Business Overview and History
Avenue Therapeutics, Inc. (ATXI) is a specialty pharmaceutical company focused on the development and commercialization of therapies for the treatment of neurologic diseases. The company’s pipeline includes several promising product candidates, including AJ201 for the treatment of spinal and bulbar muscular atrophy (SBMA), also known as Kennedy’s Disease, intravenous tramadol (IV tramadol) for the treatment of post-operative acute pain, and BAER-101 for the treatment of epilepsy and panic disorders.
Avenue Therapeutics was incorporated in Delaware on February 9, 2015, as a wholly-owned subsidiary of Fortress Biotech, Inc. (FBIO). The company was founded with the goal of developing and commercializing therapies for the treatment of neurologic diseases, a significant and growing area of unmet medical need.
At the time of incorporation, Fortress entered into a Founders Agreement with Avenue, under which Avenue agreed to issue annually to Fortress shares of common stock equal to 2.5% of the fully-diluted outstanding equity of the Company at the time of issuance. Fortress also entered into a Management Services Agreement with Avenue to provide services for the Company.
In February 2015, Fortress purchased an exclusive license to IV tramadol for the U.S. market from Revogenex, a privately held company in Dublin, Ireland. This formed the foundation of Avenue’s initial pipeline and strategic focus. In December 2019, $1 million became due to Revogenex in accordance with the Company’s submission of its NDA for IV tramadol.
Over the years, Avenue has strategically expanded its portfolio through in-licensing and acquisition agreements. In December 2019, the company acquired Baergic Bio, Inc., a clinical-stage pharmaceutical company focused on the development of treatments for neurologic disorders. This transaction brought BAER-101, a novel α2/3 subtype-selective GABA A positive allosteric modulator, into Avenue’s pipeline. Specifically, Baergic entered into two license agreements – one with AstraZeneca AB to acquire an exclusive license to patent and related intellectual property rights pertaining to their proprietary compound Gamma-aminobutyric acid receptor A alpha 2/3 (GABAA α2,3) positive allosteric modulators, and another with Cincinnati Children’s Hospital Medical Center to acquire patent and related intellectual property rights pertaining to a GABA inhibitor program for neurological disorders.
More recently, in February 2023, Avenue entered into a licensing agreement with AnnJi Pharmaceutical Co., Ltd. to obtain exclusive rights to the intellectual property underlying AJ201, a clinical-stage product candidate for the treatment of SBMA.
The company has faced several challenges over the years, including uncertainties regarding future operations for an ongoing Phase 1b/2a trial of AJ201, a potential Phase 3 safety study for IV tramadol, and the expansion of the company’s development portfolio within neuroscience. The company will require additional funds to cover operational expenses over the next 12 months, and there can be no assurance that the company will be able to raise the necessary capital under acceptable terms, if at all.
Financial Overview
As a clinical-stage biopharmaceutical company, Avenue Therapeutics has not yet generated any revenue from product sales. The company’s financial performance has been primarily driven by its research and development expenses, as well as general and administrative costs associated with its ongoing operations.
For the fiscal year ended December 31, 2023, Avenue reported a net loss of $10.38 million, a slight improvement from the net loss of $11.11 million reported in the prior year. The company’s cash and cash equivalents stood at $1.78 million as of December 31, 2023, compared to $6.71 million as of December 31, 2022. Operating cash flow for 2023 was negative $9.45 million, while free cash flow was negative $12.45 million.
In the first nine months of 2024, Avenue reported a net loss of $10.14 million, with cash and cash equivalents of $2.60 million as of September 30, 2024. The company’s quarterly cash burn has remained relatively consistent, with a net cash used in operating activities of $8.26 million for the first nine months of 2024, compared to $7.13 million for the same period in 2023.
For the most recent quarter (Q3 2024), Avenue reported a net loss of $3.08 million, with operating cash flow of negative $2.89 million and free cash flow of negative $2.89 million. The company’s research and development expenses increased to $6.08 million in the first nine months of 2024, compared to $5.15 million in the prior year period, primarily due to increased preclinical and clinical development costs. General and administrative expenses also rose to $3.61 million in the first nine months of 2024, compared to $3.04 million in the prior year period, driven by higher payments to InvaGen and increased common stock issued to Fortress.
Avenue’s financial position has been supported by its ability to raise capital through various equity and debt financings. In 2023 and 2024, the company has raised additional funds through at-the-market (ATM) offerings, as well as warrant exercise transactions, which have provided $9.4 million in gross proceeds year-to-date.
Liquidity
Avenue Therapeutics’ liquidity position remains a critical concern for the company. As of September 30, 2024, the company had cash and cash equivalents of $2.60 million, which is not sufficient to fund its operations for the next 12 months. The company continues to explore various financing options to support its ongoing clinical trials and operational expenses.
The company’s ability to raise additional capital through equity offerings, debt financing, or strategic partnerships will be crucial for its long-term viability and the advancement of its product pipeline. Avenue’s management has implemented cost-saving measures and is actively pursuing potential sources of funding to extend its cash runway.
As of the most recent financial report, Avenue Therapeutics has no debt, resulting in a debt-to-equity ratio of 0. The company’s current ratio and quick ratio are both 2.67, indicating a relatively strong short-term liquidity position. However, the company does not have any disclosed available credit lines, which limits its immediate access to additional funds if needed.
Pipeline and Product Candidates
AJ201 for Spinal and Bulbar Muscular Atrophy (SBMA) AJ201 is Avenue’s lead clinical-stage product candidate, which the company obtained the exclusive rights to in February 2023 through a licensing agreement with AnnJi Pharmaceutical Co., Ltd. AJ201 is a novel compound that activates Nrf1 and Nrf2, enhances androgen receptor degradation, and is being developed for the treatment of SBMA, also known as Kennedy’s Disease.
In May 2024, Avenue announced the completion of the last patient’s final visit in the company’s Phase 1b/2a clinical trial of AJ201 for the treatment of SBMA. Topline data from this study are expected to be reported in the second half of 2024. The 12-week, randomized, double-blind Phase 1b/2a trial enrolled 25 patients and is assessing the safety and tolerability of AJ201 in subjects with SBMA.
Under the licensing agreement with AnnJi, Avenue paid an initial cash license fee of $3 million and is obligated to make additional payments, including reimbursement payments of up to $10.8 million for the ongoing Phase 1b/2a clinical trial being conducted by AnnJi.
IV Tramadol for Post-Operative Acute Pain IV tramadol is Avenue’s other late-stage product candidate, which the company has been developing for the treatment of post-operative acute pain. In January 2024, the company announced that it had reached final agreement with the U.S. Food and Drug Administration (FDA) on the Phase 3 safety study protocol and statistical analysis approach for IV tramadol.
The final non-inferiority study is designed to assess the risk of opioid-induced respiratory depression related to opioid stacking on IV tramadol compared to IV morphine. Avenue plans to initiate this study as soon as possible, subject to securing the necessary financing.
BAER-101 for Epilepsy and Panic Disorders BAER-101 is a novel α2/3 subtype-selective GABA A positive allosteric modulator that Avenue acquired through its 2019 acquisition of Baergic Bio, Inc. In August 2023, the company reported positive preclinical data for BAER-101 from an in vivo evaluation in the Genetic Absence Epilepsy Rat from Strasbourg (GAERS) model of absence epilepsy.
The data showed that BAER-101 demonstrated full suppression of seizure activity in the GAERS model, which is considered an early informative indicator of efficacy in anti-seizure drug development. These results were subsequently presented at the American Epilepsy Society (AES) 2023 Annual Meeting and the American Society for Experimental Neurotherapeutics (ASENT) 2024 Annual Meeting, and were also published in Drug Development Research in February 2024.
Potential Catalysts and Risks
The upcoming topline data readout for the Phase 1b/2a trial of AJ201 in SBMA is a key near-term catalyst for Avenue Therapeutics. Positive results could significantly bolster the company’s pipeline and provide validation for its approach to addressing this rare and debilitating neurological disorder.
Additionally, the successful completion of the Phase 3 safety study for IV tramadol and subsequent regulatory approval would be a transformative event for the company, as it would mark the potential commercialization of its first product.
However, Avenue Therapeutics faces several risks, including the inherent uncertainties of drug development, the need for additional capital to fund its operations and clinical trials, and the competitive landscape within the neurologic diseases space. The company’s reliance on key in-licensing and acquisition agreements to build its pipeline also adds an element of risk, as the success of its programs is tied to the performance of these in-licensed assets.
Conclusion
Avenue Therapeutics is a promising biopharmaceutical company with a diversified pipeline of product candidates targeting various neurologic diseases. The company’s lead programs, AJ201 for SBMA and IV tramadol for post-operative acute pain, have the potential to address significant unmet medical needs and drive shareholder value if successfully developed and commercialized.
While the company’s financial position remains challenging, with limited cash reserves and a history of operating losses, Avenue has demonstrated its ability to raise capital and expand its portfolio through strategic in-licensing and acquisition agreements. The upcoming data readout for AJ201 and the progress of the IV tramadol program will be critical in determining the company’s near-term trajectory and long-term prospects.
Avenue Therapeutics operates exclusively in the United States market, focusing on developing therapies for neurologic conditions. The company’s financial performance reflects its development-stage status, with no revenue generated to date and increasing research and development expenses as it advances its pipeline. The company’s ability to secure additional financing and successfully navigate the regulatory landscape will be crucial for its future success.
Investors should closely monitor Avenue Therapeutics as it navigates the complex and competitive neurologic diseases landscape, particularly focusing on the upcoming clinical milestones and the company’s efforts to strengthen its financial position.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.