yale Jen -- Laidlaw -- Analyst

Good morning and thanks for taking the questions. I hope everybody is doing well. My first question is about the capacity production capacity of the Chongqing plant for both products. Could you give us a little bit color what that might be? So that's my first question.

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Okay. Jeff, do you want to answer the question? Jeff might be on mute. Let me answer the question.

Jeffrey M. Yordon -- Chief Operating Officer President,Athenex Pharmaceutical Division

No, I can answer the question, Johnson. We are in very, very good shape in Chongqing. The local government has agreed that any production that's in support of the NDA and the clinical programs can continue. We're back working. Right now, we have enough API for the supply of all of our clinical programs. And if a launch were to take place even earlier than our anticipated launch date, we will have enough raw material, both on the encequidar and on the paclitaxel. I should also add that, as you know, we have second and third options that just in case there is any problem, we're all set. So we're in good shape there.

Yale Jen -- Laidlaw -- Analyst

Okay. Great. That's very helpful. And maybe a housekeeping question regarding the payment from China to come. First, is that when that might be? And then secondly, if this payment will be amortized or just a wide shot for some kind of payment?

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Thank you. Randoll?

Randoll Sze -- Chief Financial Officer

Sure. So in terms of the revenue that was booked in Q1 in relation to the license arrangement in China, the payments actually start coming in, in April, and we anticipate to receive the majority, if not all of the payment, in Q2. So there's no amortization to this revenue recognition.

Yale Jen -- Laidlaw -- Analyst

Okay. Great. And maybe the last question here, which is that for the tirbanibulin, is there an ASCO meeting to be prepared? Or that's not the case?

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Rudolf?

Rudolf Kwan -- Chief Medical Officer

Yale, the FDA indicated they currently do not plan on holding advisory committee. So absolutely, we will be prepared if they ask for it. But I think in the strength of the data set that we submit them, I think, to us, it's a very clear cut case for them to make decision. And in the letter, they did indicate they are not planning to have an ASCO meeting.

Yale Jen -- Laidlaw -- Analyst

Okay. Maybe just sneaking in one more question. In terms of the oral paclitaxel, would that be a rolling submission for the NDA? Or that's something you will review later on?

Rudolf Kwan -- Chief Medical Officer

The question of a rolling submission is really that you have incomplete information. We believe we have complete information to go in with a full submission. On the other hand, we got guidance to continue to look at the survival endpoint. So certainly, that will be a point to be discussed with the FDA how that is going to be looked at. So we will articulate that when it's appropriate.

Yale Jen -- Laidlaw -- Analyst

Okay. Great. And again, congrats on the rapid progression of both programs.

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Thank you.

Operator

And we will take our next question from Matt Kaplan from Ladenburg Thalmann. Your line is open. Please go ahead.

Raymond -- Ladenburg Thalmann -- Analyst

This is Raymond in for Matt. Thanks for taking my question Congrats. on all the progress. I guess just some questions about perhaps the commercial side of Oraxol. I was wondering given the NCCN guidelines, has that shifted the payers' perception? And has that kind of changed how you launch commercially Thank you. For that same box businesses OK.?

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Okay. Thank you. Tim?

Timothy Cook -- Senior Vice President, Global Oncology

Yes. Thank you. The feedback from the NCCN and the change in guidelines is certainly unprecedented, quite frankly. And we have already been conducting extensive market research with payers, and we've been pleased by the reception. They see us as a highly innovative product. They don't see us as a replacement for a taxane. They see us as an innovative and are have been very encouraging in terms of how they will receive the product.

Now that doesn't mean there won't be challenges. But we've been engaging payers for over the last year, and we know exactly how they see us. We've had numerous advisory committees, and they see us as a highly innovative drug similar to the CDK 4/6s. So I don't think the new guidelines really will enhance that. We already are in a strong position due to the very strong clinical profile that we have in terms of increased overall survival, increased overall response rates, decreased neuropathies. It really gives us a very strong position. And then you add on top of that the fact that patients and physicians are looking for options that allow them to be treated at home and in a safer environment. We think that it really puts us in a position of strength.

Raymond -- Ladenburg Thalmann -- Analyst

Okay. Fair enough. And perhaps maybe as a follow-up to that, have you guys been thinking about beyond metastatic breast cancer in terms of strategy for commercialization? Or is that still kind of too preliminary?

Yiu-Nam Lau -- Chairman & Chief Executive Officer

We have to follow the FDA guidelines with regard to the fact that we only conduct appropriate marketing activities according to the guidelines, according to the indications approved by the U.S. FDA. The current package that we're submitting now for metastatic breast cancer, and when approved, we will be conducting the appropriate marketing efforts according to the approved indications in the approved projects. And Tim, do you want to add anything on top of that?

Timothy Cook -- Senior Vice President, Global Oncology

Sure, Johnson. I would just add that we're working closely with our clinical and R&D teams to really put together a robust life cycle plan. And as you know, we already have trials going on in angiosarcoma and other areas. So we will be continuing to analyze our next opportunities. Really, right now, our focus is on launching successfully in metastatic breast cancer and establishing ourselves as the preferred chemotherapy for those patients.

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Suffice to say that if you think about the fact that whether we will be conducting additional clinical studies to expand the indication and also to evaluate the potential of this of oral paclitaxel in combination with biologics and also I/O therapy, obviously, we will be conducting the appropriate set of clinical studies to support the label expansion as well as combination use, which we believe we will be able to really unlock a lot of value with regard to the potential of our product, oral paclitaxel. And thank you for your question.

Raymond -- Ladenburg Thalmann -- Analyst

Thanks.

Operator

It appears there are no further questions at this time. I would now like to turn the conference back to CEO, Mr. Johnson Lau, for any additional or closing remarks.

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Thank you. We're excited to have submitted our first NDA for tirbanibulin ointment and look forward to our second NDA for oral paclitaxel medicine. I would like to reiterate that this is a major accomplishment for a company of our size, especially during this unusual time. I want to say thanks to our team who have been working very hard to ensure all the major milestones are on time. Thank you again to all for your time this morning. Bye-bye.

Operator

[Operator Closing Remarks].

Duration: 50 minutes

Call participants:

Timothy Cook -- Senior Vice President, Global Oncology

Yiu-Nam Lau -- Chairman & Chief Executive Officer

Rudolf Kwan -- Chief Medical Officer

Jeffrey M. Yordon -- Chief Operating Officer President,Athenex Pharmaceutical Division

Randoll Sze -- Chief Financial Officer

Minh Vong -- SunTrust Robinson Humphrey -- Analyst

Kennen MacKay -- RBC Capital Markets -- Analyst

Chad Messer -- Needham & Company -- Analyst

Kevin DeGeeter -- Oppenheimer -- Analyst

Yale Jen -- Laidlaw -- Analyst

Raymond -- Ladenburg Thalmann -- Analyst

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