UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
Commission File Number
AVENUE THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices and zip code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Class | Trading Symbol(s) | Exchange Name |
| | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Class of Common Stock | Outstanding Shares as of November 11, 2024 | |
Common Stock, $0.0001 par value | |
Form 10‑Q
For the Quarter Ended September 30, 2024
Table of Contents
Page No. |
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Item 1. |
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Unaudited Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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Unaudited Condensed Consolidated Balance Sheets
($ in thousands, except share and per share amounts)
September 30, | December 31, | |||||||
2024 | 2023 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Prepaid expenses and other current assets | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | $ | ||||||
Accounts payable and accrued expenses - related party | ||||||||
Warrant liability | ||||||||
Total current liabilities | ||||||||
Total liabilities | ||||||||
Commitments and contingencies | ||||||||
Stockholders’ equity | ||||||||
Preferred stock ($ par value), shares authorized | ||||||||
Class A Preferred Stock, shares issued and outstanding as of September 30, 2024 and December 31, 2023 | ||||||||
Common stock ($ par value), and shares authorized as of September 30, 2024 and December 31, 2023, respectively | ||||||||
Common shares, and shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | ||||||||
Additional paid-in capital | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Total stockholders’ equity attributed to the Company | ||||||||
Non-controlling interests | ( | ) | ( | ) | ||||
Total stockholders’ equity | ||||||||
Total liabilities and stockholders’ equity | $ | $ |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Unaudited Condensed Consolidated Statements of Operations
($ in thousands, except share and per share amounts)
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
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2024 |
2023 |
2024 |
2023 |
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Operating expenses: |
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Research and development |
$ | $ | $ | $ | ||||||||||||
Research and development – licenses acquired |
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General and administrative |
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Loss from operations |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other income (expense): |
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Interest income |
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Financing costs – warrant liabilities |
( |
) | ||||||||||||||
Loss on settlement of common stock warrant liabilities |
( |
) | ||||||||||||||
Change in fair value of warrant liabilities |
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Total other income (expense) |
( |
) | ||||||||||||||
Net income (loss) |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||
Net loss attributable to non-controlling interests |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net income (loss) attributable to Avenue |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||
Net income (loss) attributable to common stockholders |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||
Net income (loss) per common share attributable to common stockholders, basic and diluted |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||
Weighted average number of common shares outstanding, basic and diluted |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit)
($ in thousands, except share amounts)
Three months ended September 30, 2024 |
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Class A Preferred |
Additional |
Non- |
Total |
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Shares |
Common Shares |
Paid-in |
Accumulated |
Controlling |
Stockholders’ |
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Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Interests |
Equity (Deficit) |
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Balance at June 30, 2024 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
Share based compensation |
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Common shares issuable - Founders Agreement |
— | 4,023 | ||||||||||||||||||||||||||||||
Exercise of warrants |
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Issuance of common stock, net of offering costs under open market sales agreement (ATM) |
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Non-controlling interest in subsidiaries |
— | — | ( |
) | ||||||||||||||||||||||||||||
Net loss attributable to non-controlling interest |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Net loss attributable to common stockholders |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Balance at September 30, 2024 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ |
Nine Months Ended September 30, 2024 | ||||||||||||||||||||||||||||||||
Class A Preferred | Additional | Non- | Total | |||||||||||||||||||||||||||||
Shares | Common Shares | Paid-in | Accumulated | Controlling | Stockholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Interests | Equity (Deficit) | |||||||||||||||||||||||||
Balance at December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
Share based compensation | ||||||||||||||||||||||||||||||||
Common shares issuable - Founders Agreement | — | 4,023 | ( | ) | ( | ) | ||||||||||||||||||||||||||
Issuance of common stock to Fortress | ||||||||||||||||||||||||||||||||
Loss on settlement of common stock warrant liabilities | — | — | ||||||||||||||||||||||||||||||
Exercise of warrants | ||||||||||||||||||||||||||||||||
Warrant inducement offering costs | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
Issuance of common stock, net of offering costs under open market sales agreement (ATM) | ||||||||||||||||||||||||||||||||
Reverse split (1-for- ) | ( | ) | ||||||||||||||||||||||||||||||
Non-controlling interest in subsidiaries | — | — | ( | ) | ||||||||||||||||||||||||||||
Net loss attributable to non-controlling interest | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
Net loss attributable to common stockholders | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
Balance at September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
Three months ended September 30, 2023 |
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Class A Preferred |
Additional |
Non- |
Total |
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Shares |
Common Shares |
Paid-in |
Accumulated |
Controlling |
Stockholders’ |
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Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Interests |
Equity (Deficit) |
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Balance at June 30, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
Share based compensation |
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Issuance of common stock for license expense |
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Shares issued in a private placement offering |
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Non-controlling interest in subsidiaries |
— | — | ( |
) | ||||||||||||||||||||||||||||
Net loss attributable to non-controlling interest |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Net loss attributable to common stockholders |
— | — | ||||||||||||||||||||||||||||||
Balance at September 30, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) |
Nine Months Ended September 30, 2023 |
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Class A Preferred |
Additional |
Non- |
Total |
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Shares |
Common Shares |
Paid-in |
Accumulated |
Controlling |
Stockholders’ |
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Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Interests |
Equity (Deficit) |
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Balance at December 31, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
Share based compensation |
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Issuance of common stock to Fortress |
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Issuance of common stock and pre-funded warrants, net of offering costs - registered direct offering and private placement |
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Issuance of common stock for license expense |
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Exercise of warrants |
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Shares issued in a private placement offering |
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Non-controlling interest in subsidiaries |
— | — | ( |
) | ||||||||||||||||||||||||||||
Net loss attributable to non-controlling interest |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Net loss attributable to common stockholders |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Balance at September 30, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($ in thousands)
For the Nine Months Ended |
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September 30, 2024 |
September 30, 2023 |
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Cash flows from operating activities: |
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Net loss |
$ | ( |
) | $ | ( |
) | ||
Reconciliation of net loss to net cash used in operating activities: |
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Share based compensation |
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Loss on settlement of common stock warrant liabilities |
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Change in fair value of warrant liabilities |
( |
) | ( |
) | ||||
Issuance of common stock for licenses acquired |
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Research and development-licenses acquired, expense |
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Issuance of common stock to Fortress |
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Common shares issuable - Founders Agreement |
( |
) | ||||||
Changes in operating assets and liabilities: |
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Other receivables - related party |
( |
) | ||||||
Prepaid expenses and other current assets |
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Accounts payable and accrued expenses |
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Deferred financing costs |
( |
) | ||||||
Accounts payable and accrued expenses - related party |
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Net cash used in operating activities |
( |
) | ( |
) | ||||
Cash flows from investing activities: |
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Purchase of research and development licenses |
( |
) | ||||||
Net cash used in investing activities |
( |
) | ||||||
Cash flows from financing activities: |
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Issuance of common stock and pre-funded warrants, net of offering costs - registered direct offering and private placement |
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Shares issued in a private placement offering |
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Deferred financing costs |
( |
) | ||||||
Proceeds from ATM sales of common stock, net of issuance costs |
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Exercise of warrants |
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Warrant transaction costs |
( |
) | ||||||
Net cash provided by financing activities |
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Net change in cash and cash equivalents |
( |
) | ||||||
Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
$ | $ | ||||||
Supplemental cash flow information: |
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Unpaid financing costs |
$ | $ | ||||||
Issuance of common shares - Founders Agreement |
$ | $ |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
AVENUE THERAPEUTICS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Organization, Plan of Business Operations
Avenue Therapeutics, Inc. (the “Company” or “Avenue”) was incorporated in Delaware on February 9, 2015, as a wholly-owned subsidiary of Fortress Biotech, Inc. (“Fortress”). Avenue is a specialty pharmaceutical company focused on the development and commercialization of therapies for the treatment of neurologic diseases. Avenue's current product candidates include AJ201 for the treatment of spinal and bulbar muscular atrophy ("SBMA", also known as Kennedy's Disease), intravenous tramadol ("IV tramadol") for the treatment of post-operative acute pain, and BAER-101 for the treatment of epilepsy and panic disorders.
Authorized Share Increase
On January 9, 2024, stockholders holding a majority of the outstanding voting power of the Company executed and delivered to the Board of Directors of the Company a written consent approving, among other items, an increase in the number of shares of common stock, par value $
Going Concern
These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, as described below, substantial doubt about the Company’s ability to continue as a going concern exists.
The Company is not yet generating revenue, has incurred substantial operating losses since its inception and expects to continue to incur significant operating losses for the foreseeable future as it executes on its product development plan and may never become profitable. As of September 30, 2024, the Company had an accumulated deficit of $
Note 2 - Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The Company’s consolidated financial statements have been prepared in conformity with U.S. GAAP, include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented and are stated in U.S. dollars. The Company’s consolidated financial statements include the accounts of the Company and the accounts of the Company’s subsidiary. All intercompany balances and transactions have been eliminated.
The accompanying unaudited interim condensed financial statements include the accounts of the Company's subsidiary, Baergic. Because the Company owns less than 100% of Baergic, the Company records net loss attributable to non-controlling interests in its consolidated statements of operations equal to the percentage of the economic or ownership interest retained in Baergic by the respective non-controlling parties. The Company continually assesses whether changes to existing relationships or future transactions may result in the consolidation or deconsolidation of its' subsidiary.
Certain information and footnote disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These unaudited interim condensed financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period. Therefore, these unaudited interim condensed financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the fiscal year ended December 31, 2023, which were included in the Company’s Annual Report on Form 10-K (the “2023 Form 10-K”) and filed with the U.S. Securities and Exchange Commission (“SEC”) on March 18, 2024.
Segments
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and assessing performance. The Company views its operations and manages its business in
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Fair Value Measurements
The Company follows accounting guidance on fair value measurements for financial assets and liabilities measured at fair value on a recurring basis. Under the accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.
Level 3: Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.
Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as accounts payable, accrued expenses and other current liabilities.
Non-Controlling Interests
Non-controlling interests in consolidated entities represent the component of equity in consolidated entities held by third parties. Any change in ownership of a subsidiary while the controlling financial interest is retained is accounted for as an equity transaction between the controlling and non-controlling interests. Intercompany activity is eliminated entirely in consolidation prior to the allocation of net gain/loss attributable to non-controlling interest, which is based on ownership interests.
Net Loss per Share
Net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Net loss attributable to common stockholders consisted of net loss, as adjusted for deemed dividends. The Company recorded a deemed dividend of $
The following table sets forth the potential common shares that could potentially dilute basic income per share in the future that were not included in the computation of diluted net loss per share because to do so would have been anti-dilutive for the periods presented:
As of | ||||||||
September 30, | ||||||||
2024 | 2023 | |||||||
Unvested restricted stock units/awards | ||||||||
Warrants | ||||||||
Options | ||||||||
Class A Preferred shares | ||||||||
Total potential dilutive effect |
The
Summary of Significant Accounting Policies
There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2023 Form 10-K.
Accounting Standards Not Yet Adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires that an entity report segment information in accordance with Topic 280, Segment Reporting. The amendment in the ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of the new standard on its financial statement disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that this guidance will have on its financial statement disclosures.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires new financial statement disclosures in tabular format, in the notes to financial statements, of specified information about certain costs and expenses. The amendments in this update do not change or remove current expense disclosure requirements. The amendments in this update are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the new standard on its financial statement disclosures.
Note 3 — Licenses/Supplier Agreements
IV Tramadol License
Effective as of February 17, 2015, Fortress transferred the Revogenex license and all other rights and obligations under the IV Tramadol License Agreement to the Company, pursuant to the terms of the Founders Agreement. In connection with the terms of the IV Tramadol License Agreement, Fortress purchased an exclusive license to IV tramadol for the U.S. market from Revogenex, a privately held company in Dublin, Ireland. Fortress made an upfront payment of $
On October 29, 2018, the Company and Zaklady Farmaceutyczne Polpharma (“Polpharma”) extended the term of their exclusive supply agreement for drug product of IV tramadol to eight years from the date of the launch of the product. In addition, under the terms of the amended agreement, Polpharma is eligible to receive a milestone payment totaling $
Baergic Licenses
In December 2019, Baergic entered into two license agreements: (i) a license agreement (the “AZ License”) with AstraZeneca AB (“AZ”) to acquire an exclusive license to patent and related intellectual property rights pertaining to their proprietary compound Gamma-aminobutyric acid receptor A alpha 2 & 3 (GABAA α2,3) positive allosteric modulators; and (ii) a license agreement (the “CCHMC License”) with Cincinnati Children’s Hospital Medical Center (“CCHMC”) to acquire patent and related intellectual property rights pertaining to a GABA inhibitor program for neurological disorders. Baergic paid an upfront fee of $
Development milestones totaling approximately $
AnnJi License Agreement
On February 28, 2023, the Company entered into a license agreement with AnnJi Pharmaceutical Co. Ltd. ("AnnJi"), whereby the Company obtained an exclusive license (the "AnnJi License Agreement") from AnnJi for certain intellectual property rights pertaining to AJ201. Under the AnnJi License Agreement, in exchange for exclusive rights to the intellectual property underlying the AJ201 product candidates, the Company agreed to pay $
The license provided under the AnnJi License Agreement is exclusive as to all oral forms of AJ201 for use in all indications (other than androgenetic alopecia and Alzheimer’s disease) in the United States, Canada, the European Union, the United Kingdom and Israel. The AnnJi License Agreement also contains customary representations and warranties and provisions related to confidentiality, diligence, indemnification and intellectual property protection. The Company will initially be obligated to obtain both clinical and commercial supply of AJ201 exclusively through AnnJi. AnnJi retains the manufacturing rights for AJ201 and the Company has the option to acquire those rights from AnnJi as described in the AnnJi License Agreement.
In connection with the signing of the AnnJi License Agreement, the Company issued
In connection with execution of the AnnJi License Agreement, Avenue entered into a registration rights agreement with AnnJi, pursuant to which Avenue filed a registration statement to register the resale of the First Tranche Shares and Second Tranche Shares issued to AnnJi. The Company filed such registration statement on Form S-3 with the SEC on June 16, 2023, which was declared effective on June 27, 2023.
Note 4 — Related Party Agreements
Founders Agreement and Management Services Agreement with Fortress
In February 2015, Fortress entered into a Management Services Agreement (the "MSA") with the Company to provide services for the Company pursuant to the terms of the MSA. Expenses related to the MSA are recorded
In February 2015, Fortress entered into a Founders Agreement with the Company, under which the Company agreed to: (i) issue annually to Fortress, shares of common stock equal to two and one half percent (
Annual Equity Fee
For the three and nine months ended September 30, 2024, the Company did
For the three and nine months ended September 30, 2023, the Company did
Financing Equity Fee
For the three months ended September 30, 2024, the Company recorded a Financing Equity Fee of $
For the three months ended September 30, 2023, the Company recorded a Financing Equity Fee of $
Founders Agreement and Management Services Agreement with Baergic
Pursuant to the Share Contribution Agreement between Avenue and Fortress, the Founders Agreement and Management Services Agreement that had previously been existing between Fortress and Baergic were assigned to Avenue, such that they now exist between Avenue and Baergic; those agreements are referred to herein as the Avenue-Baergic Founders Agreement and the Avenue-Baergic MSA, as applicable. The Annual Stock Dividend payable to the Company is
The Avenue-Baergic Founders Agreement has an effective date of March 9, 2017, and a term of 15 years, which upon expiration automatically renews for successive one-year periods unless terminated by Avenue and Baergic or a Change in Control (as defined in the Avenue-Baergic Founders Agreement) occurs.
As additional consideration under the Avenue-Baergic Founders Agreement, Baergic will also: (i) pay an equity fee in shares of common stock, payable within five (5) business days of the closing of any equity or debt financing for Baergic that occurs after the effective date of the Avenue-Baergic Founders Agreement and ends on the date when Avenue no longer has majority voting control in the Baergic’s voting equity, equal to two and one-half (
The Avenue-Baergic MSA has an effective date of March 9, 2017, pursuant to which Avenue renders management, advisory and consulting services to the Company. The Avenue-Baergic MSA has an initial term of
Note 5 — Accounts Payable and Accrued Expenses
Accounts payable, accrued expenses, and other liabilities consisted of the following (in thousands):
As of September 30, |
As of December 31, |
|||||||
2024 |
2023 |
|||||||
Accounts payable |
$ | $ | ||||||
Accrued employee compensation |
||||||||
Accrued contracted services and other |
||||||||
Total accounts payable and accrued expenses |
$ | $ |
Note 6 - Commitments and Contingencies
Leases
The Company is not party to any leases for office space or equipment.
Litigation
The Company recognizes a liability for a contingency when it is probable that liability has been incurred and when the amount of loss can be reasonably estimated. When a range of probable loss can be estimated, the Company will accrue the most likely amount of such loss, and if such amount is not determinable, then the Company will accrue the minimum of the range of probable loss. As of September 30, 2024, there was no litigation against the Company.
Note 7 - Stockholder's Equity
Class A Preferred Stock
On September 13, 2016,
On any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Class A Preferred Stock shall be entitled to cast for each share of Class A Preferred Stock held by such holder as of the record date for determining stockholders entitled to vote on such matter, the number of votes that is equal to one and one-tenth (1.1) times a fraction, the numerator of which is the sum of (A) the number of shares of outstanding Common Stock and (B) the whole shares of Common Stock in to which the shares of outstanding Class A Preferred Stock are convertible, and the denominator of which is number of shares of outstanding Class A Preferred Stock (the “Class A Preferred Stock Ratio”). Thus, the Class A Preferred Stock will at all times constitute a voting majority.
Each share of Class A Preferred Stock is convertible, at the option of the holder, into one fully paid and nonassessable share of Common Stock (the “Conversion Ratio”), subject to certain adjustments. If the Company, at any time effects a subdivision or combination of the outstanding Common Stock (by any stock split, stock dividend, recapitalization, reverse stock split or otherwise), the applicable Conversion Ratio in effect immediately before that subdivision is proportionately decreased or increased, as applicable, so that the number of shares of Common Stock issuable on conversion of each share of Class A Preferred Stock shall be increased or decreased, as applicable, in proportion to such increase or decrease in the aggregate number of shares of Common Stock outstanding. Additionally, if any reorganization, recapitalization, reclassification, consolidation or merger involving the Company occurs in which the Common Stock (but not the Class A Preferred Stock) is converted into or exchanged for securities, cash or other property, then each share of Class A Preferred Stock becomes convertible into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Company issuable upon conversion of one share of the Class A Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction. Pursuant to the reverse stock splits by the Company in September 2022 and April 2024, the Class A Preferred Stock has a Conversion Ratio of
Common Stock
On January 9, 2024, the stockholders holding a majority of the outstanding voting power of the Company executed and delivered to the Board of Directors of the Company a written consent approving, among other items, an increase in the number of shares of common stock authorized under the Certificate of Incorporation, from
Holders of the Company's common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. An election of directors by the stockholders is determined by a plurality of the votes cast by the stockholders entitled to vote on the election. Holders of common stock are entitled to receive proportionately any dividends as may be declared by the Company's Board of Directors, subject to any preferential dividend rights of outstanding preferred stock.
In the event of the Company's liquidation or dissolution, the holders of common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that the Company may designate and issue in the future.
Reverse Stock Split
On April 25, 2024, the Company filed an amendment (the “Reverse Split Amendment”) to its Third Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the 1-for-
All share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated.
Capital Raises
2021 Shelf
On December 7, 2021, the Company filed a shelf registration statement (File No. 333-261520) on Form S-3, which was declared effective on December 10, 2021 (the "Shelf"). Approximately $
January 2024 Warrant Inducement and Private Placement
On January 5, 2024, the Company entered into (i) an inducement offer letter agreement (the “January 2023 Investor Inducement Letter”) with a certain investor (the “January 2023 Investor”) in connection with certain outstanding warrants to purchase up to an aggregate of
Pursuant to the January 2024 Warrant Inducement, (i) the January 2023 Investor agreed to exercise for cash its January 2023 Warrants at a reduced exercise price of $
The January 2023 Warrants, which were liability classified, were revalued on January 5, 2024 using the Black-Scholes Model to calculate the difference in fair value as a result of the change in exercise price. The difference in fair value of $
The Company received aggregate net proceeds of approximately $
The Company filed a registration statement on Form S-3 (File No. 333-276671) with the SEC providing for the resale of the January 2024 Warrant Shares (the “Resale Registration Statement”) on January 24, 2024, which was declared effective on February 1, 2024.
The key inputs for the Black-Scholes Model calculations on January 5, 2024 were as follows:
January 2023 |
New Series A |
New Series B |
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Warrants |
Warrants |
Warrants |
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Stock price |
$ | $ | $ | |||||||||
Risk-free interest rate |
% | % | % | |||||||||
Expected dividend yield |
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Expected term in years |
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Expected volatility |
% | % | % |
May 2024 Warrant Inducement and Private Placement
On April 28, 2024, the Company entered into inducement offer letter agreements (the “May 2024 Warrant Inducement”) with (i) certain investors (the “October 2022 Investors”) that held certain outstanding October 2022 Warrants to purchase up to an aggregate of
The October 2022 Warrants, which were liability classified, were revalued on May 1, 2024 using the Black-Scholes Model to calculate the difference in fair value as a result of the change in exercise price. The difference in fair value of $
The Company received net proceeds of approximately $
The Company filed a registration statement on Form S-3 (File No. 333-279125) with the SEC providing for the resale of the May 2024 New Warrant Shares (the “May 2024 Resale Registration Statement”) on May 6, 2024, which was declared effective on May 10, 2024.
The key inputs for the Black-Scholes Model calculations on May 1, 2024 were as follows:
October 2022 |
Series C |
Series D |
Placement Agent |
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Warrants |
Warrants |
Warrants |
Warrants |
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Stock price |
$ | $ | $ | $ | ||||||||||||
Risk-free interest rate |
% | % | % | % | ||||||||||||
Expected dividend yield |
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Expected term in years |
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Expected volatility |
% | % | % | % |
ATM Facility
On May 10, 2024, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co. LLC (the “ATM Manager”) under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $
Under the ATM Agreement, the ATM Manager may sell shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act. The ATM Manager will use commercially reasonable efforts to sell the shares from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company agreed to pay the ATM Manager a commission of
For the three months and nine months ended September 30, 2024, the Company sold an aggregate of
Equity Incentive Plan
The Company has in effect the Avenue Therapeutics, Inc. 2015 Incentive Plan (as amended, the “2015 Incentive Plan"). The 2015 Incentive Plan was adopted in January 2015 by the Company's stockholders and, in December 2021, the Company’s stockholders approved an amendment to the plan to increase the number of authorized shares issuable to
Total shares available for the issuance of stock-based awards under the Company’s 2015 Incentive Plan was
Restricted Stock Units and Restricted Stock Awards
The following table summarizes the restricted stock unit and award activity during the nine months ended September 30, 2024:
Number of |
Weighted |
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Units and |
Average Grant |
||||||
Awards |
Date Fair Value |
||||||
Unvested balance at December 31, 2023 |
$ | ||||||
Granted |
|||||||
Forfeited |
|||||||
Vested |
( |
) | |||||
Unvested balance at March 31, 2024 |
$ | ||||||
Unvested balance at June 30, 2024 |
$ | ||||||
Granted |
|||||||
Forfeited |
|||||||
Vested |
|||||||
Unvested balance at September 30, 2024 |
$ |
At September 30, 2024, the Company had unrecognized stock-based compensation expense related to restricted stock units and restricted stock awards of $
The Company offers certain executives and key employees the opportunity to defer settlement of vested restricted stock units as part of our nonqualified deferred compensation plan. As of September 30, 2024, the Company had
Stock Options
The following table summarizes stock option activity during the nine months ended September 30, 2024:
Weighted |
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Average |
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Weighted |
Remaining |
Aggregate |
||||||||||||||
Number |
Average |
Contractual |
Intrinsic Value |
|||||||||||||
of Options |
Exercise Price |
Term (years) |
(in thousands) |
|||||||||||||
Outstanding at December 31, 2023 |
$ | $ | ||||||||||||||
Granted |
$ | $ | — | |||||||||||||
Exercised |
$ | $ | — | |||||||||||||
Cancelled/forfeited |
$ | $ | — | |||||||||||||
Expired |
$ | $ | — | |||||||||||||
Outstanding at Balance at September 30, 2024 |
$ | $ | — | |||||||||||||
Expected to vest |
$ | $ | ||||||||||||||
Exercisable |
$ | $ |
There were
The Company estimated the fair value of stock options granted in the periods presented utilizing a Black-Scholes option-pricing model utilizing the following assumptions:
For the Nine Months Ended |
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September 30, | ||||
2024 |
2023 |
|||
Volatility |
|
|
||
Expected term (in years) |
|
|
||
Risk-free rate |
|
|
||
Expected dividend yield |
|
|
Stock-based compensation expense has been reported in the Company's condensed consolidated statements of operations as follows:
For the Three Months Ended |
For the Nine Months Ended |
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September 30, | September 30, | |||||||||||||||
2024 |
2023 |
2024 |
2023 |
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Research and development |
$ | $ | $ | $ | ||||||||||||
General and administrative |
||||||||||||||||
Total stock-based compensation expense |
$ | $ | $ | $ |
Stock Warrants
The following table summarizes the warrant activity for the nine months ended September 30, 2024 and 2023:
Weighted |
||||||||||||
Average |
Aggregate |
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Exercise |
Intrinsic Value |
|||||||||||
Warrants |
Price |
(in thousands) |
||||||||||
Outstanding, December 31, 2023 |
$ | $ | ||||||||||
Granted |
||||||||||||
Exercised |
( |
) | ||||||||||
Outstanding, March 31, 2024 |
$ | $ | ||||||||||
Granted |
||||||||||||
Exercised |
( |
) | ||||||||||
Outstanding, June 30, 2024 |
$ | $ | ||||||||||
Outstanding, September 30, 2024 |
$ | $ |
Upon the exercise of warrants, the Company will issue new shares of its common stock.
InvaGen Share Repurchase
Under the Share Repurchase Agreement, the Company agreed to pay InvaGen an additional amount as a contingent fee, payable in the form of seven and a half percent (