AVENUE THERAPEUTICS, INC., 10-K filed on 3/31/2021
Annual Report
v3.21.1
Document and Entity Information - USD ($)
12 Months Ended
Dec. 31, 2020
Mar. 17, 2021
Jun. 30, 2020
Document and Entity Information [Abstract]      
Document Type 10-K    
Document Period End Date Dec. 31, 2020    
Entity Registrant Name AVENUE THERAPEUTICS, INC.    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Non-accelerated Filer    
Entity Small Business true    
Entity Emerging Growth Company true    
Entity Shell Company false    
Entity Public Float     $ 72,342,650
Entity Common Stock, Shares Outstanding   16,748,068  
Entity Central Index Key 0001644963    
Current Fiscal Year End Date --12-31    
Document Fiscal Year Focus 2020    
Document Fiscal Period Focus FY    
Amendment Flag false    
Title of 12(b) Security Common Stock, par value $0.0001 per share    
Trading Symbol ATXI    
Security Exchange Name NASDAQ    
Entity Ex Transition Period true    
v3.21.1
BALANCE SHEETS - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Current Assets:    
Cash and cash equivalents $ 3,132 $ 8,745
Prepaid expenses and other current assets 113 170
Total Assets 3,245 8,915
Current Liabilities:    
Accounts payable and accrued expenses 857 1,101
Accounts payable and accrued expenses - related party 29 14
Licenses payable 0 1,000
Total current liabilities 886 2,115
Total Liabilities 886 2,115
Commitments and Contingencies
Stockholders' Equity    
Common Stock ($0.0001 par value), 50,000,000 shares authorized Common shares, 16,747,803 and 16,682,190 shares issued and outstanding as of December 31, 2020 and 2019, respectively 2 2
Additional paid-in capital 75,625 74,915
Accumulated deficit (73,268) (68,117)
Total Stockholders' Equity 2,359 6,800
Total Liabilities and Stockholders' Equity 3,245 8,915
Class A Preferred Shares    
Stockholders' Equity    
Preferred Stock ($0.0001 par value), 2,000,000 shares authorized Class A Preferred Stock, 250,000 shares issued and outstanding as of December 31, 2020 and 2019, respectively $ 0 $ 0
v3.21.1
BALANCE SHEETS (Parenthetical) - $ / shares
Dec. 31, 2020
Dec. 31, 2019
Preferred Stock, Par or Stated Value Per Share $ 0.0001 $ 0.0001
Preferred Stock, Shares Authorized 2,000,000 2,000,000
Common Stock, Par or Stated Value Per Share $ 0.0001 $ 0.0001
Common Stock, Shares Authorized 50,000,000 50,000,000
Common Stock, Shares, Issued 16,747,803 16,682,190
Common Stock, Shares, Outstanding 16,747,803 16,682,190
Class A Preferred Shares    
Preferred Stock, Shares Issued 250,000 250,000
Preferred Stock, Shares Outstanding 250,000 250,000
v3.21.1
STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Operating expenses:    
Research and development $ 2,866 $ 22,194
Research and development - licenses acquired 0 1,000
General and administrative 2,347 3,071
Loss from operations (5,213) (26,265)
Interest income (62) (357)
Net Loss $ (5,151) $ (25,908)
Net loss per common share outstanding, basic and diluted $ (0.31) $ (1.65)
Weighted average number of common shares outstanding, basic and diluted 16,506,447 15,721,619
v3.21.1
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($)
Class A Preferred Shares
Common Shares
Additional paid-in capital
Accumulated deficit
Total
Balance at Dec. 31, 2018 $ 0 $ 1,000 $ 41,577,000 $ (42,209,000) $ (631,000)
Balance (in shares) at Dec. 31, 2018 250,000 10,667,714      
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Share based compensation $ 0 $ 0 1,839,000 0 1,839,000
Share based compensation (in shares) 0 95,000      
Issuance of common shares, net of costs $ 0 $ 1,000 31,499,000 0 31,500,000
Issuance of common shares, net of costs (in shares) 0 5,833,333      
Cashless exercise of warrants $ 0 $ 0 0 0 0
Cashless exercise of warrants (in shares) 0 86,143      
Net loss $ 0 $ 0 0 (25,908,000) (25,908,000)
Balance at Dec. 31, 2019 $ 0 $ 2,000 74,915,000 (68,117,000) 6,800,000
Balance (in shares) at Dec. 31, 2019 250,000 16,682,190      
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Share based compensation $ 0 $ 0 710,000 0 710,000
Share based compensation (in shares) 0 65,000      
Cashless exercise of warrants $ 0 $ 0 0 0 0
Cashless exercise of warrants (in shares) 0 613      
Net loss $ 0 $ 0 0 (5,151,000) (5,151,000)
Balance at Dec. 31, 2020 $ 0 $ 2,000 $ 75,625,000 $ (73,268,000) $ 2,359,000
Balance (in shares) at Dec. 31, 2020 250,000 16,747,803      
v3.21.1
STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Cash flows from operating activities:    
Net loss $ (5,151) $ (25,908)
Adjustments to reconcile net loss to net cash used in operating activities:    
Share based compensation 710 1,839
Changes in operating assets and liabilities:    
Prepaid expenses and other current assets 57 (18)
Deferred financing costs 0 61
Accounts payable and accrued expenses (244) (2,760)
Accounts payable and accrued expenses - related party 15 (473)
Licenses payable 0 1,000
Net cash used in operating activities (4,613) (26,259)
Cash flows from investing activities:    
Purchase of Short-term investments (certificates of deposit) 0 (5,000)
Maturity of Short-term investments (certificates of deposit) 0 5,000
Milestone payment for research and development licenses (1,000) 0
Net cash used in investing activities (1,000) 0
Cash flows from financing activities:    
Issuance of common shares 0 35,000
Offering costs 0 (2,667)
Net cash provided by financing activities 0 32,333
Net change in cash (5,613) 6,074
Cash and cash equivalents, beginning of period 8,745 2,671
Cash and cash equivalents, end of period 3,132 8,745
Non-cash financing activities:    
Prior period financing costs $ 0 $ 833
v3.21.1
Organization, Plan of Business Operations
12 Months Ended
Dec. 31, 2020
Organization, Plan of Business Operations  
Organization, Plan of Business Operations

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”), to develop and market pharmaceutical products for the acute care setting in the United States. The Company is focused on developing its product candidate, an intravenous (“IV”) formulation of tramadol HCI (“IV Tramadol”), for post-operative acute pain.

Stock Purchase and Merger Agreement

On November 12, 2018, the Company and InvaGen Pharmaceuticals Inc. (“InvaGen”), entered into definitive agreements with two closing stages for a proposed acquisition of the Company for a total aggregate consideration of $215.0 million (a portion of which was already paid in connection with the Stock Purchase Transaction as described below) subject to certain potential reductions. The Stock Purchase and Merger Agreement (the “SPMA”) was approved by a majority of the Company’s stockholders, including a majority of its non-affiliated stockholders, at its special shareholder meeting on February 6, 2019. On February 8, 2019, InvaGen acquired 5,833,333 shares of the Company’s common stock at $6.00 per share (the “Stock Purchase Transaction”) for net proceeds of $31.5 million after deducting commission fees and other offering costs, representing a 33.3% stake in the Company’s capital stock on a fully diluted basis.

At the second stage closing, InvaGen will acquire the remaining shares of Avenue’s common stock, pursuant to a reverse triangular merger with Avenue remaining as the surviving entity, for up to $180.0 million in the aggregate (the “Merger Transaction”). The second stage closing is subject to the satisfaction of certain closing conditions, including conditions pertaining to the U.S. Food and Drug Administration (“FDA”) approval by April 30, 2021, labeling, scheduling and the absence of any Risk Evaluation and Mitigation Strategy or similar restrictions in effect with respect to IV Tramadol, as well as the filing and expiration of any waiting period applicable to the acquisition under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which filing both parties completed on March 12, 2021.

Subject to the terms and conditions described in the SPMA, InvaGen may also provide interim financing to the Company in an amount of up to $7.0 million during the time period between the Stock Purchase Transaction (which occurred on February 8, 2019) and the Merger Transaction. Any amounts drawn on the interim financing will be deducted from the aggregate consideration payable to the Company’s stockholders by virtue of the Merger Transaction. There have been no amounts drawn upon this interim financing as of December 31, 2020.

In October 2020, InvaGen communicated to the Company that it believes a Material Adverse Effect (as defined in the SPMA) has occurred due to the impact of the COVID-19 pandemic on potential commercialization and projected sales of IV Tramadol. Additionally, in connection with the resubmission of the Company's NDA in February 2021, InvaGen communicated to the Company that it believes the proposed label for IV Tramadol would also constitute a Material Adverse Effect on the purported basis that the proposed label under certain circumstances would make the product commercially unviable, and in addition that the indication that the FDA approves may fail to satisfy a condition precedent to InvaGen’s obligation to consummate the second stage closing of the SPMA. While the Company disagrees with InvaGen's assertions, it is possible InvaGen could attempt to avoid its obligation to consummate the merger, terminate the SPMA, and/or pursue monetary claims against the Company.

Over the past several months, the Company has communicated with InvaGen relating to its assertions that Material Adverse Effects have occurred. Nevertheless, InvaGen has communicated to the Company its desire to consider all options on the proposed merger, including the option to not consummate the merger. As a result, the possible timing and likelihood of the completion of the merger are uncertain, and, accordingly, there can be no assurance that such transaction will be completed on the expected terms, anticipated schedule, or at all.

In the event that the Company does not receive FDA approval for IV Tramadol by April 30, 2021, InvaGen will have the right to terminate the SPMA and will have no further obligations to consummate the second stage closing under the SPMA. In the event that InvaGen does not exercise its right to terminate the SPMA, certain restrictions relating to financings and strategic alternatives could exist through October 31, 2021, the time at which the Company can terminate the SPMA. In the event of termination of the SPMA, InvaGen will retain certain rights pursuant to the Stockholder’s Agreement between the Company and InvaGen. These rights exist as long as InvaGen maintains at least 75% of the common shares acquired in the first stage closing. Certain actions relating to equity issuances and changes to capital stock are restricted without the prior written consent of InvaGen during this time.

Liquidity and Capital Resources

Going Concern

The Company is not 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 may never become profitable. As of December 31, 2020, the Company had an accumulated deficit of $73.3 million.

On October 12, 2020, the Company announced that it had received a Complete Response Letter ("CRL") from the FDA regarding the Company's NDA for IV Tramadol. The CRL cited deficiencies related to the terminal sterilization validation and stated that IV Tramadol, intended to treat patients in acute pain who require an opioid, is not safe for the intended patient population. On February 12, 2021, the Company resubmitted its NDA to the FDA for IV Tramadol. The NDA resubmission follows the receipt of official minutes from a Type A meeting with the FDA. The resubmission included revised language relating to the proposed product label and a report relating to terminal sterilization validation. The FDA assigned a Prescription Drug User Fee Act goal date of April 12, 2021. The Company's ability to potentially commercialize IV Tramadol, and the timing of potential commercialization, is dependent on the FDA's review of the Company's resubmission of its NDA for IV Tramadol, ultimate FDA approval, and potentially additional capital.

As of December 31, 2020, the Company had cash and cash equivalents of $3.1 million. In the event that IV Tramadol is approved by the FDA, this triggers $5.0 million in milestone payments, to which the Company currently does not have sufficient funding. In the event that IV Tramadol is not approved by the FDA, the Company believes that its cash and cash equivalents should be sufficient to fund its operating expenses through the end of the third quarter of 2021. The Company will need to secure additional funds through equity or debt offerings, or other potential sources. The Company cannot be certain that additional funding will be available on acceptable terms, or at all. These factors individually and collectively raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date of these audited financial statements. The audited financial statements do not contain any adjustments that might result from the resolution of any of the above uncertainty.

In addition to the foregoing, based on current assessments, the Company does not expect any material impact on its development timeline and its liquidity due to the worldwide spread of the COVID-19 virus (except as may be implicated by the alleged Material Adverse Effect claimed by InvaGen). However, the Company is continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the actions implemented to combat the virus throughout the world. The Company will also continue to assess the alleged Material Adverse Effect claimed by InvaGen.

v3.21.1
Significant Accounting Policies
12 Months Ended
Dec. 31, 2020
Significant Accounting Policies  
Significant Accounting Policies

Note 2 — Significant Accounting Policies

Basis of Presentation

The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“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 has no subsidiaries.

Use of Estimates

The preparation of 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 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 an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at December 31, 2020 and 2019 consisted of cash, money market funds and certificates of deposit in institutions in the United States. Balances at certain institutions have exceeded Federal Deposit Insurance Corporation (“FDIC”) insured limits and U.S. government agency securities.

Accounts Payable and Accrued Expenses – Related Party

Accounts payable and accrued expenses consist of amounts due to Fortress, a related party, and are recorded at the invoiced amount.

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 to third 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 to third parties for license and milestone costs related to in-licensed products and technology, payments made to third 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 has not reached commercial feasibility and have no 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 has no alternative future use. Accordingly, the total purchase price including any development milestone payments for the licenses acquired are reflected as research and development — licenses acquired on the Company’s Statements of Operations.

Annual Stock Dividend

In September 2016, in connection with the Amended and Restated Articles of Incorporation, the Company issued 250,000 Class A preferred shares to Fortress. The Class A preferred shares entitled the holder to a stock dividend equal to 2.5% of the fully diluted outstanding equity of the Company (“The Annual Stock Dividend”) to be paid on February 17 of each year. On June 13, 2018, the Company’s Stockholders adopted an amendment to the Company’s Third Amended and Restated Certificate of Incorporation amending the payment date going forward to January 1 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 Section 4 of the Stockholders Agreement that was signed between the Company, certain stockholders of the Company, and InvaGen.

Stock-Based Compensation

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. Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award.

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.

Income Taxes

The Company accounts for income taxes under ASC 740, Income Taxes (“ASC 740”). ASC 740 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. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

ASC 740 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. ASC 740 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 are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The 2017 through 2019 tax years are the only periods subject to examination upon filing of appropriate tax returns. The Company believes that its income tax positions and deductions would be sustained on audit and does not 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 were no amounts accrued for penalties or interest as of or during the years ended December 31, 2020 and 2019. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

Net Loss Per Share

Loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding, excluding unvested restricted stock and stock options and preferred shares, during the period. Since dividends are declared paid and set aside among the holders of shares of common stock and Class A common stock pro-rata on an as-if-converted basis, the two-class method of computing net loss per share is not required.

The following table sets forth the potential common shares that could potentially dilute basic income per share in the future that were not included in the computation of diluted net loss per share because to do so would have been anti-dilutive for the periods presented:

 

 

 

 

 

 

 

For the Years Ended

 

    

December 31, 

    

December 31, 

 

 

2020

 

2019

Unvested restricted stock units/awards

 

1,139,910

 

1,045,162

Preferred shares

 

250,000

 

250,000

Total potential dilutive effect

 

1,389,910

 

1,295,162

 

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, (“ASU 2019-12”) which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted ASU 2019-12 on January 1, 2021 and its adoption will not have a material impact on the Company’s financial statements and related disclosures.

Coronavirus Aid, Relief and Economic Security Act ("CARES Act")

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law on March 27, 2020. The CARES Act, among other things, includes tax provisions relating to refundable payroll tax credits, deferment of employer's social security payments, net operating loss utilization and carryback periods, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act has no material impact on the Company's income tax provision (benefit) for 2020.

 

On December 27, 2020, the President of the United States signed the Consolidated Appropriations Act, 2021 (“Consolidated Appropriations Act”) into law. The Consolidated Appropriations Act is intended to enhance and expand certain provisions of the CARES Act, allows for the deductions of expenses related to the Payroll Protection Program funds received by companies, and provides an update to meals and entertainment expensing for 2021. The Consolidated Appropriations Act has no material impact to the Company’s income tax provision (benefit) for 2020.

 

v3.21.1
License/Supplier Agreements
12 Months Ended
Dec. 31, 2020
License/Supplier Agreements  
License/Supplier Agreements

Note 3 — License/Supplier Agreements

Effective as of February 17, 2015, Fortress transferred the Revogenex license and all other rights and obligations under the License Agreement to Avenue, 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 June 17, 2015, Fortress paid an additional $1.0 million to Revogenex after receiving all the assets specified in the agreement. The $3.0 million cumulative payment was included in research and development-licenses acquired in the statements of operations. In December 2019, $1.0 million became due to Revogenex in accordance with the Company's submission of its NDA. The amount was expensed in research and development-licenses acquired in the statement of operations for the year ended December 31, 2019 and was included in licenses payable on the Company's balance sheets as of December 31, 2019 and subsequently paid in the first quarter of 2020. 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 for sales of the product.

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 to eight 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 royalty payments for sales of the product.

v3.21.1
Related Party Agreements
12 Months Ended
Dec. 31, 2020
Related Party Agreements  
Related Party Agreements

Note 4 — Related Party Agreements

Founders Agreement and Management Services Agreement with Fortress

Fortress entered into a Founders Agreement with Avenue in February 2015, 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 consideration for the Founders Agreement, Avenue assumed $3.0 million in debt that Fortress accumulated for expenses and costs of forming Avenue and obtaining the IV Tramadol license. This debt was repaid to Fortress in 2017. As additional consideration for the transfer of rights under the Founders Agreement, Avenue shall also: (i) issue annually to Fortress, on the anniversary date of the Founders Agreement, shares of common stock equal to two and one half percent (2.5%) of the fully-diluted outstanding equity of Avenue at the time of issuance; (ii) pay an equity fee in shares of Avenue common stock, payable within five (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 Fortress no longer has majority voting control in Avenue’s voting equity, equal to two and one half percent (2.5%) of the gross amount of any such equity or debt financing; and (iii) pay a cash fee equal to four and one half percent (4.5%) of Avenue’s annual net sales, payable on an annual basis, within ninety (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 a one-time change in control fee equal to five (5x) times the product of (i) net sales for the twelve (12) months immediately preceding the change in control and (ii) four and one-half percent (4.5%). This additional consideration was waived on November 12, 2018 with the Waiver Agreement signed between Avenue, Fortress and InvaGen.

On September 13, 2016, the Company entered into an Amended and Restated the Founders Agreement (“A&R Founders Agreement”) with Fortress. The A&R Founders Agreement eliminated the Annual Equity Fee in connection with the original agreement and added a term of 15 years, which upon expiration automatically renews for successive one-year periods unless terminated by Fortress or a Change in Control occurs. Concurrently with the A&R Founders Agreement the Company entered into an Exchange Agreement whereby the Company exchanged Fortress’ 2.3 million Class A common shares for approximately 2.5 million common shares and 250,000 Class A Preferred shares (see Note 7).

Effective as of February 17, 2015, Fortress entered into a Management Services Agreement (the “MSA”) with Avenue and each of Avenue’s current directors and officers who are directors or officers of Fortress, excluding services provided by Dr. Lucy Lu, the Company’s current Chief Executive Officer as of June 26, 2017 and the former Chief Financial Officer of Fortress (resigned as of June 26, 2017), to provide services to Avenue pursuant to the terms of the MSA. Pursuant to the terms of the MSA, for a period of five (5) years, Fortress will render advisory and consulting services to Avenue. Services provided under the MSA may include, 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 is not obligated to take or act upon any advice rendered from Fortress and Fortress shall not 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 the first 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 November 12, 2018, the MSA fee was waived with the Waiver Agreement signed between Avenue, Fortress and InvaGen.

Facility Agreement with Fortress and InvaGen

On June 12, 2020, the Company, Fortress and InvaGen entered into a Facility Agreement ("Facility Agreement") whereby beginning on October 1, 2020 the Company may borrow up to $2.0 million collectively from Fortress and InvaGen, subject to certain conditions. Fortress' commitment amount is $0.8 million, and InvaGen's is $1.2 million, and a 7% per annum interest rate applies (payable on the last day of each fiscal quarter). Repayment of the loan is due upon the earliest of i) the second stage closing ii) April 29, 2021 and iii) the date that is 30 days following the termination of the SPMA. As of December 31, 2020, there have been no amounts drawn on the Facility Agreement.

v3.21.1
Accounts Payable and Accrued Expenses
12 Months Ended
Dec. 31, 2020
Accounts Payable and Accrued Expenses  
Accounts Payable and Accrued Expenses

Note 5  Accounts Payable and Accrued Expenses

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

 

 

 

 

 

 

 

 

 

As of December 31, 

 

As of December 31, 

 

    

2020

    

2019

Accounts payable

 

$

143

 

$

354

Accrued employee compensation

 

 

23

 

 

477

Accrued contracted services and other

 

 

691

 

 

270

Accounts payable and accrued expenses

 

$

857

 

$

1,101

 

v3.21.1
Commitments and Contingencies
12 Months Ended
Dec. 31, 2020
Commitments and Contingencies  
Commitments and Contingencies

Note 6 — Commitments and Contingencies

Leases

The Company is not 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 is not determinable, then the Company accrues the minimum of the range of probable loss. As of December 31, 2020 and 2019, there was no litigation against the Company.

v3.21.1
Stockholders' Equity (Deficit)
12 Months Ended
Dec. 31, 2020
Stockholders' Equity (Deficit)  
Stockholders' Equity (Deficit)

Note 7 — Stockholders’ Equity (Deficit)

Class A Preferred Shares

On September 13, 2016, the Class A Common Stock was eliminated and 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 PIK Dividend right (as described below). The undesignated Preferred Stock may be issued from time to time in one 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 (but not below the number of shares of any such series then outstanding).

Pursuant to the Company’s Second Amended and Restated Certificate of Incorporation, the holders of the outstanding shares of Class A Preferred Stock shall receive on each February 17 (each a “PIK Dividend Payment Date”) after the original issuance date of the Class A Preferred Stock until the date all outstanding Class A Preferred Stock is converted into Common Stock or redeemed (and the purchase price is paid in full), pro rata per share dividends paid in additional fully paid and nonassessable shares of Common Stock (such dividend being herein called “PIK Dividends”) such that the aggregate number of shares of Common Stock issued pursuant to such PIK Dividend is equal to two and one-half percent (2.5%) of the Corporation’s fully-diluted outstanding capitalization on the date that is one (1) business day prior to any PIK Dividend Payment Date (“PIK Record Date”). In the event the Class A Preferred Stock converts into Common Stock, the holders shall receive all PIK Dividends accrued through the date of such conversion. No dividend or other distribution shall be paid, or declared and set apart for payment (other than dividends payable solely in capital stock on the capital stock of the Company) on the shares of Common Stock until all PIK Dividends on the Class A Preferred Stock shall have been paid or declared and set apart for payment. All dividends are non-cumulative. On June 13, 2018, the Company’s Stockholders adopted an amendment to the Company’s Third Amended and Restated Certificate of Incorporation amending the PIK Dividend Payment Date going forward to January 1 of each year. This PIK Dividend was waived in connection with the Waiver Agreement signed on November 12, 2018 between Avenue, Fortress and InvaGen.

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 to one and one-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 Common Stock and the 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.

Each share of Class A Preferred Stock is convertible, at the option of the holder, into one 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 (but not 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 of one 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.

Common Stock

As of December 31, 2020, the Company’s authorized capital stock consists of 50,000,000 shares of common stock, with $0.0001 par value.

Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. An election of directors by our 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 our Board of Directors, subject to any preferential dividend rights of outstanding preferred stock.

In the event of our 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 have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

Equity Incentive Plan

The Company has in effect the 2015 Incentive Plan (“2015 Incentive Plan’). The 2015 Incentive Plan was adopted in January 2015 by our stockholders. Under the 2015 Incentive Plan, the compensation committee of the Company’s board of directors is authorized to grant stock-based awards to directors, officers, employees and consultants. The plan authorizes grants to issue up to 2,000,000 shares of authorized but unissued common stock and expires 10 years from adoption and limits the term of each option to no more than 10 years from the date of grant.

Total shares available for the issuance of stock-based awards under the Company’s 2015 Incentive Plan was 229,436 shares at December 31, 2020.

Restricted Stock Units and Restricted Stock Awards

The following table summarizes restricted stock unit and award activity for the year ended December 31, 2020:

 

 

 

 

 

 

 

    

 

    

Weighted

 

 

Number of Units

 

Average Grant

 

 

and Awards

 

Date Fair Value

Unvested balance at December 31, 2019

 

1,045,162

 

$

5.10

Granted

 

176,413

 

$

10.99

Vested

 

(81,665)

 

$

5.78

Unvested balance at December 31, 2020

 

1,139,910

 

$

5.96

 

For the years ended December 31, 2020 and 2019 stock-based compensation expenses associated with the amortization of restricted stock units and restricted stock awards for employees and non-employees were approximately $0.7 million and $1.8 million, respectively.

For the years ended December 31, 2020, and 2019, the weighted average grant date fair value of restricted stock units and awards granted was $10.99 and $5.95, respectively. The total fair value of restricted stock units and awards that vested during the years ended December 31, 2020 and 2019 was $0.5 million and $1.2 million, respectively.

At December 31, 2020, the Company had unrecognized stock-based compensation expense related to restricted stock units and restricted stock awards of $0.4 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.1 years. This amount does not include, as of December 31, 2020, 487,586 shares of restricted stock outstanding which are performance-based and vest upon achievement of certain corporate milestones. The expense is recognized over the vesting period of the award. Stock-based compensation for milestone awards will be measured and recorded if and when it is probable that the milestone will be achieved.

Stock Options

On August 15, 2017, 20,000 stock options were granted to a consultant under the 2015 Incentive Plan. These options were cancelled in January 2019 as the vesting criteria pertaining to the price of the Company's stock was not met by the deadline.

Stock Warrants

The following table summarizes the warrant activity for the year ended December 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

Aggregate

 

 

 

 

Average Exercise

 

Intrinsic Value

 

    

Warrants

    

Price

    

(in thousands)

Outstanding, December 31, 2019

 

16,454

 

$

0.6079

 

$

148

Exercised

 

(613)

 

$

0.0001

 

 

 —

Outstanding, December 31, 2020

 

15,841

 

$

0.6315

 

$

84

 

v3.21.1
Income Taxes
12 Months Ended
Dec. 31, 2020
Income Taxes  
Income Taxes

Note 8 — Income Taxes

The Company has accumulated net losses since inception and has not recorded an income tax provision or benefit during the years ended December 31, 2020 and 2019.

A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate is as follows:

 

 

 

 

 

 

 

 

For the years ended December 31, 

 

 

    

2020

    

2019

 

Statutory federal income tax rate

 

21

%  

21

%

State taxes, net of federal tax benefit

 

13

%  

14

%

State tax rate change

 

 —

%  

 1

%

Stock-based compensation shortfall

 

 6

%

 —

%

Other

 

 —

%  

 4

%

Credits

 

 —

%  

 5

%

Change in valuation allowance

 

(40)

%  

(45)

%

Income taxes provision (benefit)

 

 —

%  

 —

%

 

The components of the net deferred tax asset as of December 31, 2020 and 2019 are the following (in thousands):

 

 

 

 

 

 

 

 

 

 

As of December 31, 

 

    

2020

    

2019

Deferred tax assets:

 

 

  

 

 

  

Net operating loss carryovers

 

$

22,240

 

$

19,953

Stock compensation and other

 

 

760

 

 

843

Amortization of license

 

 

1,283

 

 

1,413

Accruals and reserves

 

 

16

 

 

15

Tax credits

 

 

2,640

 

 

2,640

Total deferred tax assets

 

 

26,939

 

 

24,864

Less valuation allowance

 

 

(26,939)

 

 

(24,864)

Deferred tax assets, net of valuation allowance

 

$

 —

 

$

 —

 

The Company has determined, based upon available evidence, that it is more likely than not that the net deferred tax asset will not be realized and, accordingly, has provided a full valuation allowance against it. A valuation allowance of approximately $26.9 million and $24.9 million was recorded for the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020, the Company had federal and state net operating loss carryforwards of approximately $67.0 million and $125.5 million, respectively. Approximately $52.5 million of the federal net operating loss carryforwards can be carried forward indefinitely. The remaining $14.5 million of federal and all state net operating loss carryforwards will begin to expire, if not utilized, by 2035 and 2028, respectively. The Company has $2.6 million of research and development credit carryforwards, which will begin to expire, if not utilized, in 2035. Utilization of the net operating loss and credit carryforwards may be subject to an annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986. Certain tax attributes are subject to an annual limitation as a result of the Company’s June 2017 initial public offering, which constitutes an ownership change under Section 382. Certain tax attributes may be subject to an annual limitation as a result of the SPMA with InvaGen, which could constitute an ownership change under Section 382.

There are no significant matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return, in accordance with ASC 740, which clarifies the accounting for uncertainty in income taxes recognized in the financial statements, that have been recorded on the Company’s financial statements for the periods ended December 31, 2020 and 2019. The Company does not anticipate a material change to unrecognized tax benefits in the next twelve months.

Additionally, ASC 740 provides guidance on the recognition of interest and penalties related to income taxes. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the periods ended December 31, 2020 and 2019.

The federal and state tax returns for the years ended December 31, 2017, 2018, and 2019 are currently open for examination under the applicable federal and state income tax statues of limitations.  The Company is currently under examination by New York City Department of Finance for tax years between 2017 and 2019. At this time, the Company does not believe that the outcome of any examination will have a material impact on the Company’s results of operations and financial position.

v3.21.1
Subsequent Events
12 Months Ended
Dec. 31, 2020
Subsequent Events  
Subsequent Events

Note 9 — Subsequent Events

 

On February 12, 2021, the Company resubmitted its NDA to the FDA for IV Tramadol. The NDA for IV Tramadol was resubmitted following the receipt of official minutes from a Type A meeting with the FDA, which was conducted following a CRL issued by the FDA in October 2020. The resubmission included revised language relating to the proposed product label and a report relating to terminal sterilization validation. The FDA assigned a Prescription Drug User Fee Act goal date of April 12, 2021 for the resubmitted NDA for IV Tramadol.

v3.21.1
Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2020
Significant Accounting Policies  
Basis of Presentation

Basis of Presentation

The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“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 has no subsidiaries.

Use of Estimates

Use of Estimates

The preparation of 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 financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at December 31, 2020 and 2019 consisted of cash, money market funds and certificates of deposit in institutions in the United States. Balances at certain institutions have exceeded Federal Deposit Insurance Corporation (“FDIC”) insured limits and U.S. government agency securities.

Accounts Payable and Accrued Expenses - Related Party

Accounts Payable and Accrued Expenses – Related Party

Accounts payable and accrued expenses consist of amounts due to Fortress, a related party, and are recorded at the invoiced amount.

Research and Development

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 to third 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 to third parties for license and milestone costs related to in-licensed products and technology, payments made to third 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 has not reached commercial feasibility and have no 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 has no alternative future use. Accordingly, the total purchase price including any development milestone payments for the licenses acquired are reflected as research and development — licenses acquired on the Company’s Statements of Operations.

Annual Stock Dividend

Annual Stock Dividend

In September 2016, in connection with the Amended and Restated Articles of Incorporation, the Company issued 250,000 Class A preferred shares to Fortress. The Class A preferred shares entitled the holder to a stock dividend equal to 2.5% of the fully diluted outstanding equity of the Company (“The Annual Stock Dividend”) to be paid on February 17 of each year. On June 13, 2018, the Company’s Stockholders adopted an amendment to the Company’s Third Amended and Restated Certificate of Incorporation amending the payment date going forward to January 1 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 Section 4 of the Stockholders Agreement that was signed between the Company, certain stockholders of the Company, and InvaGen.

Stock-Based Compensation

Stock-Based Compensation

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. Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award.

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.

Income Taxes

Income Taxes

The Company accounts for income taxes under ASC 740, Income Taxes (“ASC 740”). ASC 740 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. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

ASC 740 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. ASC 740 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 are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The 2017 through 2019 tax years are the only periods subject to examination upon filing of appropriate tax returns. The Company believes that its income tax positions and deductions would be sustained on audit and does not 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 were no amounts accrued for penalties or interest as of or during the years ended December 31, 2020 and 2019. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

Net Loss Per Share

Net Loss Per Share

Loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding, excluding unvested restricted stock and stock options and preferred shares, during the period. Since dividends are declared paid and set aside among the holders of shares of common stock and Class A common stock pro-rata on an as-if-converted basis, the two-class method of computing net loss per share is not required.

The following table sets forth the potential common shares that could potentially dilute basic income per share in the future that were not included in the computation of diluted net loss per share because to do so would have been anti-dilutive for the periods presented:

 

 

 

 

 

 

 

For the Years Ended

 

    

December 31, 

    

December 31, 

 

 

2020

 

2019

Unvested restricted stock units/awards

 

1,139,910

 

1,045,162

Preferred shares

 

250,000

 

250,000

Total potential dilutive effect

 

1,389,910

 

1,295,162

 

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, (“ASU 2019-12”) which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted ASU 2019-12 on January 1, 2021 and its adoption will not have a material impact on the Company’s financial statements and related disclosures.

Coronavirus Aid, Relief and Economic Security Act ("CARES Act")

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law on March 27, 2020. The CARES Act, among other things, includes tax provisions relating to refundable payroll tax credits, deferment of employer's social security payments, net operating loss utilization and carryback periods, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act has no material impact on the Company's income tax provision (benefit) for 2020.

 

On December 27, 2020, the President of the United States signed the Consolidated Appropriations Act, 2021 (“Consolidated Appropriations Act”) into law. The Consolidated Appropriations Act is intended to enhance and expand certain provisions of the CARES Act, allows for the deductions of expenses related to the Payroll Protection Program funds received by companies, and provides an update to meals and entertainment expensing for 2021. The Consolidated Appropriations Act has no material impact to the Company’s income tax provision (benefit) for 2020.

v3.21.1
Significant Accounting Policies (Tables)
12 Months Ended
Dec. 31, 2020
Significant Accounting Policies  
Schedule of diluted net loss per share

The following table sets forth the potential common shares that could potentially dilute basic income per share in the future that were not included in the computation of diluted net loss per share because to do so would have been anti-dilutive for the periods presented:

 

 

 

 

 

 

 

For the Years Ended

 

    

December 31, 

    

December 31, 

 

 

2020

 

2019

Unvested restricted stock units/awards

 

1,139,910

 

1,045,162

Preferred shares

 

250,000

 

250,000

Total potential dilutive effect

 

1,389,910

 

1,295,162

 

v3.21.1
Accounts Payable and Accrued Expenses (Tables)
12 Months Ended
Dec. 31, 2020
Accounts Payable and Accrued Expenses  
Schedule of accounts payable, accrued expenses and other liabilities

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

 

 

 

 

 

 

 

 

 

As of December 31, 

 

As of December 31, 

 

    

2020

    

2019

Accounts payable

 

$

143

 

$

354

Accrued employee compensation

 

 

23

 

 

477

Accrued contracted services and other

 

 

691

 

 

270

Accounts payable and accrued expenses

 

$

857

 

$

1,101

 

v3.21.1
Stockholders' Equity (Deficit) (Tables)
12 Months Ended
Dec. 31, 2020
Stockholders' Equity (Deficit)  
Schedule of restricted stock unit and award activity

The following table summarizes restricted stock unit and award activity for the year ended December 31, 2020:

 

 

 

 

 

 

 

    

 

    

Weighted

 

 

Number of Units

 

Average Grant

 

 

and Awards

 

Date Fair Value

Unvested balance at December 31, 2019

 

1,045,162

 

$

5.10

Granted

 

176,413

 

$

10.99

Vested

 

(81,665)

 

$

5.78

Unvested balance at December 31, 2020

 

1,139,910

 

$

5.96

 

Schedule of warrant activity

The following table summarizes the warrant activity for the year ended December 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

Aggregate

 

 

 

 

Average Exercise

 

Intrinsic Value

 

    

Warrants

    

Price

    

(in thousands)

Outstanding, December 31, 2019

 

16,454

 

$

0.6079

 

$

148

Exercised

 

(613)

 

$

0.0001

 

 

 —

Outstanding, December 31, 2020

 

15,841

 

$

0.6315

 

$

84

 

v3.21.1
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2020
Income Taxes  
Schedule of federal rate

A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate is as follows:

 

 

 

 

 

 

 

 

For the years ended December 31, 

 

 

    

2020

    

2019

 

Statutory federal income tax rate

 

21

%  

21

%

State taxes, net of federal tax benefit

 

13

%  

14

%

State tax rate change

 

 —

%  

 1

%

Stock-based compensation shortfall

 

 6

%

 —

%

Other

 

 —

%  

 4

%

Credits

 

 —

%  

 5

%

Change in valuation allowance

 

(40)

%  

(45)

%

Income taxes provision (benefit)

 

 —

%  

 —

%

 

Schedule of deferred tax assets

The components of the net deferred tax asset as of December 31, 2020 and 2019 are the following (in thousands):

 

 

 

 

 

 

 

 

 

 

As of December 31, 

 

    

2020

    

2019

Deferred tax assets:

 

 

  

 

 

  

Net operating loss carryovers

 

$

22,240

 

$

19,953

Stock compensation and other

 

 

760

 

 

843

Amortization of license

 

 

1,283

 

 

1,413

Accruals and reserves

 

 

16

 

 

15

Tax credits

 

 

2,640

 

 

2,640

Total deferred tax assets

 

 

26,939

 

 

24,864

Less valuation allowance

 

 

(26,939)

 

 

(24,864)

Deferred tax assets, net of valuation allowance

 

$

 —

 

$

 —

 

v3.21.1
Organization, Plan of Business Operations (Details) - USD ($)
$ / shares in Units, $ in Thousands
12 Months Ended
Feb. 08, 2019
Dec. 31, 2020
Dec. 31, 2019
Nov. 12, 2018
Cash and cash equivalents   $ 3,132 $ 8,745  
Milestone Payments   5,000    
Accumulated deficit   $ 73,268 $ 68,117  
Line of Credit [Member]        
Interim Financing Amount $ 7,000      
Invagen Pharmaceuticals Inc [Member]        
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned $ 31,500     $ 215,000
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares 5,833,333      
Business Acquisition, Share Price $ 6.00      
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners 33.30%      
Invagen Pharmaceuticals Inc [Member] | Common Shares        
Stock Issued During Period, Value, Acquisitions $ 180,000      
v3.21.1
Significant Accounting Policies (Details) - shares
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total potential dilutive effect (in shares) 1,389,910 1,295,162
Restricted stock units/awards    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total potential dilutive effect (in shares) 1,139,910 1,045,162
Preferred shares    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total potential dilutive effect (in shares) 250,000 250,000
v3.21.1
Significant Accounting Policies - Additional Information (Details) - USD ($)
1 Months Ended
Sep. 30, 2016
Dec. 31, 2020
Dec. 31, 2019
Significant Accounting Policies      
Stock Issued During Period, Shares, New Issues 250,000    
Preferred Stock, Dividend Rate, Percentage 2.50%    
Amounts accrued for the payment of interest and penalties   $ 0 $ 0
v3.21.1
License/Supplier Agreements (Details) - USD ($)
$ in Millions
1 Months Ended
Dec. 31, 2019
Oct. 29, 2018
Jun. 17, 2015
Revogenex License [Member]      
Contractual Obligation, Maximum Future Payments     $ 3.0
IV Tramadol [Member] | Fortress [Member]      
Payments to Acquire in Process Research and Development     3.0
IV Tramadol [Member] | Fortress [Member] | Upfront Payment [Member]      
Payments to Acquire in Process Research and Development     2.0
IV Tramadol [Member] | Fortress [Member] | Additional Payment [Member]      
Payments to Acquire in Process Research and Development     $ 1.0
Polpharma [Member]      
Payments to Acquire in Process Research and Development   $ 2.0  
New Drug Application [Member] | Revogenex License [Member]      
Payments to Acquire in Process Research and Development $ 1.0    
v3.21.1
Related Party Transactions (Details) - USD ($)
1 Months Ended 12 Months Ended
Sep. 13, 2016
Jun. 26, 2017
Feb. 17, 2015
Dec. 31, 2020
Jun. 12, 2020
Agreement Description Terms       (i) issue annually to Fortress, on the anniversary date of the Founders Agreement, shares of common stock equal to two and one half percent (2.5%) of the fully-diluted outstanding equity of Avenue at the time of issuance; (ii) pay an equity fee in shares of Avenue common stock, payable within five (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 Fortress no longer has majority voting control in Avenue's voting equity, equal to two and one half percent (2.5%) of the gross amount of any such equity or debt financing; and (iii) pay a cash fee equal to four and one half percent (4.5%) of Avenue's annual net sales, payable on an annual basis, within ninety (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 a one-time change in control fee equal to five (5x) times the product of (i) net sales for the twelve (12) months immediately preceding the change in control and (ii) four and one-half percent (4.5%).  
Maximum credit facility amount         $ 2,000,000
Credit facility amount       $ 0  
Aggregate interest percentage       7.00%  
Invagen Pharmaceuticals Inc [Member]          
Credit facility amount         1,200,000
Fortress [Member]          
Credit facility amount         $ 800,000
Asset Management Income [Member]          
Annual Consulting Fee   $ 500,000      
Increase in Annual Consulting Fee     $ 1,000,000    
Excess in Net Assets Value     100,000,000    
AR Founders Agreement [Member]          
Number of shares Exchanged 2,500,000        
Amended Founders Agreements Terms 15 years        
Fortress [Member]          
Long-term Debt, Gross     $ 3,000,000    
Class A Preferred Shares | AR Founders Agreement [Member]          
Number of shares Exchanged 250,000        
Common Class A [Member] | AR Founders Agreement [Member]          
Number of shares Exchanged 2,300,000        
v3.21.1
Accounts Payable and Accrued Expenses (Details) - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Accounts Payable and Accrued Expenses    
Accounts payable $ 143 $ 354
Accrued employee compensation 23 477
Accrued contracted services and other 691 270
Accounts payable and accrued expenses $ 857 $ 1,101
v3.21.1
Stockholders' Equity (Deficit) - Restricted stock units and awards (Details) - Restricted Stock Units and Restricted Stock Awards - $ / shares
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Number of Units and Awards, Unvested Beginning Balance 1,045,162  
Number of Units and Awards, Granted 176,413  
Number of Units and Awards, Vested (81,665)  
Number of Units and Awards, Unvested Ending Balance 1,139,910 1,045,162
Weighted Average Grant Date Fair Value, Unvested Beginning Balance $ 5.10  
Weighted Average Grant Date Fair Value, Granted 10.99 $ 5.95
Weighted Average Grant Date Fair Value, Vested 5.78  
Weighted Average Grant Date Fair Value, Unvested Ending Balance $ 5.96 $ 5.10
v3.21.1
Stockholders' Equity (Deficit) - Warrant activity (Details) - Warrant [Member] - USD ($)
$ / shares in Units, $ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Number of Units and Awards, Unvested Beginning Balance 16,454  
Warrants, Exercise (613)  
Number of Units and Awards, Unvested Ending Balance 15,841  
Weighted Average Exercise Price, Outstanding $ 0.6079  
Weighted Average Exercise Price, Exercised 0.0001  
Weighted Average Exercise Price, Outstanding $ 0.6315  
Aggregate Intrinsic Value $ 84 $ 148
v3.21.1
Stockholders' Equity (Deficit) - Additional Information (Details) - USD ($)
$ / shares in Units, $ in Thousands
12 Months Ended
Feb. 16, 2018
Aug. 15, 2017
Dec. 31, 2020
Dec. 31, 2019
Sep. 13, 2016
Preferred Stock, Shares Authorized     2,000,000 2,000,000 2,000,000
Common Stock, Shares Authorized     50,000,000 50,000,000  
Common Stock, Par or Stated Value Per Share     $ 0.0001 $ 0.0001  
Share-based Compensation     $ 710 $ 1,839  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross   20,000      
Preferred Stock, Par or Stated Value Per Share     $ 0.0001 $ 0.0001  
Two Thousand Fifteen Incentive Plan          
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized     2,000,000    
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period     10 years    
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant     229,436    
Fortress [Member]          
Percentage of Diluted outstanding Equity 2.50%        
Restricted Stock Units and Restricted Stock Awards          
Share-based Compensation     $ 700 $ 1,800  
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options     $ 400    
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition     1 year 1 month 6 days    
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested Upon Performance     487,586    
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value     $ 10.99 $ 5.95  
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value     $ 500 $ 1,200  
Options | Two Thousand Fifteen Incentive Plan          
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award     10 years    
Class A Preferred Shares          
Preferred Stock, Shares Outstanding     250,000 250,000 250,000
Preferred Stock, Par or Stated Value Per Share         $ 0.0001
v3.21.1
Income Taxes - Federal rates (Details)
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Income Taxes    
Statutory federal income tax rate 21.00% 21.00%
State taxes, net of federal tax benefit 13.00% 14.00%
State tax rate change 0.00% 1.00%
Stock-based compensation shortfall 6.00% 0.00%
Other 0.00% 4.00%
Credits 0.00% 5.00%
Change in valuation allowance (40.00%) (45.00%)
Income taxes provision (benefit) 0.00% 0.00%
v3.21.1
Income Taxes - Deferred tax asset (Details) - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Deferred tax assets:    
Net operating loss carryovers $ 22,240 $ 19,953
Stock compensation and other 760 843
Amortization of license 1,283 1,413
Accruals and reserves 16 15
Tax credits 2,640 2,640
Total deferred tax assets 26,939 24,864
Less valuation allowance (26,939) (24,864)
Deferred tax assets, net of valuation allowance $ 0 $ 0
v3.21.1
Income Taxes - Additional Information (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Deferred Tax Assets, Valuation Allowance $ 26,939 $ 24,864
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent 21.00% 21.00%
Research Tax Credit Carryforward [Member]    
Tax Credit Carryforward, Amount $ 2,600  
Domestic Tax Authority [Member]    
Operating Loss Carryforwards $ 67,000  
Operating Loss Carry forward, Expire Period 2035  
State and Local Jurisdiction [Member]    
Operating Loss Carryforwards $ 125,500  
Operating Loss Carry forward, Expire Period 2028  
Indefinite Carryforward | Domestic Tax Authority [Member]    
Operating Loss Carryforwards $ 52,500  
Indefinite Carryforward | State and Local Jurisdiction [Member]    
Operating Loss Carryforwards $ 14,500