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 Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-18.
0001437749-24-008294
Item 1A. Risk FactorsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-31.
0001437749-25-010196
Item 1A. Risk FactorsThe 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 175 previous paragraphs and 186 current paragraphs.
147 unchanged; 18 reworded; 21 added; 10 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 69 previous and 70 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 (21)
Current report
We have received a purported termination letter from AnnJi, the licensor of our primary product candidate AJ201, and are currently embroiled in a dispute with them regarding such attempted termination; these legal proceedings have required, and may continue to require, Avenue to dedicate significant time, effort and financial resources, which are limited.*** There is no guarantee that we will have requisite resources to see this dispute through to final adjudication, that the dispute will ultimately be determined in our favor, or that we will be able to obtain a negotiated resolution on terms favorable to us or at all.***
Current report
On March 3, 2025, we received a notice of AnnJi’s intent to terminate the AnnJi License Agreement (the “Purported Termination Notice”) in which AnnJi purports to assert its right to terminate the AnnJi License Agreement due to alleged material breaches by the Company 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 of the Company to meet a diligence milestone of first patient dosing in a Phase 2/3 clinical trial by February 28, 2027.
Current report
We firmly believe that the grounds for termination of the AnnJi License Agreement stated in the Purported Termination Notice are without merit and intend to pursue all rights provided to it under the AnnJi License Agreement and by law. Accordingly, we believe 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. We have filed a Request for Arbitration with the International Court of Arbitration and also intend to follow the dispute resolution procedure set forth in the AnnJi License Agreement, which includes mediation.
Current report
Under the terms of the AnnJi License Agreement, the Company or AnnJi may terminate the AnnJi License Agreement upon a material breach by the other party upon written notice to the breaching party, provided that the breaching party has not cured such breach within sixty (60) calendar days after the date such written notice was received (such period, the “Cure Period”), provided that if the breaching party is exercising commercially reasonable efforts to cure the breach, the Cure Period is automatically extended for so long as such breaching party is exercising such efforts, but in no event no more than ninety (90) calendar days in the aggregate from the date of a written termination notice. The AnnJi License Agreement further provides that if the parties disagree as to whether there has been a material breach (including whether the breach is material), the disputing party may contest the allegation in accordance with the applicable provisions of the AnnJi License Agreement, and the Cure Period for any dispute must run through the date of resolution of such dispute. During the pendency of any such dispute, all terms and conditions of the AnnJi License Agreement remain in effect, and the parties are required to continue to perform their respective obligations under the AnnJi License Agreement. In sending the Purported Termination Notice, AnnJi did not observe these dispute resolution provisions in the AnnJi License Agreement.
Current report
These legal proceedings have required, and may continue to require, us to dedicate significant time, effort and financial resources, which are limited. There is no guarantee that we will have requisite resources to see this dispute through to final adjudication, that the dispute will ultimately be determined in our favor, or that we can obtain a negotiated resolution on terms favorable to us or at all. Additionally, delays incurred in adjudicating, and other factors that may inhere in, the dispute may diminish the value of AJ201, in absolute terms and/or relative to competitors.
Current report
In addition, we may incur substantial costs in order to comply with current or future environmental, health, and safety laws and regulations, including climate-related initiatives. These current or future laws and regulations may impair our research, development, or production efforts. Our failure to comply with these laws and regulations also may result in substantial fines, penalties, or other sanctions.
Current report
We may incorporate artificial intelligence (“AI”) solutions into our business, and applications of AI may become important in our operations over time. Our competitors or other third parties may incorporate AI into their businesses more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. There are also significant risks involved in developing and deploying AI, and there can be no assurance that the usage of AI will enhance the development of our product candidates or be beneficial to our business, including our efficiency or profitability. For example, any AI-related efforts, particularly those related to generative AI, could subject us to risks related to harmful content, inaccuracies, bias, discrimination, intellectual property infringement or misappropriation, defamation, data privacy, cybersecurity, and sanctions and export controls, among others. It is also uncertain how various laws will apply to content generated by AI. We are subject to the risks of new or enhanced governmental or regulatory scrutiny, litigation, or other legal liability, ethical concerns, negative consumer perceptions as to automation and AI, or other complications that could adversely affect our business, reputation, or financial results.
Current report
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/or for us to raise additional funding.
Current report
Our common stock is currently quoted for trading on the OTC Pink Open Market, an over-the-counter market, under the symbol “ATXI.” The OTC Pink Open Market is a thinly traded market and lacks the liquidity of certain other public markets with which some investors may have more experience. We may not ever be able to regain satisfaction of the listing requirements for our common stock to be listed on a national securities exchange, which is often a more widely traded and liquid market. Some of the factors which may delay or prevent the re-listing of our common stock on a more widely-traded and liquid market include the following: our stockholders’ equity may be insufficient; the market value of our outstanding securities may be too low; our net income from operations may be too low; our common stock may not be sufficiently widely held; we may not be able to secure market makers for our common stock; and we may fail to meet the rules and requirements mandated by the relevant exchanges and markets to have our common stock listed. Should we fail to satisfy the listing standards of a national exchange, or our common stock is otherwise rejected for listing, and remains listed on the OTC Pink Open Market or is suspended from the OTC Pink Open Market, the trading price of our common stock could suffer and be subject to increased volatility and the trading market for our common stock may be less liquid, making it difficult or impossible to sell shares of our common stock.
Current report
There is only a limited, liquid public trading market for our common stock. There can be no assurance that a liquid market for our common stock will continue. Therefore, investors may not be able to liquidate their investment or liquidate it at a price paid by investors equal to or greater than their initial investment in our common stock. Moreover, holders of our common stock may not find purchasers for their shares should they decide to sell the common stock held by them at any particular time, if ever. Our common stock should be purchased only by investors who have no immediate need for liquidity in their investment and who can hold our common stock, possibly for a prolonged period of time.
Current report
Additionally, Avenue's common stock has never traded on the OTC Pink Open Market, and we may have more difficulty raising additional funding with our stock listed on such exchange than we would if our stock were still listed and trading on the Nasdaq Stock Market LLC.
Current report
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
The OTC Pink Open Market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock. The trading price of our common stock is volatile and could fluctuate substantially due to a variety of factors, including quarterly operating results of other companies in the same industry, changes in general conditions in the economy and the financial markets, or other developments affecting the Company’s competitors. These factors and market fluctuations may materially and adversely affect the market price of our common stock. As a result, you may not be able to resell your shares at an attractive price. In addition, price volatility may be greater if the public float and trading volume of our common stock is low.
Current report
Our common stock may be considered a“penny stock”*** and, therefore, may be subject to certain rules that make it difficult for brokers, dealers, or investors to sell the shares.***
Current report
The SEC has adopted Rule 15g-9 under the Exchange Act, which generally defines a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is less than $5.00 per share and, therefore, it may be designated as a “penny stock” according to SEC rules.
Current report
This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain certain financial information from the purchaser to determine that the purchaser is reasonably suitable to purchase the securities, and obtain from the purchaser a signed written agreement reflecting the details of such determination and the purchaser’s financial situation, investment experience, and investment objectives. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of investors to sell their shares, and also hamper our ability to raise funds in the primary market for our shares of common stock. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.
Current report
The market for penny stocks has experienced numerous frauds and abuses, which could adversely impact investors in our common stock.
Current report
OTC Pink Open Market securities are frequent targets of fraud or market manipulation, both because of their generally low prices and because OTC Pink Open Market reporting and compliance requirements are less stringent than those of the established stock exchanges such as the Nasdaq Capital Market. Patterns of fraud and abuse include: control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; “boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons; excessive and undisclosed bid-ask differentials and mark-ups by selling broker-dealers; and wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.
Current report
The market for our common stock may have significant price volatility and we expect that our share price may continue to be volatile for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We have been and may, in the future, be the target of such litigation. Securities litigation could result in substantial costs and liabilities and could divert management's attention and resources.
Current report
Any products for which we receive approval may become subject to unfavorable pricing regulations, third-party coverage and reimbursement practices or healthcare reform initiatives, which could harm our business.
Current report
Additionally, trade policies and geopolitical disputes and other international conflicts can result in tariffs, sanctions and other measures that restrict international trade, and can materially adversely affect our business, particularly if these measures occur in regions where drug products are manufactured or raw materials are sourced. With the new presidential administration in the U.S., additional and higher tariffs and sanctions have been imposed on goods imported from Canada and China and may be imposed on good imported from other countries, which could increase the cost of goods needed to commercialize our products and continue development of our product candidates. Further, such actions by the U.S. could result in retaliatory action by those countries which could impact our ability to profitably commercialize our products in those jurisdictions. As a result, our business, operations, and financial condition could be materially harmed.
Removed paragraphs (10)
Previous report
For example, some of the most common adverse events observed in the IV tramadol clinical trials completed to date include nausea, dizziness, drowsiness, tiredness, sweating, vomiting, dry mouth, somnolence, and hypotension. With respect to BAER-101, some of the most common adverse events observed in clinical trials completed to-date include dizziness, somnolence, headache, and euphoric mood. With respect to AJ201, some of the most common adverse events observed in clinical trials completed to-date include nausea, diarrhea, headache, and abdominal distension.
Previous report
We are a“controlled company”*** within the meaning of Nasdaq listing standards and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.***
Previous report
We are a “controlled company” within the meaning of Nasdaq listing standards. Under these rules, a company of which more than 50% of the voting power is held by an individual, a group, or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements of Nasdaq, including (i) the requirement that a majority of the Board of Directors consist of independent directors, (ii) the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, and (iii) the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. We have in the past relied on, and intend to continue to rely on, some or all of these exemptions.
Previous report
Accordingly, you will not have the same protections afforded to stockholders of companies subject to all of the corporate governance requirements of Nasdaq.
Previous report
We are currently not compliant with certain applicable listing standards of The Nasdaq Capital Market, which could result in our common stock being delisted from The Nasdaq Capital Market.
Previous report
Currently our common stock trades on The Nasdaq Capital Market. On May 19, 2023 and September 27, 2023, we received notifications from the Listing Qualifications Department of the Nasdaq Stock Market (“Nasdaq”) informing us of certain listing deficiencies related to the minimum stockholders’ equity and minimum bid price listing requirements, which led to the issuance of delisting notices. The Company was afforded a 180-calendar day grace period, through March 25, 2024, to regain compliance with the minimum bid price requirement. In July 2023, the Company submitted its plan to regain compliance with the minimum stockholders’ equity requirement and, on July 17, 2023, Nasdaq granted the Company’s request for an extension of the deadline to November 15, 2023 to regain compliance. On November 20, 2023, Nasdaq formally notified the Company that it had determined to delist the Company’s securities from Nasdaq based on its continued non-compliance with the minimum stockholders’ equity requirement. The Company requested a hearing before the Nasdaq Hearings Panel (the “Panel”), which stayed further action by Nasdaq pending completion of the hearing.
Previous report
The hearing before the Panel was held on February 15, 2024 and on March 11, 2024, Nasdaq granted the Company's request for an extension until May 20, 2024 to regain compliance. The Company intends to closely monitor the closing bid price of the common stock and consider all available options to remedy these deficiencies. While our common stock will continue to trade on The Nasdaq Capital Market during this time, there can be no assurance that the Company will be successful in its efforts to maintain its Nasdaq listing. If we fail to maintain compliance with any Nasdaq listing requirements, our common stock could be delisted from The Nasdaq Capital Market. This could severely limit the liquidity of our common stock and your ability to sell our securities on the secondary market. Delisting from the Nasdaq could adversely affect our ability to raise additional financing through the public or private sale of equity securities, would significantly affect the ability of investors to trade our securities, and would negatively affect the value and liquidity of our common stock. Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest, and fewer business development opportunities. If our common stock is delisted by Nasdaq, the price of our common stock may decline and our common stock may be eligible to trade on the OTC Bulletin Board, another over-the-counter quotation system, or on the pink sheets, where an investor may find it more difficult to dispose of their common stock or obtain accurate quotations as to the market value of our common stock. Further, if we are delisted, we would incur additional costs under requirements of state “blue sky” laws in connection with any sales of our securities. These requirements could severely limit the market liquidity of our common stock and the ability of our stockholders to sell our common stock in the secondary market.
Previous report
In the United States and certain foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system that could prevent or delay marketing approval of our product candidate, restrict or regulate post-approval activities, and affect our ability to profitably sell any product candidates for which we obtain marketing approval. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “PPACA” or collectively, the “ACA”), substantially regulates the way healthcare is financed by both governmental and private insurers in the United States. Among other things, the ACA increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs from 15.1% to 23.1%; required collection of rebates for drugs paid by Medicaid managed care organizations; imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell certain “branded prescription drugs” to specified federal government programs; implemented a new methodology under which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected; expanded the eligibility criteria for Medicaid programs; created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare and Medicaid Innovation (“CMMI”) at the CMS, to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
Previous report
Since its enactment, there have been executive, judicial, and Congressional challenges to certain aspects of the ACA, and we expect there will be additional challenges and amendments to the ACA in the future. Drug pricing continues to be a subject of debate at the executive and legislative levels of U.S. government. The American Rescue Plan Act of 2021 signed into law by President Biden on March 14, 2021 includes a provision that eliminated the statutory cap on rebates drug manufacturers pay to Medicaid beginning in January 2024. With the elimination of the rebate cap, manufacturers may be required to compensate states in an amount greater than what the state Medicaid programs pay for the drug. Additionally, the Inflation Reduction Act of 2022 contains substantial drug pricing reforms, including the establishment of a drug price negotiation program within the U.S. Department of Health and Human Services that would require manufacturers to charge a negotiated “maximum fair price” for certain selected drugs or pay an excise tax for noncompliance, the establishment of rebate payment requirements on manufacturers of certain drugs payable under Medicare Parts B and D to penalize price increases that outpace inflation, and requires manufacturers to provide discounts on Part D drugs. Substantial penalties can be assessed for noncompliance with the drug pricing provisions in the Inflation Reduction Act of 2022. The Inflation Reduction Act of 2022 could have the effect of reducing the prices we can charge and reimbursement we receive for our product candidates, if approved, thereby reducing our profitability, and could have a material adverse effect on our financial condition, results of operations, and growth prospects. The effect of Inflation Reduction Act of 2022 on our business and the pharmaceutical industry in general is not yet known.
Previous report
We expect that additional federal, state, and foreign healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in limited coverage and reimbursement and reduced demand for our product candidates, once approved, or additional pricing pressures.
Reworded paragraphs (18)
Previous wording
We sometimes share directors and/or officers with certain of our parent company, affiliates, related parties, or other companies with which we transact business, and such arrangements could create conflicts of interest in the future, including with respect to the allocation of corporate opportunities. While we believe that we have put in place policies and procedures to identify such conflicts, and that any existing agreements that may give rise to such conflicts and any such policies or procedures, were negotiated at arm’s length in conformity with fiduciary duties, such conflicts of interest may nonetheless arise. The existence and consequences of such potential conflicts could expose us to lost profits, claims by our investors and creditors, violations of Nasdaq’s director and audit committee independence rules, and harm to our business, financial condition, and results of operations.
Current wording
We sometimes share directors and/or officers with certain of our parent company, affiliates, related parties, or other companies with which we transact business, and such arrangements could create conflicts of interest in the future, including with respect to the allocation of corporate opportunities. While we believe that we have put in place policies and procedures to identify such conflicts, and that any existing agreements that may give rise to such conflicts and any such policies or procedures, were negotiated at arm’s length in conformity with fiduciary duties, such conflicts of interest may nonetheless arise. The existence and consequences of such potential conflicts could expose us to lost profits, claims by our investors and creditors, and harm to our business, financial condition, and results of operations.
Previous wording
We have a limited operating history. We have focused primarily on in-licensing and developing IV tramadol, with the goal of supporting regulatory approval for this product candidate. We also recently acquired two new product candidates, BAER-101 and AJ201, which we are developing. We have incurred losses since our inception in February 2015.
Current wording
We have a limited operating history. We have focused primarily on in-licensing and developing IV tramadol, BAER-101 and AJ201 with the goal of supporting regulatory approval for these product candidates. We have incurred losses since our inception in February 2015.
Previous wording
Our audited consolidated financial statements as of December 31, 2023 have been prepared under the assumption that we will continue as a going concern for the next twelve months. As of December 31, 2023, we had cash and cash equivalents of $1.8 million and an accumulated deficit of $90.9 million. We do not believe that our cash and cash equivalents are sufficient for the next twelve months. As a result of our financial condition and other factors described herein, there is substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern will depend on our ability to obtain additional funding, as to which no assurances can be given. We continue to analyze various alternatives, including potentially obtaining lines of credit, debt or equity financings, or other arrangements. Our future success depends on our ability to raise capital and/or implement the various strategic alternatives discussed above. We cannot be certain that these initiatives or raising additional capital, whether through selling additional debt or equity securities or obtaining a line of credit or other loan, will be available to us or, if available, will be on terms acceptable to us. If we issue additional securities after the closing of this offering to raise funds, these securities may have rights, preferences, or privileges senior to those of our common stock, and our current shareholders may experience dilution. If we are unable to obtain funds when needed or on acceptable terms, we may be required to curtail our current development programs, cut operating costs, forego future development and other opportunities, or even terminate our operations.
Current wording
Our audited consolidated financial statements as of December 31, 2024 have been prepared under the assumption that we will continue as a going concern for the next twelve months. As of December 31, 2024, we had cash and cash equivalents of $2.6 million and an accumulated deficit of $102.6 million. As a result of our financial condition and other factors described herein, there is substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern will depend on our ability to resolve the ongoing dispute with the licensor of one of our product candidates and obtain additional funding, as to which no assurances can be given. We continue to analyze various alternatives, including potentially obtaining lines of credit, debt or equity financings, or other arrangements, including the sale or out-licensing of one or more of our product candidates. Our future success depends on our ability to raise capital and/or implement the various strategic alternatives discussed above. We cannot be certain that these initiatives or raising additional capital, whether through selling additional debt or equity securities or obtaining a line of credit or other loan, will be available to us or, if available, will be on terms acceptable to us. If we issue additional securities after the closing of this offering to raise funds, these securities may have rights, preferences, or privileges senior to those of our common stock, and our current shareholders may experience dilution. If we are unable to obtain funds when needed or on acceptable terms, we may be required to curtail our current development programs, cut operating costs, forego future development and other opportunities, or even terminate our operations.
Previous wording
In order to meet anticipated demand for IV tramadol, if this product candidate is approved, we currently have one manufacturer to provide us clinical and commercial supply of IV tramadol in accordance with the CGMP requirements. We also may plan to qualify a backup manufacturer, in order to ensure an alternative source and to mitigate any potential supply issues. We have sufficient drug substance for BAER-101 on hand to execute our planned near-term studies and are in process of identifying future manufacturers. AnnJi, from whom we license the intellectual property underlying AJ201, has committed to provide us with limited supplies of this product candidate, but we will need to secure longer-term manufacturing sources to complete development and, if approved, commercialization of this product candidate. Failure to secure such sources could have a material adverse effect on our ability to pursue these product candidates.
Current wording
In order to meet anticipated demand for IV tramadol, if this product candidate is approved, we currently have one manufacturer to provide us clinical and commercial supply of IV tramadol in accordance with the CGMP requirements. We also may plan to qualify a backup manufacturer, in order to ensure an alternative source and to mitigate any potential supply issues. We have sufficient drug substance for BAER-101 on hand to execute our planned near-term studies and are in process of identifying future manufacturers. AnnJi, from whom we license the intellectual property underlying AJ201, previously committed to provide us with limited supplies of this product candidate, but we will need to secure longer-term manufacturing sources to complete development and, if approved, commercialization of this product candidate. 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. Failure to secure such sources could have a material adverse effect on our ability to pursue these product candidates.
Previous wording
All of our contract manufacturers must comply with strictly enforced federal, state and, where applicable, foreign regulations, including CGMP requirements enforced by the FDA through its inspectional authority over facilities under the FDCA, as well as requirements for controlled substance handling and security requirements enforced by DEA, and while we exercise oversight of our suppliers, we have limited direct control over their compliance with these regulations, as reflected in day-to-day operations. Any failure to comply with applicable regulations may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall, or withdrawal of product approval, and would limit the availability of our product candidates, if approved. Any quality or compliance issue, manufacturing defect, or error discovered after products have been produced and distributed could result in even more significant consequences, including costly recall procedures, re-stocking costs, damage to our reputation, and potential for product liability claims.
Current wording
All of our contract manufacturers must comply with strictly enforced federal, state and, where applicable, foreign regulations, including CGMP requirements enforced by the FDA through its inspectional authority over facilities under the Federal Food Drug and Cosmetics Act ("FDCA"), as well as requirements for controlled substance handling and security requirements enforced by DEA, and while we exercise oversight of our suppliers, we have limited direct control over their compliance with these regulations, as reflected in day-to-day operations. Any failure to comply with applicable regulations may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall, or withdrawal of product approval, and would limit the availability of our product candidates, if approved. Any quality or compliance issue, manufacturing defect, or error discovered after products have been produced and distributed could result in even more significant consequences, including costly recall procedures, re-stocking costs, damage to our reputation, and potential for product liability claims.
Previous wording
The facilities used by our contract manufacturers to manufacture our product candidates are subject to registration requirements, and inspection by the FDA. A pre-approval inspection may be conducted after the submission of an application to the FDA. Although we will have oversight over our suppliers and manufacturers, we do not directly control the manufacturing operations and processes at these facilities, and therefore, rely on our contract manufacturers to ensure full compliance with CGMP regulations with respect to the day-to-day operations related to the manufacture of our product candidates. Third-party manufacturers may, following an inspection, be subject to a Form FDA-483 or similar inspectional findings, or a Warning Letter, or may not otherwise be able to comply with the CGMP regulations or similar regulatory requirements outside the United States. The failure of our third-party manufacturers to comply with applicable regulations directly impacts our compliance and could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions, and criminal prosecutions, any of which could significantly and adversely affect supplies of our products.
Current wording
The facilities used by our contract manufacturers to manufacture our product candidates are subject to registration requirements, and inspection by the FDA. A pre-approval inspection may be conducted after the submission of an application to the FDA. Although we will have oversight over our suppliers and manufacturers, we do not directly control the manufacturing operations and processes at these facilities, and therefore, rely on our contract manufacturers to ensure full compliance with CGMP regulations with respect to the day-to-day operations related to the manufacture of our product candidates. Third-party manufacturers may, following an inspection, be subject to a Form FDA-483 or similar inspectional findings, or a Warning or Untitled Letter, or may not otherwise be able to comply with the CGMP regulations or similar regulatory requirements outside the United States. The failure of our third-party manufacturers to comply with applicable regulations directly impacts our compliance and could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions, and criminal prosecutions, any of which could significantly and adversely affect supplies of our products.
Previous wording
Our product candidates and any other product candidates we may license or acquire will also be subject to ongoing regulatory and compliance requirements, including regular inspections by the FDA and other regulatory authorities. These requirements relate to, among others, labeling, packaging, storage, advertising, promotion, record-keeping and submission of safety and other post-market information and reports, registration and listing requirements, ongoing CGMP requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping of the drug.
Current wording
Our product candidates and any other product candidates we may license or acquire will also be subject to ongoing regulatory and compliance requirements, including regular inspections by the FDA and other regulatory authorities, following any such approval. These requirements relate to, among others, labeling, packaging, storage, advertising, promotion, record-keeping and submission of safety and other post-market information and reports, registration and listing requirements, ongoing CGMP requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping of the drug.
Previous wording
The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance programs to monitor the safety or efficacy of the product. The FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding off-label use and off-label information and if we do not market our products for only their approved indications and on-label information, we may be subject to enforcement action for off-label marketing as well as false claims liability. Violations of the FDCA relating to the promotion of prescription drugs may lead to investigations alleging violations of federal and state health care fraud and abuse laws, as well as state consumer protection laws.
Current wording
The FDA, and/or other regulatory authorities, may also impose requirements for costly post-marketing studies or clinical trials and surveillance programs to monitor the safety or efficacy of the products. The FDA and other regulatory authorities closely regulate the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the approved labeling. The FDA and other regulatory authorities impose stringent restrictions on manufacturers’ communications regarding off-label use and off-label information and if we market any of our approved products for uses other than their approved indications and on-label information, we may be subject to enforcement action for off-label marketing as well as false claims liability. Violations of the FDCA relating to the promotion of prescription drugs may lead to investigations, civil claims, and/or criminal charges alleging violations of federal and state health care fraud and abuse laws, as well as state consumer protection laws.
Previous wording
The FDA’s policies, as well as policies of the DEA, which has jurisdiction over controlled substances and opioids, including IV tramadol, may change and additional government regulations may be enacted that could prevent, limit, or delay regulatory approval of our product candidate. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained.
Current wording
The FDA’s policies, as well as policies of the DEA, which has jurisdiction over controlled substances and opioids, including IV tramadol, may change and additional government regulations may be enacted that could prevent, limit, or delay regulatory approval of our product candidate. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained. We do not know what impact any changes made by the new presidential administration will have on our business. Such actions may impact the development and commercialization of drug products and could materially harm our business and financial condition.
Previous wording
The Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act, added Section 505(b)(2) to the FDCA. Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference. Section 505(b)(2), if applicable to us under the FDCA, would allow an NDA we submit to FDA to rely in part on data in the public domain or the FDA’s prior conclusions regarding the safety and effectiveness of approved compounds, which could expedite the development program for our product candidates by potentially decreasing the amount of clinical data that we would need to generate in order to obtain FDA approval. If the FDA does not allow us to pursue the Section 505(b)(2) regulatory pathway as anticipated, we may need to conduct additional clinical trials, provide additional data and information, and meet additional standards for regulatory approval. If this were to occur, the time and financial resources required to obtain FDA approval for these product candidates, and complications and risks associated with these product candidates, would likely substantially increase. We could need to obtain more additional funding, which could result in significant dilution to the ownership interests of our then existing stockholders to the extent we issue equity securities or convertible debt. We cannot assure you that we would be able to obtain such additional financing on terms acceptable to us, if at all. Moreover, inability to pursue the Section 505(b)(2) regulatory pathway would likely result in new competitive products reaching the market more quickly than our product candidates, which would likely materially adversely impact our competitive position and prospects. Even if we are allowed to pursue the Section 505(b)(2) regulatory pathway, we cannot assure you that our product candidates will receive the requisite approvals for commercialization in a timely manner, or at all.
Current wording
The Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act, added Section 505(b)(2) to the FDCA. Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference. Section 505(b)(2), if applicable to us under the FDCA, would allow an NDA we submit to FDA to rely in part on data in the public domain or the FDA’s prior conclusions regarding the safety and effectiveness of approved compounds, which could expedite the development program for our product candidates by potentially decreasing the amount of clinical data that we would need to generate in order to obtain FDA approval. If the FDA does not allow us to pursue the Section 505(b)(2) regulatory pathway as anticipated, we may need to conduct additional clinical trials, provide additional data and information, and meet additional standards for regulatory approval. If this were to occur, the time and financial resources required to obtain FDA approval for these product candidates, and complications and risks associated with these product candidates, would likely substantially increase. We could need to obtain additional funding, which could result in significant dilution to the ownership interests of our then existing stockholders to the extent we issue equity securities or convertible debt. We cannot assure you that we would be able to obtain such additional financing on terms acceptable to us, if at all. Moreover, inability to pursue the Section 505(b)(2) regulatory pathway would likely result in new competitive products reaching the market more quickly than our product candidates, which would likely materially adversely impact our competitive position and prospects. Even if we are allowed to pursue the Section 505(b)(2) regulatory pathway, we cannot assure you that our product candidates will receive the requisite approvals for commercialization in a timely manner, or at all.
Previous wording
Risks Pertaining to the Commercialization of Product Candidates
Current wording
Risks Pertaining to the Commercialization of Product Candidates, if Approved
Previous wording
These and other healthcare reform measures that may be adopted in the future may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any current or future product candidates. Any reduction in reimbursement from Medicare or other government healthcare programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our product candidates, if approved. Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for drugs. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance, or interpretations will be changed, or what the impact of such changes on the marketing approvals of any current or future product candidates, if any, may be. In addition, increased Congressional scrutiny of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.
Current wording
We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on our products or any future product candidates may be. In addition, increased Congressional scrutiny of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. We do not know what actions will be taken by the new presidential administration. Such actions may impact the development and commercialization of drug products and could materially harm our business and financial condition.
Previous wording
IV tramadol will compete with well-established products with similar indications. Competing products available for the management of pain include other approved opioid agonists such as morphine, hydromorphone, and fentanyl. In 2020, the FDA also approved OLINVYK (oliceridine), an intravenous opioid agonist for the management of moderate to severe acute pain in adults, where the pain is severe enough to require an intravenous opioid and for whom alternative treatments are inadequate. Non-opioid products include Combogesic (combination IV acetaminophen and ibuprofen), Ofirmev (IV acetaminophen) and IV formulations of NSAIDs such as Dyloject (diclofenac), Toradol (ketorolac), Anjeso (meloxicam), and Caldolor (ibuprofen). In addition, we also expect to compete with agents such as Exparel (bupivacaine lipsome injectable suspension), Zynrelef (bupivacaine and meloxicam) and Xaracoll (bupivacaine implant). In addition to approved products, there are a number of product candidates in development for the management of acute pain. In addition to reformulations and fixed-dose combination products of already available therapies, there are also several novel agents in clinical development such as VX-548 (Vertex Pharmaceuticals), LTG-001 (Latigo Biotherapeutics), STC-004 (SiteOne Therpaeutics), NTM-001 (Neumentum) and CA-008 (Concentric Analgesics).
Current wording
IV tramadol will compete with well-established products with similar indications. Competing products available for the management of pain include other approved opioid agonists such as morphine, hydromorphone, and fentanyl, and the recently approved sodium channel blocker Journavx (suzetrigine). In 2020, the FDA also approved OLINVYK (oliceridine), an intravenous opioid agonist for the management of moderate to severe acute pain in adults, where the pain is severe enough to require an intravenous opioid and for whom alternative treatments are inadequate. Non-opioid products include Journavx, Combogesic (combination IV acetaminophen and ibuprofen), Ofirmev (IV acetaminophen) and IV formulations of NSAIDs such as Dyloject (diclofenac), Toradol (ketorolac), Anjeso (meloxicam), and Caldolor (ibuprofen). In addition, we also expect to compete with agents such as Exparel (bupivacaine lipsome injectable suspension), Zynrelef (bupivacaine and meloxicam) and Xaracoll (bupivacaine implant). In addition to approved products, there are a number of product candidates in development for the management of acute pain. In addition to reformulations and fixed-dose combination products of already available therapies, there are also several novel agents in clinical development such as LTG-001 (Latigo Biotherapeutics), STC-004 (SiteOne Therpaeutics), NTM-001 (Neumentum) and CA-008 (Concentric Analgesics).
Previous wording
If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidate, if approved, we may not be successful in commercializing our product candidates if and when they are approved.
Current wording
If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, if approved, we may not be successful in commercializing our product candidates if and when they are approved.
Previous wording
Factors that may inhibit our potential efforts to successfully commercialize our future product, if any, using our own sales and marketing capabilities include, but are not necessarily limited to:
Current wording
Factors that may inhibit our potential efforts to successfully commercialize our future products, if any, using our own sales and marketing capabilities include, but are not necessarily limited to:
Previous wording
We are a listed and traded public company. As a public company, we incur significant legal, accounting, and other expenses under the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the rules of the Nasdaq Stock Market, on which our common stock is listed. These rules impose various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and appropriate corporate governance practices. Our management and other personnel have devoted and will continue to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly. For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees, or as executive officers.
Current wording
We are a traded public company. As a public company, we incur significant legal, accounting, and other expenses under the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC. These rules impose various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and appropriate corporate governance practices. Our management and other personnel have devoted and will continue to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly. For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees, or as executive officers.
Previous wording
The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the common stock of biotechnology and pharmaceutical companies. These broad market fluctuations may cause the market price of our stock to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and biopharmaceutical companies have experienced significant stock price volatility in recent years and due to the significant stock price decline we experienced following the announcement of the First CRL. We may become involved in this type of litigation in the future. Litigation often is expensive and diverts management’s attention and resources, which could adversely affect our business.
Current wording
The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the common stock of biotechnology and pharmaceutical companies. These broad market fluctuations may cause the market price of our stock to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and biopharmaceutical companies have experienced significant stock price volatility in recent years. We may become involved in this type of litigation in the future. Litigation often is expensive and diverts management’s attention and resources, which could adversely affect our business.
Previous wording
Pursuant to the terms of the Class A Preferred Stock held by Fortress, Fortress is entitled to cast, for each share of Class A Preferred Stock held by Fortress, the number of votes that is equal to 1.1 times a fraction, the numerator of which is the sum of (A) the aggregate number of shares of outstanding common stock and (B) the whole shares of common stock into which the shares of outstanding the Class A Preferred Stock are convertible and the denominator of which is the aggregate number of shares of outstanding Class A Preferred Stock, or the “Class A Preferred Stock Ratio.” Thus, Fortress will at all times have voting control of us. Further, for a period of ten (10) years from the date of the first issuance of shares of Class A Preferred Stock, the holders of record of the shares of Class A Preferred Stock (or other capital stock or securities issued upon conversion of or in exchange for the Class A Preferred Stock), exclusively and as a separate class, shall be entitled to appoint or elect the majority of our directors.
Current wording
Pursuant to the terms of the Class A Preferred Stock held by Fortress, Fortress is entitled to cast, for each share of Class A Preferred Stock held by Fortress, the number of votes that is equal to 1.1 times a fraction, the numerator of which is the sum of (A) the aggregate number of shares of outstanding common stock and (B) the whole shares of common stock into which the shares of outstanding the Class A Preferred Stock are convertible and the denominator of which is the aggregate number of shares of outstanding Class A Preferred Stock, or the “Class A Preferred Stock Ratio.” Thus, Fortress will at all times have voting control of us. Further, for a period of ten (10) years from the date of the first issuance of shares of Class A Preferred Stock, the holders of record of the shares of Class A Preferred Stock (or other capital stock or securities issued upon conversion of or in exchange for the Class A Preferred Stock), exclusively and as a separate class, shall be entitled to appoint or elect the majority of our directors; however, the Company and Fortress waived application of this provision of the certificate of incorporation, and the holders of the Common Stock voted together with the holders of the Class A Preferred Stock for all directors, at our most recent annual meeting of stockholders, with the holders of the Class A Preferred Stock utilizing the super-voting rights described above.