10-K: Avenue Therapeutics Faces Delisting Amidst Ongoing Legal Dispute with AnnJi

Avenue Therapeutics reports its 10-K filing for FY 2024, highlighting a delisting notice from Nasdaq and an ongoing dispute with AnnJi over the AJ201 license agreement.

Summary

• Avenue Therapeutics, a specialty pharmaceutical company, is focused on developing therapies for neurologic diseases.
• The company's key product candidates include AJ201 for spinal and bulbar muscular atrophy (SBMA), IV tramadol for post-operative acute pain, and BAER-101 for epilepsy and panic disorders.
• Avenue received a delisting notice from Nasdaq on March 17, 2025, and its stock began trading on the OTC Pink Open Market on March 19, 2025.
• A significant dispute has arisen with AnnJi, the licensor of AJ201, regarding the termination of the license agreement.
• Avenue believes the termination is invalid and is pursuing arbitration.
• The company reported a net loss of $11.7 million for the year ended December 31, 2024.
• There is substantial doubt about the company's ability to continue as a going concern.
• Avenue is seeking additional funding through various means, including potential debt or equity financings.
• The company is developing BAER-101 for treatment of neurologic disorders including epilepsy and panic disorders.
• The company is developing IV tramadol for the management of postoperative acute pain.

Sentiment

Score: 3

Explanation: The document presents a challenging financial situation with significant uncertainties, including a delisting notice and a legal dispute, leading to a negative sentiment.

Positives

• Avenue is pursuing arbitration to resolve the dispute with AnnJi and maintain the AJ201 license agreement.
• The company has reached final agreement with the FDA on a Phase 3 safety study protocol for IV tramadol, although initiation is contingent on financing.
• Preclinical data for BAER-101 has shown promising results in suppressing seizure activity.
• The company has a strategy to develop AJ201 for SBMA and potentially other polyQ-related diseases.
• The company has a strategy to develop BAER-101 for treatment of neurologic disorders including epilepsy and panic disorders.

Negatives

• The delisting from Nasdaq could make it more difficult for the company to raise additional funding.
• The dispute with AnnJi may impact the company's ability to further pursue clinical efforts for AJ201.
• The company has incurred significant losses since inception and expects to continue to incur losses for the foreseeable future.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company does not currently have any plans to initiate the Phase 3 safety study for IV tramadol unless it obtains financing for this purpose.

Risks

• The outcome of the dispute with AnnJi is uncertain and could negatively impact the AJ201 program.
• The company's ability to obtain future financing is uncertain.
• The company relies on third parties for several aspects of its operations, including clinical trials and manufacturing.
• The company may not receive regulatory approval for its product candidates.
• The company faces intense competition for its product candidates.
• The company is controlled by Fortress Biotech, which could create conflicts of interest.

Future Outlook

Avenue expects to continue to incur research and development costs and general and administration costs and incur operating losses for at least the next several years as it continues the development of its product candidates. The company intends to obtain additional capital through the sale of debt or equity securities or other arrangements to fund its operations, research and development activity or regulatory approval activity.

Industry Context

The pharmaceutical industry is characterized by rapidly advancing technologies, intense competition and a strong emphasis of proprietary products. The company faces competition and potential competition from a number of sources, including pharmaceutical and biotechnology companies, generic drug companies, drug delivery companies and academic and research institutions.

Comparison to Industry Standards

• The most commonly used opioids in the postoperative and acute pain settings are 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.
• The non-opioid drugs used in this setting 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).
• The most commonly used therapies for anxiety and epilepsy are benzodiazepines.
• Commonly prescribed benzodiazepine therapies are Valium (diazepam), Ativan (lorazepam), Alepam (oxazepam), Alodorm (nitrazepam), Euhypnos (temazepam), Xanax (alprazolam), Clonazepam (klonopin).
• There are other selective GABA A receptor agonists in clinical development such as darigabat (Cerevel Therapeutics), ENX101 (Engrail Therapeutics), and SAN711 (Saniona).
• Product candidates in development for the treatment of SBMA include NIDO-361 (Nido Biosciences) and AAV gene therapy targeting mutant androgen receptor (University of Pennsylvania).
• In Japan, Leuprorelin (Takeda) is approved for the treatment of SBMA but is not approved outside of Japan.

Legal Proceedings

• The Company has filed a Request for Arbitration with the International Court of Arbitration and also intends to follow the dispute resolution procedure set forth in the AnnJi License Agreement, which includes mediation.

Related Party Transactions

• The company has entered into certain agreements with Fortress Biotech, Inc., including the Management Services Agreement and the Founders Agreement.
• The company has entered into a share repurchase agreement with InvaGen, which requires the company to pay InvaGen seven and a half (7.5%) of the proceeds of future financings, as defined in the agreement, up to $4 million in aggregate.

Stakeholder Impact

• The delisting from Nasdaq could negatively impact shareholders.
• The dispute with AnnJi may impact the company's ability to develop AJ201, affecting patients with SBMA.
• The company's financial condition raises concerns about its ability to continue operations, potentially impacting employees and other stakeholders.

Next Steps

• Avenue intends to pursue all rights provided to it under the AnnJi License Agreement and by law.
• Avenue will need to obtain additional financing to carry out its business plan and implement its strategy.
• Avenue will continue to file its required periodic reports and other filings with the SEC.

Key Dates

Keywords

Avenue Therapeutics, AJ201, IV tramadol, BAER-101, AnnJi, delisting, SBMA, epilepsy, pain, FDA, clinical trials, licensing, financing, neurologic diseases, pharmaceutical