AVENUE THERAPEUTICS, INC., 10-Q filed on 11/15/2021
Quarterly Report
v3.21.2
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2021
Nov. 12, 2021
Document and Entity Information [Abstract]    
Document Type 10-Q  
Document Period End Date Sep. 30, 2021  
Entity Registrant Name AVENUE THERAPEUTICS, INC.  
Document Quarterly Report true  
Document Transition Report false  
Entity File Number 001-38114  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 47-4113275  
Entity Address, Address Line One 1140 Avenue of the Americas, Floor 9  
Entity Address, City or Town New York  
Entity Address, State or Province NY  
Entity Address, Postal Zip Code 10036  
City Area Code 781  
Local Phone Number 652-4500  
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 Common Stock, Shares Outstanding   18,700,480
Entity Central Index Key 0001644963  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q3  
Amendment Flag false  
Title of 12(b) Security Common Stock  
Trading Symbol ATXI  
Security Exchange Name NASDAQ  
Entity Ex Transition Period true  
v3.21.2
CONDENSED BALANCE SHEETS - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Current Assets:    
Cash and cash equivalents $ 585 $ 3,132
Other receivables - related party 74  
Prepaid expenses and other current assets 29 113
Total Assets 688 3,245
Current Liabilities:    
Accounts payable and accrued expenses 672 857
Accounts payable and accrued expenses - related party 176 29
Total current liabilities 848 886
Total Liabilities 848 886
Commitments and Contingencies
Stockholders' Equity (Deficit)    
Common shares, 16,793,693 and 16,747,803 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively 2 2
Additional paid-in capital 75,924 75,625
Accumulated deficit (76,086) (73,268)
Total Stockholders' Equity (Deficit) (160) 2,359
Total Liabilities and Stockholders' Equity (Deficit) 688 3,245
Class A Preferred Shares    
Stockholders' Equity (Deficit)    
Class A Preferred Stock, 250,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively $ 0 $ 0
v3.21.2
CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares
Sep. 30, 2021
Dec. 31, 2020
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 16,793,693 16,747,803
Common Stock, Shares, Outstanding 16,793,693 16,747,803
Class A Preferred Shares    
Preferred Stock, Shares Issued 250,000 250,000
Preferred Stock, Shares Outstanding 250,000 250,000
v3.21.2
CONDENSED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Operating expenses:        
Research and development $ 278 $ 466 $ 864 $ 2,382
General and administrative 594 571 1,960 1,832
Loss from operations (872) (1,037) (2,824) (4,214)
Interest income (1) (9) (6) (56)
Net Loss $ (871) $ (1,028) $ (2,818) $ (4,158)
Net loss per common share outstanding, basic $ (0.05) $ (0.06) $ (0.17) $ (0.25)
Net loss per common share outstanding, diluted $ (0.05) $ (0.06) $ (0.17) $ (0.25)
Weighted average number of common shares outstanding, basic 16,627,427 16,519,464 16,580,283 16,489,701
Weighted average number of common shares outstanding, diluted 16,627,427 16,519,464 16,580,283 16,489,701
v3.21.2
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($)
Class A Preferred Share
Common Shares
Additional paid-in capital
Accumulated deficit
Total
Balance at Dec. 31, 2019   $ 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     592,000   592,000
Share based compensation (in shares)   65,000      
Cashless exercise of warrants (in shares)   613      
Net loss       (4,158,000) (4,158,000)
Balance at Sep. 30, 2020   $ 2,000 75,507,000 (72,275,000) 3,234,000
Balance (in shares) at Sep. 30, 2020 250,000 16,747,803      
Balance at Jun. 30, 2020   $ 2,000 75,346,000 (71,247,000) 4,101,000
Balance (in shares) at Jun. 30, 2020 250,000 16,702,803      
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Share based compensation     161,000   161,000
Share based compensation (in shares)   45,000      
Net loss       (1,028,000) (1,028,000)
Balance at Sep. 30, 2020   $ 2,000 75,507,000 (72,275,000) 3,234,000
Balance (in shares) at Sep. 30, 2020 250,000 16,747,803      
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      
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Share based compensation $ 0 $ 0 299,000 0 299,000
Share based compensation (in shares) 0 45,000      
Cashless exercise of warrants $ 0 $ 0 0 0 0
Cashless exercise of warrants (in shares) 0 890      
Net loss $ 0 $ 0 0 (2,818,000) (2,818,000)
Balance at Sep. 30, 2021 $ 0 $ 2,000 75,924,000 (76,086,000) (160,000)
Balance (in shares) at Sep. 30, 2021 250,000 16,793,693      
Balance at Jun. 30, 2021 $ 0 $ 2,000 75,855,000 (75,215,000) 642,000
Balance (in shares) at Jun. 30, 2021 250,000 16,748,068      
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Share based compensation $ 0 $ 0 69,000 0 69,000
Share based compensation (in shares) 0 45,000      
Cashless exercise of warrants (in shares)   625      
Net loss $ 0 $ 0 0 (871,000) (871,000)
Balance at Sep. 30, 2021 $ 0 $ 2,000 $ 75,924,000 $ (76,086,000) $ (160,000)
Balance (in shares) at Sep. 30, 2021 250,000 16,793,693      
v3.21.2
CONDENSED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Cash flows from operating activities:    
Net loss $ (2,818) $ (4,158)
Adjustments to reconcile net loss to net cash used in operating activities:    
Share based compensation 299 592
Changes in operating assets and liabilities:    
Other receivables - related party (74) 0
Prepaid expenses and other current assets 84 143
Accounts payable and accrued expenses (185) (14)
Accounts payable and accrued expenses - related party 147 17
Net cash and cash equivalents used in operating activities (2,547) (3,420)
Cash flows from investing activities:    
Milestone payment for research and development licenses 0 (1,000)
Net cash and cash equivalents used in investing activities 0 (1,000)
Net change in cash and cash equivalents (2,547) (4,420)
Cash and cash equivalents, beginning of period 3,132 8,745
Cash and cash equivalents, end of period $ 585 $ 4,325
v3.21.2
Organization, Plan of Business Operations
9 Months Ended
Sep. 30, 2021
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, InvaGen Pharmaceuticals Inc. (“InvaGen”), and Madison Pharmaceuticals, Inc. entered into a Stock Purchase and Merger Agreement (“SPMA”), pursuant to which the Company agreed to its sale in a two-stage transaction. In the first stage, InvaGen agreed to purchase, for $35 million, common shares representing 33.3% of the fully diluted capitalization of the Company. In the second stage, InvaGen would acquire the remaining issued and outstanding capital stock of the Company for approximately $180 million in a reverse subsidiary merger transaction (the “Merger Transaction”). 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.

Consummation of the Merger Transaction was conditioned upon, among other things, U.S. Federal Drug Administration (“FDA”) approval of IV Tramadol, its labeling and scheduling, and the absence of certain other restrictions in effect with respect to IV Tramadol. Pursuant to the SPMA, if FDA approval of IV Tramadol was not obtained on or before April 30, 2021, InvaGen would not be subject to the mandatory closing obligations set forth in the SPMA with respect to the Merger Transaction (but would instead retain an option to complete the Merger Transaction up until such time as the SPMA was terminated). Pursuant to the SPMA, the Company could choose to terminate the SPMA after October 31, 2021, if FDA approval of IV Tramadol had not occurred by such time. On November 1, 2021, the Company terminated the SPMA.

Even though the SPMA has been terminated, InvaGen retains certain rights pursuant to the Stockholders Agreement, entered into on November 12, 2018 between the Company, InvaGen and Fortress, and other agreements entered into in connection therewith on such date. These rights exist as long as InvaGen maintains at least 75% of the common shares acquired in the Stock Purchase Transaction and include among other things, the right to restrict the Company from certain equity issuances and changes to the Company’s capital stock without obtaining InvaGen’s prior written consent.

Over the past year, the Company has communicated with InvaGen relating to InvaGen’s assertions that Material Adverse Effects (as defined in the SPMA) have 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 New Drug Application (“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 (as defined in the SPMA) on the purported basis that the proposed label under certain circumstances would make the product commercially unviable. Even though the SPMA has been terminated, it is still possible for InvaGen to pursue monetary claims against the Company and/or Fortress based on the foregoing or other potential causes of action.

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 September 30, 2021, the Company had an accumulated deficit of $76.1 million.

On October 12, 2020, the Company announced that it had received a Complete Response Letter (“the First CRL”) from the FDA regarding the Company’s NDA for IV Tramadol. The First 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 followed 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. On June 14, 2021, the Company announced that it had received a second Complete Response Letter (the “Second CRL”) from the FDA regarding the Company’s NDA for IV Tramadol. The Second CRL stated that the delayed and unpredictable onset of analgesia with IV Tramadol does not support its benefit as a monotherapy to treat patients in acute pain and that there is insufficient information to support that IV Tramadol in combination with other analgesics is safe and effective for the intended patient population. In particular, the Second CRL stated that, while the primary endpoint was met in two efficacy studies, meaningful pain relief was delayed (accounting for the use of rescue medication, e.g., ibuprofen), and some patients never achieved pain relief. The Company continues to pursue regulatory approval for IV Tramadol and had a Type A meeting with the FDA in July 2021. The FDA did not deviate from any of the positions the FDA previously took in the First CRL and the Second CRL. The Company submitted a formal dispute resolution request (“FDRR”) with the Office of Neuroscience of the FDA on July 27, 2021. On August 26, 2021, the Company received an Appeal Denied Letter from the Office of Neuroscience of the FDA in response to the FDRR submitted on July 27, 2021. On August 31, 2021, the Company submitted a FDRR with the Office of New Drugs (“OND”) of the FDA. On October 21, 2021, the Company received a written response from the OND of the FDA stating that the OND needs additional input from an Advisory Committee in order to reach a decision on the FDRR. There can be no assurance that any such FDRR will be successful. The Company’s ability to potentially commercialize IV Tramadol, and the timing of any potential commercialization, are dependent on the FDA’s review of the FDRR for IV Tramadol, whether or not the FDA ultimately approves IV Tramadol which would follow shortly after a potentially successful outcome from the FDRR review, and potentially on whether or not the Company procures additional capital.

As of September 30, 2021, the Company had cash and cash equivalents of $0.6 million. The Company believes that its cash and cash equivalents are only sufficient to fund its operating expenses into the fourth quarter of 2021. The Company will need to secure additional funds through equity or debt offerings, or other potential sources. Furthermore, under the SPMA, any equity funding must be approved by InvaGen. The Company cannot be certain that additional funding will be available to it 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 this report. The unaudited interim condensed financial statements do not contain any adjustments that might result from the resolution of any of the above uncertainty.

In light of the foregoing, it may be necessary at some point for the Company to seek protection under Chapter 11 of the United States Bankruptcy Code, which could have a material adverse impact on the Company’s business, financial condition, operations and could place its shareholders at significant risk of losing all of their investment. In any such Chapter 11 proceeding, the Company may seek to restructure its obligations or commence an orderly wind-down of its operations and sale of its assets, in either event, holders of equity interests could receive or retain little or no recovery. The Company also notes that the process of exploring refinancing or restructuring alternatives, including those under Chapter 11, may be disruptive to its business and operations.

v3.21.2
Significant Accounting Policies
9 Months Ended
Sep. 30, 2021
Significant Accounting Policies  
Significant Accounting Policies

Note 2 — Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Certain information and footnote disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These unaudited interim condensed financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period.

Therefore, these unaudited interim condensed financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2020, which were included in the Company’s Form 10-K, and filed with the U.S. Securities and Exchange Commission (“SEC”) on March 31, 2021. The results of operations for any interim periods are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period.

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

Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 in its audited financial statements for the year ended December 31, 2020 included in the Company’s Form 10-K. With the exception of those noted below, there have been no material changes to the Company’s significant accounting policies.

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 Three and Nine Months Ended

September 30, 

September 30, 

    

2021

    

2020

Unvested restricted stock units/awards

 

1,014,256

 

1,139,910

Preferred shares

 

250,000

 

250,000

Total potential dilutive effect

 

1,264,256

 

1,389,910

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 did not have a material impact on the Company’s unaudited interim condensed 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. 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 Company does not anticipate the Consolidated Appropriations Act to have a material impact to the Company’s income tax provision (benefit) for 2021.

v3.21.2
Accounts Payable and Accrued Expenses
9 Months Ended
Sep. 30, 2021
Accounts Payable and Accrued Expenses  
Accounts Payable and Accrued Expenses

Note 3 — Accounts Payable and Accrued Expenses

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

As of September 30, 

As of December 31,

    

2021

    

2020

Accounts payable

$

202

$

143

Accrued employee compensation

 

302

 

23

Accrued contracted services and other

 

168

 

691

Accounts payable and accrued expenses

$

672

$

857

v3.21.2
Related Party Transactions
9 Months Ended
Sep. 30, 2021
Related Party Transactions  
Related Party Transactions

Note 4 — Related Party Transactions

Effective June 1, 2021, the Company, InvaGen, Fortress and Journey Medical Corporation (“Journey”), a consolidated entity under Fortress, entered into a secondment agreement for a certain Avenue employee to be seconded to Journey. During the secondment, Journey will have the authority to supervise the Avenue employee and will reimburse the Company for the employee’s salary and salary-related costs. The term of this agreement lasts until the approval of IV tramadol by the FDA or until the employee’s services are needed again by the Company. The amounts reimbursable to Avenue are $74,000 and $98,000 for the three and nine months ended September 30, 2021, respectively. The amount due to the Company as of September 30, 2021 that is related to this secondment agreement is $74,000 and is included in "Other receivables - related party" on the Company's condensed balance sheets.

Effective June 24, 2021, Fortress and certain of the Company’s key employees entered into retention agreements (the “Fortress Retention Agreements”) pursuant to which retention bonuses are payable only if the Merger Transaction (as defined in the SPMA) occurs and the applicable employee remains employed by the Company immediately prior to the closing of the Merger Transaction. These Fortress Retention Agreements are effective until the earlier of the consummation of the Merger Transaction or the termination of the SPMA. Amounts potentially payable to these key employees are $2.9 million as of September 30, 2021. On October 7, 2021, an agreement with a fourth key employee was signed with the same terms and conditions as set forth in the Fortress Retention Agreements. The amount potentially payable to this employee is $0.3 million. As the SPMA was terminated on November 1, 2021, there are no amounts payable under the Fortress Retention Agreements.

v3.21.2
Stockholders' Equity
9 Months Ended
Sep. 30, 2021
Stockholders' Equity  
Stockholders' Equity

Note 5 — Stockholders’ Equity

Equity Incentive Plan

The Company has in effect the 2015 Incentive Plan (“2015 Incentive Plan”). The 2015 Incentive Plan was adopted in December 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.

Restricted Stock Units and Restricted Stock Awards

The following table summarizes restricted stock unit and award activity for the nine months ended September 30, 2021:

Weighted

Number of Units

Average Grant

    

and Awards

    

Date Fair Value

Unvested balance at December 31, 2020

 

1,139,910

$

5.96

Granted

 

$

Vested

 

(125,654)

$

4.97

Unvested balance at September 30, 2021

 

1,014,256

$

6.09

For the three months ended September 30, 2021 and 2020, stock-based compensation expenses associated with the amortization of restricted stock units and restricted stock awards for employees and non-employees were approximately $69,000 and $0.2 million, respectively. For the nine months ended September 30, 2021 and 2020, stock-based compensation expenses associated with the amortization of restricted stock units and restricted stock awards for employees and non-employees were approximately $0.3 million and $0.6 million, respectively.

At September 30, 2021, 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 0.9 years. This amount does not include, as of September 30, 2021, 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 Warrants

The following table summarizes the warrant activity for the nine months ended September 30, 2021:

Weighted

Aggregate

Average

Intrinsic Value

    

Warrants

    

Exercise Price

    

(in thousands)

Outstanding, December 31, 2020

15,841

$

0.6315

$

84

Exercised

 

(890)

$

0.0001

 

Outstanding, September 30, 2021

 

14,951

$

0.6691

$

19

v3.21.2
Subsequent Events
9 Months Ended
Sep. 30, 2021
Subsequent Events  
Subsequent Events

Note 6 — Subsequent Events

On November 12, 2021, the Company, pursuant to an underwritten public offering, sold 1,946,787 shares of its common stock at a price of $1.34 per share for gross proceeds of approximately $2.6 million before deducting underwriting discounts and commissions and other estimated expenses. In addition, the Company granted the underwriters a 45-day option to purchase additional shares of common stock, representing up to 15% of the number of the shares, solely to cover over-allotments, if any, which would increase the total gross proceeds of the offering to approximately $3.0 million, if the over-allotment option is exercised in full.

v3.21.2
Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2021
Significant Accounting Policies  
Basis of Presentation

Basis of Presentation

The accompanying unaudited interim condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Certain information and footnote disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These unaudited interim condensed financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period.

Therefore, these unaudited interim condensed financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2020, which were included in the Company’s Form 10-K, and filed with the U.S. Securities and Exchange Commission (“SEC”) on March 31, 2021. The results of operations for any interim periods are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period.

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

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 in its audited financial statements for the year ended December 31, 2020 included in the Company’s Form 10-K. With the exception of those noted below, there have been no material changes to the Company’s significant accounting policies.

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 Three and Nine Months Ended

September 30, 

September 30, 

    

2021

    

2020

Unvested restricted stock units/awards

 

1,014,256

 

1,139,910

Preferred shares

 

250,000

 

250,000

Total potential dilutive effect

 

1,264,256

 

1,389,910

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 did not have a material impact on the Company’s unaudited interim condensed 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. 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 Company does not anticipate the Consolidated Appropriations Act to have a material impact to the Company’s income tax provision (benefit) for 2021.

v3.21.2
Significant Accounting Policies (Tables)
9 Months Ended
Sep. 30, 2021
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 Three and Nine Months Ended

September 30, 

September 30, 

    

2021

    

2020

Unvested restricted stock units/awards

 

1,014,256

 

1,139,910

Preferred shares

 

250,000

 

250,000

Total potential dilutive effect

 

1,264,256

 

1,389,910

v3.21.2
Accounts Payable and Accrued Expenses (Tables)
9 Months Ended
Sep. 30, 2021
Accounts Payable and Accrued Expenses  
Schedule of accounts payable and accrued expenses

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

As of September 30, 

As of December 31,

    

2021

    

2020

Accounts payable

$

202

$

143

Accrued employee compensation

 

302

 

23

Accrued contracted services and other

 

168

 

691

Accounts payable and accrued expenses

$

672

$

857

v3.21.2
Stockholders' Equity (Tables)
9 Months Ended
Sep. 30, 2021
Stockholders' Equity  
Schedule of restricted stock unit and award activity

The following table summarizes restricted stock unit and award activity for the nine months ended September 30, 2021:

Weighted

Number of Units

Average Grant

    

and Awards

    

Date Fair Value

Unvested balance at December 31, 2020

 

1,139,910

$

5.96

Granted

 

$

Vested

 

(125,654)

$

4.97

Unvested balance at September 30, 2021

 

1,014,256

$

6.09

Schedule of warrant activity

The following table summarizes the warrant activity for the nine months ended September 30, 2021:

Weighted

Aggregate

Average

Intrinsic Value

    

Warrants

    

Exercise Price

    

(in thousands)

Outstanding, December 31, 2020

15,841

$

0.6315

$

84

Exercised

 

(890)

$

0.0001

 

Outstanding, September 30, 2021

 

14,951

$

0.6691

$

19

v3.21.2
Organization, Plan of Business Operations (Details) - USD ($)
$ / shares in Units, $ in Thousands
Feb. 08, 2019
Sep. 30, 2021
Dec. 31, 2020
Nov. 12, 2018
Accumulated deficit   $ 76,086 $ 73,268  
Cash and cash equivalents   $ 585 $ 3,132  
Invagen Pharmaceuticals Inc [Member]        
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned       $ 35,000
Percentage of equity interest agreed to acquire in first stage       33.30%
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned, Remaining Purchase Amount       $ 180,000
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares 5,833,333      
Business Acquisition, Share Price $ 6.00      
Business acquisition shares acquisition for net proceeds $ 31,500      
Invagen Pharmaceuticals Inc [Member] | Invagen Pharmaceuticals Inc [Member]        
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners 33.30%      
v3.21.2
Significant Accounting Policies (Details) - shares
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Total potential dilutive effect (in shares) 1,264,256 1,389,910 1,264,256 1,389,910
Unvested restricted stock units/awards        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Total potential dilutive effect (in shares) 1,014,256 1,139,910 1,014,256 1,139,910
Preferred shares        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Total potential dilutive effect (in shares) 250,000 250,000 250,000 250,000
v3.21.2
Accounts Payable and Accrued Expenses (Details) - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Accounts Payable and Accrued Expenses    
Accounts payable $ 202 $ 143
Accrued employee compensation 302 23
Accrued contracted services and other 168 691
Accounts payable and accrued expenses $ 672 $ 857
v3.21.2
Related Party Transactions (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2021
Nov. 01, 2021
Oct. 07, 2021
Other receivables - related party $ 74,000 $ 74,000    
Fortress Retention Agreements        
Payable to key employees     $ 0  
Fortress Retention Agreements | Key Employees        
Payable to key employees 2,900,000 2,900,000   $ 300,000
Fortress        
Reimbursable amount 74,000 98,000    
Fortress | Other receivables - related party        
Other receivables - related party $ 74,000 $ 74,000    
v3.21.2
Stockholders' Equity - Equity Incentive Plan (Details) - Two Thousand Fifteen Incentive Plan
9 Months Ended
Sep. 30, 2021
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
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
Options  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award 10 years
v3.21.2
Stockholders' Equity - Restricted Stock Units and Restricted Stock Awards - Activity (Details) - Unvested restricted stock units/awards
9 Months Ended
Sep. 30, 2021
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]  
Number of Units and Awards, Unvested Beginning Balance | shares 1,139,910
Number of Units and Awards, Granted | shares 0
Number of Units and Awards, Vested | shares (125,654)
Number of Units and Awards, Unvested Ending Balance | shares 1,014,256
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]  
Weighted Average Grant Date Fair Value, Unvested Beginning Balance | $ / shares $ 5.96
Weighted Average Grant Date Fair Value, Granted | $ / shares 0
Weighted Average Grant Date Fair Value, Vested | $ / shares 4.97
Weighted Average Grant Date Fair Value, Unvested Ending Balance | $ / shares $ 6.09
v3.21.2
Stockholders' Equity - Restricted Stock Units and Restricted Stock Awards - Share-based Compensation Expense (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Unvested restricted stock units/awards        
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]        
Share-based Compensation $ 69,000 $ 200,000 $ 300,000 $ 600,000
v3.21.2
Stockholders' Equity - Restricted Stock Units and Restricted Stock Awards - Unrecognized Share-based Compensation Expense (Details) - Unvested restricted stock units/awards
$ in Millions
9 Months Ended
Sep. 30, 2021
USD ($)
shares
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract]  
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ $ 0.1
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition 10 months 24 days
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested Upon Performance | shares 487,586
v3.21.2
Stockholders' Equity - Warrants (Details) - Warrants under National Securities, Inc Note
$ / shares in Units, $ in Thousands
9 Months Ended
Sep. 30, 2021
USD ($)
$ / shares
shares
Dec. 31, 2020
USD ($)
Class of Warrant or Right [Line Items]    
Beginning Balance (in shares) | shares 15,841  
Exercised (in shares) | shares (890)  
Ending Balance (in shares) | shares 14,951  
Aggregate Intrinsic Value | $ $ 19 $ 84
Weighted Average    
Class of Warrant or Right [Line Items]    
Beginning Balance (in dollars per shares) | $ / shares $ 0.6315  
Exercised (in dollars per share) | $ / shares 0.0001  
Ending Balance (in dollars per shares) | $ / shares $ 0.6691  
v3.21.2
Subsequent Events (Details) - Subsequent Event [Member]
$ / shares in Units, $ in Millions
Nov. 12, 2021
USD ($)
$ / shares
shares
Number of units issued | shares 1,946,787
Price per share | $ / shares $ 1.34
Gross proceeds from initial public offering before deducting expenses $ 2.6
Number Of Period Options To Purchase Granted Underwriters 45 days
Percentage of additional shares issued to underwriters 15.00%
Total gross proceeds from initial public offering $ 3.0