UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-38114

AVENUE THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)


Delaware		47-4113275
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1140 Avenue of the Americas, Floor 9 New York, NY 10036

(Address of principal executive offices and zip code)

(781) 652-4500

(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
Common Stock		ATXI		Nasdaq Capital Market

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. Yes ⌧ No ☐

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). Yes ⌧ No ☐

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 ☐
Non-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 ☐ No ⌧

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 12, 2021
Common Stock, $0.0001 par value		18,700,480

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AVENUE THERAPEUTICS, INC.

Form 10-Q

For the Quarter Ended September 30, 2021

Table of Contents


		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Unaudited Interim Condensed Financial Statements

	Condensed Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020	3

	Unaudited Condensed Statements of Operations for the three and nine months ended September 30, 2021 and 2020	4

	Unaudited Condensed Statements of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2021 and 2020	5

	Unaudited Condensed Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	6

	Notes to Unaudited Interim Condensed Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17

Item 4.	Controls and Procedures	17

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	19

Item 1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49

Item 3.	Defaults Upon Senior Securities	49

Item 4.	Mine Safety Disclosures	49

Item 5.	Other Information	49

Item 6.	Exhibits	50

Signatures		51

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SUMMARY RISK FACTORS

Our business is subject to risks of which you should be aware before making an investment decision. The risks described below are a summary of the principal risks associated with an investment in us and are not the only risks we face. You should carefully consider these risk factors, the risk factors described in Item 1A, and the other reports and documents that we have filed with the Securities and Exchange Commission (“SEC”).

Risks Pertaining to the Influence of Fortress Biotech, Inc. (“Fortress”)

●

Fortress controls a voting majority of our capital stock pursuant to its ownership of a class of preferred stock, some of the features of which have been contractually suspended.

Risks Pertaining to Our Business and Influence

●

If we fail to satisfy applicable listing standards, including compliance with the minimum market value of listed securities requirement, our common stock may be delisted from the NASDAQ Capital Market, which would impact the liquidity, and potentially the value, of your investment.

●

We currently have no drug products for sale, and only one drug product candidate, Intravenous (“IV”) Tramadol. We are dependent on the success of IV Tramadol and cannot guarantee that we will receive regulatory approval, or that IV Tramadol will be successfully commercialized.

●

If serious adverse or unacceptable side effects are identified during the development of IV Tramadol or any future product candidates, we may need to abandon or limit our development of some of our product candidates.

●

We are an “emerging growth company” and a “smaller reporting company,” and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors.

Risks Pertaining to Our Finances

●

There is substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.

●

We have incurred significant losses since our inception. We expect to incur losses for the foreseeable future, and may never achieve or maintain profitability.

●

We do not have any products that are approved for commercial sale and therefore do not expect to generate any revenues from product sales in the foreseeable future, if ever.

●

Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish proprietary rights.

Risks Pertaining to Reliance on Third Parties

●

We rely, and expect to continue to rely, on third parties to conduct our preclinical studies and clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials or complying with applicable regulatory requirements.

●

We rely on clinical data and results obtained by third parties that could ultimately prove to be inaccurate or unreliable.

Risks Pertaining to Regulatory Approval Process

●

We may not receive regulatory approval for IV Tramadol, or our approval may be significantly delayed due to scientific or regulatory reasons.

●

We may encounter FDA deficiencies that delay our approval, or we may not obtain approval, if we do not sufficiently address the issues raised by FDA during our meetings with FDA, as described in Complete Response Letters (“CRLs”), or as part of our Formal Dispute Resolution Request.

●

Even if we respond to FDA’s requests for information and deficiencies, provide robust scientific justifications and supporting data, there is no guarantee that FDA will accept our responses, or change its own preliminary conclusions about our product candidate.

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●

Even if IV Tramadol receives regulatory approval, which may not occur, it and any other products we may market will remain subject to substantial ongoing regulatory scrutiny.

●

We will need to obtain FDA approval of any proposed product brand names, and any failure or delay associated with such approval may adversely impact our business.

●

If the Drug Enforcement Agency (“DEA”) decides to reschedule Tramadol from a Schedule IV controlled substance to a more restrictive Schedule, IV Tramadol could lose its competitive advantage, and our related clinical development and regulatory approval could be delayed or prevented.

Risks Pertaining to the Commercialization of Product Candidates

●

Current and future legislation and regulation may increase the difficulty and cost for us to obtain marketing approval of, and to commercialize, our product candidate and may affect the prices we are able to obtain.

●

Public concern regarding the safety of opioid drug products such as IV Tramadol could delay or limit our ability to obtain regulatory approval, result in the inclusion of serious risk information in our labeling, negatively impact market performance, or require us to undertake other activities that may entail additional costs.

●

We expect intense competition for IV Tramadol, and new products may emerge that provide different or better therapeutic alternatives for our targeted indications.

●

If IV Tramadol does not achieve broad market acceptance, the revenues that we generate from its sales will be limited.

Risks Pertaining to Intellectual Property and Potential Disputes Thereof

●

If we are unable to obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and products may be impaired.

●

If we are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in any litigation would harm our business.

●

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

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AVENUE THERAPEUTICS, INC.

CONDENSED BALANCE SHEETS

($ in thousands, except share and per share amounts)


	September 30,		December 31,
	2021		2020
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	585	$	3,132
Other receivables - related party		74		—
Prepaid expenses and other current assets		29		113
Total Assets	$	688	$	3,245

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses	$	672	$	857
Accounts payable and accrued expenses - related party		176		29
Total current liabilities		848		886

Total Liabilities		848		886

Commitments and Contingencies

Stockholders’ Equity (Deficit)
Preferred Stock ($0.0001 par value), 2,000,000 shares authorized
Class A Preferred Stock, 250,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		—		—
Common Stock ($0.0001 par value), 50,000,000 shares authorized
Common shares, 16,793,693 and 16,747,803 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		2		2
Additional paid-in capital		75,924		75,625
Accumulated deficit		(76,086)		(73,268)
Total Stockholders’ Equity (Deficit)		(160)		2,359
Total Liabilities and Stockholders’ Equity (Deficit)	$	688	$	3,245

The accompanying notes are an integral part of these unaudited condensed financial statements.

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AVENUE THERAPEUTICS, INC.

CONDENSED STATEMENTS OF OPERATIONS

($ in thousands, except share and per share amounts)

(Unaudited)


	For the Three Months Ended				For the Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2021		2020		2021		2020
Operating expenses:
Research and development	$	278	$	466	$	864	$	2,382
General and administrative		594		571		1,960		1,832
Loss from operations		(872)		(1,037)		(2,824)		(4,214)

Interest income		(1)		(9)		(6)		(56)
Net Loss	$	(871)	$	(1,028)	$	(2,818)	$	(4,158)

Net loss per common share outstanding, basic and diluted	$	(0.05)	$	(0.06)	$	(0.17)	$	(0.25)

Weighted average number of common shares outstanding, basic and diluted		16,627,427		16,519,464		16,580,283		16,489,701

The accompanying notes are an integral part of these unaudited condensed financial statements.

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AVENUE THERAPEUTICS, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

($ in thousands, except share amounts)

(Unaudited)


Three months ended September 30, 2021

	Class A Preferred						Additional				Total
	Shares			Common Shares			paid-in		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		capital		deficit		equity (deficit)
Balance at June 30, 2021	250,000	$	—	16,748,068	$	2	$	75,855	$	(75,215)	$	642
Share based compensation	—		—	45,000		—		69		—		69
Cashless exercise of warrants	—		—	625		—		—		—		—
Net loss	—		—	—		—		—		(871)		(871)
Balance at September 30, 2021	250,000	$	—	16,793,693	$	2	$	75,924	$	(76,086)	$	(160)


Nine months ended September 30, 2021

	Class A Preferred						Additional				Total
	Shares			Common Shares			paid-in		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		capital		deficit		equity (deficit)
Balance at December 31, 2020	250,000	$	—	16,747,803	$	2	$	75,625	$	(73,268)	$	2,359
Share based compensation	—		—	45,000		—		299		—		299
Cashless exercise of warrants	—		—	890		—		—		—		—
Net loss	—		—	—		—		—		(2,818)		(2,818)
Balance at September 30, 2021	250,000	$	—	16,793,693	$	2	$	75,924	$	(76,086)	$	(160)

Three months ended September 30, 2020

SEC Form 10-Q filed by Avenue Therapeutics, Inc.