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Athenex, Inc. (NASDAQ:ATNX)
Q2 2020 Earnings Call
Aug 7, 2020, 10:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Athenex Incorporated Second Quarter 2020 Earnings Call. [Operator Instructions] I will now turn the conference over to your host, Michael Wood with LifeSci Advisors. Thank you. You may begin.

Michael Wood -- Managing Director, LifeSci Advisors

Good morning, and thank you for joining our conference call today as the Company provides an update on Athenex's business, as well as reviewing the financial results for the second quarter and first half of 2020. And 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 Athenex's website.

During the course of today's conference call, the Company will be making projections or forward-looking statements regarding future events, including statements about financial, business and clinical milestones anticipated in fiscal year 2020 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 the Company's SEC filings on the EDGAR database at www.sec.gov or the Investor Relations section of the Company's website at 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; Timothy Cook, Senior VP of Global Commercial Oncology. They'd all be available to answer questions during the Q&A session.

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

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you. Hello and welcome. So far, 2020 has been a very productive year at Athenex. We continue to make advancements in our two-head products: tirbanibulin ointment and oral paclitaxel, both of which we believe could be important and valuable medicines. We are completing our commercialization infrastructure and supply chain, further positioning Athenex as a commercial stage biopharmaceutical company. And we continue to strengthen our balance sheet, giving us the additional flexibility to invest in and maximize the value of our pipeline, including especially the Orascovery platform.

Regarding the NDA for oral paclitaxel, we will be taking the same approach as we did with tirbanibulin ointment and plan to make an official announcement once the filing has been accepted by the FDA. We are over-pleased [Phonetic] here with the excellent work conducted by our clinical and regulatory teams and the execution on both of these products. We look forward to providing a further update soon. Our commercial team is putting all the key elements in place for successful oral paclitaxel launch. Our goal, as we have previously said, is to make oral paclitaxel the chemotherapy of choice for metastatic breast cancer. And we hope to build on the success in this initial indication and expand into the compelling opportunities that exist in other cancers. Mr. Tim Cook, our Head of Marketing, will provide further details on our commercial initiatives later on in this call.

We have strengthened our balance sheet through additional financings. Use of proceeds will include the commercial launch of oral paclitaxel, as well as ongoing pipeline development and manufacturing infrastructure. Having a strong balance sheet is important in providing the financial flexibility to further invest in the life cycle management of oral paclitaxel and additional R&D activities in order to maximize the potential value of our product pipeline. Dr. Rudolf Kwan will provide more details on this shortly.

Our specialty pharma business is performing well, and we reported today record $40.2 million in revenue from product sales in the second quarter, an increase of 82% year-over-year. This represents our highest quarterly product sales to date. As a result, we are raising our product sales guidance for the full year 2020 to at least mid-teen percentage growth year-over-year from $80.5 million in 2019.

Very importantly, our supply chain remains operational. Our manufacturing facilities in Chongqing and Dunkirk continue to proceed on schedule. We are building up our inventories and are confident that we will have sufficient supply for our clinical, regulatory and commercial needs.

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

Good morning, every one. I'm very pleased by our progress on tirbanibulin ointment and oral paclitaxel. The tirbanibulin ointment FDA review process is on schedule. We note the regulatory process of inspecting CMC and clinical sites is proceeding well. And so far, no Form 483s have been issued. The PDUFA date for this topical actinic keratosis product is December 30. For oral paclitaxel and encequidar, the regulatory process is ongoing, and we intend to provide an update upon FDA acceptance of filing of that application.

COVID-19 is changing the way oncology drugs are used. As mentioned in last quarter, the National Comprehensive Cancer Network, or NCCN, had 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. We believe that, if approved, oral paclitaxel will also provide an important alternative to patients who prefer to receive treatment in the safety of their own home.

Chemotherapy remains one of the cornerstones of oncology treatment, and paclitaxel is a widely used chemotherapy agent, indicated for various tumor types and a backbone to many combination treatments. We believe we have a very important drug, and our goal is to bring oral paclitaxel to as many cancer patients in need as possible. We are in the process of exploring a number of life cycle management and label expansion studies for oral paclitaxel, including various combination therapies, as well as new indications. As soon as they have been finalized, we expect to make further important announcements.

A recent development on this front was our presentation of interim data from our ongoing Phase II study in unresectable cutaneous angiosarcoma at the ASCO '20 Virtual Scientific Program in May. The data we are seeing from this study continue to be very encouraging and further highlight the potential broad utility of oral paclitaxel. We showed an overall clinical benefit rate of 100% in the 22 evaluable patients receiving oral paclitaxel treatment. The rate for complete responses, partial responses and stable disease were 27.3%, 22.7% and 30% respectively. All 22 patients experienced a reduction in tumor size, and oral paclitaxel has been generally well tolerated in this predominantly elderly population. There is a high unmet medical need in angiosarcoma. There are no FDA approved drugs to treat this rare aggressive disease. And we have been granted orphan drug designations for oral paclitaxel in the US and Europe.

For our earlier stage product candidates, like the majority of our peers in the industry, we have experienced slowed enrollment, as well as temporary suspensions in our clinical trials, as healthcare resources are diverted to address the pandemic. Our anticipated timelines for our later stage product candidates, however, remain largely unaffected by the COVID-19.

I would now turn the call over to Tim Cook for the commercial update. Tim?

Timothy Cook -- Senior Vice President, Global Oncology

Thank you, Rudolf, and good morning, everyone. Commercial preparations for oral paclitaxel launch are at an advanced stage. It is our number one priority to ensure that our team is prepared to enter the field as soon as we have FDA approval. Hiring is progressing on schedule. Last quarter, we added our MSL team lead. In this quarter, we have hired our Head of Sales. Recruitment efforts are still under way for the account directors, who will call on payers and corporate customers, as well as our lead for that group.

We have adapted to the new COVID environment and are preparing to have both in-person detailing and virtual promotion tactics in place for our launch. With respect to in-person promotion, we have completed our territory alignments and constructed our physician target list. Additionally, virtual detailing systems are in place for sales reps, medical science liaisons and other members of the marketing team to provide us with additional flexibility. Our plan is still to hire 25 territory reps upon approval to cover 70% of the highest prescribers, and then a handful of in-house sales people to call on the remaining 30% of physicians. Additionally, we will employ a team of oncology nurse educators, who will be focused on targeting nurses, nurse practitioners and pharmacists to provide support on patient education, new patient starts and managing side effects. These staff will be hired in Q4.

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 benefits, as well as lower neuropathy. Our team is excited by the clinical results and are further driven by the encouraging feedback from most of the US clinical experts that we spoke to who have viewed 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 US. We also know that in metastatic breast cancer, chemotherapy is used mostly after CDK4/6 and endocrine therapy, and single-agent chemotherapy is preferred. So we are very enthusiastic about the commercial prospects.

On June 13 and 14, we participated in a virtual metastatic breast cancer conference sponsored by Living Beyond Breast Cancer, a leading breast cancer advocacy organization. Athenex had a virtual booth at the conference to promote its Facing Metastatic Breast Cancer Together program and digital application. This program targets social isolation in metastatic breast cancer patients and provides patients with a digital tool to create an online list of ways that friends can help. The booth was the number one visited booth at the conference, and we managed to increase the Company's social media presence and the number of media impressions.

We continue to monitor the commercial landscape in oncology and note that the total number of cancer details is back to pre-COVID levels. But the mix of outreach is now 85% virtual and 15% in-person. One interesting observation is that oral oncolytics are favorably impacted by COVID-19 and are trending 5% to 10% ahead of where they were before COVID-19, and there is continued increase in demand for keeping patients at home.

Now, I'll turn the call over to Jeff Yordon, our COO.

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

Thank you, Tim. Let me give you an update on current developments with our infrastructure and supply chain, and also on the existing commercial business. Our strategy, as you know, is to build an oncology company that is vertically integrated. We have taken what we believe to be very thoughtful and proactive approach to investing in our commercial and manufacturing infrastructure, adding resilience to our business model.

We are confident that all elements of our supply chain are prepared for our clinical studies, and more importantly, the launch of oral paclitaxel. We recognize the importance of this in capturing maximum value once we launch our proprietary products. As we have said on last call, this puts us in a stronger position to handle the challenges that have resulted from COVID-19.

Our Taiho facility in Chongqing, which is where we manufacture the raw material for oral paclitaxel, resumed operations in March and is able to supply product for launch and also for planned clinical trials. Our new and larger API facility is also on track to commence operations later this year. As a backup, we have the secondary raw material supplier, which would allow us to substitute freely, while maintaining the same high quality and the same cost.

On our facility in Dunkirk, our plan is to dedicate part of Dunkirk to manufacturing our 503B products. This could allow us to increase the 503B business, which has been constrained because of our limited manufacturing capacity. Additionally, we also plan to manufacture our injectable products at the facility, as well as proprietary products in the future.

As Johnson mentioned, we reported our highest-ever quarterly product sales of $40.2 million. This increase was mainly due to a significant increase in specialty product sales as a result of increased demand for certain drugs that are used to treat patients that have been hospitalized with COVID-19 and our ability to supply products, which are on the FDA shortage list. These include azithromycin, midazolam, ketorolac and piperacillin/tazobactam. Future revenue here will obviously depend on rate of COVID infections. Given our track record, we believe we are in a decent position to well capitalize on these opportunities.

Athenex Pharmaceutical Division currently markets 30 products with 56 SKUs, and Athenex Pharma Solutions markets six products and 18 SKUs. We will continue to introduce new products this year.

I will now turn the call over to Randoll to discuss the financials.

Randoll Sze -- Chief Financial Officer

Thank you, Jeff. Revenue from product sales increased to $40.2 million for the three months ended June 30, 2020, compared with $22 million in the same period last year, an increase of 82% year-over-year. Quarterly product sales increased significantly primarily due to increased demand of products used to treat COVID-19 patients. We experienced an increase in purchases from our existing customers, as well as obtaining large non-recurring orders of specialty products from new customers.

Cost of sales for the second quarter totaled $33 million, an increase of $16.1 million or 95%, as compared to $16.9 million in the same period last year. Cost of specialty product sales increased in line with the increase in revenue, and we continue to incur fixed costs despite the decreased production at our API and APS facilities.

R&D expenses for the second quarter totaled $22 million as compared to $18.5 million in the same period last year. This was primarily due to an increase in regulatory costs, R&D-related compensation, preclinical operations, and drug licensing costs. SG&A expenses for the second quarter totaled $17.5 million as compared to $17.2 million in same period in 2019.

Of note, below the EBIT line, we recognized $7.2 million loss related to the termination of the Perceptive senior secured loan in the second quarter. We did not incur expenses of a similar nature for the same period in 2019.

As a result of foregoing, net loss attributable to Athenex was $40.5 million or $0.50 per diluted share in Q2 2020, compared with $32 million or $0.44 per diluted share in Q2 2019. Excluding the one-time debt extinguishment expenses of $7.2 million, the net loss attributable to Athenex in Q2 2020 was $33.2 million or $0.41 per diluted share.

In terms of product sales, we are raising our guidance for the full year 2020 to year-over-year growth of at least mid-teens percentage versus the mid-single digit growth that we communicated previously, from $80.5 million in 2019. This takes into account our sales performance year-to-date, as well as our outlook for the remainder of the year. Our product mix may continue to include products that are used to treat COVID patients, but we do not view these revenues as recurring in nature. As a reminder, our guidance only includes product sales. We do not provide guidance on partnership revenue or milestone payments.

As of June 30, 2020, Athenex had cash and cash equivalents of $105.9 million, restricted cash of $11 million and short-term investments of $10.4 million.

There are also two financial transactions I want to cover briefly. On June 19, we entered into a senior credit agreement with Oaktree, which allows us to borrow up to $225 million in five tranches and with a maturity date of June 19, 2026. The first tranche of $100 million was drawn down prior to June 30, 2020, with $54.1 million of the proceeds used in part to repay in full the outstanding loan and fees under the credit agreement with Perceptive. And additional four [Phonetic] tranches totaling $125 million will be available for borrowing from time to time, subject to our achievement of certain regulatory and commercial milestones.

Second of all, we announced this morning that we have entered into a revenue interest financing agreement with Sagard Healthcare Royalty Partners. This agreement provides us with $50 million of capital upon FDA approval of oral paclitaxel for the treatment of metastatic breast cancer. In exchange for funding this capital, Sagard will receive a mid-single digit royalty on worldwide net sales oral paclitaxel up to a finite agreed-upon total payment.

Based on our current operating plan, we expect our cash, cash equivalents, restricted cash and short-term investments as of June 30, 2020, together with cash to be generated from our operating activities and the non-dilutive capital made available by Oaktree and Sagard, will enable us to fund our operations into 2022.

For additional details, including financial results for the six months ended June 30, 2020, as well as the details on the Oaktree and Sagard transaction, please refer to our Form 10-Q to be filed with the SEC.

I will now turn the call back to Johnson for closing remarks.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you, Randoll. Before we open the call to questions, there are two more recent announcements I want to highlight. The first is the appointment of Dr. Robert Spiegel to our Board of Directors. Dr. Spiegel is a very experienced pharma industry executive, and he brings a strong track record of innovation and successful NDA approvals at large cap pharma and biotech. He was previously Chief Medical Officer at Schering-Plough, and his responsibilities there include chairing the oncology development team for over 10 years and overseeing more than 30 successful new drug applications. We welcome Robert and are very honored that he has agreed to join the Board.

We also wanted to express our deep appreciation to Mr. John Koh for his contributions and service on our Board, and wish him well as he steps down.

Second, we recently announced the promotion of Teresa Bair to General Counsel and Senior Vice President, Administration. Teresa has been with Athenex since 2015. She has been involved in every aspect of the business and has already established herself as a key member of the team here. I want to congratulate Teresa, and we look forward to her continued contributions in this expanded role.

Finally, I want to thank the clinical and regulatory, preclinical, CMC and supply chain teams for their solid execution in what has been a challenging environment for everyone. The ongoing work by our commercial teams also exceeds expectations. This was an exceptionally strong quarter in terms of sales, and our commercial infrastructure is now in an advanced phase of [Indecipherable] despite COVID-19.

We will now open up the call to questions. Operator, please go ahead.

Questions and Answers:

Operator

[Operator Instructions] Our first question is from Robyn Karnauskas with Truist Securities.

Robyn Karnauskas -- Truist Securities -- Analyst

Hi, guys. Thanks for taking my question. I was just wondering -- first, I know you're not going to comment on when you file. But maybe you can give us a sense of if there were, in general, any surprises in the FDA minute or were they as you expected. And then, the second question is, you talk a lot about how there is a push toward real increased use of oral pills during COVID. But what do you think the steps are? Once you get approval, what do you -- what needs to be done? Do you have to get on the hospital formulary first? Is there such an unmet need for using oral drugs that you think will have immediate use by certain hospitals or certain community basis [Phonetic]? Maybe just give us some color regarding the steps and what that actually means for uptake for a new drug that's being launched. Thank you.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you. You have two questions. I think Rudolf can answer your first question and Tim can answer the second question. Thank you. Rudolf?

Rudolf Kwan -- Chief Medical Officer

Hey, Robyn. The -- as you say, we are not commenting on our filing. We follow the corporate policy of announcing the acceptance of filing. Your questions regarding are we anticipating any surprises from the FDA, I would comment that when I follow what the FDA has been announcing recently, what they are approving recently, that the FDA oncology director, Dr. Pazdur, has publicly announced that the FDA is focusing on oral anti-cancer treatment, and they will be -- because they have a major role to play in the COVID-19 to keeping patients safe at home and also keeping the health service provider lower burden. So, those are very encouraging public announcements from the FDA. So, I would anticipate, if any surprises, those will be the upside surprises we'll be looking for.

Tim, you want to address the second question?

Timothy Cook -- Senior Vice President, Global Oncology

Certainly. Thanks, Robyn, for the question. The first step really in terms of gaining access is to engage the payers through the Preapproval Information Exchange Act. That's a program that's in place that allows us to engage population decision makers prior to the approval. And so, that -- as I mentioned in my opening comments, we are currently recruiting that payer team, and we anticipate having them in place here likely this quarter. They will then begin engaging payers with the information so that they're prepared to cover the product quickly after approval.

The second step then is really these large community-based practices. The majority of our business will come from private practice, and they are able to dispense, in many cases, themselves. And so there's very little requirement that will be in place in those particular offices. And we've actually begun consulting with those practices already through some of their heads of pharmacy, etc.

And then, the last step would be formulary in the large IDNs. And again, our corporate account directors will be engaging them immediately upon approval to gain access through formulary etc. So, we feel like we have the primary three areas covered and laid out. And the feedback that we're getting from payers that we've engaged is pretty encouraging. Based on our target product profile and the data that we've shared, they see this as an important product in the treatment of metastatic breast cancer, especially in the environment that we're in right now.

Robyn Karnauskas -- Truist Securities -- Analyst

Great. Thank you so much.

Operator

Our next question comes from Kennen MacKay with RBC.

Kennen MacKay -- RBC Capital Markets -- Analyst

Hi, good morning, and thanks for taking the questions. So, your press release had noted that the Oraxol filing was on track, at least, for the guidance that was previously issued, with sort of Q2 submission. I know that you're not going to comment on this until it's accepted. But can you at least help with my math being that we should hear about this by the end of the month if this was submitted in Q2, thinking about sort of the 60-day timelines associated with an acceptance of the filing? Is that the correct way to think about this?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Rudolf?

Rudolf Kwan -- Chief Medical Officer

Right. As I said, you will hear from us when we hear from the FDA about the acceptance of the filing. I don't think it will be right for me to comment on the expectation of timing at this time point. So, stay tuned, and you'll hear.

Kennen MacKay -- RBC Capital Markets -- Analyst

Are there any sort of clock stoppages within that sort of 60-day notice period of acceptance that I'm not thinking about that maybe we should be thinking about? I think we're all sort of holding our breath for the filing here. And again, any further context would be really helpful.

Rudolf Kwan -- Chief Medical Officer

Absolutely. The point is to keep holding your breath. You're absolutely right. The general rule of the FDA is about 60 days. They will announce the -- whether the filing accepted or not. And that is what we -- the time that we will announce that the file has been accepted.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

And I think to give you more color is that we have been very good in executing according to our timeline and -- but it is our policy that we only comment when we have some reply from the FDA. So I think that, in a way, address your question, not completely, but in a way giving you some indications already.

Kennen MacKay -- RBC Capital Markets -- Analyst

Okay, got it. And again, just going back to the line in the press release that the filings are on track, should we interpret that they're on track with prior guidance?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

We are firm with our guidance, and we have not provided any information or any sheets with regard to -- that we're not staying with our guidance.

Kennen MacKay -- RBC Capital Markets -- Analyst

Okay. All right. Thank you very much. And congrats on the progress.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you.

Operator

Our next question comes from Kevin DeGeeter with Oppenheimer.

Kevin DeGeeter -- Oppenheimer & Co. -- Analyst

Hey, guys. Thanks for taking the question. I'm not going to kind of go further into regulatory, I guess, maybe go in a different direction. And just talk a little bit about cap structure here. Listen, you're taking on what's potentially a significant amount of debt here. When you looked at other sort of comparable development stage biotech companies with similar potential level of debt, what do you sort of call out as a good benchmark as sort of your peer companies that have been able to handle the kind of debt you're potentially taking on here? And as one thinks about leverage ratios here or sort of decisions on whether or not to make future draws, are there any particular balance sheet parameters that you'll look to that will help inform that decision?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Randoll?

Randoll Sze -- Chief Financial Officer

Yeah. Thank you, Kevin, for your question. Yeah, actually, throughout the process, we've always been evaluating some kinds of financing instruments. I guess, maybe I can use [Phonetic] this opportunity to give you a bit more color as to what we think of these two recent financings that we completed. Just to let you know, neither of these two financings are putting any sort of significant risk of financial distress on the Company. And why I'm saying this is because -- let's take the Oaktree senior secured debt as an example. They actually have very limited financial covenants. And what we're looking at it is a minimum liquidity covenant and a range of minimum total company's revenue target that we believe we should be able to achieve. And coming back to the coupon rate, if you look at the press release that we put out earlier today, I think primarily, what we're looking at are actually pretty issuer friendly. We're talking about 11% fixed per annum.

And with regard to the Sagard revenue interest financing that we just entered into earlier this week, it's actually pretty, again, a favorable structure for us. And the reason why I'm saying this is because we are actually looking at 5% of Oraxol net sales as the payment. And in terms of cash outflow, we believe it's actually pretty modest.

And the other thing I would like to comment on is, it is actually interesting to note that these two are -- the combination of the financings that we've done, it is actually the first risk [Phonetic] transactions completed that could coexist with a large amount of senior term debt [Phonetic]. So, the way we look at it is, we don't just look at the leverage ratio or some of the numbers. I think the one thing that I want to highlight is, throughout the process, I think the way we evaluate the financing options or financing avenues, [Technical Issues] we want to be associated with. In the last couple of months, I will have to say, we are very excited to be able to partnering with both Oaktree and Sagard because we don't view them as just a financial partner or a capital partner. I think throughout the process, they actually demonstrated to us that they share the same vision as a company and they truly believe in our assets. So we [Technical Issues] long-term business partners. So hopefully, that addresses the questions.

Kevin DeGeeter -- Oppenheimer & Co. -- Analyst

Got it. A lot of debt. So, maybe on a different note, can you talk a little bit about -- and maybe this is for Rudolf -- additional studies that you may look to potentially kick off perhaps in the second half of the year with oral paclitaxel to build on the strong data you have in breast cancer? You've particularly various combination studies that could be of interest to the Company to further expand the potential clinical utility of oral paclitaxel.

Rudolf Kwan -- Chief Medical Officer

Absolutely, Kevin. Now that we know the regulatory processes are on track for both our products, I'm turning into focusing on how we can help the Company and team in terms of a life cycle management strategy. So basically, we are mapping out the directions we have been seeing all along in more detail. And once we got that map out, we will communicate. As you heard from me in the past that we are focusing in additional indications to, in essence, tap into the standard of care where IV paclitaxel is widely used. And also, we look forward to combination therapies very much in the immunotherapy combination area. So, you will hear a lot from us. And now that we have the time to look into supporting Tim's team, we will be articulating that once we have that map out. You will see that we'll go through a very rigorous process, look at the market assessment, the return on investment and come up with a very thoughtful plan.

Kevin DeGeeter -- Oppenheimer & Co. -- Analyst

Fair enough. Appreciate that. Thank you so much.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Yeah, Kevin, let me also provide a little bit of feedback for your question with regard to debt. I think that one [Indecipherable] is that we believe that some investors consider that we do -- we did have a financing overhang. And the good part is that we are at a stage that we can both do dilutive and non-dilutive financing. Assuming that we believe that our equity actually is undervalued, I think it will be very appropriate to actually conduct what we are doing. So we did have many options. And that decision was actually based on the fact that we believe that this non-dilutive nature of financing will be to the best interest of our stakeholders and that's the reason why we elected to pursue along this path. And I hope that you can appreciate how we arrived at this conclusion.

Kevin DeGeeter -- Oppenheimer & Co. -- Analyst

The actual context is helpful. I appreciate that, Johnson. Thank you.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Yeah, thank you.

Operator

[Operator Instructions] Our next question is from Chad Messer with Needham.

Chad Messer -- Needham & Company -- Analyst

Great, thanks. Good morning. Thanks for taking my question. Very exciting times here with one PDUFA date looming later this year and hopefully another one being assigned soon. Tim went through some of the pre-launch awareness activities that you're doing for Oraxol. I was wondering if you could just comment on where you think you guys are with the awareness for this product. This could be really big. I think we all appreciate that. Either anecdotally or if you have any numbers or figures from surveys, where do you think you are with awareness? Are the key opinion leaders and other doctors as aware as they need to be that this is a potential product on the horizon?

Timothy Cook -- Senior Vice President, Global Oncology

Thanks Chad. Thanks for the question. Yeah, we have spent a lot of time focusing -- it's one of our critical success factors to make sure that by the time we gain approval that there's high awareness of this product and of Athenex, quite frankly. And so, since San Antonio, we conducted 150 unique one-on-one discussions with clinical experts in breast cancer, most of them in the US, but some of them global. And the awareness we've seen dramatically increased from the first round of interviews we did to the second round which we just completed. And the themes are pretty common. They're impressed with our overall efficacy profile, the response rates and the overall survival. They are impressed with the significant decrease in neuropathy, something that really to them is incomprehensible that they can use a taxane without neuropathies and use it for a long period of time. And they see our toxicity profiles being manageable. So the overall feedback has been very positive. And we actually did, earlier this year, do a survey to a broader element of the marketplace, and we've seen our awareness really go from zero, up to about 70% across the board, both the product, oral paclitaxel, as well Athenex. So, we feel like where we are at this point in time, still quite a bit ahead of launch, that we've made real progress across physicians with overall awareness. And then, particularly when we drill down on the clinical experts, we've seen a real improvement in their perception of the product. Hope that answers your question.

Chad Messer -- Needham & Company -- Analyst

It does, and thank you. Very, very helpful.

Operator

Our next question is from Yale Jen with Laidlaw & Company.

Yale Jen -- Laidlaw & Company -- Analyst

Good morning, and thanks for taking the question. The first question is a little bit housekeeping that R&D expense in the second quarter was -- it jumped from the prior quarter. So, should we consider for the remaining of the second half of this year, that will be a benchmark quarterly? Or is that just a one-time thing?

Randoll Sze -- Chief Financial Officer

Yeah. Thank you, Yale, for your question. Yes, I think you can use that the Q2 number as a benchmark for the rest of the year. That's, I would say, a safe assumption.

Yale Jen -- Laidlaw & Company -- Analyst

Okay, great. And also in the product sales, second quarter obviously is a great news. And given that the COVID-19 seems to be with us for a while, if not a long while, you cited [Phonetic] about mid-double-digit teen growth that roughly -- my estimate is that for the second half of this year, each quarter to roughly get back to the level first quarter sales. Is that a more conservative measurement? Or you feel there's additional things that you can talk about?

Randoll Sze -- Chief Financial Officer

Yeah. The guidance we gave earlier on the call, actually, takes into account the performance year-to-date and also our outlook for the remainder of the year. And the reason why we gave out that [Technical Issues] I guess the basis for us to give out that guidance is obviously, we have looked at the numbers in July. However, I would say, some of the COVID-related opportunities are -- as I mentioned, they are non-recurring in nature. So we want to set the expectation right. Obviously, if there is an upside surprise, we will be able to come back and provide an update in November. But for now, the mid-teens year-over-year growth would be a fair assumption of your estimate for our full-year product sales number.

Yale Jen -- Laidlaw & Company -- Analyst

Okay, great. Maybe the last question I've got here is that I know the focus for oral paclitaxel is for the US filing. Could you guys talk a little bit about the strategy in other parts of the world, for instance, in Europe? Or maybe you want to talk a little about it in China? And thanks.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Rudolf?

Rudolf Kwan -- Chief Medical Officer

Yeah, of course, our focus so far is in the US, and we of course are keeping an eye on the rest of the world. And especially, as you rightly mentioned, Europe is a major market. So, we have activity initiating there. And we will be reporting as soon as we hear our plans are being finalized in the European area.

In China, certainly, we have this licensing with Xiangxue, and we are actively discussing with them regarding the China registration strategy. I think there are exciting developments in the China FDA new regulations, and we certainly would want to exploit anyone that we can apply. But certainly, we will expect to communicate once we've finalized our strategies with our partner.

Yale Jen -- Laidlaw & Company -- Analyst

Okay, great. And we will keep [Indecipherable]. Thanks a lot.

Rudolf Kwan -- Chief Medical Officer

Thank you, Yale.

Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session. I would like to turn the call back to Dr. Lau for closing remarks.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you everyone for joining us this morning. We are pleased with the execution this quarter and look forward to providing you with further updates very soon. Please contact us if you have any further questions. And again, thank you for joining us in our quarterly earnings call this morning. Bye-bye.

Operator

[Operator Closing Remarks]

Duration: 47 minutes

Call participants:

Michael Wood -- Managing Director, LifeSci Advisors

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Rudolf Kwan -- Chief Medical Officer

Timothy Cook -- Senior Vice President, Global Oncology

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

Randoll Sze -- Chief Financial Officer

Robyn Karnauskas -- Truist Securities -- Analyst

Kennen MacKay -- RBC Capital Markets -- Analyst

Kevin DeGeeter -- Oppenheimer & Co. -- Analyst

Chad Messer -- Needham & Company -- Analyst

Yale Jen -- Laidlaw & Company -- Analyst

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