Business Overview and History
Avenue Therapeutics, Inc. (ATXI) is a specialty pharmaceutical company dedicated to developing innovative treatments for neurologic diseases. With a focus on addressing unmet medical needs, Avenue has built an impressive pipeline that holds immense promise for improving the lives of patients suffering from a range of neurological conditions.
Incorporated in Delaware on February 9, 2015, Avenue Therapeutics was founded as a wholly-owned subsidiary of Fortress Biotech, Inc. The company's mission from the outset has been to leverage its expertise in pharmaceutical development to advance novel therapies that can make a meaningful difference for individuals grappling with neurological disorders.
In February 2015, Fortress transferred the Revogenex license and all other rights and obligations under the IV Tramadol License Agreement to Avenue. This agreement granted Avenue an exclusive license to IV tramadol for the U.S. market, which Fortress had previously acquired from Revogenex, a privately held company in Dublin, Ireland.
Avenue's lead product candidate, AJ201, is a potential best-in-class treatment for spinal and bulbar muscular atrophy (SBMA), also known as Kennedy's Disease. In February 2023, the company secured an exclusive license to the intellectual property rights for AJ201 through a strategic agreement with AnnJi Pharmaceutical Co. Under the terms of the deal, Avenue gained the rights to develop and commercialize AJ201 for all oral indications, excluding androgenetic alopecia and Alzheimer's disease, in key markets including the United States, Canada, the European Union, the United Kingdom, and Israel.
The 12-week, randomized, double-blind Phase 1b/2a trial for AJ201 in SBMA enrolled 25 patients, with top-line data expected to be reported around year-end 2024. This clinical milestone represents a critical juncture for Avenue as it works to establish AJ201 as a disease-modifying treatment option for this rare and debilitating neuromuscular disorder. The study's primary endpoint is to assess safety and tolerability of AJ201 in subjects with clinically and genetically defined SBMA. Secondary endpoints include pharmacodynamic data measuring change from baseline in mutant androgen receptor protein levels in skeletal muscle and changes in the fat and muscle composition as seen on MRI scans. In May 2024, Avenue announced the last patient last visit in the Phase 1b/2a trial.
In addition to AJ201, Avenue's pipeline includes an intravenous (IV) formulation of the opioid analgesic tramadol, which the company has been developing for the treatment of post-operative acute pain. After a series of regulatory setbacks, Avenue recently announced that it had reached final agreement with the FDA on the protocol and statistical analysis approach for a Phase 3 safety study of IV tramadol. This study, designed to assess the risk of opioid-induced respiratory depression, is slated to commence as soon as the necessary financing is secured. The final non-inferiority study will randomize approximately 300 post bunionectomy patients to IV tramadol or IV morphine for pain relief administered during a 48-hour post-operative period. Patients will have access to IV hydromorphone, a Schedule II opioid, for rescue of breakthrough pain. The primary endpoint is a composite of elements indicative of respiratory depression.
The company's portfolio was further bolstered in December 2019 through the acquisition of Baergic Bio, a clinical-stage pharmaceutical firm focused on neurologic disorders. This acquisition was executed pursuant to a stock contribution agreement with Fortress, in order to strategically align with Avenue's goals of building a rare and neurologic pipeline. Baergic's lead asset, BAER-101, is a novel α2,3 subtype-selective GABA A positive allosteric modulator (PAM) with potential applications in the treatment of epilepsy and panic disorders. Preclinical data presented at scientific conferences in 2023 and 2024 have generated significant excitement around BAER-101's therapeutic promise. In August 2023, Avenue reported positive preclinical data for BAER-101 from an in vivo evaluation in the GAERS model of absence epilepsy. The data showed that BAER-101 demonstrated full suppression of seizure activity with a minimal effective dose of 0.3 mg/kg administered orally. These findings were subsequently presented at the American Epilepsy Society and American Society for Experimental Neurotherapeutics annual meetings and published in Drug Development Research in February 2024.
Financial Performance and Position
As a clinical-stage biopharmaceutical company, Avenue Therapeutics has yet to generate revenue from product sales. The company has been primarily funded through various public and private equity offerings, with its most recent capital raise in 2024 netting $9.4 million from the exercise of outstanding warrants.
For the fiscal year ended December 31, 2023, Avenue reported a net loss of $10.4 million, compared to a net loss of $3.6 million in the prior year. This increase in net loss was largely attributable to the company's continued investments in research and development, as well as expenses related to the acquisition and integration of Baergic Bio.
For the nine months ended September 30, 2024, Avenue reported a net loss of $10.14 million, an improvement from the $11.11 million net loss reported for the same period in the prior year. In the most recent quarter (Q3 2024), the company reported a quarterly net loss of $3.08 million, primarily due to ongoing research and development expenses related to the company's clinical pipeline.
Liquidity
As of September 30, 2024, Avenue had $2.6 million in cash and cash equivalents on its balance sheet. The company's current ratio and quick ratio both stand at 2.70, indicating a relatively strong short-term liquidity position. However, Avenue has acknowledged that its current cash runway may only be sufficient to fund operations through the first half of 2025, underscoring the need for additional financing to support the advancement of its pipeline.
The company has no long-term debt, as evidenced by a debt-to-equity ratio of 0. Avenue is exploring various financing alternatives, including equity or debt offerings and potential strategic partnerships, to secure the necessary capital to advance its pipeline beyond the near-term.
Risks and Challenges
As with any clinical-stage biopharmaceutical company, Avenue Therapeutics faces a number of risks and challenges that investors should be aware of. The most significant risk is the inherent uncertainty surrounding the successful development and regulatory approval of the company's product candidates. Delays or failures in the clinical trial process, or the inability to obtain necessary regulatory clearances, could significantly impair Avenue's ability to bring its therapies to market.
Additionally, the company's reliance on third-party contract research organizations and manufacturers introduces operational and supply chain risks that could disrupt the development and commercialization of its products. Avenue also faces competition from other pharmaceutical and biotechnology companies, as well as the potential for pricing pressures that could impact the commercial viability of its therapies.
Finally, as a majority-controlled subsidiary of Fortress Biotech, Avenue Therapeutics' strategic and financial decisions may be influenced by the parent company, which could impact minority shareholders' interests.
Outlook and Conclusion
Despite the challenges facing Avenue Therapeutics, the company's innovative pipeline and strategic focus on unmet needs in the neurological disease landscape make it a compelling investment opportunity. The anticipated topline data readout for the AJ201 Phase 1b/2a trial in SBMA around year-end 2024, as well as the potential initiation of the IV tramadol Phase 3 study, represent significant near-term catalysts that could drive value for shareholders.
Furthermore, the addition of Baergic Bio's BAER-101 program has diversified Avenue's portfolio and expanded its footprint in the neurotherapeutics space. The positive preclinical data for BAER-101 in the treatment of epilepsy provides additional promise for the company's pipeline.
As the company continues to execute on its strategic priorities, investors will closely monitor its ability to navigate the regulatory landscape, secure necessary financing, and ultimately deliver on the promise of its cutting-edge treatments. The company's focus on developing therapies for neurological disorders, with its lead candidates being AJ201 for SBMA, IV tramadol for post-operative acute pain, and BAER-101 for epilepsy and panic disorders, positions it well in the specialty pharmaceutical industry.
In conclusion, Avenue Therapeutics' unwavering commitment to developing innovative solutions for patients suffering from neurological disorders, coupled with its robust pipeline and experienced management team, make it a compelling story in the specialty pharmaceutical industry. As the company works to unlock the full potential of its assets and overcome financial challenges, it remains a stock worthy of close attention in the years to come.
