Baergic shareholders eligible to receive up to approximately $82 million in potential development, regulatory, and sales milestones plus a tiered mid-to-high single digit royalty on global net sales from AxsomeMIAMI, Nov. 06, 2025 (GLOBE NEWSWIRE) -- Avenue Therapeutics, Inc. (OTC: ATXI) (“Avenue” or the “Company”), a specialty pharmaceutical company focused on the development and commercialization of therapies for the treatment of neurologic diseases, and its majority-owned subsidiary, Baergic Bio, Inc. (“ ...

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's analysis of financial condition and operations [Item 1. Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Avenue Therapeutics, Inc., including the balance sheets, statements of operations, statements of changes in stockholders' equity, and statements of cash flows, along with accompanying notes [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :----------------------------------- | :------------------------------- | :--------------------------------- | | Cash and cash equivalents | 3,326 | 2,594 | | Total assets | 4,161 | 2,672 | | Total current liabilities | 1,329 | 816 | | Total liabilities | 1,329 | 816 | | Total stockholders' equity | 2,832 | 1,856 | - Total assets increased by **$1,489 thousand** from December 31, 2024, to June 30, 2025, primarily due to an increase in cash and cash equivalents and a new receivable from a license termination agreement[9](index=9&type=chunk) - Total stockholders' equity increased by **$976 thousand**, driven by changes in additional paid-in capital and a reduction in accumulated deficit[9](index=9&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The financial statements reflect the company's financial performance for the periods ended June 30, 2025, highlighting a net income for the three months ended June 30, 2025, compared to a net loss in the prior year, and a reduced net loss for the six months ended June 30, 2025 | Metric | Three Months Ended June 30, 2025 ($ in thousands) | Three Months Ended June 30, 2024 ($ in thousands) | Six Months Ended June 30, 2025 ($ in thousands) | Six Months Ended June 30, 2024 ($ in thousands) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Other revenue | 1,404 | — | 1,404 | — | | Research and development expenses | 192 | 1,361 | 603 | 3,752 | | General and administrative expenses | 915 | 1,462 | 2,408 | 2,778 | | Net income (loss) | 329 | (2,701) | (1,529) | (7,050) | | Net income (loss) attributable to Avenue | 335 | (2,692) | (1,517) | (7,032) | | Net income (loss) per common share (basic & diluted) | 0.11 | (6.43) | (0.49) | (18.86) | - The company reported a net income of **$329 thousand** for the three months ended June 30, 2025, a significant improvement from a net loss of **$2,701 thousand** in the same period of 2024, primarily due to **$1.4 million** in other revenue from the AnnJi license termination and reduced operating expenses[12](index=12&type=chunk) - For the six months ended June 30, 2025, the net loss decreased to **$1,529 thousand** from **$7,050 thousand** in the prior year, driven by the new revenue stream and substantial reductions in research and development expenses[12](index=12&type=chunk) [Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Stockholders'%20Equity) This section details changes in stockholders' equity, including additional paid-in capital and accumulated deficit, for the six months ended June 30, 2025 | Metric | Balance at Dec 31, 2024 ($ in thousands) | Balance at June 30, 2025 ($ in thousands) | | :-------------------------------- | :------------------------------------- | :------------------------------------ | | Additional paid-in capital | 105,377 | 108,155 | | Accumulated deficit | (102,580) | (104,097) | | Total stockholders' equity | 1,856 | 2,832 | - Additional paid-in capital increased by **$2,778 thousand** for the six months ended June 30, 2025, primarily due to ATM sales of common stock and share-based compensation[16](index=16&type=chunk) - The accumulated deficit increased by **$1,517 thousand** during the six months ended June 30, 2025, reflecting the net loss for the period[16](index=16&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 | Cash Flow Activity | Six Months Ended June 30, 2025 ($ in thousands) | Six Months Ended June 30, 2024 ($ in thousands) | | :--------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Operating activities | (1,362) | (5,373) | | Financing activities | 2,094 | 8,509 | | Net change in cash and cash equivalents | 732 | 3,136 | | Cash and cash equivalents, end of period | 3,326 | 4,919 | - Net cash used in operating activities significantly decreased to **$1,362 thousand** for the six months ended June 30, 2025, from **$5,373 thousand** in the prior year, mainly due to a reduced net loss and changes in operating assets and liabilities[20](index=20&type=chunk) - Net cash provided by financing activities was **$2,094 thousand** for the six months ended June 30, 2025, primarily from ATM sales of common stock, a decrease from **$8,509 thousand** in the prior year which included significant proceeds from warrant exercises[20](index=20&type=chunk) [NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=8&type=section&id=NOTES%20TO%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [Note 1 - Organization, Plan of Business Operations](index=8&type=section&id=Note%201%20-%20Organization,%20Plan%20of%20Business%20Operations) This note describes the company's business, product candidates, recent Nasdaq delisting, AnnJi license termination, and going concern considerations - Avenue Therapeutics, Inc. is a specialty pharmaceutical company focused on developing therapies for neurologic diseases, with current product candidates including IV tramadol for post-operative acute pain and BAER-101 for epilepsy and panic disorders[22](index=22&type=chunk) - The company's common stock was delisted from Nasdaq on March 19, 2025, due to non-compliance with listing rules and now trades on the OTCID under the symbol 'ATXI'[23](index=23&type=chunk) - The license agreement for AJ201 with AnnJi Pharmaceutical Co. Ltd. was terminated on April 24, 2025. Avenue transferred all rights to AJ201 back to AnnJi and received **$1.4 million** in net revenue, with potential for future milestone and royalty payments[25](index=25&type=chunk)[26](index=26&type=chunk) - The company has incurred substantial operating losses and has an accumulated deficit of **$104.1 million** as of June 30, 2025, raising substantial doubt about its ability to continue as a going concern without additional funding[30](index=30&type=chunk) [Note 2 - Significant Accounting Policies](index=9&type=section&id=Note%202%20-%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and policies used in preparing the consolidated financial statements, including revenue recognition and fair value measurements - The consolidated financial statements are prepared in conformity with U.S. GAAP and include the accounts of the Company and its subsidiary, Baergic, with all intercompany balances eliminated[31](index=31&type=chunk)[32](index=32&type=chunk) - The Company operates and manages its business as one operating and reportable segment[34](index=34&type=chunk) - Fair value measurements are classified into a three-level hierarchy based on the observability of inputs, with Level 3 inputs being unobservable and requiring significant judgment[38](index=38&type=chunk) - Basic and diluted net loss per share are computed by dividing net loss attributable to common shares outstanding, with potential dilutive securities excluded when anti-dilutive[41](index=41&type=chunk) | Potential Dilutive Securities | As of June 30, 2025 | As of June 30, 2024 | | :---------------------------- | :------------------ | :------------------ | | Unvested restricted stock units/awards | 532 | 1,028 | | Deferred stock units | 235,000 | — | | Warrants | 1,476,200 | 1,476,200 | | Options | 256,474 | 22,474 | | Class A Preferred shares | 222 | 222 | | Total potential dilutive effect | 1,968,428 | 1,499,924 | - The Company is evaluating the impact of ASU 2023-09 (Income Tax Disclosures) and ASU No. 2024-03 (Expense Disaggregation Disclosures), with adoption planned for fiscal years beginning after December 15, 2024, and December 15, 2026, respectively[47](index=47&type=chunk)[48](index=48&type=chunk) [Note 3 — Licenses/Supplier Agreements](index=12&type=section&id=Note%203%20%E2%80%94%20Licenses/Supplier%20Agreements) This note details the company's exclusive license agreements for IV tramadol and neurological disorder compounds, including potential milestone and royalty payments - The Company holds an exclusive license for IV tramadol in the U.S. market from Revogenex, with potential future milestone payments of **$3.0 million** upon FDA approval and high single-digit to low double-digit royalties on net sales[49](index=49&type=chunk) - Baergic, a subsidiary, has license agreements with AstraZeneca AB and Cincinnati Children's Hospital Medical Center for compounds related to neurological disorders, involving potential development milestones up to **$81.5 million** and commercial/sales-based milestones up to **$151 million**, plus low to high single-digit royalties[51](index=51&type=chunk)[52](index=52&type=chunk) [Note 4 — Related Party Agreements](index=12&type=section&id=Note%204%20%E2%80%94%20Related%20Party%20Agreements) This note describes agreements and transactions with related parties, including management services from Fortress Biotech and consulting fees for Baergic - Fortress Biotech, Inc. provides management services to Avenue, with related expenses recorded **50% in R&D** and **50% in G&A**, totaling **$0.1 million** for the three months and **$0.3 million** for the six months ended June 30, 2025[53](index=53&type=chunk) - Avenue issued **22,476 common shares** to Fortress as an Annual Equity Fee on January 2, 2025, representing **2.5%** of fully-diluted outstanding equity[55](index=55&type=chunk) - For the six months ended June 30, 2025, Avenue recorded a Financing Equity Fee of **$0.1 million** and issued **23,474 common shares** to Fortress[56](index=56&type=chunk) - Avenue provides management, advisory, and consulting services to its subsidiary Baergic, for an annual consulting fee of **$0.5 million**, which increases to **$1.0 million** if Baergic's net assets exceed **$100 million**[61](index=61&type=chunk) [Note 5 — Accounts Payable and Accrued Expenses](index=14&type=section&id=Note%205%20%E2%80%94%20Accounts%20Payable%20and%20Accrued%20Expenses) This note provides a breakdown of accounts payable and accrued expenses as of June 30, 2025, and December 31, 2024 | Category | As of June 30, 2025 ($ in thousands) | As of December 31, 2024 ($ in thousands) | | :------------------------------ | :----------------------------------- | :------------------------------------- | | Accounts payable | 79 | 155 | | Accrued employee compensation | 107 | 18 | | Accrued contracted services and other | 766 | 481 | | Total accounts payable and accrued expenses | 952 | 654 | - Total accounts payable and accrued expenses increased by **$298 thousand** from December 31, 2024, to June 30, 2025, primarily due to increases in accrued employee compensation and accrued contracted services[63](index=63&type=chunk) [Note 6 - Commitments and Contingencies](index=14&type=section&id=Note%206%20-%20Commitments%20and%20Contingencies) This note discloses the company's commitments and contingencies, including the absence of material litigation or lease obligations - The Company is not party to any leases for office space or equipment[64](index=64&type=chunk) - As of June 30, 2025, there was no litigation against the Company that is expected to have a material adverse effect on its business, financial condition, results of operations, or cash flows[65](index=65&type=chunk) [Note 7 - Stockholder's Equity](index=15&type=section&id=Note%207%20-%20Stockholder's%20Equity) This note details the components of stockholders' equity, including preferred stock, common stock, warrants, and stock-based compensation plans - Class A Preferred Stock holders have superior voting rights, casting **1.1 times** the votes of common stock on an as-if-converted basis, ensuring a voting majority[67](index=67&type=chunk) - Each share of Class A Preferred Stock is convertible into **1,125 shares** of Common Stock, adjusted for reverse stock splits in September 2022 and April 2024[68](index=68&type=chunk) - The Company is no longer eligible to use its Form S-3 shelf registration statement or the ATM facility due to its delisting from Nasdaq[71](index=71&type=chunk)[72](index=72&type=chunk) - In January 2024 and May 2024, the Company conducted warrant inducement and private placement transactions, resulting in the issuance of new warrants and the exercise of existing ones, with associated losses on settlement and deemed dividends recorded[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - The 2015 Incentive Plan was amended in June 2024 to increase authorized shares issuable to **5,070,223** and extend its term to June 24, 2034[79](index=79&type=chunk) - As of June 30, 2025, the Company had **235,532** unvested restricted stock units and awards, with **$0.1 million** in unrecognized stock-based compensation expense expected to be recognized over **1.0 years**[81](index=81&type=chunk)[82](index=82&type=chunk) - Total stock-based compensation expense for the six months ended June 30, 2025, was **$360 thousand**, slightly down from **$383 thousand** in the prior year[87](index=87&type=chunk) - The Company made payments totaling **$0.2 million** to InvaGen during the six months ended June 30, 2025, under a share repurchase agreement, with approximately **$1.4 million** paid in aggregate to date[89](index=89&type=chunk) [Note 8 - Common Stock Warrants](index=19&type=section&id=Note%208%20-%20Common%20Stock%20Warrants) This note explains the accounting treatment and fair value measurement of common stock warrants, classified as liability instruments - Warrants are classified as either equity or liability instruments based on specific terms and accounting guidance, with liability-classified warrants re-measured at fair value each reporting period[90](index=90&type=chunk)[91](index=91&type=chunk) - The October 2022 Warrants are classified as liabilities due to redemption terms outside the Company's control and are valued using the Black-Scholes Model[92](index=92&type=chunk)[93](index=93&type=chunk) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------- | :---------------- | :-------------- | | Stock price | $2.00 | $0.20 | | Risk-free interest rate | 4.27% | 3.72% | | Expected term in years | 2.8 | 2.3 | | Expected volatility | 155% | 132% | - The fair value of warrant liabilities decreased from **$16 thousand** at December 31, 2024, to **$0** at June 30, 2025, primarily due to changes in fair value and the exercise of warrants[94](index=94&type=chunk) [Note 9 - Subsequent Events](index=19&type=section&id=Note%209%20-%20Subsequent%20Events) This note reports on events occurring after the balance sheet date that may require disclosure - No subsequent events requiring disclosure were reported as of the date of this report[95](index=95&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to the same periods in 2024 [Forward-Looking Statements](index=21&type=section&id=Forward-Looking%20Statements) This section highlights the inherent risks and uncertainties associated with forward-looking statements in the report - The report contains forward-looking statements regarding future activities, events, and financial conditions, which are subject to risks and uncertainties, including the need for regulatory approval of product candidates, potential adverse side effects, and the ability to secure future financing[96](index=96&type=chunk) - Key risks include the company's lack of drug products for sale, substantial doubt about its ability to continue as a going concern, reliance on third parties, and the impact of Nasdaq delisting on liquidity and market price[96](index=96&type=chunk)[105](index=105&type=chunk) [Overview](index=22&type=section&id=Overview) This section provides a general business description, financial performance summary, and future capital needs of the company - Avenue Therapeutics, Inc. is a specialty pharmaceutical company developing IV tramadol for post-operative acute pain and BAER-101 for epilepsy and panic disorders[99](index=99&type=chunk) - The company reported a net loss of approximately **$1.5 million** for the six months ended June 30, 2025, and had an accumulated deficit of **$104.1 million**, primarily from R&D and G&A costs[100](index=100&type=chunk) - Additional capital through debt or equity offerings or strategic partnerships is needed to fund operations and product development, with no assurance of availability on acceptable terms[102](index=102&type=chunk) [Recent Developments](index=22&type=section&id=Recent%20Developments) This section details key recent events, including Nasdaq delisting, AnnJi license termination, and updates on IV tramadol and BAER-101 development - The company's common stock was delisted from Nasdaq on March 19, 2025, due to non-compliance with the **$2.5 million** stockholders' equity rule and now trades on the OTCID under 'ATXI'[104](index=104&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - The AnnJi License Agreement for AJ201 was terminated on April 24, 2025. Avenue transferred all rights to AnnJi and received **$1.4 million** in net revenue, with potential future milestone and royalty payments[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - Avenue reached final agreement with the FDA in January 2024 on the Phase 3 safety study protocol for IV tramadol, designed to assess respiratory depression risk compared to IV morphine, but currently lacks plans to initiate the study without financing[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) - Preclinical data for BAER-101 showed full suppression of seizure activity in an epilepsy model, and the company is exploring strategic alternatives for Baergic and/or BAER-101, including partnerships or a sale, or initiating a Phase 2a study with additional financing[118](index=118&type=chunk)[119](index=119&type=chunk) [Critical Accounting Policies and Use of Estimates](index=25&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) This section discusses management's significant judgments and estimates used in preparing the financial statements - The preparation of financial statements requires management to make estimates and judgments, particularly for accrued expenses and stock-based compensation, which are based on historical experience and known trends[120](index=120&type=chunk) - There were no material changes in critical accounting estimates or policies from December 31, 2024[121](index=121&type=chunk) [Accounting Pronouncements](index=25&type=section&id=Accounting%20Pronouncements) This section refers to Note 2 for details on recent accounting pronouncements and their potential impact - Refer to Note 2, 'Significant Accounting Policies,' for a discussion of recent accounting pronouncements[122](index=122&type=chunk) [Smaller Reporting Company Status](index=25&type=section&id=Smaller%20Reporting%20Company%20Status) This section clarifies the company's status as a smaller reporting company and its reduced disclosure obligations - The company qualifies as a 'smaller reporting company,' allowing for reduced disclosure obligations, such as presenting only two years of audited financial statements and simplified executive compensation disclosures[123](index=123&type=chunk) [Basis of Presentation and Principles of Consolidation](index=25&type=section&id=Basis%20of%20Presentation%20and%20Principles%20of%20Consolidation) This section outlines the basis for financial statement preparation and consolidation principles, including non-controlling interests - The consolidated financial statements are prepared in conformity with U.S. GAAP and include the accounts of the Company and its subsidiary, Baergic, with all intercompany balances and transactions eliminated[124](index=124&type=chunk) - Net loss attributable to non-controlling interests is recorded based on the percentage of economic or ownership interest retained by third parties in Baergic[124](index=124&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance for the three and six months ended June 30, 2025, compared to prior periods [General](index=27&type=section&id=General) This section provides an overview of the company's accumulated deficit and expected future operating losses - As of June 30, 2025, the company had an accumulated deficit of **$104.1 million** and expects to incur substantial operating losses for the foreseeable future as product candidates are still in development[126](index=126&type=chunk) [Comparison of the Three Months Ended June 30, 2025 and 2024](index=27&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares the company's financial results for the second quarter of 2025 against the same period in 2024 | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | Change ($ in thousands) | Change (%) | | :------------------------------------------ | :----------------------- | :----------------------- | :---------------------- | :--------- | | Other revenue | 1,404 | — | 1,404 | —% | | Research and development expenses | 192 | 1,361 | (1,169) | (86)% | | General and administrative expenses | 915 | 1,462 | (547) | (37)% | | Income (loss) from operations | 297 | (2,823) | 3,120 | (111)% | | Net income (loss) attributable to Avenue | 335 | (2,692) | 3,027 | (112)% | - Other revenue of **$1.4 million** was recognized in Q2 2025 due to the AnnJi license termination, compared to no revenue in Q2 2024[128](index=128&type=chunk) - Research and development expenses decreased by **$1.2 million (86%)** in Q2 2025, primarily due to a **$1.1 million** decrease in AJ201 development costs following its sale[130](index=130&type=chunk) - General and administrative expenses decreased by **$0.6 million (37%)** in Q2 2025, driven by lower legal expenses, reduced stock issuance to Fortress, and decreased professional fees[132](index=132&type=chunk) - The company recorded a gain of **$1 thousand** from the change in fair value of warrant liabilities in Q2 2025, compared to a gain of **$0.3 million** in Q2 2024[135](index=135&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=29&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares the company's financial results for the first half of 2025 against the same period in 2024 | Metric | H1 2025 ($ in thousands) | H1 2024 ($ in thousands) | Change ($ in thousands) | Change (%) | | :------------------------------------------ | :----------------------- | :----------------------- | :---------------------- | :--------- | | Other revenue | 1,404 | — | 1,404 | —% | | Research and development expenses | 603 | 3,752 | (3,149) | (84)% | | General and administrative expenses | 2,408 | 2,778 | (370) | (13)% | | Income (loss) from operations | (1,607) | (6,530) | 4,923 | (75)% | | Net loss attributable to Avenue | (1,517) | (7,032) | 5,515 | (78)% | - Other revenue of **$1.4 million** was generated in H1 2025 from the AnnJi license termination, with no revenue in H1 2024[138](index=138&type=chunk) - Research and development expenses decreased by **$3.2 million (84%)** in H1 2025, primarily due to a **$2.9 million** reduction in AJ201 development costs[140](index=140&type=chunk) - General and administrative expenses decreased by **$0.4 million (13%)** in H1 2025, mainly due to lower professional fees and reduced equity issuance to Fortress[142](index=142&type=chunk) - The company recorded a gain of **$16 thousand** from the change in fair value of warrant liabilities in H1 2025, compared to a loss of **$0.1 million** in H1 2024[145](index=145&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, future funding requirements, and the impact of Nasdaq delisting on capital access - As of June 30, 2025, the company had **$3.3 million** in cash and cash equivalents. It expects to require additional financing to fund operations and product development for more than 12 months[147](index=147&type=chunk) - The Nasdaq delisting on July 18, 2025, makes it more difficult to obtain additional funding, as the company is no longer eligible to use its Form S-3 shelf registration statement or ATM facility[147](index=147&type=chunk) | Cash Flow Activity | Six Months Ended June 30, 2025 ($ in thousands) | Six Months Ended June 30, 2024 ($ in thousands) | | :--------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Operating activities | (1,362) | (5,373) | | Financing activities | 2,094 | 8,509 | | Net increase (decrease) in cash and cash equivalents | 732 | 3,136 | - Net cash used in operating activities decreased significantly to **$1.4 million** in H1 2025 from **$5.4 million** in H1 2024, primarily due to a reduced net loss and changes in operating assets and liabilities[149](index=149&type=chunk) - Net cash provided by financing activities was **$2.1 million** in H1 2025, mainly from ATM sales of common stock, a decrease from **$8.5 million** in H1 2024 which included substantial proceeds from warrant exercises[151](index=151&type=chunk)[152](index=152&type=chunk) - Contractual obligations include potential milestone payments for Baergic's licenses (up to **$81.5 million** development, **$151 million** commercial) and IV tramadol (**$3.0 million** regulatory), plus royalties[154](index=154&type=chunk)[155](index=155&type=chunk) - The company has paid approximately **$1.4 million** to InvaGen under a share repurchase agreement as of June 30, 2025, with a remaining contingent fee of up to **$4.0 million** from future financings[156](index=156&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Avenue Therapeutics, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is therefore not required to provide quantitative and qualitative disclosures about market risk[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Disclosure Controls and Procedures](index=32&type=section&id=Disclosure%20Controls%20and%20Procedures) This section describes the company's disclosure controls and procedures and management's conclusion on their effectiveness - The company maintains disclosure controls and procedures designed to ensure timely recording, processing, summarizing, and reporting of information required under the Exchange Act[158](index=158&type=chunk) - As of June 30, 2025, management, including the CEO and interim CFO, concluded that the company's disclosure controls and procedures were effective[160](index=160&type=chunk) - A control system provides only reasonable, not absolute, assurance that objectives are met, acknowledging inherent limitations and resource constraints[161](index=161&type=chunk) [Changes in Internal Control over Financial Reporting](index=33&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any material changes in internal control over financial reporting during the quarter - There were no changes in internal control over financial reporting during the fiscal quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[162](index=162&type=chunk) [PART II. OTHER INFORMATION](index=34&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section includes legal proceedings, risk factors, and other required disclosures not covered in the financial information [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) This section states that there are no material legal proceedings pending against the company, beyond routine actions not expected to have a material adverse effect on its business - To the company's knowledge, there are no legal proceedings pending against it that are expected to have a material adverse effect on its business, financial condition, results of operations, or cash flows[163](index=163&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the 'Risk Factors' disclosed in the company's 2024 Form 10-K and other information in the current 10-Q, emphasizing that these may not cover all potential risks - Readers should carefully consider the 'Risk Factors' outlined in the 2024 Form 10-K and other information in this Quarterly Report on Form 10-Q, as additional unknown risks may also adversely affect the business[164](index=164&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is marked as 'N/A', indicating no information to report regarding unregistered sales of equity securities and use of proceeds - This item is not applicable, indicating no unregistered sales of equity securities or use of proceeds to report[165](index=165&type=chunk) [Item 3. Defaults Upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is marked as 'N/A', indicating no information to report regarding defaults upon senior securities - This item is not applicable, indicating no defaults upon senior securities to report[166](index=166&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as 'N/A', indicating no information to report regarding mine safety disclosures - This item is not applicable, indicating no mine safety disclosures to report[167](index=167&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) This section reports that no directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[168](index=168&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including various certificates of incorporation, bylaws, the AnnJi License Termination and Program Transfer Agreement, certifications from executive officers, and financial information in iXBRL format - The exhibits include amendments to the Certificate of Incorporation, Second Amended and Restated Bylaws, the AnnJi License Termination and Program Transfer Agreement, and certifications from the Principal Executive Officer and Principal Financial Officer[170](index=170&type=chunk) - Financial information for the period ended June 30, 2025, is provided in Inline Extensible Business Reporting Language (iXBRL) format[170](index=170&type=chunk) [SIGNATURES](index=36&type=section&id=SIGNATURES) This section contains the required signatures of the registrant's authorized officers, confirming the due filing of the report - The report is signed by Alexandra MacLean, M.D., Chief Executive Officer and Director, and David Jin, Interim Chief Financial Officer and Chief Operating Officer, on August 14, 2025[174](index=174&type=chunk)

FORM 10-Q Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ 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) (State or other jurisdiction of in ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2024 or ☐ 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 j ...

Table of Contents 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, 2024 OR ☐ 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 ...

[Corporate Highlights and Pipeline Update](index=1&type=section&id=Corporate%20Highlights%20and%20Pipeline%20Update) Avenue Therapeutics made significant progress in its neurologic disease treatment pipeline, with AJ201 topline data expected by year-end 2024, and other programs contingent on financing [AJ201 for SBMA](index=1&type=section&id=AJ201%20for%20SBMA) AJ201's Phase 1b/2a clinical trial for SBMA completed patient visits in May 2024, with topline safety and tolerability data expected by year-end - Topline data from the Phase 1b/2a clinical trial of AJ201 for spinal and bulbar muscular atrophy (SBMA) is anticipated around **year-end 2024**[1](index=1&type=chunk)[3](index=3&type=chunk) - The final patient visit for the 12-week, 25-patient trial was completed in **May 2024**, marking the last clinical milestone before the data announcement[3](index=3&type=chunk) - The primary endpoint of the study is to evaluate the **safety and tolerability** of AJ201, with secondary endpoints measuring changes in mutant AR protein levels and Nrf2-activated genes[3](index=3&type=chunk) [BAER-101 for Epilepsy](index=1&type=section&id=BAER-101%20for%20Epilepsy) Avenue plans a Phase 2a clinical trial for BAER-101 in focal epilepsy, contingent on securing additional financing - Avenue plans to initiate a Phase 2a clinical trial of BAER-101 for patients with focal epilepsy, but this is **contingent upon receiving additional financing**[4](index=4&type=chunk) [IV Tramadol for Post-Operative Pain](index=1&type=section&id=IV%20Tramadol%20for%20Post-Operative%20Pain) Avenue reached final FDA agreement on the IV tramadol Phase 3 safety study protocol, with initiation contingent on financing or partnership - Final agreement has been reached with the U.S. FDA on the safety study protocol for the **Phase 3 trial of IV tramadol**[4](index=4&type=chunk) - The initiation of the Phase 3 study, which will compare IV tramadol to IV morphine in post-bunionectomy patients, is **pending additional financing or a partnership**[4](index=4&type=chunk) [Third Quarter 2024 Financial Results](index=1&type=section&id=Third%20Quarter%202024%20Financial%20Results) Avenue Therapeutics reported a **net loss of $3.1 million** for Q3 2024, a significant shift from prior year's net income, with increased R&D and reduced cash Q3 2024 Financial Highlights (in millions, except per share data) | Financial Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | $2.6 million | N/A | -$2.3M vs Q2 2024 | | R&D Expenses | $2.3 million | $0.9 million | +$1.4 million | | G&A Expenses | $0.8 million | $1.2 million | -$0.4 million | | Net (Loss) Income | ($3.1 million) | $0.5 million | -$3.6 million | | (Loss) Income Per Share | ($1.92) | $4.86 | -$6.78 | [Condensed Consolidated Balance Sheets](index=2&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2024, Avenue Therapeutics reported **total assets of $2.6 million**, primarily cash, and total stockholders' equity of $1.7 million Balance Sheet Summary (in thousands) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,597 | $1,783 | | Total assets | $2,625 | $1,850 | | Total current liabilities | $973 | $1,196 | | Total stockholders' equity | $1,652 | $654 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q3 2024, Avenue Therapeutics reported a **loss from operations of $3.2 million** and a net loss of $3.1 million, a significant decline from prior year Statement of Operations Summary - Three Months Ended Sep 30 (in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Research and development | $2,327 | $907 | | General and administrative | $829 | $1,161 | | Loss from operations | ($3,156) | ($2,068) | | Net (loss) income | ($3,087) | $513 | | Net (loss) income per share | ($1.92) | $4.86 | Statement of Operations Summary - Nine Months Ended Sep 30 (in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Research and development | $6,080 | $5,149 | | General and administrative | $3,607 | $3,042 | | Loss from operations | ($9,687) | ($12,421) | | Net loss | ($10,137) | ($11,105) | | Net loss per share | ($17.27) | ($115.55) |

MIAMI, Nov. 14, 2024 (GLOBE NEWSWIRE) -- Avenue Therapeutics, Inc. (Nasdaq: ATXI) (“Avenue” or the “Company”), a specialty pharmaceutical company focused on the development and commercialization of therapies for the treatment of neurologic diseases, today reported financial results and recent corporate highlights for the third quarter ended September 30, 2024. “We have generated considerable momentum this past quarter in advancing our pipeline of innovative treatments for neurologic diseases,” said Alexandr ...

MIAMI, Oct. 09, 2024 (GLOBE NEWSWIRE) -- Avenue Therapeutics, Inc. (Nasdaq: ATXI) (“Avenue” or the “Company”), a specialty pharmaceutical company focused on the development and commercialization of therapies for the treatment of neurologic diseases, today announced that Alexandra MacLean, M.D., Chief Executive Officer of Avenue Therapeutics, will participate in a fireside chat at Maxim Group’s 2024 Healthcare Virtual Summit on Tuesday, October 15, 2024 at 1:30 PM ET. The fireside chat will be available to r ...

MIAMI, Sept. 03, 2024 (GLOBE NEWSWIRE) -- Avenue Therapeutics, Inc. (Nasdaq: ATXI) (“Avenue” or the “Company”), a specialty pharmaceutical company focused on the development and commercialization of therapies for the treatment of neurologic diseases, today announced that Alexandra MacLean, M.D., Chief Executive Officer of Avenue Therapeutics, will participate in the following upcoming investor conferences: H.C. Wainwright 26th Annual Global Investment ConferenceDate: Monday, September 9, 2024Location: New Y ...

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements, management's analysis of operations, market risk disclosures, and internal controls [Item 1. Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, operations, equity, and cash flows, with detailed notes on organization, accounting policies, agreements, and equity changes [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show the company's financial position as of June 30, 2024, and December 31, 2023, indicating a significant increase in cash and cash equivalents, leading to higher total assets and stockholders' equity, while total liabilities remained relatively stable Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2024 | December 31, 2023 | | :---------------------------------- | :------------ | :------------------ | | Cash and cash equivalents | $4,919 | $1,783 | | Total assets | $4,988 | $1,850 | | Total current liabilities | $1,161 | $1,196 | | Total stockholders' equity | $3,827 | $654 | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations reveal a reduced net loss attributable to Avenue for both the three and six months ended June 30, 2024, compared to 2023. However, the net loss attributable to common stockholders increased significantly due to deemed dividends from warrant transactions Condensed Consolidated Statements of Operations Highlights (in thousands, except per share) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $1,361 | $3,027 | $3,752 | $4,242 | | General and administrative | $1,462 | $896 | $2,778 | $1,880 | | Loss from operations | $(2,823) | $(3,923) | $(6,530) | $(10,352) | | Net loss attributable to Avenue | $(2,692) | $(4,007) | $(7,032) | $(11,543) | | Net loss attributable to common stockholders | $(7,186) | $(4,007) | $(15,842) | $(11,543) | | Net loss per common share, basic and diluted | $(6.43) | $(38.74) | $(18.86) | $(129.84) | [Unaudited Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%28Deficit%29) The statements of stockholders' equity show an increase in total stockholders' equity from $654k at December 31, 2023, to $3,827k at June 30, 2024, primarily driven by additional paid-in capital from warrant exercises and common stock issuances, despite an increase in accumulated deficit Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | December 31, 2023 | June 30, 2024 | | :-------------------------------- | :---------------- | :------------ | | Additional Paid-in Capital | $92,507 | $102,724 | | Accumulated Deficit | $(90,928) | $(97,960) | | Total Stockholders' Equity | $654 | $3,827 | - Common shares issued and outstanding increased from **341,324** at December 31, 2023, to **1,189,724** at June 30, 2024, reflecting capital raises and warrant exercises[6](index=6&type=chunk)[13](index=13&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statements indicate a net increase in cash and cash equivalents of $3.1 million for the six months ended June 30, 2024, a significant improvement from a net decrease of $5.1 million in the prior year, primarily driven by increased cash provided by financing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(5,373) | $(6,238) | | Net cash used in investing activities | $0 | $(2,000) | | Net cash provided by financing activities| $8,509 | $3,101 | | Net change in cash and cash equivalents | $3,136 | $(5,137) | | Cash and cash equivalents, end of period | $4,919 | $1,571 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential details supporting the financial statements, covering the company's business operations, accounting policies, various license and related party agreements, and the specifics of its equity structure and warrant liabilities, including recent capital-raising activities and their financial impact [Note 1 - Organization, Plan of Business Operations](index=9&type=section&id=Note%201%20-%20Organization%2C%20Plan%20of%20Business%20Operations) Avenue Therapeutics, Inc. is a specialty pharmaceutical company focused on neurologic diseases with product candidates AJ201, IV tramadol, and BAER-101. The company has an accumulated deficit of $98.0 million as of June 30, 2024, and faces substantial doubt about its ability to continue as a going concern due to ongoing operating losses and the need for additional funding for its development plans - Company focuses on developing and commercializing therapies for neurologic diseases, with product candidates AJ201, IV tramadol, and BAER-101[23](index=23&type=chunk) - Accumulated deficit as of June 30, 2024, was **$98.0 million**[26](index=26&type=chunk) - Substantial doubt exists about the company's ability to continue as a going concern due to significant operating losses and the need for additional funds for product development and trials[25](index=25&type=chunk)[26](index=26&type=chunk) [Note 2 - Significant Accounting Policies](index=9&type=section&id=Note%202%20-%20Significant%20Accounting%20Policies) This note outlines the company's accounting policies, including its conformity with U.S. GAAP, principles of consolidation for its subsidiary Baergic, and methods for fair value measurements and net loss per share calculation. It also notes the evaluation of new accounting standards for segment reporting and income tax disclosures, with no material changes to existing policies from the prior fiscal year - Consolidated financial statements are prepared in conformity with U.S. GAAP and include the accounts of the Company and its subsidiary, Baergic, with intercompany balances eliminated[27](index=27&type=chunk)[28](index=28&type=chunk) - Net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding, adjusted for deemed dividends[36](index=36&type=chunk) Potential Common Shares Not Included in Diluted Net Loss Per Share (June 30) | Category | 2024 | 2023 | | :----------------------------------- | :-------- | :------ | | Unvested restricted stock units/awards | 1,028 | 1,311 | | Warrants | 1,476,200 | 81,043 | | Options | 22,474 | 22,474 | | Class A Preferred shares | 223 | 223 | | Total potential dilutive effect | 1,499,925 | 105,051 | - The company is evaluating the impact of new FASB ASUs on Segment Reporting (2023-07) and Income Tax Disclosures (2023-09) for future financial statement disclosures[40](index=40&type=chunk)[41](index=41&type=chunk) [Note 3 - Licenses/Supplier Agreements](index=12&type=section&id=Note%203%20-%20Licenses%2FSupplier%20Agreements) This note details the company's key license and supplier agreements for its product candidates. For IV Tramadol, it holds an exclusive U.S. license with milestone and royalty obligations. Baergic has licenses for GABAA α2,3 modulators and a GABA inhibitor program, involving upfront fees, equity, and substantial development/commercial milestones. The AnnJi License Agreement grants exclusive rights to AJ201, requiring an initial cash fee, stock issuance, and significant reimbursement, milestone, and royalty payments - IV Tramadol License: Exclusive U.S. market license from Revogenex, with **$3.0 million** in milestone payments upon FDA approval and high single-digit to low double-digit royalties on net sales[42](index=42&type=chunk) - Baergic Licenses: Acquired exclusive licenses from AstraZeneca and Cincinnati Children's Hospital Medical Center, involving upfront fees of **$3.0 million** and **$0.2 million**, respectively, plus common shares of Baergic[44](index=44&type=chunk) - Baergic Milestones: Development milestones totaling approximately **$81.5 million** and commercial/sales-based milestones totaling approximately **$151 million**, plus low to high single-digit royalties[45](index=45&type=chunk) - AnnJi License Agreement (AJ201): Obtained exclusive rights for AJ201, with an initial **$3.0 million** cash fee, up to **$10.8 million** for Phase 1b/2a trial reimbursement, up to **$14.5 million** for U.S. development milestones, up to **$27.5 million** for additional indications/ex-U.S. development, up to **$165 million** for net sales milestones, and mid-single to low double-digit royalties[46](index=46&type=chunk) [Note 4 - Related Party Agreements](index=13&type=section&id=Note%204%20-%20Related%20Party%20Agreements) The company has management services and founders agreements with Fortress Biotech, Inc. and Baergic. The Fortress MSA incurred $0.1 million in expenses for both three-month periods. The Founders Agreement with Fortress includes annual equity fees and financing equity fees. The Avenue-Baergic MSA provides for Avenue to render management and consulting services to Baergic for an annual fee of $0.5 million, which can increase to $1.0 million under certain conditions - Management Services Agreement (MSA) with Fortress incurred **$0.1 million** in expenses for the three months ended June 30, 2024 and 2023[50](index=50&type=chunk) - Founders Agreement with Fortress includes an Annual Equity Fee (**2.5%** of fully-diluted outstanding equity) and a Financing Equity Fee (**2.5%** of gross equity or debt financing)[51](index=51&type=chunk) - Avenue-Baergic MSA: Avenue provides management, advisory, and consulting services to Baergic for an annual consulting fee of **$0.5 million**, increasing to **$1.0 million** if Baergic's net assets exceed **$100 million**[54](index=54&type=chunk) [Note 5 - Accounts Payable and Accrued Expenses](index=14&type=section&id=Note%205%20-%20Accounts%20Payable%20and%20Accrued%20Expenses) Accounts payable and accrued expenses increased significantly from $287k at December 31, 2023, to $714k at June 30, 2024, primarily driven by higher accrued employee compensation and contracted services Accounts Payable and Accrued Expenses (in thousands) | Category | June 30, 2024 | December 31, 2023 | | :------------------------------------ | :------------ | :------------------ | | Accounts payable | $192 | $78 | | Accrued employee compensation | $182 | $11 | | Accrued contracted services and other | $340 | $198 | | Total accounts payable and accrued expenses | $714 | $287 | [Note 6 - Commitments and Contingencies](index=14&type=section&id=Note%206%20-%20Commitments%20and%20Contingencies) The company has no leases for office space or equipment and no material litigation pending against it as of June 30, 2024. It recognizes liabilities for contingencies when probable and estimable - The Company is not party to any leases for office space or equipment[57](index=57&type=chunk) - As of June 30, 2024, there was no material litigation against the Company[58](index=58&type=chunk) [Note 7 - Stockholder's Equity](index=15&type=section&id=Note%207%20-%20Stockholder%27s%20Equity) This note details the company's capital structure, including Class A Preferred Stock and Common Stock, which saw a 1-for-75 reverse stock split and increased authorized shares. Recent warrant inducements generated $4.5 million and $3.7 million in net proceeds, with an ATM facility selling 87,683 shares for $0.3 million - Class A Preferred Stock holds a voting majority (**1.1 times** the voting power of common stock) and is convertible into common stock at a **1,125:1** ratio after reverse stock splits[61](index=61&type=chunk)[62](index=62&type=chunk) - Authorized common stock increased from **75,000,000** to **200,000,000** shares on February 20, 2024[63](index=63&type=chunk) - A **1-for-75** reverse stock split became effective on April 26, 2024, retroactively adjusting all share and per share information[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk) - January 2024 Warrant Inducement generated approximately **$4.5 million** in net proceeds from warrant exercises[72](index=72&type=chunk) - May 2024 Warrant Inducement generated approximately **$3.7 million** in net proceeds from warrant exercises and additional consideration[76](index=76&type=chunk) - Under the ATM Agreement, **87,683** shares of common stock were sold for approximately **$0.3 million** in net proceeds during the three months ended June 30, 2024[81](index=81&type=chunk) - The 2015 Equity Incentive Plan's authorized shares were increased to **5,070,223** on June 24, 2024[82](index=82&type=chunk) Stock Warrants Activity (Six Months Ended June 30, 2024) | Metric | Warrants | Weighted Average Exercise Price | | :-------------------------------- | :--------- | :------------------------------ | | Outstanding, December 31, 2023 | 524,601 | $32.42 | | Granted | 441,076 | $6.20 | | Exercised | (220,538) | $22.55 | | Outstanding, March 31, 2024 | 745,139 | $29.50 | | Granted | 1,420,741 | $6.25 | | Exercised | (689,680) | $6.20 | | Outstanding, June 30, 2024 | 1,476,200 | $8.64 | [Note 8 - Common Stock Warrant Liabilities](index=21&type=section&id=Note%208%20-%20Common%20Stock%20Warrant%20Liabilities) This note explains that warrants are classified as liabilities if their redemption terms are outside the company's control and are valued at fair value using the Black-Scholes Model. The fair value of warrant liabilities decreased from $586k at December 31, 2023, to $47k at June 30, 2024, primarily due to warrant inducements and exercises, and stock price fluctuations - Warrants are classified as liabilities if their redemption terms are outside the company's control (e.g., October 2022 Warrants) and are valued at fair value using the Black-Scholes Model[93](index=93&type=chunk)[95](index=95&type=chunk) Fair Value of Warrant Liabilities (in thousands) | Metric | December 31, 2023 | March 31, 2024 | June 30, 2024 | | :--------------------------------------- | :---------------- | :------------- | :------------ | | Fair value of warrants outstanding | $586 | $413 | $47 | | Change in fair value of warrants | N/A | $116 | $(255) | | Exercise of warrants | N/A | $(289) | $(111) | - The decrease in fair value of warrant liabilities was primarily due to the modification of exercise prices as part of warrant inducements, the exercise of liability-classified warrants, and fluctuations in the company's stock price[97](index=97&type=chunk)[98](index=98&type=chunk)[101](index=101&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition and operational results, covering forward-looking statements, product candidates, recent events, accounting policies, and a detailed comparison of financial performance and liquidity [Forward-Looking Statements](index=23&type=section&id=Forward-Looking%20Statements) This section serves as a cautionary note, highlighting that statements about future events are subject to significant risks and uncertainties. Key risks include dependence on regulatory approval for product candidates (AJ201, IV tramadol, BAER-101), potential adverse side effects, the need for substantial additional funding, and reliance on third parties for operations and clinical data - Forward-looking statements are subject to risks and uncertainties, including dependence on regulatory approval and successful commercialization of product candidates (AJ201, IV tramadol, BAER-101)[104](index=104&type=chunk) - Significant financial risks include substantial doubt about the company's ability to continue as a going concern, incurred losses, and the need for additional funding which may not be available on acceptable terms[104](index=104&type=chunk) - Operational risks involve reliance on third parties for development, potential for delayed or denied regulatory approval, and ongoing regulatory scrutiny post-approval[104](index=104&type=chunk) [Overview](index=24&type=section&id=Overview) Avenue Therapeutics is a specialty pharmaceutical company focused on neurologic diseases, with product candidates AJ201, IV tramadol, and BAER-101. The company reported a net loss of approximately $7.1 million for the six months ended June 30, 2024, and an accumulated deficit of $98.0 million, indicating a continued need for substantial additional capital to fund ongoing development and operations - Avenue Therapeutics is a specialty pharmaceutical company focused on developing and commercializing therapies for neurologic diseases[107](index=107&type=chunk) - Product candidates include AJ201 for SBMA, IV tramadol for post-operative acute pain, and BAER-101 for epilepsy and panic disorders[107](index=107&type=chunk) - Net loss for the six months ended June 30, 2024, was approximately **$7.1 million**, with an accumulated deficit of approximately **$98.0 million**[107](index=107&type=chunk) - The company expects to continue incurring operating losses and requires additional capital through debt, equity, or strategic partnerships to fund future operations[108](index=108&type=chunk)[109](index=109&type=chunk) [Product Candidates](index=24&type=section&id=Product%20Candidates) Avenue Therapeutics is advancing three product candidates: AJ201 for SBMA, which has completed its Phase 1b/2a trial with top-line data expected in H2 2024; IV tramadol for post-operative acute pain, for which a Phase 3 safety study protocol has been finalized with the FDA, pending financing; and BAER-101 for epilepsy and panic disorders, which showed full seizure suppression in preclinical models [AJ201](index=24&type=section&id=AJ201) AJ201, licensed from AnnJi Pharmaceutical, is being developed for Spinal and Bulbar Muscular Atrophy (SBMA). The Phase 1b/2a clinical trial, which enrolled 25 patients, completed its last patient last visit in May 2024, and top-line data readout is anticipated in the second half of 2024 - AJ201 is a clinical product candidate for Spinal and Bulbar Muscular Atrophy (SBMA), licensed exclusively from AnnJi Pharmaceutical Co., Ltd[111](index=111&type=chunk)[112](index=112&type=chunk) - The Phase 1b/2a clinical trial for AJ201 completed its last patient last visit in May 2024[113](index=113&type=chunk) - Top-line data readout for the AJ201 Phase 1b/2a trial is anticipated in the second half of 2024[113](index=113&type=chunk) [IV Tramadol](index=25&type=section&id=IV%20Tramadol) The company has reached final agreement with the FDA on the Phase 3 safety study protocol and statistical analysis approach for IV tramadol, intended for post-operative acute pain. This non-inferiority study will compare IV tramadol to IV morphine regarding opioid-induced respiratory depression risk, with study initiation planned upon securing necessary financing - Final agreement reached with the FDA in January 2024 on the Phase 3 safety study protocol and statistical analysis approach for IV tramadol[115](index=115&type=chunk) - The Phase 3 study is designed as a non-inferiority trial to assess the risk of opioid-induced respiratory depression related to opioid stacking on IV tramadol compared to IV morphine[115](index=115&type=chunk) - Study initiation is planned as soon as necessary financing is secured[116](index=116&type=chunk) [BAER-101 (novel α2/3–subtype-selective GABA A PAM)](index=26&type=section&id=BAER-101%20%28novel%20%CE%B12%2F3%E2%80%93subtype-selective%20GABA%20A%20PAM%29) BAER-101, a novel α2/3–subtype-selective GABA A positive allosteric modulator, was acquired with Baergic Bio, Inc. for neurologic disorders like epilepsy and panic disorders. Preclinical data from an in vivo evaluation in a genetic absence epilepsy model demonstrated full suppression of seizure activity at a minimal effective dose, with these findings presented at major scientific meetings and published - BAER-101 is a novel α2/3–subtype-selective GABA A positive allosteric modulator for the treatment of epilepsy and panic disorders, acquired with Baergic Bio, Inc[117](index=117&type=chunk) - Preclinical data showed **full suppression of seizure activity** in SynapCell's Genetic Absence Epilepsy Rate from the Strasbourg (GAERS) model of absence epilepsy at a minimal effective dose of **0.3 mg/kg** orally[118](index=118&type=chunk) - These preclinical data were presented at the American Epilepsy Society (AES) 2023 Annual Meeting and the American Society for Experimental Neurotherapeutics (ASENT) 2024 Annual Meeting, and published in Drug Development Research[118](index=118&type=chunk) [Recent Events](index=26&type=section&id=Recent%20Events) Recent corporate events include a 1-for-75 reverse stock split, regaining Nasdaq compliance, and warrant inducements generating $4.5 million and $3.7 million in net proceeds, alongside an ATM offering raising $0.3 million [Reverse Stock Split](index=26&type=section&id=Reverse%20Stock%20Split) The company effected a 1-for-75 reverse stock split on April 25, 2024, which became effective on April 26, 2024. This action combined every 75 shares of common stock into one without changing the par value, and all share and per share information has been retroactively adjusted - A **1-for-75** reverse stock split became effective on April 26, 2024[119](index=119&type=chunk) - Every **75 shares** of common stock outstanding were combined into one share, with no change in par value[119](index=119&type=chunk) - All share and per share information has been retroactively adjusted to reflect the reverse stock split[120](index=120&type=chunk) [Nasdaq Deficiency Letter](index=26&type=section&id=Nasdaq%20Deficiency%20Letter) The company received deficiency letters from Nasdaq in May and September 2023 for non-compliance with minimum stockholders' equity and bid price requirements. Following a hearing, the company was granted an extension and successfully evidenced compliance with both requirements by May 21, 2024, though it will remain under a one-year 'Panel Monitor' until May 21, 2025 - Received Nasdaq deficiency letters in May 2023 for minimum stockholders' equity and in September 2023 for minimum bid price[121](index=121&type=chunk)[122](index=122&type=chunk) - Granted an extension by the Nasdaq Hearings Panel through May 20, 2024, to demonstrate compliance[122](index=122&type=chunk) - Notified by Nasdaq on May 21, 2024, of compliance with both the Bid Price Requirement and the Stockholders' Equity Requirement[123](index=123&type=chunk) - The company will remain subject to a 'Panel Monitor' for **one year**, through May 21, 2025[123](index=123&type=chunk) [January 2024 Warrant Inducement and Private Placement](index=27&type=section&id=January%202024%20Warrant%20Inducement%20and%20Private%20Placement) On January 5, 2024, the company entered into an inducement offer for existing warrants, leading to their exercise for cash at reduced or existing prices. This transaction generated approximately $4.5 million in net proceeds and resulted in the issuance of new Series A and B warrants, which were accounted for as a $4.3 million deemed dividend - On January 5, 2024, the company entered into an inducement offer for existing warrants (January 2023 and November 2023 Warrants) to be exercised for cash[125](index=125&type=chunk) - The transaction generated approximately **$4.5 million** in net proceeds from the exercise of existing warrants[125](index=125&type=chunk) - The issuance of new Series A and Series B common stock purchase warrants resulted in a **$4.3 million** deemed dividend for the six months ended June 30, 2024[125](index=125&type=chunk)[126](index=126&type=chunk) [May 2024 Warrant Inducement and Private Placement](index=27&type=section&id=May%202024%20Warrant%20Inducement%20and%20Private%20Placement) On April 28, 2024, the company completed the May 2024 Warrant Inducement, where various existing warrants were exercised for cash at a reduced price of $6.20 per share, along with additional consideration. This transaction generated approximately $3.7 million in net proceeds and led to the issuance of new Series C and D warrants, resulting in a $4.5 million deemed dividend - On April 28, 2024, the company entered into an inducement offer for existing warrants (October 2022, November 2023, January 2024 Warrants) to be exercised for cash at a reduced price of **$6.20 per share**, plus additional consideration[127](index=127&type=chunk)[128](index=128&type=chunk) - The transaction generated approximately **$3.7 million** in aggregate net proceeds from warrant exercises and additional warrant consideration[129](index=129&type=chunk) - The issuance of new Series C and Series D common stock purchase warrants resulted in a **$4.5 million** deemed dividend for the quarter ended June 30, 2024[128](index=128&type=chunk)[131](index=131&type=chunk) [ATM Offering](index=28&type=section&id=ATM%20Offering) On May 10, 2024, the company entered into an At-the-Market (ATM) Offering Agreement with H.C. Wainwright & Co. LLC, allowing it to sell up to $3.85 million of common stock. For the three months ended June 30, 2024, the company sold 87,683 shares, generating approximately $0.3 million in net proceeds after deducting underwriting discounts - The company entered into an At-the-Market (ATM) Offering Agreement on May 10, 2024, to sell up to **$3,850,000** of common stock through H.C. Wainwright & Co. LLC[132](index=132&type=chunk) - For the three months ended June 30, 2024, **87,683 shares** of common stock were sold, resulting in approximately **$0.3 million** in net proceeds[132](index=132&type=chunk) [Critical Accounting Policies and Use of Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) The company's financial statements are prepared in accordance with U.S. GAAP and involve management's estimates and judgments. There were no material changes in critical accounting estimates or policies from December 31, 2023 - Financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and judgments[133](index=133&type=chunk) - No material changes in critical accounting estimates or accounting policies from December 31, 2023[134](index=134&type=chunk) [Accounting Pronouncements](index=28&type=section&id=Accounting%20Pronouncements) As of June 30, 2024, there were no new accounting pronouncements or updates to recently issued accounting pronouncements disclosed in the 2023 Form 10-K that are expected to materially affect the company's present or future financial statements upon adoption - No new accounting pronouncements or updates are expected to materially affect the company's financial statements upon adoption as of June 30, 2024[135](index=135&type=chunk) [Smaller Reporting Company Status](index=28&type=section&id=Smaller%20Reporting%20Company%20Status) The company qualifies as a 'smaller reporting company,' which allows it to benefit from reduced disclosure obligations, such as presenting only two years of audited financial statements and delaying the adoption of certain new accounting standards - The company is a 'smaller reporting company' as defined by Rule 12b-2 of the Exchange Act[136](index=136&type=chunk) - This status allows for reduced disclosure obligations, including presenting only two years of audited financial statements and delaying the adoption of certain accounting standards[136](index=136&type=chunk) [Basis of Presentation and Principles of Consolidation](index=28&type=section&id=Basis%20of%20Presentation%20and%20Principles%20of%20Consolidation) The consolidated financial statements are prepared in conformity with U.S. GAAP and include the accounts of the company and its subsidiary, Baergic. All intercompany balances and transactions have been eliminated, and net loss attributable to non-controlling interests is recorded based on their ownership percentage in Baergic - Consolidated financial statements are prepared in conformity with U.S. GAAP[137](index=137&type=chunk) - The statements include the accounts of the Company and its subsidiary, Baergic, with all intercompany balances and transactions eliminated[137](index=137&type=chunk) - Net loss attributable to non-controlling interests is recorded based on the percentage of economic or ownership interest retained by non-controlling parties in Baergic[137](index=137&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) The company continues to incur substantial operating losses, with an accumulated deficit of $98.0 million as of June 30, 2024. Net loss attributable to Avenue decreased, but net loss attributable to common stockholders increased due to deemed dividends, influenced by decreased R&D and increased G&A expenses [General](index=29&type=section&id=General) As of June 30, 2024, the company had an accumulated deficit of $98.0 million. With product candidates still in development and no current revenue generation, the company expects to continue incurring substantial operating losses for the foreseeable future - Accumulated deficit at June 30, 2024, was **$98.0 million**[139](index=139&type=chunk) - The company is not yet generating revenue, and its product candidates are still in development[139](index=139&type=chunk) - Substantial operating losses are expected to continue for the foreseeable future[139](index=139&type=chunk) [Comparison of the Three Months Ended June 30, 2024 and 2023](index=29&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202024%20and%202023) For the three months ended June 30, 2024, the net loss attributable to Avenue decreased by 33% to $(2,692)k, while the net loss attributable to common stockholders increased by 79% to $(7,186)k, primarily due to deemed dividends. Loss from operations also decreased by 28% to $(2,823)k Financial Performance (Three Months Ended June 30, in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :------------------------------------------------ | :------- | :------- | :--------- | :--------- | | Research and development | $1,361 | $3,027 | $(1,666) | (55)% | | General and administrative | $1,462 | $896 | $566 | 63% | | Loss from operations | $(2,823) | $(3,923) | $1,100 | (28)% | | Net loss attributable to Avenue | $(2,692) | $(4,007) | $1,315 | (33)% | | Net loss attributable to common stockholders | $(7,186) | $(4,007) | $(3,179) | 79% | [Research and Development Expenses (Three Months)](index=30&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses decreased by $1.6 million (55%) to $1.4 million for the three months ended June 30, 2024, primarily due to a reduction in clinical development costs Research and Development Expenses (Three Months Ended June 30, in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :-------------------------- | :------- | :------- | :--------- | :--------- | | Research and development | $1,361 | $3,027 | $(1,666) | (55)% | - The decrease was primarily associated with a **$1.6 million** decrease in clinical development costs[141](index=141&type=chunk) [General and Administrative Expenses (Three Months)](index=30&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses increased by $0.6 million (63%) to $1.5 million for the three months ended June 30, 2024. This rise was mainly due to increased payments to InvaGen, common stock issued to Fortress, and non-cash stock compensation costs, partially offset by a decrease in professional fees General and Administrative Expenses (Three Months Ended June 30, in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :-------------------------------- | :------- | :------- | :--------- | :--------- | | General and administrative | $1,462 | $896 | $566 | 63% | - The increase was related to a **$0.3 million** increase in payments to InvaGen, **$0.2 million** in common stock issued to Fortress, and **$0.1 million** in non-cash stock compensation costs[143](index=143&type=chunk) [Interest Income (Three Months)](index=30&type=section&id=Interest%20Income) Interest income remained stable at approximately $0.1 million for both the three months ended June 30, 2024, and 2023 Interest Income (Three Months Ended June 30, in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :------------- | :--- | :--- | :--------- | :--------- | | Interest income| $52 | $57 | $(5) | (9)% | [Loss on Settlement of Common Stock Warrant Liabilities (Three Months)](index=30&type=section&id=Loss%20on%20Settlement%20of%20Common%20Stock%20Warrant%20Liabilities) A loss of $0.2 million was recorded for the three months ended June 30, 2024, due to the fair value of May 2024 Warrants allocated to the October 2022 Warrants as a cost of inducement Loss on Settlement of Common Stock Warrant Liabilities (Three Months Ended June 30, in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :------------------------------------------------ | :------- | :--- | :--------- | :--------- | | Loss on settlement of common stock warrant liabilities | $(185) | $0 | $(185) | —% | - The loss was due to the fair value of May 2024 Warrants allocated to the October 2022 Warrants as a cost of inducement[144](index=144&type=chunk) [Change in Fair Value of Warrant Liabilities (Three Months)](index=30&type=section&id=Change%20in%20Fair%20Value%20of%20Warrant%20Liabilities) The change in fair value of warrant liabilities resulted in a gain of $0.3 million for the three months ended June 30, 2024, a significant shift from a loss of $0.2 million in the prior year. This change was primarily influenced by warrant modifications, exercises, and fluctuations in the company's stock price Change in Fair Value of Warrant Liabilities (Three Months Ended June 30, in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :---------------------------------------- | :------- | :------- | :--------- | :--------- | | Change in fair value of warrant liabilities | $255 | $(150) | $405 | (270)% | - The change was primarily due to the modification of the exercise price as part of a warrant inducement, the exercise of warrants classified as liabilities, and fluctuation in the company's stock price[145](index=145&type=chunk) [Comparison of the Six Months Ended June 30, 2024 and 2023](index=30&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202024%20and%202023) For the six months ended June 30, 2024, the net loss attributable to Avenue decreased by 39% to $(7,032)k, while the net loss attributable to common stockholders increased by 37% to $(15,842)k due to deemed dividends. Loss from operations decreased by 37% to $(6,530)k, largely driven by the absence of R&D licenses acquired expenses in 2024 Financial Performance (Six Months Ended June 30, in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :------------------------------------------------ | :------- | :------- | :--------- | :--------- | | Research and development | $3,752 | $4,242 | $(490) | (12)% | | Research and development – licenses acquired | $0 | $4,230 | $(4,230) | (100)% | | General and administrative | $2,778 | $1,880 | $898 | 48% | | Loss from operations | $(6,530) | $(10,352)| $3,822 | (37)% | | Net loss attributable to Avenue | $(7,032) | $(11,543)| $4,511 | (39)% | | Net loss attributable to common stockholders | $(15,842)| $(11,543)| $(4,299) | 37% | [Research and Development Expenses (Six Months)](index=32&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses decreased by $0.4 million (12%) to $3.8 million for the six months ended June 30, 2024, primarily due to a $0.6 million decrease in pre-clinical and clinical development costs, partially offset by increased personnel-related costs. Notably, there were no R&D licenses acquired expenses in 2024, compared to $4.2 million in 2023 Research and Development Expenses (Six Months Ended June 30, in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :-------------------------------- | :------- | :------- | :--------- | :--------- | | Research and development | $3,752 | $4,242 | $(490) | (12)% | | R&D – licenses acquired | $0 | $4,230 | $(4,230) | (100)% | - The decrease in R&D expenses was primarily associated with a **$0.6 million** decrease in pre-clinical and clinical development costs, partially offset by a **$0.2 million** increase in personnel-related costs[150](index=150&type=chunk) [General and Administrative Expenses (Six Months)](index=32&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses increased by $0.9 million (48%) to $2.8 million for the six months ended June 30, 2024. This increase was mainly driven by higher payments to InvaGen, personnel-related costs, professional fees, and common stock issued to Fortress General and Administrative Expenses (Six Months Ended June 30, in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :-------------------------------- | :------- | :------- | :--------- | :--------- | | General and administrative | $2,778 | $1,880 | $898 | 48% | - The increase was primarily related to a **$0.4 million** increase in payments to InvaGen, **$0.2 million** in personnel-related costs, **$0.2 million** in professional fees, and **$0.1 million** in common stock issued to Fortress[151](index=151&type=chunk) [Interest Income (Six Months)](index=32&type=section&id=Interest%20Income) Interest income remained stable at approximately $0.1 million for both the six months ended June 30, 2024, and 2023 Interest Income (Six Months Ended June 30, in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :------------- | :--- | :--- | :--------- | :--------- | | Interest income| $100 | $94 | $6 | 6% | [Loss on Settlement of Common Stock Warrant Liabilities (Six Months)](index=32&type=section&id=Loss%20on%20Settlement%20of%20Common%20Stock%20Warrant%20Liabilities) A loss of $0.8 million was recorded for the six months ended June 30, 2024, compared to $0 in the prior year. This loss was attributed to the fair value of new warrants (Series A, B, and May 2024 Warrants) allocated to liability-classified warrants as a cost of inducement Loss on Settlement of Common Stock Warrant Liabilities (Six Months Ended June 30, in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :------------------------------------------------ | :------- | :--- | :--------- | :--------- | | Loss on settlement of common stock warrant liabilities | $(759) | $0 | $(759) | —% | - The loss was due to the fair value of New Series A Warrants, New Series B Warrants, and May 2024 Warrants allocated to liability-classified October 2022 Warrants and January 2023 Warrants as a cost of inducement[152](index=152&type=chunk) [Change in Fair Value of Warrant Liabilities (Six Months)](index=32&type=section&id=Change%20in%20Fair%20Value%20of%20Warrant%20Liabilities) The change in fair value of warrant liabilities resulted in a gain of $0.1 million for the six months ended June 30, 2024, a significant improvement from a loss of $1.0 million in the prior year. This change was primarily due to warrant modifications, exercises, and fluctuations in the company's stock price Change in Fair Value of Warrant Liabilities (Six Months Ended June 30, in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :---------------------------------------- | :------- | :------- | :--------- | :--------- | | Change in fair value of warrant liabilities | $139 | $(1,028) | $1,167 | (114)% | - The change was primarily due to the modification of the exercise price as part of a warrant inducement, the exercise of warrants classified as liabilities, and fluctuation in the company's stock price[153](index=153&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2024, the company had $4.9 million in cash and cash equivalents. It anticipates increased expenses and projects that current cash will not be sufficient to fund operations past the first quarter of 2025, necessitating additional financing through debt, equity offerings (including ATM programs), or strategic partnerships - Cash and cash equivalents totaled **$4.9 million** at June 30, 2024[154](index=154&type=chunk) - Current cash is not expected to be sufficient to fund projected operating requirements past the **first quarter of 2025**[154](index=154&type=chunk) - The company will require additional financing and is evaluating various alternatives, including lines of credit, debt or equity financings (such as at-the-market offerings), or other arrangements like strategic collaborations[154](index=154&type=chunk) [Cash Flows for the Six Months Ended June 30, 2024 and 2023](index=32&type=section&id=Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202024%20and%202023) For the six months ended June 30, 2024, the company reported a net increase in cash and cash equivalents of $3.1 million, a significant improvement compared to a net decrease of $5.1 million in the prior year. This positive change was primarily driven by substantial cash provided by financing activities Summary of Cash Flows (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2024 | 2023 | | :--------------------------------------- | :------- | :------- | | Operating activities | $(5,373) | $(6,238) | | Investing activities | $0 | $(2,000) | | Financing activities | $8,509 | $3,101 | | Net increase (decrease) in cash and cash equivalents | $3,136 | $(5,137) | [Operating Activities](index=34&type=section&id=Operating%20Activities) Net cash used in operating activities decreased to $5.4 million for the six months ended June 30, 2024, from $6.2 million in 2023. This was primarily influenced by a lower net loss in 2024, partially offset by non-cash adjustments such as loss on settlement of common stock warrant liabilities and share-based compensation - Net cash used in operating activities was **$5.4 million** for the six months ended June 30, 2024, compared to **$6.2 million** in 2023[157](index=157&type=chunk)[158](index=158&type=chunk) - Key factors for 2024 included a **$7.1 million** net loss, partially offset by a **$0.8 million** loss on settlement of common stock warrant liabilities and **$0.4 million** in share-based compensation[157](index=157&type=chunk) - Key factors for 2023 included an **$11.6 million** net loss, partially offset by **$2.0 million** in research and development AJ201 license expense and **$1.2 million** in stock issuance for licenses acquired[158](index=158&type=chunk) [Investing Activities](index=34&type=section&id=Investing%20Activities) Net cash used in investing activities was $0 for the six months ended June 30, 2024, a decrease from $2.0 million in 2023, which was primarily due to the AJ201 license payment made in the prior year - Net cash used in investing activities was **$0** for the six months ended June 30, 2024, compared to **$2.0 million** in 2023[159](index=159&type=chunk) - The **$2.0 million** used in 2023 was primarily for the AJ201 license payment[159](index=159&type=chunk) [Financing Activities](index=34&type=section&id=Financing%20Activities) Net cash provided by financing activities significantly increased to $8.5 million for the six months ended June 30, 2024, from $3.1 million in 2023. This increase was primarily driven by $8.2 million in net proceeds from the May 2024 Warrant Inducement and $0.3 million from ATM sales - Net cash provided by financing activities was **$8.5 million** for the six months ended June 30, 2024, compared to **$3.1 million** in 2023[159](index=159&type=chunk) - The 2024 financing activities were primarily due to **$8.2 million** in net proceeds from the May 2024 Warrant Inducement and **$0.3 million** from ATM sales[159](index=159&type=chunk) - The 2023 financing activities were primarily due to **$3.1 million** raised in a registered direct offering and private placement[159](index=159&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Avenue Therapeutics is exempt from providing quantitative and qualitative disclosures about market risk, as defined by Rule 12b-2 of the Exchange Act - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[160](index=160&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2024, ensuring timely and accurate financial reporting. There were no material changes in internal control over financial reporting during the quarter [Disclosure Controls and Procedures](index=34&type=section&id=Disclosure%20Controls%20and%20Procedures) The company's management, including the CEO and interim CFO, concluded that its disclosure controls and procedures were effective as of June 30, 2024. These controls are designed to ensure that information required for SEC reports is recorded, processed, summarized, and reported in a timely and accurate manner - The company's disclosure controls and procedures were deemed effective as of June 30, 2024, based on an evaluation by management[162](index=162&type=chunk) - These controls are designed to ensure timely and accurate recording, processing, summarizing, and reporting of information required for SEC filings[161](index=161&type=chunk) [Changes in Internal Control over Financial Reporting](index=34&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There were no changes in the company's internal control over financial reporting during the fiscal quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, these controls - No changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2024, that materially affected or are reasonably likely to materially affect these controls[163](index=163&type=chunk) PART II. OTHER INFORMATION This section addresses legal proceedings, risk factors, equity sales, defaults, mine safety, other disclosures, and the list of exhibits [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) As of the reporting date, the company is not aware of any material legal proceedings pending against it, beyond routine actions and administrative proceedings that are not expected to have a material adverse effect on its financial condition - To the company's knowledge, there are no material legal proceedings pending against it as of the reporting date[165](index=165&type=chunk) - Routine actions and administrative proceedings are not deemed material and are not expected to have a material adverse effect on financial condition, results of operations, or cash flows[165](index=165&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the comprehensive 'Risk Factors' disclosure in the 2023 Form 10-K for a detailed understanding of potential risks affecting the business, and advises considering additional risks not currently known - Readers should carefully consider the 'Risk Factors' set forth in the 2023 Form 10-K and other information in this Quarterly Report on Form 10-Q[166](index=166&type=chunk) - The disclosed risk factors may not describe every risk the company faces, and additional unknown risks may materially adversely affect the business[166](index=166&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is marked as 'N/A,' indicating that there are no unregistered sales of equity securities or use of proceeds to report for the period - No information to report for unregistered sales of equity securities and use of proceeds (N/A)[167](index=167&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is marked as 'N/A,' indicating that there are no defaults upon senior securities to report for the period - No information to report for defaults upon senior securities (N/A)[167](index=167&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as 'N/A,' indicating that there are no mine safety disclosures to report for the period - No information to report for mine safety disclosures (N/A)[167](index=167&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) During the three months ended June 30, 2024, none of the company's directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2024[167](index=167&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including various agreements (e.g., ATM Agreement, Investor Inducement Letter), corporate governance documents (e.g., Certificate of Incorporation amendments), warrant forms, and certifications, many of which are incorporated by reference from previous filings - Exhibits include the At the Market Offering Agreement, various amendments to the Certificate of Incorporation, forms of New Series C, D, and Placement Agent Warrants, the Investor Inducement Letter, and certifications[168](index=168&type=chunk) [Signatures](index=38&type=section&id=Signatures) The report is duly signed on behalf of Avenue Therapeutics, Inc. by Alexandra MacLean, M.D., Chief Executive Officer and Director, and David Jin, Interim Chief Financial Officer and Chief Operating Officer, as of August 9, 2024 - The report is signed by Alexandra MacLean, M.D., Chief Executive Officer and Director, and David Jin, Interim Chief Financial Officer and Chief Operating Officer[169](index=169&type=chunk) - The signing date for the report is August 9, 2024[169](index=169&type=chunk)