Note 8 - Stockholders' Equity

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 an amendment to the plan to increase the number of authorized shares issuable to 266,666 shares was approved by the Company's stockholders in December 2021. The 2015 Incentive Plan was amended again to increase the number of authorized shares issuable to 5,266,666 shares and approved by the Company's stockholders on January 30, 2023. Under the 2015 Incentive Plan, the compensation committee of the Company’s board of directors is authorized to grant stock-based awards to directors, officers, employees and consultants. The plan authorizes grants to issue up to 5,266,666 shares of authorized but unissued common stock and expires 10 years from adoption and limits the term of each option to no more than 10 years from the date of grant.

Total shares available for the issuance of stock-based awards under the Company’s 2015 Incentive Plan was 3,352,489 shares at September 30, 2023.

Stock Options

The following table summarizes stock option activity during the nine months ended September 30, 2023:

There were no options granted or outstanding in the nine month period ending September 30, 2022. The aggregate intrinsic value of options is calculated as the difference between the exercise price of the underlying options and the fair value of the Company's common stock for those options that had exercise prices lower than the fair value of the Company's common stock. As of September 30, 2023, the total compensation cost related to non-vested options awards not yet recognized is approximately $1.2 million with a weighted average remaining vesting period of 1.8 years.

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:

Restricted Stock Units ("RSU") and Restricted Stock Awards ("RSA")

The following table summarizes the aggregate RSU and RSA activity during the nine months ended  September 30, 2023:

At September 30, 2023, the Company had unrecognized stock-based compensation expense related to restricted stock units and restricted stock awards of $0.1 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.6 years. This amount does not include, as of September 30, 2023, 3,333 shares of restricted stock outstanding which are performance-based and vest upon achievement of certain corporate milestones. The expense is recognized over the vesting period of the award. Stock-based compensation for awards containing performance conditions will be measured as of the grant date and recorded if and when it is probable that the performance condition will be achieved.

Stock-based compensation expense has been reported in the Company's condensed consolidated statements of operations as follows:

Stock Warrants

The following table summarizes the warrant activity for the nine months ended September 30, 2023 and 2022:

There were no outstanding warrants during the nine months ended September 30, 2022.

Capital Raises

January 2023 Registered Direct and Private Placement

On January 27, 2023, the Company entered into a Securities Purchase Agreement (the “Registered Purchase Agreement”) with a single institutional accredited investor, pursuant to which the Company agreed to issue and sell (i) 448,000 shares (the “Shares”) of the Companies' common stock at a price per Share of $1.55, and (ii) pre-funded warrants (the “Pre-funded Warrants”) to purchase 1,492,299 shares of common stock, at a price per Pre-funded Warrant equal to the price per Share, less $0.001 (the “Registered Offering”). The Pre-funded Warrants have an exercise price of $0.001 per share and became exercisable upon issuance and remain exercisable until exercised in full. The Company received approximately $3.0 million in gross proceeds from the Registered Offering, before deducting placement agency fees and estimated offering expenses.

On January 27, 2023, the Company also entered into a Securities Purchase Agreement (the “PIPE Purchase Agreement”) with the same institutional accredited investor for a private placement offering (“Private Placement”) of the January 2023 Warrants to purchase 1,940,299 shares of common stock. Pursuant to the PIPE Purchase Agreement, the Company agreed to issue and sell the January 2023 Warrants at an offering price of $0.125 per January 2023 Warrant to purchase one share of common stock. The January 2023 Warrants have an exercise price of $1.55 per share (subject to adjustment as set forth in the January 2023 Warrants), are exercisable immediately after issuance and will expire three years from the date on which the January 2023 Warrants become exercisable. The January 2023 Warrants contain standard anti-dilution adjustments to the exercise price including for share splits, share dividend, rights offerings and pro rata distributions. The Private Placement closed on January 31, 2023, concurrently with the Registered Offering. The gross proceeds to the Company from the Private Placement, before deducting placement agent fees and other estimated offering expenses payable by the Company, were approximately $0.24 million.

September 2023 Private Placement

On September 8, 2023, the Company entered into an unwritten agreement with Fortress and Dr. Lindsay A. Rosenwald, a director on the board of directors of the Company (Dr. Rosenwald and Fortress, together, the “Private Placement Investors”), pursuant to which the Company agreed to issue and sell 767,085 shares (the “September 2023 Private Placement Shares”) of common stock of the Company, par value $0.0001 per share, for an aggregate purchase price of approximately $550,000 in a private placement transaction (the “September 2023 Private Placement”) exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations of the SEC thereunder. The shares were purchased by the Private Placement Investors at a price per September 2023 Private Placement Share of $0.717, which was the “consolidated closing bid price” of the Common Stock on the Nasdaq Capital Market as of September 7, 2023, in compliance with Nasdaq Listing Rule 5365(c). The gross proceeds to the Company from the September 2023 Private Placement, before deducting estimated offering expenses payable by the Company, were approximately $550,000. The Company did not incur any underwriting or placement agent fees associated with the September 2023 Private Placement. The Company intends to use the net proceeds from the September 2023 Private Placement for working capital and other general corporate purposes.

In connection with the September 2023 Private Placement, the Company entered into a registration rights letter agreement (the “Registration Rights Letter Agreement”) with the Private Placement Investors. Pursuant to the Registration Rights Letter Agreement, the Company will be required to file, on or prior to September 8, 2024 (the “Private Placement Filing Date”), a resale registration statement (the “Private Placement Resale Registration Statement”) with the SEC to register the resale of the September 2023 Private Placement Shares.

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 (7.5%) of the proceeds of future financings, up to $4.0 million. In connection with the closing of the January 2023 Registered Direct and Private Placement, the Company made a payment of $0.2 million to InvaGen on February 3, 2023.