AVENUE THERAPEUTICS, INC.
For the period ended Dec 31, 2024. Filed Mar 31, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 31, 2025
ATXI$0.42-50.7%Stored close · as of Mar 18, 2025
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-18.
0001437749-24-008294
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-31.
0001437749-25-010196
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 101 previous paragraphs and 107 current paragraphs.
61 unchanged; 22 reworded; 23 added; 18 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
On March 3, 2025, we received a notice of AnnJi’s intent to terminate the AnnJi License Agreement in which AnnJi purports to assert its right to terminate the AnnJi License Agreement due to alleged material breaches by us of various provisions in the AnnJi License Agreement for (i) failure to use its commercially reasonable efforts to develop and commercialize AJ201, (ii) failure to negotiate and execute a clinical supply agreement by March 31, 2024, and (iii) the anticipated failure by us to meet a diligence milestone of first patient dosing in a Phase 2/3 clinical trial by February 28, 2027. The Company believes that the purported termination of the AnnJi License Agreement in the Purported Termination Notice is invalid and of no force and effect, and that the AnnJi License Agreement remains a valid and binding agreement. See “Item 1. Business – Product Candidates Under Development – AJ201 – AnnJi Dispute” and “Item 1A. Risk Factors” for more information regarding this dispute.
Current report
Reverse Stock Split
Current report
On April 25, 2024, we filed the Reverse Split Amendment to the Company’s Third Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a 1-for-75 reverse stock split of our shares of common stock ("Reverse Stock Split"). As a result of the Reverse Stock Split, every 75 shares of common stock outstanding immediately prior to effectiveness of the Reverse Stock Split were combined and converted into one share of common stock without any change in the par value per share. The Reverse Stock Split became effective on April 26, 2024, and the common stock was quoted on the Nasdaq Stock Market on a post-split basis at the open of business on April 26, 2024. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who would have otherwise been entitled to a fraction of one share of common stock as a result of the Reverse Stock Split instead received one whole share of common stock.
Current report
All share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated.
Current report
We do not currently have any plans to initiate the study, unless we obtain financing for this purpose.
Current report
Nasdaq Delisting
Current report
On March 17, 2025, The Nasdaq Stock Market LLC (“Nasdaq”) notified the Company that the Nasdaq Hearings Panel (the “Panel”) has determined to delist the Company’s common stock due to a violation of Nasdaq Listing Rule 5550(b)(1), which requires companies listed on The Nasdaq Capital Market to maintain stockholders’ equity of at least $2,500,000. As a result, trading of the Company’s common stock was suspended from Nasdaq at the open of trading on March 19, 2025.
Current report
The Company’s common stock began trading under its current trading symbol (“ATXI”) on the OTC Markets system effective with the open of the markets on March 19, 2025. The Company plans to continue to file its required periodic reports and other filings with the SEC. The Company can provide no assurance that its common stock will continue to trade on this market, whether broker-dealers will continue to provide public quotes of its common stock on this market, or whether the trading volume of its common stock will be sufficient to provide for an efficient trading market for existing and potential holders of its common stock. See “Item 1A. Risk Factors” under “The OTC Pink Open Market is a thinly traded market lacking in liquidity, which could make it difficult for our stockholders to sell their shares of common stock,” and “Our stock price and trading volume on the OTC Pink Open Market is subject to price volatility unrelated to us or our operations, which could depress the market price of our common stock and result in rapid and substantial losses for our stockholders, who may lose all or part of their investment.”
Current report
Warrants
Current report
For the twelve months ended December 31, 2023, research and development - licenses acquired expenses were $4.2 million related to the AJ201 license acquisition, with no comparable expense in 2024.
Current report
We expect our research and development activities to remain flat or decrease as we continue to advance our portfolio, reflecting costs associated with the following:
Current report
Loss on common stock warrant liabilities
Current report
The loss on common stock warrant liabilities was $0.8 million and $0 for the twelve months ended December 31, 2024 and 2023, respectively. The new Series A common stock warrants, new Series B common stock warrants, new Series C common stock warrants and new Series D common stock warrants had a fair value of $0.8 million allocated to the liability classified warrants to purchase shares of our common stock originally issued in October 2022 and January 2023 at the time of issuance as a cost of inducement, which was recorded as a loss on settlement of common stock warrant liabilities.
Current report
Net cash provided by financing activities for the year ended December 31, 2024 was $9.8 million, primarily due to $8.2 million in net proceeds from the inducement offer letter agreements we entered into in January 2024 and April 2024 and $1.6 million in net proceeds received from the sale of common stock pursuant to the At the Market Offering Agreement we entered into with H.C. Wainwright & Co. in May 2024.
Current report
Approximately $4.3 million of the New Jan 2024 Warrants fair value was allocated to the November 2023 Warrants and deemed to be a dividend and recorded to additional paid-in-capital because we had an accumulated deficit on the exercise date. The deemed dividend was included in net loss attributable to common stockholders in the calculation of net loss per share in the condensed consolidated statements of operations (See Note 2).
Current report
On April 28, 2024, we entered into inducement offer letter agreements (the “May 2024 Warrant Inducement”) with (i) certain investors (the “October 2022 Investors”) that held certain outstanding October 2022 Warrants to purchase up to an aggregate of 27,271 shares of the Company’s common stock; (ii) certain investors (the “May Inducement November 2023 Investors”) that hold November 2023 Warrants to purchase up to an aggregate of 221,333 shares of common stock; and (iii) certain investors (the “January 2024 Investors” and, collectively with the October 2022 Investors and May Inducement November 2023 Investors, the “May 2024 Holders”) that hold January 2024 Warrants to purchase up to an aggregate of 441,076 shares of common stock. We refer to the exercised January 2024 Warrants collectively with the October 2022 Warrants and November 2023 Warrants as the "May 2024 Exercised Warrants"). The October 2022 Warrants had an exercise price of $116.25 per share, the November 2023 Warrants had an exercise price of $22.545 per share, and the January 2024 Warrants had an exercise price of $22.545 per share. Pursuant to the May 2024 Warrant Inducement, the May 2024 Holders agreed to exercise for cash the May 2024 Exercised Warrants at a reduced exercise price of $6.20 per share in partial consideration for our agreement to issue in a private placement (x) new Series C Common Stock purchase warrants (the “New Series C Warrants”) to purchase up to 689,680 shares of common stock (the “New Series C Warrant Shares”) and (y) new Series D Common Stock Purchase Warrants (the “New Series D Warrants” and, together with the New Series C Warrants, the “May 2024 Warrants”) to purchase up to 689,680 shares of common stock (the “New Series D Warrant Shares” and, together with the New Series C Warrant Shares, the “May 2024 Warrant Shares”). The May 2024 Holders also agreed to pay us $0.125 per May 2024 Warrant Share (the “Additional Warrant Consideration”). The closing of the transactions contemplated pursuant to the May 2024 Warrant Inducement occurred on May 1, 2024. The May 2024 Warrants meet the criteria for permanent equity classification.
Current report
The October 2022 Warrants, which were liability classified, were revalued on May 1, 2024 using the Black-Scholes Model to calculate the difference in fair value as a result of the change in exercise price. The difference in fair value of $0.1 million was recorded as a change in fair value of warrant liabilities in the Condensed Consolidated Statements of Operations (see Note 8). The issuance of the May 2024 Warrants was considered as part of the cost of the inducement and the May 2024 Warrants were valued using the Black-Scholes Model with the fair value being allocated between the October 2022 Warrants, November 2023 Warrants and January 2024 Warrants on a weighted basis. The approximately $0.2 million of the May 2024 Warrants fair value was allocated to the October 2022 warrants and recorded as a loss on common stock warrant liabilities in the Condensed Consolidated Statements of Operations with a corresponding offset to additional paid-in-capital. Approximately $4.5 million of the May 2024 Warrant fair value was allocated to the November 2023 Warrants and January 2024 Warrants and deemed to be a dividend and recorded to additional paid-in-capital because the Company had an accumulated deficit on the exercise date. The deemed dividend was included in net loss attributable to common stockholders in the calculation of net loss per share in the condensed consolidated statements of operations (see Note 2).
Current report
We received net proceeds of approximately $3.7 million from the exercise of the May 2024 Exercised Warrants by the May 2024 Holders and the payment of the Additional Warrant Consideration, after deducting placement agent fees and other expenses payable by us.
Current report
We filed a registration statement on Form S-3 (File No. 333-279125) with the SEC providing for the resale of the May 2024 New Warrant Shares (the “May 2024 Resale Registration Statement”) on May 6, 2024, which was declared effective on May 10, 2024.
Current report
ATM Facility
Current report
On May 10, 2024, we entered into an At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co. LLC (the “ATM Manager”) under which we may offer and sell, from time to time at its sole discretion, shares of our common stock, par value $0.0001 per share, through or to the ATM Manager. The offer and sale of the shares will be made pursuant to a previously filed shelf registration statement on Form S-3 (File No. 333-261520), originally filed with the SEC on December 7, 2021 and declared effective by the SEC on December 10, 2021, and the related prospectus supplement dated May 10, 2024 (including such replacement registration statement as may be filed with the SEC, the “ATM Registration Statement”) and filed with the SEC on such date pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”). As a result of the limitations of General Instruction I.B.6 of Form S-3, we may sell up to a maximum of $3,850,000 of our shares pursuant to the ATM Agreement.
Current report
Under the ATM Agreement, the ATM Manager may sell shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act. The ATM Manager will use commercially reasonable efforts to sell the shares from time to time, based upon instructions from us (including any price, time or size limits or other customary parameters or conditions we may impose). We agreed to pay the ATM Manager a commission of 3.0% of the gross proceeds from the sales of shares sold through the ATM Manager under the ATM Agreement and has provided the ATM Manager with customary indemnification and contribution rights. We also agreed to reimburse the ATM Manager for certain expenses incurred in connection with the ATM Agreement. We and the ATM Manager may each terminate the ATM Agreement at any time upon specified prior written notice.
Current report
For the twelve months ended December 31, 2024, we sold an aggregate of 591,205 shares of our common stock pursuant to the ATM Agreement, resulting in net proceeds of approximately $1.6 million, after deducting underwriting discounts.
Removed paragraphs (18)
Previous report
As more fully described in the Business section above, in February 2022, we had our Advisory Committee meeting with the U.S. Food and Drug Administration ("FDA") regarding IV tramadol. In the final part of the public meeting, the Advisory Committee voted yes or no on the following question: “Has the Applicant submitted adequate information to support the position that the benefits of their product outweigh the risks for the management of acute pain severe enough to require an opioid analgesic in an inpatient setting?” The results were 8 yes votes and 14 no votes. In March 2022, we received an Appeal Denied Letter from the OND in response to the FDRR. In August 2022, we participated in a Type A Meeting with the FDA Division of Anesthesia, Analgesia, and Addiction Products (“DAAAP”) regarding a briefing document submitted that presented a study design we believed would have the potential to address the comments and deficiencies noted in the Appeal Denial Letter. The meeting on August 9, 2022 was a collaborative discussion on the study design and potential path forward. We incorporated the FDA’s suggestions from the meeting minutes and submitted a detailed study protocol.
Previous report
We plan to initiate the study as soon as possible, subject to having the necessary financing.
Previous report
On May 11, 2022, we entered into a stock contribution agreement (the “Contribution Agreement”) with Fortress, pursuant to which Fortress agreed to transfer ownership of 100% of its shares (common and preferred) in Baergic to us. The acquisition was completed on November 8, 2022 and as a result, Baergic is currently a majority-controlled and owned private subsidiary company of Avenue.
Previous report
Under the Contribution Agreement, Fortress also agreed to assign to us certain intercompany agreements existing between Fortress and Baergic, including a Founders Agreement and Management Services Agreement. Consummation of the transactions contemplated by the Contribution Agreement was subject to the satisfaction of certain conditions precedent, including, inter alia: (i) the closing of an equity financing by the Company resulting in gross proceeds of no less than $7.5 million, (ii) the agreement by minority Avenue shareholder InvaGen Pharmaceuticals Inc. (“InvaGen”) to (A) have 100% of its shares in us repurchased by us and (B) terminate certain of the agreements to which it was party with us and/or Fortress in connection with InvaGen’s 2019 equity investment in us, which eliminated certain negative consent rights of InvaGen over us and restored certain rights and privileges of Fortress in us; and (iii) the sustained listing of our common stock on Nasdaq.
Previous report
The Baergic transaction expands our development portfolio within neurologic diseases. Evaluation and negotiation of the Contribution Agreement was overseen, and execution of the Contribution Agreement was approved, by special committees at the Avenue and Fortress levels, both of which exclusively comprised independent and disinterested directors of the respective companies’ boards.
Previous report
Nasdaq Deficiency Letters
Previous report
On May 19, 2023, we received a deficiency letter (the “First Letter”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (the “Nasdaq”) notifying us that we were not in compliance with Nasdaq Listing Rule 5550(b)(1), the minimum stockholders’ equity requirement for continued listing on The Nasdaq Capital Market (the “Stockholders’ Equity Requirement”). In accordance with Nasdaq rules, we were provided 45 calendar days, or until July 3, 2023, to submit a plan to regain compliance (the “Compliance Plan”). We submitted our Compliance Plan and, on July 17, 2023, the Staff granted our request for an extension through November 15, 2023 to regain compliance with the Stockholders’ Equity Requirement. We were unable to demonstrate compliance with the Stockholders’ Equity Requirement by that date, and, on November 20, 2023, the Staff formally notified us that it would move to delist our securities from Nasdaq unless we timely requested a hearing before the Nasdaq Hearings Panel (the “Panel”). We submitted the request for a hearing before the Panel (the “Hearing”), which request stayed any further action by Nasdaq pending completion of the Hearing and the expiration of any extension that may be granted by the Panel to the Company.
Previous report
Also as previously disclosed, on September 27, 2023, we received a second deficiency letter (the “Second Letter”) from the Staff stating that the bid price of our common stock had closed below $1.00 per share for 30 consecutive business days and, as such, we were not in compliance with Nasdaq Listing Rule 5550(a)(2), the minimum bid price requirement for continued listing on The Nasdaq Capital Market (the “Bid Price Requirement”). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we were afforded a 180-calendar day grace period, through March 25, 2024, to regain compliance with the Bid Price Requirement.
Previous report
The Hearing before the Panel was held on February 15, 2024 and, by decision dated March 11, 2024, the Panel granted the Company's request for an extension through May 20, 2024 to demonstrate compliance with the Stockholders' Equity Requirement and Bid Price Requirement. In order to timely evidence compliance with the Bid Price Requirement in particular, we must evidence a closing bid price of at least $1.00 per share for a minimum of 10, though generally not more than 20, consecutive business days by May 20, 2024. The Company is considering all options available to it to regain compliance with the Stockholders’ equity Requirement and the Big Price Requirement; however, there can be no assurance that we will be able to do so.
Previous report
Authorized Share Increase
Previous report
On January 9, 2024, stockholders holding a majority of the outstanding voting power of the Company executed and delivered to the Board of Directors of the Company a written consent approving, among other items, an increase in the number of shares of common stock, par value $0.0001 per share, authorized under the Company’s Third Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), from 75,000,000 to 200,000,000 (the “Authorized Shares Increase”). On February 20, 2024, the Company filed a Certificate of Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) with the Secretary of State for the State of Delaware effectuating the Authorized Shares Increase.
Previous report
Action by Written Consent of Stockholders to Effect Reverse Stock Split
Previous report
Effective March 6, 2024, the holders of a majority of the voting power of the capital stock of the Company executed a written consent approving a grant of discretionary authority to the board of directors of the Company to, without further stockholder approval, effect a reverse stock split of the Company's issued and outstanding common stock within a range of between 1-for-30 and 1-for-75 (with the board of directors being authorized to determinate the exact ratio) (the "Reverse Stock Split") by filing an amendment (the "Reverse Split Amendment") to the Company's Third Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware. The written consent was signed by the holders of 3,133,886 shares of the Company’s common stock and 250,000 shares of the Company’s Class A Preferred Stock. Each share of common stock entitles the holder thereof to one vote on all matters submitted to stockholders and each share of Class A Preferred Stock has the voting power of 1.1 times (A) the number of outstanding shares of common stock plus (B) the whole shares of Company common stock into which the outstanding shares of Class A Preferred Stock are convertible, divided by the number of outstanding shares of Class A Preferred Stock, or 194.8 votes per share as of March 6, 2024. Accordingly, the holders of approximately 56% of the voting power of the Company’s capital stock as of March 6, 2024 signed the written consent approving the Reverse Stock Split and the Reverse Split Amendment. The board of directors also approved the Reverse Stock Split and the Reverse Split Amendment.
Previous report
Warrant Liabilities
Previous report
N/A - not applicable or not meaningful
Previous report
For the years ended December 31, 2023 and 2022 research and development - licenses acquired expenses were $4.2 million and $0, respectively. The increase of $4.2 million is due to the AnnJi $3.0 million upfront payment and $1.2 million fair value of the Consideration Shares.
Previous report
We expect our research and development activities to continue at an elevated level as we attempt to gain regulatory approval for IV tramadol and pursue continued development of AJ201 and BAER-101, reflecting costs associated with the following:
Previous report
Net cash provided by financing activities for the year ended December 31, 2022 was $10.5 million, primarily related to $11.5 million in proceeds from the sale of our securities in our underwritten public offering in October 2022 and $0.1 million proceeds from exercises of warrants, partially offset by the $1.1 million repurchase of shares of our common stock from InvaGen.
Reworded paragraphs (22)
Previous wording
Avenue Therapeutics, Inc. (“Avenue” or the “Company”) is a specialty pharmaceutical company focused on the development and commercialization of therapies for the treatment of neurologic diseases. Our product candidates include AJ201 for the treatment of spinal and bulbar muscular atrophy (“SBMA”, also known as Kennedy’s Disease), an intravenous formulation of tramadol (“IV tramadol”), a schedule IV opioid for the treatment of post-operative acute pain, and BAER-101 for the treatment of epilepsy and panic disorders.
Current wording
Avenue Therapeutics, Inc. (“Avenue” or the “Company”) is a specialty pharmaceutical company focused on the development and commercialization of therapies for the treatment of neurologic diseases. Our product candidates include AJ201 for the treatment of spinal and bulbar muscular atrophy (“SBMA”, also known as Kennedy’s Disease), an intravenous formulation of tramadol (“IV tramadol”), a schedule IV opioid for the treatment of post-operative acute pain, and BAER-101 for the treatment of epilepsy and panic disorders. We may in the future acquire additional product candidates.
Previous wording
Our net loss for the years ended December 31, 2023 and 2022 was approximately $10.5 million and $3.6 million, respectively. As of December 31, 2023, we had an accumulated deficit of approximately $90.9 million. Substantially all our net losses resulted from costs incurred for licenses acquired, research and development, and general and administrative purposes.
Current wording
Our net loss for the years ended December 31, 2024 and 2023 was approximately $11.7 million and $10.5 million, respectively. As of December 31, 2024, we had an accumulated deficit of approximately $102.6 million. Substantially all our net losses resulted from costs incurred for licenses acquired, research and development, and general and administrative purposes.
Previous wording
In connection with the signing of the AnnJi License Agreement, we issued 831,618 shares of our common stock to AnnJi (the “First Tranche Shares”) in March 2023, and an additional 276,652 shares of our common stock in September 2023 upon enrollment of the eighth patient in the ongoing Phase 1b/2a SBMA clinical trial (the “Second Tranche Shares” and, together with the First Tranche Shares, the “Consideration Shares”). The license provided under the AnnJi License Agreement is exclusive as to all oral forms of AJ201 for use in all indications (other than androgenetic alopecia and Alzheimer’s disease) in the United States, Canada, the European Union, the United Kingdom and Israel. The AnnJi License Agreement also contains customary representations and warranties and provisions related to confidentiality, diligence, indemnification and intellectual property protection. We will initially be obligated to obtain both clinical and commercial supply of AJ201 exclusively through AnnJi. In connection with the execution of the AnnJi License Agreement, we agreed to file a registration statement to register the resale of the Consideration Shares. We filed such registration statement on Form S-3 on June 16, 2023, and the registration statement was subsequently declared effective by the SEC on June 27, 2023.
Current wording
In connection with the signing of the AnnJi License Agreement, we issued 11,089 shares of our common stock to AnnJi (the “First Tranche Shares”) in March 2023, and an additional 3,688 shares of our common stock in September 2023 upon enrollment of the eighth patient in the ongoing Phase 1b/2a SBMA clinical trial (the “Second Tranche Shares” and, together with the First Tranche Shares, the “Consideration Shares”). The license provided under the AnnJi License Agreement is exclusive as to all oral forms of AJ201 for use in all indications (other than androgenetic alopecia and Alzheimer’s disease) in the United States, Canada, the European Union, the United Kingdom and Israel. The AnnJi License Agreement also contains customary representations and warranties and provisions related to confidentiality, diligence, indemnification and intellectual property protection. We will initially be obligated to obtain both clinical and commercial supply of AJ201 exclusively through AnnJi. In connection with the execution of the AnnJi License Agreement, we agreed to file a registration statement to register the resale of the Consideration Shares. We filed such registration statement on Form S-3 on June 16, 2023, and the registration statement was subsequently declared effective by the SEC on June 27, 2023.
Previous wording
In January 2024, we announced the completion of enrollment for the Phase 1b/2a trial with topline data anticipated in the second quarter of 2024.
Current wording
In January 2024, we announced the completion of enrollment for the Phase 1b/2a trial. In May 2024, we announced last patient last visit in the Phase 1b/2a trial.
Previous wording
We have issued freestanding warrants to purchase shares of our common stock in connection with financing activities. Our outstanding common stock warrants issued in connection with the equity financings completed in 2022 and January 2023 are each classified as liabilities in the consolidated balance sheet as they contain terms for redemption of the underlying security that are outside our control. We use the Black-Scholes option pricing model to value warrants, which requires management to estimate inputs including expected volatility and expected term, and is most significantly impacted by our common stock price. We have also used the Monte Carlo option pricing model to initially value the warrants issued in 2022. These inputs are inherently subjective and require significant analysis and judgment to develop. The fair value of all warrants is re-measured at each financial reporting date with any changes in fair value being recognized in change in fair value of warrant liabilities, a component of other income (expense), in the consolidated statements of operations and comprehensive income (loss). We will continue to re-measure the fair value of the warrant liabilities until exercise or expiration of the related warrant.
Current wording
We have issued freestanding warrants to purchase shares of our common stock in connection with financing activities and account for them in accordance with applicable accounting guidance as either liabilities or as equity instruments depending on the specific terms of the warrant agreements. Our outstanding common stock warrants issued in connection with the equity financings completed in 2022 are classified as liabilities in the consolidated balance sheet as they contain terms for redemption of the underlying security that are outside our control. We use the Black-Scholes option pricing model to value warrants, which requires management to estimate inputs including expected volatility and expected term, and is most significantly impacted by our common stock price. These inputs are inherently subjective and require significant analysis and judgment to develop. The fair value of all warrants is re-measured at each financial reporting date with any changes in fair value being recognized in change in fair value of warrant liabilities, a component of other income (expense), in the consolidated statements of operations and comprehensive income (loss). We will continue to re-measure the fair value of the warrant liabilities until exercise or expiration of the related warrant. Equity-classified warrants are recorded within equity and are not remeasured.
Previous wording
For the years ended December 31, 2023 and 2022, research and development expenses were $6.1 million and $2.7 million, respectively. The $3.4 million increase primarily reflects an increase of $4.7 million in clinical trial expenses, $0.2 million in Fortress-Avenue Master Services Agreement ("MSA") fees and $0.1 million in IV tramadol supply expenses, offset by a decrease of $1.0 million in advisory committee preparation and costs, $0.5 million in compensation costs and $0.1 million in non-cash stock compensation costs.
Current wording
For the years ended December 31, 2024 and 2023, research and development expenses were $6.6 million and $6.1 million, respectively. The $0.5 million increase primarily reflects an increase of $0.6 million in clinical trial expenses, $0.1 million in personnel costs and $0.1 million in non-cash stock compensation costs, offset by a decrease of $0.2 million in Fortress-Avenue Master Services Agreement ("MSA") fees and $0.1 million in IV tramadol supply expenses.
Previous wording
For the years ended December 31, 2023 and 2022, general and administrative expenses were $4.2 million and $5.3 million, respectively. The $1.1 million decrease primarily reflects a decrease of $2.0 million in expenses related to the repurchase of shares held by InvaGen in 2022, offset by increased expense of $0.3 million in non-cash stock compensation costs, $0.2 million in MSA fees, $0.2 million in consulting and professional fees, $0.1 million in personnel costs and $0.1 million in travel and entertainment costs.
Current wording
For the years ended December 31, 2024 and 2023, general and administrative expenses were $4.6 million and $4.2 million, respectively. The $0.5 million increase primarily reflects an increase of $0.4 million in payments to InvaGen, $0.2 million in personnel costs and $0.1 million in operational expenses, offset by a decrease of $0.1 million in professional fees and $0.1 million in MSA fees.
Previous wording
Interest income was $0.1 million and $20 thousand for the years ended December 31, 2023 and 2022, respectively. The increase in interest income was due to increased interest rates on our cash and cash equivalents.
Current wording
Interest income was $0.2 million and $0.1 million for the years ended December 31, 2024 and 2023, respectively. The increase in interest income was due to an increased average balance in our cash and cash equivalents.
Previous wording
Financing costs of our warrant liabilities reflect an allocation of total financing costs associated with the public offering in October 2022 and registered direct offering and private placement in January 2023 (the "January 2023 Registered Direct Offering and Private Placement"), on the basis of the fair value of the warrant liabilities as compared to the total proceeds received by us in such offerings.
Current wording
For the twelve months ended December 31, 2023, financing costs – warrant liabilities were $0.3 million, with no comparable expense in 2024. Financing costs of our warrant liabilities reflect an allocation of total financing costs associated with the public offering in October 2022 and registered direct offering and private placement in January 2023 (the "January 2023 Registered Direct Offering and Private Placement"), on the basis of the fair value of the warrant liabilities as compared to the total proceeds received by us in such offerings.
Previous wording
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations. The fair value of the warrants was estimated using a Monte Carlo simulation approach in 2022 and using the Black-Scholes Model in 2023. (see Note 8 to our audited consolidated financial statements included herein).
Current wording
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations. The fair value of the warrants was estimated using the Black-Scholes Model. (see Note 8 to our audited consolidated financial statements included herein).
Previous wording
At December 31, 2023, we had $1.8 million in cash and cash equivalents as compared to $6.7 million at December 31, 2022. To date, we have funded our operations primarily with proceeds from various public and private offerings of our common and preferred stock. We expect that our expenses will increase substantially for the foreseeable future as we continue to execute on our product development plan and seek opportunities to license or acquire additional products. We will require additional financing to carry out our business plan and implement our strategy, and continue to analyze various alternatives, including potentially obtaining lines of credit, debt or equity financings, or other arrangements. We cannot be sure that any additional funding, if needed, will be available on terms favorable to us or at all. If we obtain funding through a strategic collaboration or licensing arrangement, we may be required to relinquish our rights to our product candidates or marketing territories. Without additional capital, we do not expect our cash will be sufficient to fund our projected operating requirements or allow us to fund our operating plan past the third quarter of 2024. We regularly evaluate market conditions, our liquidity profile, and various financing alternatives for opportunities to enhance our capital structure.
Current wording
At December 31, 2024, we had $2.6 million in cash and cash equivalents as compared to $1.8 million at December 31, 2023. To date, we have funded our operations primarily with proceeds from various public and private offerings of our common and preferred stock. We expect that our expenses may increase substantially for the foreseeable future as we continue to execute on our product development plan and seek opportunities to license or acquire additional products. Our development plan for certain products is also under evaluation – see “Item 1. Business – Product Candidates Under Development – AJ201 – AnnJi Dispute” and “Item 1A. Risk Factors” for more information regarding the dispute on one of our products. We will require additional financing to carry out our business plan and implement our strategy, and continue to analyze various alternatives, including potentially obtaining lines of credit, debt or equity financings, or other arrangements. We cannot be sure that any additional funding, if needed, will be available on terms favorable to us or at all. If we obtain funding through a strategic collaboration or licensing arrangement, we may be required to relinquish our rights to our product candidates or marketing territories. We regularly evaluate market conditions, our liquidity profile, and various financing alternatives for opportunities to enhance our capital structure.
Previous wording
Net cash and cash equivalents used in operating activities was approximately $7.6 million for the year ended December 31, 2022, primarily comprised of our $3.6 million net loss and decrease in operating assets and liabilities of $0.5 million, partially offset by non-cash charges of $0.4 million in share-based compensation.
Current wording
Net cash and cash equivalents used in operating activities was approximately $9.0 million for the year ended December 31, 2024, primarily comprised of our $11.7 million net loss, $0.2 million reduction in common shares issuable to Fortress and $0.2 million change in fair value of warrant liabilities, partially offset by a $0.8 million loss on settlement of common stock warrant liabilities, an increase of $0.1 million in operating assets and liabilities, $0.8 million for common shares issued to Fortress and $1.2 million in share-based compensation.
Previous wording
On January 27, 2023, we entered into a Securities Purchase Agreement (the “January 2023 Registered Purchase Agreement”) with a single institutional accredited investor, pursuant to which we agreed to issue and sell (i) 448,000 shares (the “January 2023 Shares”) of our common stock at a price per share of $1.55 and (ii) pre-funded warrants (the “January 2023 Pre-funded Warrants”) to purchase 1,492,299 shares of common stock, at a price per January 2023 Pre-funded Warrant equal to the price per January 2023 Share, less $0.001 (the “January 2023 Registered Direct Offering”). The January 2023 Pre-funded Warrants had an exercise price of $0.001 per share, became exercisable upon issuance and have been fully exercised.
Current wording
On January 27, 2023, we entered into a Securities Purchase Agreement (the “January 2023 Registered Purchase Agreement”) with a single institutional accredited investor, pursuant to which we agreed to issue and sell (i) 5,974 shares (the “January 2023 Shares”) of our common stock at a price per share of $116.25 and (ii) pre-funded warrants (the “January 2023 Pre-funded Warrants”) to purchase 19,898 shares of common stock, at a price per January 2023 Pre-funded Warrant equal to the price per January 2023 Share, less $0.001 (the “January 2023 Registered Direct Offering”). The January 2023 Pre-funded Warrants had an exercise price of $0.075 per share, became exercisable upon issuance and have been fully exercised.
Previous wording
On January 27, 2023, we also entered into a Securities Purchase Agreement (the “January 2023 PIPE Purchase Agreement”) with the same institutional accredited investor for a private placement offering (“January 2023 Private Placement”) of warrants (the “January 2023 PIPE Warrants”) to purchase 1,940,299 shares of common stock. Pursuant to the January 2023 PIPE Purchase Agreement, we agreed to issue and sell the January 2023 PIPE Warrants at an offering price of $0.125 per January 2023 PIPE Warrant to purchase one share of common stock. The January 2023 PIPE Warrants have an exercise price of $1.55 per share (subject to adjustment as set forth in the January 2023 PIPE Warrants), are exercisable six months after issuance and will expire three years from the date on which the January 2023 PIPE Warrants become exercisable. The January 2023 PIPE Warrants contain standard anti-dilution adjustments to the exercise price including for share splits, share dividends, rights offerings and pro rata distributions. The January 2023 Private Placement closed on January 31, 2023, concurrently with the January 2023 Registered Direct Offering.
Current wording
On January 27, 2023, we also entered into a Securities Purchase Agreement (the “January 2023 PIPE Purchase Agreement”) with the same institutional accredited investor for a private placement offering (“January 2023 Private Placement”) of warrants (the “January 2023 Warrants”) to purchase 25,871 shares of common stock. Pursuant to the January 2023 PIPE Purchase Agreement, we agreed to issue and sell the January 2023 Warrants at an offering price of $9.375 per January 2023 Warrant to purchase one share of common stock. The January 2023 Warrants have an exercise price of $116.25 per share (subject to adjustment as set forth in the January 2023 Warrants), are exercisable six months after issuance and will expire three years from the date on which the January 2023 Warrants become exercisable. The January 2023 Warrants contain standard anti-dilution adjustments to the exercise price including for share splits, share dividends, rights offerings and pro rata distributions. The January 2023 Private Placement closed on January 31, 2023, concurrently with the January 2023 Registered Direct Offering.
Previous wording
In connection with the January 2023 PIPE Purchase Agreement, we entered into a registration rights agreement (the “January 2023 Registration Rights Agreement”) with the investor. We filed such registration statement on Form S-1 in April 2023, and the registration statement was subsequently declared effective by the SEC in May 2023. As described in more detail below an in Note 10 to our audited consolidated financial statements included herein, we entered into an inducement offer letter agreement with the same institutional accredited investor who agreed exercise the January 2023 PIPE Warrants at a reduced exercise price of $0.3006 per share in January 2024.
Current wording
In connection with the January 2023 PIPE Purchase Agreement, we entered into a registration rights agreement (the “January 2023 Registration Rights Agreement”) with the investor. We filed such registration statement on Form S-1 in April 2023, and the registration statement was subsequently declared effective by the SEC in May 2023. As described in more detail below an in Note 10 to our audited consolidated financial statements included herein, we entered into an inducement offer letter agreement with the same institutional accredited investor who agreed exercise the January 2023 Warrants at a reduced exercise price of $22.545 per share in January 2024.
Previous wording
On September 8, 2023, we entered into an unwritten agreement with Fortress and Dr. Lindsay A. Rosenwald, a director on the board of directors of the Company (Dr. Rosenwald and Fortress, together, the “Private Placement Investors”), pursuant to which we agreed to issue and sell 767,085 shares (the “September 2023 Private Placement Shares”) of our common stock, for an aggregate purchase price of approximately $0.6 million in a private placement transaction (the “September 2023 Private Placement”). The September 2023 Private Placement Shares were purchased by the September 2023 Private Placement Investors at a price per share of $0.717, which was the “consolidated closing bid price” of the common stock on Nasdaq as of September 7, 2023, in compliance with Nasdaq Listing Rule 5365(c). The net proceeds to us from the September 2023 Private Placement, after deducting offering expenses, were approximately $0.6 million. We did not incur any underwriting or placement agent fees associated with the September 2023 Private Placement.
Current wording
On September 8, 2023, we entered into an unwritten agreement with Fortress and Dr. Lindsay A. Rosenwald, a director on the board of directors of the Company (Dr. Rosenwald and Fortress, together, the “Private Placement Investors”), pursuant to which we agreed to issue and sell 10,227 shares (the “September 2023 Private Placement Shares”) of our common stock, for an aggregate purchase price of approximately $0.6 million in a private placement transaction (the “September 2023 Private Placement”). The September 2023 Private Placement Shares were purchased by the September 2023 Private Placement Investors at a price per share of $53.775, which was the “consolidated closing bid price” of the common stock on Nasdaq as of September 7, 2023, in compliance with Nasdaq Listing Rule 5365(c). The net proceeds to us from the September 2023 Private Placement, after deducting offering expenses, were approximately $0.6 million. We did not incur any underwriting or placement agent fees associated with the September 2023 Private Placement.
Previous wording
On October 31, 2023, we entered into a Placement Agency Agreement (the “November 2023 Placement Agency Agreement”) with Maxim Group LLC and Lake Street Capital, LLC as placement agents (together, the “November 2023 Placement Agents”) related to the our public offering (the “November 2023 Offering”) of 16,633,400 units (each consisting of either (A) one share of the our common stock, par value $0.0001 per share, a Series A warrant (“November 2023 Series A Warrant”) to purchase one share of common stock and a Series B warrant (“November 2023 Series B Warrant” and, collectively with the Series A Warrants, “November 2023 Warrants”) to purchase one share of common stock (such units, the “November 2023 Common Units”) or (B) one pre-funded warrant to purchase one share of our common stock (the “November 2023 Pre-funded Warrants”), a November 2023 Series A Warrant and a November 2023 Series B Warrant (such units, the “November 2023 Pre-funded Units” and together with the common stock, the November 2023 Warrants, the November 2023 Common Units and the November 2023 Pre-funded Warrants, the “November 2023 Securities”)). Under the terms of the November 2023 Placement Agency Agreement, the Placement Agents acted as our exclusive placement agents to solicit offers to purchase the November 2023 Securities on a “best efforts” basis. We also entered into a securities purchase agreement, dated as of October 31, 2023 (the “November 2023 Securities Purchase Agreement”), with certain institutional investors buying November 2023 Securities in the November 2023 Offering. In the November 2023 Offering, 3,853,400 November 2023 Common Units were sold at a price of $0.3006 per unit and the 12,780,000 November 2023 Pre-Funded Units were sold at a price of $0.3005.
Current wording
On October 31, 2023, we entered into a Placement Agency Agreement (the “November 2023 Placement Agency Agreement”) with Maxim Group LLC and Lake Street Capital, LLC as placement agents (together, the “November 2023 Placement Agents”) related to the our public offering (the “November 2023 Offering”) of 221,779 units (each consisting of either (A) one share of the our common stock, par value $0.0001 per share, a Series A warrant (“November 2023 Series A Warrant”) to purchase one share of common stock and a Series B warrant (“November 2023 Series B Warrant” and, collectively with the Series A Warrants, “November 2023 Warrants”) to purchase one share of common stock (such units, the “November 2023 Common Units”) or (B) one pre-funded warrant to purchase one share of our common stock (the “November 2023 Pre-funded Warrants”), a November 2023 Series A Warrant and a November 2023 Series B Warrant (such units, the “November 2023 Pre-funded Units” and together with the common stock, the November 2023 Warrants, the November 2023 Common Units and the November 2023 Pre-funded Warrants, the “November 2023 Securities”)). Under the terms of the November 2023 Placement Agency Agreement, the Placement Agents acted as our exclusive placement agents to solicit offers to purchase the November 2023 Securities on a “best efforts” basis. We also entered into a securities purchase agreement, dated as of October 31, 2023 (the “November 2023 Securities Purchase Agreement”), with certain institutional investors buying November 2023 Securities in the November 2023 Offering. In the November 2023 Offering, 51,379 November 2023 Common Units were sold at a price of $22.545 per unit and the 170,400 November 2023 Pre-Funded Units were sold at a price of $22.5375.
Previous wording
The November 2023 Series A Warrants became immediately exercisable upon issuance at a price of $0.3006 per share for a period of five years after the issuance date. The November 2023 Series B Warrants became immediately exercisable upon issuance at a price of $0.3006 per share for a period of 18 months after the issuance date. The November 2023 Pre-funded Warrants became immediately exercisable upon issuance at a price of $0.0001 per share until exercised in full. The November 2023 Shares, the November 2023 Pre-funded Warrants and the November 2023 Warrants were immediately separable upon issuance and were issued separately. We consummated the transactions contemplated by the November 2023 Offering and the November 2023 Placement Agency Agreement on November 2, 2023.
Current wording
The November 2023 Series A Warrants became immediately exercisable upon issuance at a price of $22.545 per share for a period of five years after the issuance date. The November 2023 Series B Warrants became immediately exercisable upon issuance at a price of $22.545 per share for a period of 18 months after the issuance date. The November 2023 Pre-funded Warrants became immediately exercisable upon issuance at a price of $0.0001 per share until exercised in full. The November 2023 Shares, the November 2023 Pre-funded Warrants and the November 2023 Warrants were immediately separable upon issuance and were issued separately. We consummated the transactions contemplated by the November 2023 Offering and the November 2023 Placement Agency Agreement on November 2, 2023.
Previous wording
We received net proceeds from the November 2023 Offering of approximately $3.8 million, after deducting the placement agent fees and offering expenses, before giving effect to any exercises of the November 2023 Warrants. As described in more detail below and in Note 10 to our audited consolidated financial statements included herein, we entered into an inducement offer letter agreement with certain investors in the November 2023 Offering who agreed to exercise certain outstanding November 2023 Warrants to purchase up to an aggregate of 14,600,000 shares of common stock at their exercise price of $0.3006 per share in January 2024.
Current wording
We received net proceeds from the November 2023 Offering of approximately $3.8 million, after deducting the placement agent fees and offering expenses, before giving effect to any exercises of the November 2023 Warrants. As described in more detail below and in Note 10 to our audited consolidated financial statements included herein, we entered into an inducement offer letter agreement with certain investors in the November 2023 Offering who agreed to exercise certain outstanding November 2023 Warrants to purchase up to an aggregate of 194,667 shares of common stock at their exercise price of $22.545 per share in January 2024.
Previous wording
On January 5, 2024, we entered into (i) an inducement offer letter agreement (the “January 2023 Investor Inducement Letter”) with a certain investor (the “January 2023 Investor”) in connection with certain outstanding January 2023 PIPE Warrants and (ii) an inducement offer letter agreement (the “November 2023 Investor Inducement Letter Agreement” and, together with the January 2023 Investor Inducement Letter, the “Inducement Letters”) with certain investors (the “November 2023 Investors” and, together with the January 2023 Investor, the “Holders”) in connection with certain outstanding November 2023 Warrants (and, together with the January 2023 Warrants, the “Existing Warrants”) to purchase up to an aggregate of 14,600,000 shares of common stock. The January 2023 Warrants had an exercise price of $1.55 per share, and the November 2023 Warrants had an exercise price of $0.3006 per share. Pursuant to the Inducement Letters, (i) the January 2023 Investor agreed to exercise its January 2023 Warrants for cash at a reduced exercise price of $0.3006 per share and (ii) the November 2023 Investors agreed to exercise their November 2023 Warrants for cash at the existing exercise price of $0.3006, in each case in consideration for our agreement to issue in a private placement (x) Series A Warrants to purchase up to 16,540,299 shares of common stock and (y) Series B Warrants to purchase up to 16,540,299 shares of common stock. The gross proceeds to us from the exercise of the warrants was approximately $5.0 million, before deducting placement agent fees and offering costs.
Current wording
On January 5, 2024, we entered into (i) an inducement offer letter agreement (the “January 2023 Investor Inducement Letter”) with a certain investor (the “January 2023 Investor”) in connection with certain outstanding January 2023 Warrants and (ii) an inducement offer letter agreement (the “November 2023 Investor Inducement Letter Agreement” and, together with the January 2023 Investor Inducement Letter, the “Inducement Letters”) with certain investors (the “November 2023 Investors” and, together with the January 2023 Investor, the “Holders”) in connection with certain outstanding November 2023 Warrants (and, together with the January 2023 Warrants, the “Existing Warrants”) to purchase up to an aggregate of 194,667 shares of common stock. The January 2023 Warrants had an exercise price of $116.25 per share, and the November 2023 Warrants had an exercise price of $22.545 per share. Pursuant to the Inducement Letters, (i) the January 2023 Investor agreed to exercise its January 2023 Warrants for cash at a reduced exercise price of $22.545 per share and (ii) the November 2023 Investors agreed to exercise their November 2023 Warrants for cash at the existing exercise price of $22.545, in each case in consideration for our agreement to issue in a private placement (x) Series A Warrants to purchase up to 220,538 shares of common stock and (y) Series B Warrants to purchase up to 220,538 shares of common stock (together, the "New Jan 2024 Warrants"). The gross proceeds to us from the exercise of the warrants was approximately $5.0 million, before deducting placement agent fees and offering costs.
Previous wording
Under our license agreement with AnnJi, pursuant to which we licensed exclusive rights to the intellectual property underlying the AJ201 product candidate, we are required to make periodic payments based upon development, regulatory, and commercial milestones. The maximum Phase 1b/2a clinical development payments we are obligated to make are $10.8 million, of which $6.3 million is remaining as of December 31, 2023. Additional development, regulatory, and commercial milestone payments totaling $207.0 million may also be payable. Royalties are payable on net sales of products covered by the licensed intellectual property ranging from low-to-mid single digits.
Current wording
Under our license agreement with AnnJi, pursuant to which we licensed exclusive rights to the intellectual property underlying the AJ201 product candidate, we are required to make periodic payments based upon development, regulatory, and commercial milestones. The maximum Phase 1b/2a clinical development payments we are obligated to make are $10.8 million, of which $6.3 million is remaining as of December 31, 2023. Additional development, regulatory, and commercial milestone payments totaling $207.0 million may also be payable. Royalties are payable on net sales of products covered by the licensed intellectual property ranging from low-to-mid single digits. See “Item 1. Business – Product Candidates Under Development – AJ201 – AnnJi Dispute” and “Item 1A. Risk Factors” for more information regarding a dispute regarding this license agreement.
Previous wording
We entered into a share repurchase agreement with InvaGen, which requires us to pay InvaGen seven and a half (7.5%) of the proceeds of future financings, as defined in the agreement, up to $4 million in aggregate. As of December 31, 2023, we have paid $0.5 million towards this aggregate amount.
Current wording
We entered into a share repurchase agreement with InvaGen, which requires us to pay InvaGen seven and a half (7.5%) of the proceeds of future financings, as defined in the agreement, up to $4 million in aggregate. For the years ended December 31, 2024 and 2023, we have paid $0.7 million and $0.5 million, respectively, towards this aggregate amount.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
May 2024 Warrant Inducement and Private Placement