AVENUE THERAPEUTICS, INC.

AVENUE THERAPEUTICS, INC

Notes to Consolidated Financial Statements

Note 1 —Organization, Plan of Business Operations

Avenue Therapeutics, Inc. (the “Company” or “Avenue”) was incorporated in Delaware on* February**9,* 2015, as a wholly owned subsidiary of Fortress Biotech, Inc. (“Fortress”) and completed its initial public offering in2017. Avenue is a specialty pharmaceutical company focused on the development and commercialization of therapies for the treatment of neurologic diseases. Avenue's current product candidates are intravenous tramadol ("IV tramadol") for the treatment of post-operative acute pain and ATX-04 for the treatment of Pompe disease, and previously, through* April 2025,AJ201 for the treatment of spinal bulbar and muscular atrophy, and through November 2025,*BAER-101 for the treatment of epilepsy and panic disorders.

AJ201 Termination

On* February 28, 2023,Avenue entered into a license agreement with AnnJi Pharmaceutical Co. Ltd. (“AnnJi”), whereby Avenue obtained an exclusive license (the “AnnJi License Agreement”) from AnnJi to the intellectual property rights pertaining to the molecule known asJM17,* which activatesNrf1 andNrf2, enhances androgen receptor degradation and underliesAJ201, a clinical product candidate currently in a Phase1b/2a clinical trial in the U.S. for the treatment of spinal and bulbar muscular atrophy (“SBMA”, also known as Kennedy's Disease). Under the AnnJi License Agreement, in exchange for exclusive rights to the intellectual property underlying theAJ201 product candidates, Avenue paid $3.0 million, issued shares of Avenue stock intwo tranches, and agreed to make additional payments including: reimbursement of payments up to $10.8 million in connection with the product’s Phase1b/2a clinical trial, up to $14.5 million in connection with certain development milestones pertaining to thefirst indication in the U.S., up to $27.5 million in connection with certain drug development milestones pertaining to additional indications and development outside the U.S., up to $165 million upon the achievement of certain net sales milestones ranging from $75 million to $750 million in annual net sales, and royalty payments based on a percentage of net sales ranging from mid-single digits to the low-double digits, which were subject to potential diminution in certain circumstances. On* March 3, 2025,*Avenue received a notice of AnnJi’s intent to terminate the AnnJi License Agreement, in which AnnJi asserted several bases for its right to terminate the AnnJi License Agreement.

On* April 24, 2025 (the “Termination Effective Date”), Avenue and AnnJi entered into a License Termination and Program Transfer Agreement (the “Termination and Transfer Agreement”), pursuant to which: (i) the AnnJi License Agreement and related agreements were terminated with immediate effect; (ii) the parties dismissed all pending dispute resolution proceedings and provided mutual releases of claims; (iii) Avenue transferred to AnnJi all of its rights, title and interest to and under the assets arising under the AnnJi License Agreement and otherwise related toAJ201* and (iv) Avenue agreednot to, for48 months following the date of the Termination and Transfer Agreement, develop, commercialize, manufacture or sell any product competing withAJ201 in the US, Canada, the European Union, Great Britain or Israel. Under the Termination and Transfer Agreement, Avenue repurchased all shares of common stock held by AnnJi for an aggregate payment of $1.00, and Avenue also made a payment of $0.2 million to AnnJi as consideration for legal expenses, which was accounted for as consideration payable to a customer and reduced the amount of revenue recognized under the agreement.

AnnJi made payments to Avenue of $1.6 million (which amount reflects the netting of a 20% tax withholding payment obligation), with $0.8 million having been collected in* May 2025and $0.8 million collected in July 2025.The$1.6* million, less the $0.2 million as consideration for legal expenses, was recognized as other revenue as the performance obligations related to rights transferred to AnnJi were satisfied during the quarter ended* June 30, 2025.*Additionally, Avenue will be eligible to receive from AnnJi:

The Company is treating the payments related to future milestones and potential royalties as variable consideration that is constrained until the achievement of the specified milestones. The Termination and Transfer Agreement also contains customary representations and warranties related to confidentiality and indemnification.

Sale of Baergic

On* May 11, 2022,the Company 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) (the “Contributed Shares”) in Baergic Bio, Inc. ("Baergic") to the Company. Under the Contribution Agreement, Fortress also agreed to assign to Avenue certain intercompany agreements existing between Fortress and Baergic, including a Founders Agreement, by and between Fortress and Baergic, dated as of March 9, 2017,and Management Services Agreement, by and between Fortress and Baergic, dated as of March 9, 2017.*

The transaction expanded Avenue’s development portfolio within neuroscience. 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. See Note4 below.

On* November 5, 2025,*Avenue Therapeutics, Inc. (the “Company” or “Avenue”) and its majority owned subsidiary, Baergic Bio, Inc., a Delaware corporation (“Baergic”), entered into a stock purchase agreement (the “Agreement”) with Axsome Therapeutics, Inc., a Delaware corporation (together with its affiliates, “Axsome”), and the holders of outstanding options, warrants and other similar rights with respect to shares of Baergic. Pursuant to the Agreement, Axsome: (i) purchased 100% of the equity interests in Baergic from Avenue and the other stockholders of Baergic for an upfront payment of $0.3 million (less transaction fees) and additional contingent consideration described below (the “Disposition”) and (ii) received worldwide commercial, development, and manufacturing rights to BAER-101 (now referred to as AXS-17), including all available nonclinical and clinical data.

Additionally, Avenue and the other former stockholders of Baergic will be eligible to receive from Axsome:

Avenue is eligible to receive approximately 74% of all future payments and royalties payable under the Agreement.

The Agreement also contains customary representations and warranties and provisions related to confidentiality, indemnification and intellectual property protection.

The Company determined that Baergic didnot meet the definition of a business as substantially all of the fair value of the gross assets was concentrated in a single identifiable intangible asset. Accordingly, the transaction was accounted for as a sale of a nonfinancial asset under ASC610-20. The Company further concluded that the contingent consideration related to development and regulatory milestones is constrained and will be recognized when it is probable that a significant revenue reversal willnot occur. Avenue received $0.3 million up front, which included $0.1 million that Avenue was entitled to as reimbursement for transaction costs. Under the terms of the agreement, Avenue was entitled to $0.2 million of the upfront payment and the remaining $0.1 million went to the other shareholders of Baergic based on their ownership percentages. For the year ended* December 31, 2025,*the Company recognized a gain of $0.2 million related to the deconsolidation upon the loss of control of Baergic, after accounting for transaction fees and expenses for shares issued related to the Agreement.

Reverse Stock Split

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 a1*-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 intoone 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 ofone share of common stock as a result of the Reverse Stock Split instead receivedone whole share of common stock.

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.

Nasdaq Delisting

On* March 17, 2025,the Nasdaq Stock Market LLC (“Nasdaq”) notified the Company that Nasdaq had determined to delist the Company’s common stock and that trading of the Company’s securities would be suspended at the open of trading on March 19, 2025.On July 18, 2025,Nasdaq filed a Form25* with the United States Securities and Exchange Commission (the “SEC”) to remove the Company's common stock from listing and registration. As a result, the common stock of the Company ceased to be registered pursuant to Section12(b) of the Securities Act and was immediately deemed registered pursuant to Section12(g) of the Securities Act of1933, as amended (the “Securities Act”). The Company doesnot intend to appeal the delisting determination. Since* March 19, 2025,the Company’s common stock has been quoted on the over-the-counter market (OTCID) under the symbol “ATXI”. The delisting may*negatively impact the liquidity and market price of the Company's common stock and could make it more difficult for shareholders to dispose of their holdings.

F-7

Stock Purchase and Merger Agreement

In* July 2022the Company entered into a share repurchase agreement with InvaGen Pharmaceuticals Inc. ("InvaGen"). Upon the closing of a public offering in October 2022,InvaGen gave up all rights set forth in the stockholders agreement to which it was previously party and the Company repurchased the 5,185 common shares of the Company held by InvaGen. Under the share repurchase agreement with InvaGen, the Company agreed to pay InvaGenseven* and a half percent (7.5%) of the proceeds from future financings, up to $4 million, which the Company accounts for as a derivative. Due to the uncertainty related to future financings, the estimated fair value of the derivative isnot material. The Company recognizes changes in fair value within general and administrative expenses in the statement of operations. In connection with the closing of financings that occurred in2025 and2024, Avenue made payments totaling $0.2 million and $0.7 million to InvaGen, respectively. Approximately $1.4 million in aggregate has been paid to InvaGen under the Share Repurchase Agreement as of* December 31, 2025.*

Liquidity and Capital Resources

F-8

• January 2024*Warrant Inducement and Private Placement

On* January 5, 2024,the Company entered into (i) an inducement offer letter agreement (the “January 2023Investor Inducement Letter”) with a certain investor (the “January 2023Investor”) in connection with certain outstanding warrants to purchase up to an aggregate of 25,871 of the Company’s common stock originally issued to the January 2023Investor on January 31, 2023 (the “January 2023Warrants”) and (ii) an inducement offer letter agreement (the “November 2023Investor Inducement Letter Agreement” and, together with the January 2023Investor Inducement Letter, the “January 2024Warrant Inducement”) with certain investors (the November 2023Investors” and, together with the January 2023Investor, the “January 2024Holders”) in connection with certain outstanding warrants to purchase up to an aggregate of 194,667 shares of common stock, originally issued to the November 2023Investors on November 2, 2023 (the “November 2023Warrants” and, together with the January 2023Warrants, the “Existing Warrants”). The January 2023Warrants 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* January 2024Warrant Inducement, (i) the January 2023Investor agreed to exercise for cash its January 2023Warrants at a reduced exercise price of $22.545 per share and (ii) the November 2023Investors agreed to exercise for cash their November 2023Warrants at the existing exercise price of $22.545 in consideration for the Company’s agreement to issue in a private placement (x) new Series A common stock purchase warrants (the “New Series A Warrants”) to purchase up to 220,538 shares of common stock (the “New Series A Warrants Shares”) and (y) new Series B common stock purchase warrants (the “New Series B Warrants” and, together with the New Series A Warrants, the “January 2024Warrants”) to purchase up to 220,538 shares of common stock (the “New Series B Warrants Shares”). The New Series A Warrants will expire five years following the issuance date and the New Series B Warrants will expireeighteen* months following the issuance date. The New Series A Warrants and New Series B Warrants meet the criteria for permanent equity classification.

The* January 2023Warrants, which were liability classified, were revalued on January 5, 2024using 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 consolidated statements of operations (see Note8*). The issuance of the* January 2024Warrants was considered as part of the cost of the inducement and the January 2024Warrants were valued using the Black-Scholes Model with the fair value being allocated between the January 2023Warrants and November 2023Warrants on a weighted basis. The approximately $0.6 million of the January 2024Warrants fair value was allocated to the January 2023warrants and recorded as a loss on common stock warrant liabilities in the consolidated statements of operations with a corresponding offset to additional paid-in-capital. Approximately $4.3 million of the January 2024Warrant fair value was allocated to the November 2023Warrants and deemed to be a dividend and recorded to additional paid-in-capital because the Company had an accumulated deficit on the issuance date. The deemed dividend was included in net loss attributable to common stockholders in the calculation of net loss per share in the consolidated statements of operations (see Note2*).

The Company received aggregate net proceeds of approximately $4.5 million from the exercise of the Existing Warrants by the* January 2024*Holders, after deducting placement agent fees and other expenses payable by the Company.

The Company filed a registration statement on Form S-3 (FileNo. 333-276671) with the SEC providing for the resale of the* January 2024Warrant Shares (the “Resale Registration Statement”) on January 24, 2024,which was declared effective on February 1, 2024.*

See the* May 2024Warrant Inducement below for the January 2024Warrants exercised in May 2024.*

• May 2024*Warrant Inducement and Private Placement

On* April 28, 2024,the Company entered into inducement offer letter agreements (the “May 2024Warrant Inducement”) with (i) certain investors (the “October 2022Investors”) that held certain outstanding October 2022Warrants to purchase up to an aggregate of 27,271 shares of the Company’s common stock; (ii) certain investors (the “MayInducement November 2023Investors”) that hold November 2023Warrants to purchase up to an aggregate of 221,333 shares of common stock; and (iii) certain investors (the “January 2024Investors” and, collectively with the October 2022Investors and MayInducement November 2023Investors, the “May 2024Holders”) that hold January 2024Warrants to purchase up to an aggregate of 441,076 shares of common stock. We refer to the exercised January 2024Warrants collectively with the October 2022Warrants and November 2023Warrants as the "May 2024Exercised Warrants"). The October 2022Warrants had an exercise price of $116.25 per share, the November 2023Warrants had an exercise price of $22.545 per share, and the January 2024Warrants had an exercise price of $22.545 per share. Pursuant to the May 2024Warrant Inducement, the May 2024Holders agreed to exercise for cash the May 2024Exercised Warrants at a reduced exercise price of $6.20 per share in partial consideration for the Company’s 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 2024Warrants”) 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 2024Warrant Shares”). The May 2024Holders also agreed to pay the Company $0.125 per May 2024Warrant Share (the “Additional Warrant Consideration”). The closing of the transactions contemplated pursuant to the May 2024Warrant Inducement occurred on May 1, 2024.The May 2024Warrants meet the requirement for equity classification under ASC815.*

The* October 2022Warrants, which were liability classified, were revalued on May 1, 2024using 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 consolidated statements of operations (see Note8*). The issuance of the* May 2024Warrants was considered as part of the cost of the inducement and the May 2024Warrants were valued using the Black-Scholes Model with the fair value being allocated between the October 2022Warrants, November 2023Warrants and January 2024Warrants on a weighted basis. The approximately $0.2 million of the May**2024* Warrants fair value was allocated to the* October 2022warrants and recorded as a loss on common stock warrant liabilities in the consolidated statements of operations with a corresponding offset to additional paid-in-capital. Approximately $4.5 million of the May 2024Warrant fair value was allocated to the November 2023Warrants and January 2024Warrants and deemed to be a dividend and recorded to additional paid-in-capital because the Company had an accumulated deficit on the issuance date. The deemed dividend was included in net loss attributable to common stockholders in the calculation of net loss per share in the consolidated statements of operations (see Note2*).

The Company received net proceeds of approximately $3.7 million from the exercise of the* May 2024Exercised Warrants by the May 2024*Holders and the payment of the Additional Warrant Consideration, after deducting placement agent fees and other expenses payable by the Company.

The Company filed a registration statement on Form S-3 (FileNo. 333-279125) with the SEC providing for the resale of the* May 2024New Warrant Shares (the “May 2024Resale Registration Statement”) on May 6, 2024,which was declared effective on May 10, 2024.Due to our delisting from a national securities exchange, we areno* longer eligible to use a shelf registration statement on Form S-3.

ATM Facility

On* May 10, 2024,the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co. LLC (the “ATM Manager”) under which the Company mayoffer and sell, from time to time at its sole discretion, shares of its 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 (FileNo.* 333-261520), originally filed with the SEC on* December 7, 2021and declared effective by the SEC on December 10, 2021,and the related prospectus supplement dated May 10, 2024 (including such replacement registration statement as maybe filed with the SEC, the “ATM Registration Statement”) and filed with the SEC on such date pursuant to Rule424*(b) under the Securities Act of1933, as amended (the “Securities Act”). The replacement registration statement was later withdrawn. As a result of the limitations of General InstructionI.B.6 of Form S-3, the Company* maysell up to a maximum of $3,850,000 of its shares pursuant to the ATM Agreement. On December 15, 2025,the Company filed a Post-Effective AmendmentNo.* 1 for Form S-3 on Form S-1 (FileNo. 333-279125), which Post-Effective Amendment was declared effective on* December 16, 2025.*

Under the ATM Agreement, the ATM Manager* maysell shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule415*(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 the Company (including any price, time or size limits or other customary parameters or conditions the Company* mayimpose). The Company 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. The Company also agreed to reimburse the ATM Manager for certain expenses incurred in connection with the ATM Agreement. The Company and the ATM Manager may*each terminate the ATM Agreement at any time upon specified prior written notice.

For the year ended* December 31, 2025,the Company sold an aggregate of 938,990 shares of its common stock pursuant to the ATM Agreement, resulting in net proceeds of approximately $2.1 million, after deducting underwriting discounts. Avenue isno* longer able to utilize the Avenue ATM as a result of the delisting of its stock from trading on Nasdaq.

F-9

Going Concern

These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, as described below, substantial doubt about the Company’s ability to continue as a going concern exists.

The Company isnot yet generating revenue, has incurred substantial operating losses since its inception and expects to continue to incur significant operating losses for the foreseeable future as it executes on its product development plan and* maynever become profitable. As of December 31, 2025*, the Company had an accumulated deficit of $105.5 million. Due to uncertainties regarding future operations of the Company, including a potential Phase3 safety study for IV tramadol, and pivotal study for ATX-04, the Company will need to secure additional funds through equity or debt offerings, or other potential sources, the timing of which is unknown at this time. The Company cannot be certain that additional funding will be available to it on acceptable terms, or at all. These factors individually and collectively causes substantial doubt about the Company’s ability to continue as a going concern to exist withinone year from the date of this report. The consolidated financial statements donot include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that* may*be necessary if the Company were unable to continue as a going concern.

Note 2 —Significant Accounting Policies

Basis of Presentation & Principles of Consolidation

The Company’s consolidated financial statements have been prepared in conformity with U.S. GAAP, include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented and are stated in U.S. dollars. The Company’s consolidated financial statements include the accounts of the Company and the accounts of the Company’s subsidiary until its sale on* November 5, 2025.All intercompany balances and transactions have been eliminated as appropriate through the date of the deconsolidation of Baergic on November 5, 2025.*

The accompanying consolidated financial statements include the accounts of the Company’s subsidiary, Baergic. Because the Company owns less than100% of Baergic, the Company records net loss attributable to non-controlling interests in its consolidated statements of operations equal to the percentage of the economic or ownership interest retained in Baergic by the respective non-controlling parties.

Segment Reporting

Operating segments are defined as components of an enterprise that engage in business activities from which it* may*recognize revenues and incur expenses, and for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) to allocate resources and assess performance.

The Company operates inone reportable segment, development and commercialization of therapies for the treatment of neurologic diseases, which includes all activities related to the development and commercialization ofAJ201 until the termination of the license in* April 2025,BAER-101 until its sale to Axsome in November 2025,*and IV tramadol. The determination of a single reportable segment is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (CODM), which is its chief executive officer, who reviews and evaluates consolidated net income (loss) for purposes of assessing performance, making operating decisions, allocating resources and planning and forecasting for future periods. The measure of segment assets is reported on the balance sheet as total assets.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all short-term investments with a maturity ofthree months or less when purchased to be cash equivalents. Cash and cash equivalents at* December 31, 2025* and2024 consisted of cash in institutions in the United States. The Company maintains its cash and cash equivalent balances with high-quality financial institutions and, consequently, the Company believes that such funds are currently adequately protected against credit risk. At times, portions of the Company’s cash and cash equivalents* maybe uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. As of December 31, 2025*, the Company hadnot experienced losses on these accounts, and management believes the Company isnot exposed to significant risk on such accounts. The Company’s cash equivalents and investments* may*comprise money market funds that are invested in U.S. Treasury obligations, corporate debt securities, U.S. Treasury obligations and government agency securities. Credit risk in these securities is reduced as a result of the Company’s investment policy to limit the amount invested in any single issuer and to only invest in securities of a high credit quality.

F-10

Accounts Payable and Accrued Expenses–*** Related Party***

In the normal course of business, Fortress incurs certain expenses on behalf of the Company. Such expenses are recorded as accounts payable and accrued expenses – related party and are recorded at the invoiced amount and reimbursed to Fortress in the normal course of business. The Company believes that the difference, if any, between the amounts invoiced and the amounts that would have been incurred if the Company operated as an unaffiliated entity isnot material.

Research and Development

Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Upfront and milestone payments due tothird parties that perform research and development services on the Company’s behalf will be expensed as services are rendered or when the milestone is achieved.

Research and development costs primarily consist of personnel related expenses, including salaries, benefits, travel, and other related expenses, stock-based compensation, payments made tothird parties for license and milestone costs related to in-licensed products and technology, payments made tothird party contract research organizations for preclinical and clinical studies, investigative sites for clinical trials, consultants, the cost of acquiring and manufacturing clinical trial materials, costs associated with regulatory filings and patents, laboratory costs and other supplies.

Costs incurred in obtaining technology licenses are charged to research and development expense if the technology licensed hasnot reached commercial feasibility and haveno alternative future use. The licenses purchased by the Company require substantial completion of research and development, regulatory and marketing approval efforts in order to reach commercial feasibility and hasno alternative future use. Accordingly, the total purchase price including any development milestone payments for the licenses acquired are reflected as research and development on the Company's consolidated statements of operations.

Contingencies

The Company records accruals for contingencies and legal proceedings expected to be incurred in connection with a loss contingency when it is probable that a liability has been incurred and the amount can be reasonably estimated. If a loss contingency isnot probable but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

Freestanding Warrants

The Company has issued freestanding warrants to purchase shares of its common stock in connection with financing activities (see Note8) and accounts for them in accordance with applicable accounting guidance as either liabilities or as equity instruments depending on the specific terms of the warrant agreements. Warrants classified as liabilities are remeasured each period they are outstanding. Any resulting gain or loss related to the change in the fair value of the warrant liability is recognized in change in fair value of warrant liabilities, a component of other income (loss), in the consolidated statements of operations.

Fair Value Measurements

The Company follows accounting guidance on fair value measurements for financial assets and liabilities measured at fair value on a recurring basis. Under the accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

F-11

The accounting guidance requires fair value measurements be classified and disclosed inone of the followingthree categories:

Level1: Quoted prices in active markets for identical assets or liabilities.

Level2: Observable inputs other than Level1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.

Level3: Unobservable inputs which are supported by little orno market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

Certain of the Company’s financial instruments arenot measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as accounts payable, accrued expenses and other current liabilities.

Annual Stock Dividend

In* September2016,* in connection with the adoption of the Amended and Restated Articles of Incorporation, the Company issued 250,000 Class A Preferred stock to Fortress. The Class A Preferred stock entitled the holder to a stock dividend equal to 2.5% of the fully-diluted outstanding equity of the Company on* February 16 (the "Annual Stock Dividend”) to be paid on February17* of each year. On* June13,* 2018, the Company’s Stockholders adopted an amendment to the Company’s Third Amended and Restated Certificate of Incorporation amending the record date to* December 31and the payment date going forward to January1* of each year. Concurrently with the execution and delivery of the SPMA, the Company, InvaGen and Fortress entered into a waiver agreement (“the Waiver Agreement”), pursuant to which, among other things, Fortress irrevocably waived its right to receive dividends of the Company’s common shares under the terms of the Class A Preferred Stock and any fees, payments, reimbursements or other distributions under a certain management services agreement between the Company and Fortress and the Founders Agreement (as defined in the SPMA), for the period* November**12,* 2018 to the termination of InvaGen’s rights under Section4 of the Stockholders Agreement that was signed between the Company, certain stockholders of the Company, and InvaGen. As a result of the consummation of the Share Repurchase Agreement on* October 31, 2022,*the Waiver Agreement was terminated and the right to dividends of the Company’s Common Stock was restored. The Annual Stock Dividend terminates upon conversion of the Class A Preferred stock or a Change of Control as defined in the Third Amended and Restated Certificate of Incorporation.

Pursuant to the Third Amended and Restated Certificate of Incorporation, the Company issued 111,209 shares of common stock to Fortress for the Annual Stock Dividend, representing 2.5% of the fully-diluted outstanding equity of the Company, on* January 5, 2026.This was shown in the consolidated statements of stockholders’ equity at December 31, 2025*, as part of additional paid-in capital. The Company recorded an expense of approximately $0.1 million in research and development related to these issuable shares during the year ended* December 31, 2025*, as the shares are considered compensation to Fortress for services rendered.

The Company issued 101,935 shares of common stock to Fortress for the Annual Stock Dividend, representing 2.5% of the fully-diluted outstanding equity of the Company, on* January 2, 2025.This was shown in the consolidated statements of stockholders’ equity at December 31, 2024,as part of additional paid-in capital. The Company recorded an expense of approximately $0.2 million in research and development related to these issuable shares during the year ended December 31, 2024,*as the shares are considered compensation to Fortress for services rendered.

The Company expenses stock-based compensation to its employees, consultants and board members over the requisite service period based on the estimated grant-date fair value of the awards. The Company estimates the fair value of option grants using the Black-Scholes option pricing model, which includes assumptions for expected volatility, risk-free interest rate, dividend yield, and estimated expected term. Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting tranche of the award. The Company accounts for forfeitures as they occur by reversing any expense recognized for unvested awards. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. Stock options granted to employees generally vest over three years and have a term often years.

F-12

Income Taxes

The Company accounts for income taxes under ASC740, Income Taxes (“ASC740”). ASC740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC740 additionally requires a valuation allowance to be established when it is more likely thannot that all or a portion of deferred tax assets willnot be realized.

ASC740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there areno significant uncertain tax positions requiring recognition in the Company’s financial statements. All tax years since inception remain open to examination by major tax jurisdictions to which the Company is subject, as carryforward attributes generated in years past* maystill be adjusted upon examination by the respective tax authorities if they have or will be used in a future period. The Company believes that its income tax positions and deductions would be sustained on audit and doesnot* anticipate any adjustments that would result in a material change to its financial position.

The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. There wereno amounts accrued for penalties or interest as of or during the years ended* December 31, 2025* and2024. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

Non-Controlling Interests

Non-controlling interests in consolidated entities represent the component of equity in consolidated entities held bythird parties. Any change in ownership of a subsidiary while the controlling financial interest is retained is accounted for as an equity transaction between the controlling and non-controlling interests. Intercompany activity has been eliminated entirely in consolidation prior to the allocation of net gain/loss attributable to non-controlling interest, which is based on ownership interests. As of* November 5, 2025,Baergic was deconsolidated as a result of the Axsome transaction (see Note1*).

Comprehensive Loss

The Company’s comprehensive loss is equal to its net loss for all periods presented.

N

et Loss Per Share

Basic and diluted net loss per share is computed by dividing net loss attributable to common share outstanding, including prefunded warrants and shares held in abeyance, during the period, without consideration of potential dilutive securities. For periods in which the Company generated a net loss, the Company doesnot include potential shares of common stock in diluted net loss per share when the impact of these items is anti-dilutive. The Company has generated a net loss for all periods presented, therefore diluted net loss per share is the same as basic net loss per share since the inclusion of potentially dilutive securities would be anti-dilutive. Dividends declared are paid and set aside among the holders of shares of common stock and Class A Preferred stock pro-rata on an as-if-converted basis.

The following table sets forth the potential common shares that could potentially dilute basic income per share in the future that werenot included in the computation of diluted net loss per share because to do so would have been anti-dilutive for the periods presented:

(1) Class A preferred shares are presented on an as-if converted basis.

In connection with the exercise of certain existing warrants in* January 2024and May 2024 (see Note1*), the Company recorded deemed dividends of $8.8 million for the issuance of new warrants. For the year ended* December 31, 2024,*net loss attributable to common stockholders consisted of net loss, as adjusted for deemed dividends.

The Company considers Class A preferred stock to be an additional class of common stock for the purpose of calculating net loss per share, as it doesnot have preferential rights in liquidation when compared to the Company's common stock, and therefore losses are allocated to these additional classes using thetwo-class method. Thetwo-class method is an earnings allocation formula that treats participating securities as having rights that would otherwise have been available to common stockholders. Earnings allocated to the Class A preferred stock arenot material for the years ended* December 31, 2025and2024.*

F-13

Recently Issued Accounting Standards

In* December 2023,the FASB issued ASU2023*-09, "Income Taxes (Topic740*): Improvements to Income Tax Disclosures",* which expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after* December 15, 2024.The Company adopted ASU2023‑09* on* January 1, 2025,the beginning of its fiscal year ending December 31, 2025,on a prospective basis for annual periods, as permitted by the standard. Adoption of ASU2023‑09* resulted in expanded income tax disclosures, including a more disaggregated reconciliation of the statutory U.S. federal income tax rate to the Company’s effective tax rate. The Company’s enhanced income tax disclosures required by ASU2023‑09 are presented in Note9 to the consolidated financial statements.

In* November 2024,the FASB issued ASUNo.* 2024-03, Income Statement–* Reporting Comprehensive Income*–* Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses*, which requires new financial statement disclosures in tabular format, in the notes to financial statements, of specified information about certain costs and expenses. The amendments in this update donot change or remove current expense disclosure requirements. The amendments in this update are effective for fiscal years beginning after* December 15, 2026,and interim periods within fiscal years beginning after December 15, 2027.*Early adoption is permitted. The Company is currently evaluating the impact of the new standard on its financial statement disclosures.

Note 3 —License/Supplier Agreements

IV Tramadol License

Effective as of* February17,* 2015, Fortress transferred the Revogenex license and all other rights and obligations under the License Agreement to the Company, pursuant to the terms of the Founders Agreement. In connection with the terms of the License Agreement, Fortress purchased an exclusive license to IV tramadol for the U.S. market from Revogenex, a privately held company in Dublin, Ireland. Fortress made an upfront payment of $2.0 million to Revogenex upon execution of the exclusive license, and on* June17,* 2015, Fortress paid an additional $1.0 million to Revogenex after receiving all the assets specified in the agreement. In* December 2019,*$1.0 million became due to Revogenex in accordance with the Company’s submission of its NDA. In addition, under the terms of the agreement, Revogenex is eligible to receive an additional milestone payment totaling $3.0 million upon the approval of IV tramadol from the FDA as well as royalty payments on net sales of the product ranging in the high single digits to low double digits.

On* October**29,* 2018, the Company and Zaklady Farmaceutyczne Polpharma (“Polpharma”) extended the term of their exclusive supply agreement for drug product of IV tramadol toeight years from the date of the launch of the product. In addition, under the terms of the amended agreement, Polpharma is eligible to receive a milestone payment totaling $2.0 million upon the approval of IV tramadol from the FDA, as well as a low single digit royalty on net sales of the product forfive years after launch.

F-14

Note 4 —Related Party Agreements

Founders Agreement and Management Services Agreement with Fortress

Fortress entered into a Founders Agreement with Avenue in* February**2015* (as amended, the “Fortress-Avenue Founders Agreement”), pursuant to which Fortress assigned to Avenue all of its rights and interest under Fortress’s license agreement with Revogenex for IV tramadol (the “License Agreement”). As partial consideration for the Fortress-Avenue Founders Agreement, Avenue assumed $3.0 million in debt that Fortress had accumulated for expenses and costs of forming Avenue and obtaining the IV tramadol license. This debt was repaid to Fortress in2017. As additional consideration for the transfer of rights under the original Fortress-Avenue Founders Agreement, Avenue also agreed to: (i) issue annually to Fortress, on the anniversary date of the Fortress-Avenue Founders Agreement, shares of common stock equal totwo andone half percent (2.5%) of the fully-diluted outstanding equity of Avenue; (ii) pay an equity fee in shares of Avenue common stock, payable withinfive (5) business days of the closing of any equity or debt financing for Avenue or any of its respective subsidiaries that occurs after the effective date of the Founders Agreement and ending on the date when Fortressno longer has majority voting control in Avenue’s voting equity, equal totwo andone half percent (2.5%) of the gross amount of any such equity or debt financing; and (iii) pay a cash fee equal tofour andone half percent (4.5%) of Avenue’s annual net sales, payable on an annual basis, withinninety (90) days of the end of each calendar year. In the event of a change in control (as it is defined in the Founders Agreement), Fortress will be paid aone-time change in control fee equal tofive (5x) times the product of (i) net sales for thetwelve (12) months immediately preceding the change in control and (ii)four andone-half percent (4.5%).

On* September 13, 2016,the Company amended the Fortress-Avenue Founders Agreement to remove the Annual Equity Fee (that feature remained in substance and became issuable to the holders of Avenue’s Class A Preferred stock, all of which is currently held by Fortress) and to add a term of 15 years, which upon expiration automatically renews for successiveone*-year periods unless terminated by Fortress or a Change in Control occurs. Concurrently with effecting such amendment of the Fortress-Avenue Founders Agreement, the Company entered into an Exchange Agreement whereby the Company exchanged Fortress’155,555 Class A common shares for approximately 166,027 common shares and 250,000 Class A Preferred stock (see Note7).

Effective as of* February 17, 2015,Fortress entered into a Management Services Agreement (the “Fortress-Avenue MSA”) with Avenue pursuant to which Fortress provides advisory and consulting services to Avenue pursuant to the terms thereof. The Fortress-Avenue MSA contained an initial five-year term and shall be automatically extended for additional five-year periods unless Fortress or the Company provides written notice of its desirenot* to automatically extend the term of the MSA at least90 days prior to the applicable expiration date. Services provided under the Fortress-Avenue MSA* mayinclude, without limitation, (i) advice and assistance concerning any and all aspects of Avenue’s operations, clinical trials, financial planning and strategic transactions and financings and (ii) conducting relations on behalf of Avenue with accountants, attorneys, financial advisors and other professionals (collectively, the “Services”). Avenue is obligated to utilize clinical research services, medical education, communication and marketing services and investor relations/public relation services of companies or individuals designated by Fortress, provided those services are offered at market prices. However, Avenue isnot* obligated to take or act upon any advice rendered from Fortress, and Fortress shallnot be liable for any of Avenue’s actions or inactions based upon their advice. Fortress and its affiliates, including all members of Avenue’s Board of Directors, have been contractually exempt from fiduciary duties to Avenue relating to corporate opportunities. In consideration for the Services, Avenue will pay Fortress an annual consulting fee of $0.5 million (the “Annual Consulting Fee”), payable in advance in equal quarterly installments on thefirst business day of each calendar quarter in each year, provided, however, that such Annual Consulting Fee shall be increased to $1.0 million for each calendar year in which Avenue has net assets in excess of $100.0 million at the beginning of the calendar year. Effective beginning on* November**12,* 2018, eligibility to receive such fees was waived pursuant to a Waiver Agreement signed between Avenue, Fortress and InvaGen. The Fortress-Avenue MSA fee was reinstated upon the closing of the* October 2022*public offering.

For the years ended* December 31, 2025and2024,* the Company had expenses related to the MSA of $500,000 and $250,000, respectively. The MSA expenses are split between research and development and general and administrative expense in the consolidated statements of operations. $250,000 and $125,000 of expenses related to the MSA were recognized in research and development and general and administrative for the years ended* December 31**2025* and2024, respectively. On* November 13, 2024,*the Company entered into a Subscription and Forgiveness Agreement with Fortress, whereby Fortress agreed to convert 50% of a total of $0.5 million owed by the Company under the MSA into newly issued common stock of the Company and forgive the remaining 50% of the accrued balance. Therefore, the Company issued a total of 122,850 shares based on the closing price of $2.035 on the day prior to the execution of the agreement and reduced its liabilities associated with accounts payable and accrued expenses by $0.5 million.

Acquisition of Baergic

On* May 11, 2022,the Company entered into the Contribution Agreement with Fortress related to the Company’s acquisition of Baergic, on the terms and subject to the satisfaction of conditions described above in Note1* – Organization, Plan of Business Operations. 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. The Company believed that the terms of the Contribution Agreement were at least as favorable as the terms that the Company would have been able to obtain with a disinterested party.

The transaction was accounted for as an asset acquisition between entities under common control. As such, the transaction was recorded at carryover basis, with all assets, liabilities and non-controlling interests measured at their historical carrying values. The consolidated financial statements of the Company included the consolidated results of operations for Avenue and Baergic since the acquisition date on* November 8, 2022until the sale of Baergic to Axsome in November 2025 (see Note1*).

F-15

Founders Agreement and Management Services Agreement with Baergic

Pursuant to the Contribution Agreement between Avenue and Fortress, the Founders Agreement and Management Services Agreement that had previously been existing between Fortress and Baergic were assigned to Avenue, such that they then existed between Avenue and Baergic; those agreements are referred to herein as the Avenue-Baergic Founders Agreement and the Avenue-Baergic MSA, as applicable. The Annual Stock Dividend payable to the Company was 2.5% of common stock calculated as a percentage of fully diluted outstanding capital and became effective as of* November 8, 2022through November 5, 2025,the date of the sale of Baergic to Axsome (see Note1*). For the years ended* December 31, 2025and December 31, 2024,Baergic recorded an Annual Stock Dividend of $0 and $18,000 to Avenue on December 31, 2025and2024,* respectively.No Annual Stock Dividend for the year ended* December 31, 2025was due as a result of the sale of Baergic to Axsome on November 5, 2025.The Annual Stock Dividend for the year ended December 31, 2024was paid in shares on December 17, 2024.*

The Avenue-Baergic Founders Agreement had an effective date of* March 9, 2017,and a term of15* years, which upon expiration automatically renewed for successiveone-year periods unless terminated by Avenue and Baergic or a Change in Control (as defined in the Avenue-Baergic Founders Agreement) occurs. The Avenue-Baergic Founders Agreement terminated on* November 5, 2025with the sale of Baergic to Axsome, and the amount owed to Avenue under the Avenue-Baergic Agreement of $0.6 million as of November 5, 2025,*was forgiven.

As additional consideration under the Avenue-Baergic Founders Agreement, Baergic had also: (i) paid an equity fee in shares of common stock, payable withinfive (5) business days of the closing of any equity or debt financing for Baergic that occurs after the effective date of the Avenue-Baergic Founders Agreement and ending on the date when Avenueno longer has majority voting control in the Baergic’s voting equity, equal totwo andone-half (2.5%) of the gross amount of any such equity or debt financing; and (ii) would have paid a cash fee equal tofour andone-half percent (4.5%) of the Baergic’s annual net sales, payable on an annual basis, withinninety (90) days of the end of each calendar year. In the event of a Change in Control, Baergic would have paid aone-time change in control fee equal tofive (5x) times the product of (A) net sales for thetwelve (12) months immediately preceding the change in control and (B)four andone-half percent (4.5%).

The Avenue-Baergic MSA had an effective date of* March 9, 2017,pursuant to which Avenue rendered management, advisory and consulting services to Baergic. The MSA had an initial term offive years and was automatically renewed for successive five-year terms unless terminated in accordance with its provisions. Services provided under the MSA included, without limitation, (i) advice and assistance concerning any and all aspects of Baergic’s operations, clinical trials, financial planning and strategic transactions and financings and (ii) conducting relations on behalf of the Baergic with accountants, attorneys, financial advisors and other professionals (collectively, the “Avenue Services”). Baergic was obligated to utilize clinical research services, medical education, communication and marketing services and investor relations/public relation services of companies or individuals designated by Avenue, provided those services were offered at market prices. However, Baergic wasnot* obligated to take or act upon any advice rendered from Avenue and Avenue wouldnot be liable for any of its actions or inactions based upon their advice. Pursuant to the Avenue-Baergic MSA and Baergic’s Certificate of Incorporation, Avenue and its affiliates, including all members of Baergic’s Board of Directors, hadno fiduciary or other duty to communicate or present any corporate opportunities to Baergic or to refrain from engaging in business that is similar to that of Baergic. In consideration for the Avenue Services, Baergic paid Avenue an annual consulting fee of $0.5 million (the “Avenue-Baergic Annual Consulting Fee”), payable in advance in equal quarterly installments on thefirst business day of each calendar quarter in each year, provided, however, that such Avenue-Baergic Annual Consulting Fee shall be increased to $1.0 million for each calendar year in which Baergic has net assets in excess of $100 million at the beginning of the calendar year. The Avenue-Baergic MSA terminated on* November 5, 2025with the sale of Baergic to Axsome, and the amount owed to Avenue under the Avenue-Baergic MSA of $2.9 million as of November 5, 2025,*was forgiven.

F-16

Note5 —Accounts Payable and Accrued Expenses

Accounts payable, accrued expenses and other liabilities consisted of the following (in thousands):

Note 6 —Commitments and Contingencies

Leases

The Company isnot a party to any leases for office space or equipment.

Litigation

The Company recognizes a liability for a contingency when it is probable that liability has been incurred and when the amount of loss can be reasonably estimated. When a range of probable loss can be estimated, the Company accrues the most likely amount of such loss, and if such amount isnot determinable, then the Company accrues the minimum of the range of probable loss. As of* December 31, 2025* and2024, there wasno litigation against the Company.

Note 7 —Stockholders’** Equity**

Class A Preferred Stock

On* September**13,* 2016, 2,000,000 shares of Preferred Stock were authorized, of which 250,000 have been designated as Class A Preferred Stock and the remainder are undesignated preferred stock. The Class A Preferred Stock, with a par value of $0.0001 per share, is identical to undesignated Common Stock other than as to voting rights, conversion rights, and the Annual Stock Dividend right (as described below). The undesignated Preferred Stock* maybe issued from time to time inone* or more series. The Company’s Board of Directors is authorized to determine or alter the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions, if any), the redemption price or prices, the liquidation preferences and other designations, powers, preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock, and to fix the number of shares of any series of Preferred Stock (butnot below the number of shares of any such series then outstanding).

On any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Class A Preferred Stock shall be entitled to cast for each share of Class A Preferred Stock held by such holder as of the record date for determining stockholders entitled to vote on such matter, the number of votes that is equal toone andone-tenth (1.1) times a fraction, the numerator of which is the sum of (A) the number of shares of outstanding Common Stock and (B) the whole shares of Common Stock in to which the shares of outstanding Class A Preferred Stock are convertible, and the denominator of which is number of shares of outstanding Class A Preferred Stock (the “Class A Preferred Stock Ratio”). Thus, the Class A Preferred Stock will at all times constitute a voting majority.

F-17

Each share of Class A Preferred Stock is convertible, at the option of the holder, intoone fully paid and nonassessable share of Common Stock (the “Conversion Ratio”), subject to certain adjustments. If the Company, at any time effects a subdivision or combination of the outstanding Common Stock (by any stock split, stock dividend, recapitalization, reverse stock split or otherwise), the applicable Conversion Ratio in effect immediately before that subdivision is proportionately decreased or increased, as applicable, so that the number of shares of Common Stock issuable on conversion of each share of Class A Preferred Stock shall be increased or decreased, a applicable, in proportion to such increase or decrease in the aggregate number of shares of Common Stock outstanding. Additionally, if any reorganization, recapitalization, reclassification, consolidation or merger involving the Company occurs in which the Common Stock (butnot the Class A Preferred Stock) is converted into or exchanged for securities, cash or other property, then each share of Class A Preferred Stock becomes convertible into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Company issuable upon conversion ofone share of the Class A Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction. Pursuant to the reverse stock split by the Company in* April 2024,the Class A Preferred Stock has a Conversion Ratio of 1,125 Class A Preferred shares toone* share of common stock.

Common Stock

On* January 9, 2024,the 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 authorized under the Certificate of Incorporation, from 75,000,000 to 200,000,000. On February 20, 2024,the Company filed the Certificate of Amendment with the Secretary of State for the State of Delaware effectuating the Authorized Shares Increase. As of December 31, 2025,*200,000,000 shares were authorized and 3,183,558 shares of common stock were outstanding.

Holders of the Company's common stock are entitled toone vote for each share held on all matters submitted to a vote of stockholders and donot have cumulative voting rights. An election of directors by Avenue stockholders shall be determined by a plurality of the votes cast by the stockholders entitled to vote on the election. Holders of common stock are entitled to receive proportionately any dividends as* may*be declared by the Company's Board of Directors, subject to any preferential dividend rights of outstanding preferred stock.

In the event of the Company's liquidation or dissolution, the holders of common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of common stock haveno preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to, and* maybe adversely affected by, the rights of the holders of shares of any series of preferred stock that the Company may*designate and issue in the future.

F-18

Equity Incentive Plan

The Company has in effect the2015 Plan. The2015 Plan was adopted in* January**2015* by Avenue's stockholders and an amendment to the plan to increase the number of authorized shares issuable to 3,556 shares was approved by Avenue stockholders in* December 2021.The2015* Plan was amended again to increase the number of authorized shares issuable to 70,223 shares and approved by the Company's stockholders on* January 30, 2023.On June 24, 2024,the Company’s stockholders approved an amendment to the2015* Plan to increase the number of authorized shares issuable to 5,070,223 shares, extend the term of the2015 Plan to* June 24, 2034,increase the limit of shares that maybe issued upon exercise of incentive stock options by 5,000,000 shares, and to increase the annual share limit awards for non-employee directors to 500,000. Under the2015* Plan, the Compensation Committee is authorized to grant stock-based awards to directors, officers, employees and consultants. The2015 Plan limits the term of any option granted under the2015 Plan tono more than 10 years from the date of grant.

Total shares available for the issuance of stock-based awards under the Company’s2015 Plan was 4,575,906 shares at* December 31, 2025*.

The following table summarizes stock-based compensation expense for the years ended* December 31, 2025and2024* (in thousands):

Restricted Stock Units and Restricted Stock Awards

The following table summarizes restricted stock unit and award activity for the year ended* December 31, 2025*:

For the years ended* December 31, 2025* and2024, stock-based compensation expenses associated with the amortization of restricted stock units and restricted stock awards for employees and non-employees were approximately $0.2 million and $0.4 million, respectively.

F-19

At* December 31, 2025*, the Company had unrecognized stock-based compensation expense related to restricted stock units and restricted stock awards of $0.1 million, which is expected to be recognized over the remaining weighted-average vesting period of 0.8 years. The expense is recognized over the vesting period of the award.

Stock Options

The following table summarizes the stock option activity for the years ended* December 31, 2025and2024*:

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of common stock for those options that had exercise prices lower than the fair value of common stock.

Upon the exercise of stock options, the Company will issue new shares of its common stock.

For the years ended* December 31, 2025* and2024, stock-based compensation expenses associated with the amortization of options awards for employees and non-employees were approximately $0.5 million and $0.8 million, respectively. As of* December 31, 2025,*unrecognized compensation cost for options issued was $0.1 million and will be recognized over an estimated weighted average amortization period of 0.8 years.

F-20

The Company used the Black-Scholes Model for determining the estimated fair value of stock-based compensation related to stock options. The table below summarized the assumptions used:

No options were granted for the year ended* December 31, 2025.*

Stock Warrants

The following table summarizes the warrant activity for the years ended* December 31, 2025*, and2024:

For the year ended* December 31, 2025,13,779 Series B warrants originally issued in November 2023and 689,680 Series D warrants originally issued in May 2024*expired. Upon the exercise of warrants, the Company will issue new shares of its common stock.

** January 2024Warrant Inducement and Private Placement

As described in Note1, the issuance of the* January 2024Warrants was considered as part of the cost of an inducement and the January 2024*Warrants were valued using the Black-Scholes Model resulting in a $4.3 million deemed dividend that was recorded to additional paid-in-capital.

The key inputs for the Black-Scholes Model calculations on* January 5, 2024*were as follows:

** May 2024Warrant Inducement and Private Placement

As described in Note1, the issuance of the* May 2024Warrants was considered as part of the cost of an inducement and the November 2023Warrants and January 2024*Warrants were valued using the Black-Scholes Model resulting in a $4.5 million deemed dividend that was recorded to additional paid-in-capital.

The key inputs for the Black-Scholes Model calculations on* May 1, 2024*were as follows:

Note 8 —Common Stock Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC480 and ASC815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC480, meet the definition of a liability pursuant to ASC480, and whether the warrants meet all of the requirements for equity classification under ASC815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

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 donot 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 consolidated balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a gain or loss on the consolidated statements of operations.

F-21

Warrant Liability

The Company has issued freestanding warrants to purchase shares of its common stock in connection with financing activities (* October 2022Warrants and January 2023Warrants as described in Note1*). The outstanding* October 2022Warrants and January 2023*Warrants are classified as liabilities in the balance sheet as they contain terms for redemption of the underlying security that are outside the Company's control.

The fair value of the 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). The Company will continue to re-measure the fair value of the* October 2022Warrant liabilities until exercise or expiration of the warrants on October 10, 2027.The October 2022Warrants originally contained aone*-time down-round price protection feature. In connection with the* January 2023Registered Direct Offering and Private Placement, the down-round price protection feature was triggered and the exercise price for the October 2022Warrants was permanently adjusted to $116.25, which was the offering price for the January 2023Registered Direct Offering and Private Placement. The Black-Scholes model was used to value any outstanding October 2022Warrants and January 2023Warrants as of December 31, 2025and2024.* The approach required management to estimate inputs including expected volatility and expected term and is most significantly impacted by the volatility of the Company's common stock price. These inputs are inherently subjective and require significant analysis and judgment to develop.

Fair Value of Warrant Liabilities

Warrant liabilities are categorized within Level3 of the fair value hierarchy and are measured at fair value on a recurring basis as follows (in thousands):

The key inputs for the* October 2022*Warrants using the Black-Scholes model were as follows:

F-22

Note 9 —Income Taxes

The Company has accumulated net losses since inception. The Company recorded a minimal provision for the year ended* December 31, 2025* and didnot record an income tax provision or benefit during the year ended* December 31,*2024.

The Company adopted ASU2023-09, Income Taxes (Topic740): Improvements to Income Tax Disclosures, on a prospective basis. As a result, the2025 rate reconciliation is presented in accordance with the new disclosure requirements, while the2024 reconciliation continues to be presented under the disclosure requirements in effect for that period.

A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate pursuant to the disclosure requirements of ASU2023-09 for the year ended* December 31, 2025*is as follows:

A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate for the year ended* December 31, 2024*is as follows:

The components of the net deferred tax asset as of* December 31, 2025* and2024 are the following (in thousands):

The Company has determined, based upon available evidence, that it is more likely thannot that the net deferred tax asset willnot be realized and, accordingly, has provided a full valuation allowance against it. A valuation allowance of approximately $34.6 million and $35.0 million was recorded as of* December 31, 2025* and2024, respectively.

As of* December 31, 2025*, the Company had federal and state net operating loss carryforwards of approximately $88.7 million and $144.3 million, respectively. Approximately $74.3 million of the federal net operating loss carryforwards and $3.2 million of the state net operating loss carryforwards can be carried forward indefinitely. The remaining $14.5 million of federal and $141.1 million of state net operating loss carryforwards will begin to expire, ifnot utilized, by2035 and2037, respectively. The Company has $3.0 million of research and development credit carryforwards, which will begin to expire, ifnot utilized, in2035. Utilization of the net operating loss and credit carryforwards* maybe subject to an annual limitation due to the ownership change limitations provided by Section382* of the Internal Revenue Code. The Company hasnot performed a Section382 analysis as of* December 31, 2025*.

There areno significant matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return, in accordance with ASC740, which clarifies the accounting for uncertainty in income taxes recognized in the consolidated financial statements, that have been recorded on the Company's consolidated financial statements for the periods year ended* December 31, 2025and2024.*

Additionally, ASC740 provides guidance on the recognition of interest and penalties related to income taxes. There wereno interest or penalties related to income taxes that have been accrued or recognized as of and for the periods ended* December 31, 2025and2024.*

F-23

The Company is subject to U.S. federal and various state taxes. Because of net operating losses, all federal tax years since inception remain open for the assessment of income taxes. The expiration of the statute of limitations related to the various state income and franchise tax returns varies by state.

On* July 4, 2025,President Donald J. Trump signed the “One Big Beautiful Bill Act” (OBBBA) into law. Key corporate tax provisions include the restoration of100%* bonus depreciation, immediate expensing for domestic research and experimental expenditures, changes to interest limitation rules, and expanded aggregation requirements for compensation deductibility limits. In accordance with ASC740, the Company recognized the effects of the new tax law in the period enacted. As a result, the Company immediately expensed current-year domestic research and experimental expenditures and elected to continue amortizing its existing domestic capitalized research and experimental expenditures over their remaining useful lives. Due to the Company having a full valuation allowance, there wereno impacts to the effective tax rate.

Under ASC2023-09, entities must disclose income taxes paid (net of refunds received), disaggregated between federal and state. This also requires disclosing income taxes paid (net of refunds) by individual jurisdictions that represent more than5% of total income taxes paid (net of refunds).

Because the company doesnot have significant payments for the year ended* December 31, 2025,*no amounts are disclosed.

Note10 — Subsequent Events

On* February 18, 2026,*Avenue entered into a license agreement with Duke University (“Duke”), whereby Avenue obtained an exclusive worldwide license (the "ATX-04 License") from Duke to certain patents and know-how pertaining to clenbuterol for the treatment of lysosomal storage diseases. Under the ATX-04 License, Avenue agreed to make an upfront payment and reimburse certain patent expenses to Duke and has an obligation to make development, regulatory, and commercial milestone payments upon the achievement of certain milestones. In addition, Avenue is obligated to pay a tiered low single-digit royalty on future net sales of ATX-04. Avenue intends to advance ATX-04 through a late-stage clinical development program leveraging existing human safety and efficacy data, with an initial focus on treating Pompe disease as an adjunct to enzyme replacement therapy (“ERT”).

F-24

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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