Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 28, 2023 | Jun. 30, 2022 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Transition Report | false | ||
Entity File Number | 001-38114 | ||
Entity Registrant Name | AVENUE THERAPEUTICS, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 47-4113275 | ||
Entity Address, Address Line One | 1111 Kane Concourse, Suite 301 | ||
Entity Address, City or Town | Bay Harbor Islands | ||
Entity Address, State or Province | FL | ||
Entity Address, Postal Zip Code | 33154 | ||
City Area Code | 781 | ||
Local Phone Number | 652-4500 | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | ||
Trading Symbol | ATXI | ||
Security Exchange Name | NASDAQ | ||
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 | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2,946,058 | ||
Entity Common Stock, Shares Outstanding | 5,944,149 | ||
Entity Central Index Key | 0001644963 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Auditor Name | KPMG LLP | ||
Auditor Firm ID | 185 | ||
Auditor Location | New York, New York |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 6,708 | $ 3,763 |
Other receivables - related party | 90 | |
Prepaid expenses and other current assets | 137 | 107 |
Total assets | 6,845 | 3,960 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 949 | 451 |
Accounts payable and accrued expenses - related party | 21 | 58 |
Warrant liability | 2,609 | |
Total current liabilities | 3,579 | 509 |
Total liabilities | 3,579 | 509 |
Commitments and Contingencies | ||
Stockholders' equity | ||
Additional paid-in capital | 84,456 | 80,450 |
Accumulated deficit | (80,551) | (76,999) |
Total stockholders' equity attributed to the Company | 3,905 | 3,451 |
Non-controlling interests | (639) | |
Total stockholders' equity | 3,266 | 3,451 |
Total liabilities and stockholders' equity | 6,845 | 3,960 |
Class A Preferred Shares | ||
Stockholders' equity | ||
Preferred stock ($0.0001 par value), 2,000,000 shares authorized |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Preferred Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock, shares authorized | 2,000,000 | 2,000,000 |
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, shares authorized | 20,000,000 | 20,000,000 |
Common Stock, shares issued | 4,773,841 | 4,773,841 |
Common Stock, shares outstanding | 1,405,959 | 1,405,959 |
Class A Preferred Shares | ||
Preferred Stock, shares issued | 250,000 | 250,000 |
Preferred Stock, shares outstanding | 250,000 | 250,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating expenses: | ||
Research and development | $ 2,698 | $ 1,254 |
General and administrative | 5,345 | 2,484 |
Loss from operations | (8,043) | (3,738) |
Interest income | (20) | (7) |
Financing costs - warrant liabilities | 1,160 | 0 |
Change in fair value of warrant liabilities | (5,580) | 0 |
Net loss | (3,603) | (3,731) |
Net loss attributable to non-controlling interests | 51 | 0 |
Net loss attributable to common stockholders | $ (3,552) | $ (3,731) |
Net loss per common share attributable to common stockholders, basic | $ (1.63) | $ (3.29) |
Net loss per common share attributable to common stockholders, diluted | $ (1.63) | $ (3.29) |
Weighted average number of common shares outstanding, basic | 2,185,159 | 1,133,170 |
Weighted average number of common shares outstanding, diluted | 2,185,159 | 1,133,170 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Class A Preferred Shares Class A Preferred Shares | Common Shares | Additional Paid-in Capital | Accumulated Deficit | Non-controlling Interest | Total |
Balance at Dec. 31, 2020 | $ 75,627,000 | $ (73,268,000) | $ 2,359,000 | |||
Balance (in shares) at Dec. 31, 2020 | 250,000 | 1,116,505 | ||||
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY | ||||||
Share based compensation | 442,000 | 442,000 | ||||
Share based compensation (in shares) | 0 | 12,803 | ||||
Issuance of common shares, net of costs | 4,381,000 | 4,381,000 | ||||
Issuance of common shares, net of costs (in shares) | 0 | 276,592 | ||||
Cashless exercise of warrants (in shares) | 0 | 59 | ||||
Net loss attributable to non-controlling interests | 0 | |||||
Net loss | $ 0 | (3,731,000) | (3,731,000) | |||
Balance at Dec. 31, 2021 | 80,450,000 | (76,999,000) | 3,451,000 | |||
Balance (in shares) at Dec. 31, 2021 | 250,000 | 1,405,959 | ||||
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY | ||||||
Share based compensation | $ 0 | 649,000 | 649,000 | |||
Share based compensation (in shares) | 75,505 | |||||
Common shares issuable - Founders Agreement | 0 | 526,000 | 526,000 | |||
Issuance of common shares and pre-funded warrants at private placement, net of issuance costs | 0 | 3,205,000 | 3,205,000 | |||
Issuance of common shares and pre-funded warrants at private placement, net of issuance costs (in shares) | 3,636,365 | |||||
US Repurchase of common stock held by InvaGen | 0 | (1,104,000) | (1,104,000) | |||
Repurchase of common stock held by InvaGen (in shares) | (388,888) | |||||
Fortress contribution of Baergic Inc | 0 | (99,000) | (99,000) | |||
Issuance of subsidiaries' common shares for license expenses | 0 | 4,000 | 4,000 | |||
Exercise of warrants | 0 | 237,000 | 237,000 | |||
Exercise of warrants (in shares) | 44,900 | |||||
Non-controlling interest in subsidiaries | 0 | 588,000 | $ (588,000) | |||
Net loss attributable to non-controlling interests | 0 | (51,000) | (51,000) | |||
Net loss attributable to common stockholders | $ 0 | (3,552,000) | (3,552,000) | |||
Net loss | (3,552,000) | |||||
Balance at Dec. 31, 2022 | $ 84,456,000 | $ (80,551,000) | $ (639,000) | $ 3,266,000 | ||
Balance (in shares) at Dec. 31, 2022 | 250,000 | 4,773,841 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (3,603) | $ (3,731) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share based compensation | 649 | 442 |
Change in fair value of warrant liability | (5,580) | 0 |
Common shares issuable - Founders Agreement | 526 | |
Issuance of subsidiaries' common shares for license expenses | 4 | |
Changes in operating assets and liabilities: | ||
Other receivables - related party | 90 | (90) |
Prepaid expenses and other current assets | (30) | 6 |
Accounts payable and accrued expenses | 385 | (406) |
Accounts payable and accrued expenses - related party | (37) | 29 |
Net cash and cash equivalents used in operating activities | (7,596) | (3,750) |
Cash flows from financing activities: | ||
Proceeds from the issuance of common shares | 5,044 | |
Proceeds from issuance of common stock and accompanying warrants and pre-funded warrants in private placement | 12,005 | |
Repurchase of common stock held by InvaGen | (1,104) | |
Proceeds from exercise of warrants | 148 | |
Payment of offering costs | (508) | (663) |
Net cash provided by financing activities | 10,541 | 4,381 |
Net change in cash and cash equivalents | 2,945 | 631 |
Cash and cash equivalents, beginning of period | 3,763 | 3,132 |
Cash and cash equivalents, end of period | 6,708 | $ 3,763 |
Supplement disclosure of non-cash information: | ||
Receipt of interest in Baergic from Parent | 99 | |
Unpaid offering costs | $ 14 |
Organization, Plan of Business
Organization, Plan of Business Operations | 12 Months Ended |
Dec. 31, 2022 | |
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. Baergic On May 11, 2022, the Company entered into a stock contribution agreement (the “Contribution Agreement”) with Fortress, pursuant to which Fortress agreed to transfer ownership of 100% of its shares (common and preferred) (the “Contributed Shares”) in Baergic, to the Company. Under the Contribution Agreement, Fortress also agreed to assign to Avenue certain intercompany agreements existing between Fortress and Baergic, including a Founders Agreement, by and between Fortress and Baergic, dated as of March 9, 2017, and Management Services Agreement, by and between Fortress and Baergic, dated as of March 9, 2017. Consummation of the transactions contemplated by the Contribution Agreement was subject to the satisfaction of certain conditions precedent, including, inter alia: (i) the closing of an equity financing by the Company resulting in gross proceeds of at least $7.5 million, (ii) the agreement by minority Avenue shareholder InvaGen Pharmaceuticals Inc. (“InvaGen”) to (A) have 100% of its shares in the Company repurchased by the Company and (B) terminate certain of the agreements into which it entered with the Company and/or Fortress in connection with InvaGen’s 2019 equity investment in the Company, which would eliminate certain negative consent rights of InvaGen over the Company and restore certain rights and privileges of Fortress in the Company (all upon terms to be agreed upon with InvaGen); and (iii) the sustained listing of Avenue’s common stock on The Nasdaq Capital Market. The transaction is expected to expand Avenue’s development portfolio within neuroscience. Evaluation and negotiation of the Contribution Agreement was overseen, and execution of the Contribution Agreement was approved, by special committees at the Avenue and Fortress levels, both of which exclusively comprised independent and disinterested directors of the respective companies’ boards. See Note 4 below. Reverse Stock Split On July 25, 2022, the holders of a majority of the voting power of the capital stock of the Company executed a written consent approving a grant of discretionary authority to the board of directors of the Company (the “Board”) to, without further stockholder approval, (i) effect a reverse stock split of the Company’s issued and outstanding common stock within a range of between 10-for-1 and 20-for-1 (with the Board being authorized to determinate the exact ratio) (the “Reverse Stock Split”) and (ii) reduce the number of the Company’s authorized shares of common stock from 50,000,000 to 20,000,000 (the “Authorized Share Reduction”) by filing an amendment (the “Amendment”) to the Company’s Third Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware. The written consent was signed by the holders of 9,423,429 shares of the Company’s common stock and 250,000 shares of the Company’s Class A Preferred Stock. Each share of common stock entitles the holder thereof to one vote on all matters submitted to stockholders and each share of Class A Preferred Stock has the voting power of 1.1 times (A) the number of outstanding shares of common stock plus (B) the whole shares of Company common stock into which the outstanding shares of Class A Preferred Stock are convertible, divided by the number of outstanding shares of Class A Preferred Stock, or 99 votes per share as of July 25, 2022. Accordingly, the holders of approximately 73% of the voting power of the Company’s capital stock as of July 25, 2022 signed the written consent approving the Reverse Stock Split, the Authorized Share Reduction and the Amendment. The Board also approved the Reverse Stock Split, the Authorized Share Reduction and the Amendment. The Reverse Stock Split was effective on September 23, 2022 upon filing of the Amendment with the Secretary of State of Delaware, which date was at least twenty (20) days from the mailing of the information statement. Under the Amendment, the number of authorized shares of Common Stock immediately after the Reverse Stock Split (“New Common Stock”) was simultaneously reduced from 50,000,000 to 20,000,000 shares. All share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated. As a result of the Reverse Stock Split, every 15 shares of Common Stock outstanding immediately prior to the effectiveness of the Reverse Stock Split were combined and converted into one share of New Common Stock without any change in the par value per share. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who would otherwise be entitled to a fraction of one share of New Common Stock as a result of the Reverse Stock Split instead received $9,580 in cash equal to such fraction multiplied by the closing sale price of Common Stock on The Nasdaq Capital Market on September 22, 2022, as adjusted for the Reverse Stock Split. Proportionate adjustments were made to the per share exercise price and/or the number of shares issuable upon the exercise or vesting of all stock options, restricted stock and warrants outstanding at September 23, 2022, which resulted in a proportional decrease in the number of shares of the Company’s common stock reserved for issuance upon exercise or vesting of such stock options, restricted stock and warrants, and, in the case of stock options and warrants, a proportional increase in the exercise price of all such stock options and warrants. 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 388,888 shares of the Company’s common stock at $90.00 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 was terminated, InvaGen retained 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. Those rights existed as long as InvaGen maintained 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. Throughout 2021, the Company 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. In July 2022 we entered into a Share Repurchase Agreement with InvaGen. Upon the closing of the October 2022 public offering, InvaGen gave up all rights stated in the Stockholders Agreement and the Company repurchased the 388,888 common shares of the Company held by InvaGen. The excess of the consideration paid to InvaGen over the fair market value on the date of repurchase of $1.9 million was recognized in general and administrative expense. Liquidity and Capital Resources Going Concern These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, as described below, substantial doubt about the Company’s ability to continue as a going concern exists. 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, 2022, the Company had an accumulated deficit of $80.6 million. Due to uncertainties regarding future operations of the Company for a study protocol that could form the basis for the submission of a complete response to the second Complete Response Letter for IV Tramadol, and the expansion of the Company’s development portfolio within neuroscience with the consummation of the transaction with Baergic, the Company will need to secure additional funds through equity or debt offerings, or other potential sources, the timing of which is unknown at this time. The Company will require the additional funds to cover operational expenses over the next 12 months. The Company cannot be certain that additional funding will be available to it on acceptable terms, or at all. These factors individually and collectively causes substantial doubt about the Company’s ability to continue as a going concern to exist within one year from the date of this report. The consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Significant Accounting Policies | |
Significant Accounting Policies | Note 2 — Significant Accounting Policies Basis of Presentation The Company’s consolidated 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’s consolidated financial statements include the accounts of the Company and the accounts of the Company’s subsidiary. All intercompany balances and transactions have been eliminated. The accompanying consolidated financial statements include the accounts of the Company’s subsidiary. For consolidated entities where the Company owns less than 100% of the subsidiary, the Company records net loss attributable to non-controlling interests in its consolidated statements of operations equal to the percentage of the economic or ownership interest retained in such entities by the respective non-controlling parties. The Company continually assesses whether changes to existing relationships or future transactions may result in the consolidation or deconsolidation of partner companies. Use of Estimates The preparation of consolidated 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 consolidated 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, 2022 and 2021 consisted of cash in institutions in the United States. The Company maintains its cash and cash equivalent balances with high-quality financial institutions and, consequently, the Company believes that such funds are currently adequately protected against credit risk. At times, portions of the Company’s cash and cash equivalents may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. As of December 31, 2022, the Company had not experienced losses on these accounts, and management believes the Company is not exposed to significant risk on such accounts. The Company’s cash equivalents and investments may comprise money market funds that are invested in U.S. Treasury obligations, corporate debt securities, U.S. Treasury obligations and government agency securities. Credit risk in these securities is reduced as a result of the Company’s investment policy to limit the amount invested in any single issuer and to only invest in securities of a high credit quality. The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. Other Receivables – Related Party Other receivables consist of amounts due from Journey Medical Corporation (“Journey”), a consolidated entity under Fortress, and are recorded at the invoiced amount. Accounts Payable and Accrued Expenses – Related Party In the normal course of business, Fortress pays for certain expenses on behalf of the Company. Such expenses are record as accounts payable and accrued expenses – related party and are recorded at the invoiced amount and reimbursed to Fortress in the normal course of business. 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 on our consolidated statements of operations. Warrant Liability We have issued freestanding warrants to purchase shares of our common stock in connection with financing activities (Warrants as described in Note 7). Our outstanding common stock warrants issued in connection with the equity financing completed in October 2022 (“October Public Offering”) are classified as liabilities in the balance sheet as they contain terms for redemption of the underlying security that are outside our control. We use a Monte Carlo simulation approach to value warrants, which requires management to estimate inputs including expected volatility and expected term, and is most significantly impacted by the volatility of our common stock price. These inputs are inherently subjective and require significant analysis and judgment to develop. The fair value of all warrants is re-measured at each financial reporting date with any changes in fair value being recognized in change in fair value of warrant liabilities, a component of other income (expense), in the consolidated statements of operations and comprehensive income (loss). We will continue to re-measure the fair value of the warrant liabilities until exercise or expiration of the related warrant on October 10, 2027. The key inputs for the Monte Carlo simulation for the year ending December 31, 2022 were as follows: October 11, December 31, 2022 2022 Stock price $ 2.84 $ 1.16 Risk-free interest rate 4.14 % 4.02 % Expected dividend yield — — Expected term in years 5.00 4.78 Expected volatility 90 % 93 % Fair Value Measurements The Company follows accounting guidance on fair value measurements for financial assets and liabilities measured at fair value on a recurring basis. Under the accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. Level 3: Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as accounts payable, accrued expenses and other current liabilities. Liabilities measured at fair value on a recurring basis as of December 31, 2022 were as follows (in thousands): December 31, 2022 Level 1 Level 2 Level 3 Liabilities: Warrant liabilities $ 2,609 $ — $ — $ 2,609 The warrant liability was initially measured at $8.3 million as of October 11, 2022. For the year ended December 31, 2022, there was a $5.6 million decrease in fair value of the warrant liability primarily driven by the decrease in the Company’s stock price. 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 on February 16 (“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 record date to December 31 and 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. As a result of the consummation of the Share Repurchase Agreement on October 31, 2022, the Waiver Agreement was terminated and the right to dividends of the Company’s Common Stock was restored. The Annual Stock Dividend terminates upon conversion of the Class A Preferred shares or a Change of Control as defined in the Third Amended and Restated Certificate of Incorporation. Pursuant to the Third Amended and Restated Certificate of Incorporation, the Company issued 231,316 shares of common stock to Fortress for the Annual Stock Dividend, representing 2.5% of the fully-diluted outstanding equity of the Company on January 1, 2023. This was shown in the consolidated statements of stockholders’ equity at December 31, 2022, as part of additional paid-in capital. The Company recorded an expense of approximately $268 thousand in research and development related to these issuable shares during the year ended December 31, 2022. 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 Company accounts for forfeitures as they occur. 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 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 2019 through 2021 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, 2022 and 2021. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. Non-Controlling Interests Non-controlling interests in consolidated entities represent the component of equity in consolidated entities held by third parties. Any change in ownership of a subsidiary while the controlling financial interest is retained is accounted for as an equity transaction between the controlling and non-controlling interests. Net Loss Per Share Loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding, excluding unvested restricted stock and stock options and preferred shares, during the period. Dividends declared are paid and set aside among the holders of shares of common stock and Class A Preferred stock pro-rata on an as-if-converted basis. 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, 2022 2021 Unvested restricted stock units/awards 13,137 94,418 Common stock issuable 322,225 — Warrants 4,137,916 — Class A Preferred shares 16,666 16,666 Total potential dilutive effect 4,489,944 111,084 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, |
License_Supplier Agreements
License/Supplier Agreements | 12 Months Ended |
Dec. 31, 2022 | |
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 the Company, 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. In December 2019, $1.0 million became due to Revogenex in accordance with the Company’s submission of its NDA. 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 on net sales of the product ranging in the high single digits to low double digits. 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 a low single digit royalty on net sales of the product for five years after launch. Baergic Licenses In December 2019, Baergic entered into two license agreements: (i) a license agreement (the “AZ License”) with AstraZeneca AB (“AZ”) 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 (ii) a license agreement (the “CCHMC License”) with Cincinnati Children’s Hospital Medical Center (“CCHMC”) to acquire patent and related intellectual property rights pertaining to a GABA inhibitor program for neurological disorders. Baergic paid an upfront fee of $3.0 million to AZ and $0.2 million to CCHMC, as well as issued common shares of Baergic of approximately 20% and 5% of Baergic to each at the time of the license agreement, respectively. Development milestones totaling approximately $81.5 million in the aggregate are due upon achievement of each milestone. Commercial and sales-based milestone payments totaling approximately $151 million are due upon achievement of each milestone, as well as royalty payments in the low to high single digits on any future aggregate, annual, worldwide net sales. |
Related Party Agreements
Related Party Agreements | 12 Months Ended |
Dec. 31, 2022 | |
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 (as amended, the “Fortress-Avenue Founders Agreement”), 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 partial consideration for the Fortress-Avenue Founders Agreement, Avenue assumed $3.0 million in debt that Fortress had 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 original Fortress-Avenue Founders Agreement, Avenue also agreed to: (i) issue annually to Fortress, on the anniversary date of the Fortress-Avenue Founders Agreement, shares of common stock equal to two and one half percent (2.5%) of the fully-diluted outstanding equity of Avenue; (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%). On September 13, 2016, the Company amended the Fortress-Avenue Founders Agreement to remove the Annual Equity Fee (that feature remained in substance and became issuable to the holders of Avenue’s Class A Preferred Stock, all of which is currently held by Fortress) and to add 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 effecting such amendment of the Fortress-Avenue Founders Agreement, the Company entered into an Exchange Agreement whereby the Company exchanged Fortress’ 155,555 Class A common shares for approximately 166,027 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 “Fortress-Avenue MSA”) with Avenue pursuant to which Fortress provides advisory and consulting services to Avenue pursuant to the terms thereof. The Fortress-Avenue MSA contained an initial five-year term and shall be automatically extended for additional five-year periods unless Fortress or the Company provides written notice of its desire not to automatically extend the term of the MSA at least 90 days prior to the applicable expiration date. Services provided under the Fortress-Avenue 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 beginning on November 12, 2018, eligibility to receive such fees was waived pursuant to a Waiver Agreement signed between Avenue, Fortress and InvaGen. The Fortress-Avenue MSA fee was reinstated upon the closing of the October 2022 public offering. Founders Agreement and Management Services Agreement with Baergic Pursuant to the Share Contribution Agreement between Avenue and Fortress, the Founders Agreement and Management Services Agreement that had previously been existing between Fortress and Baergic were assigned to Avenue, such that they now exist between Avenue and Baergic; those agreements are referred to herein as the Avenue-Baergic Founders Agreement and the Avenue-Baergic MSA, as applicable. The Annual Stock Dividend payable to the Company is 2.5% of common stock calculated as a percentage of fully diluted outstanding capital and became effective as of November 8, 2022. For the year ended December 31, 2022, Baergic recorded an Annual Stock Dividend of $10.5 thousand to Avenue on December 31, 2022, which was paid in shares on January 1, 2023. The Avenue-Baergic Founders Agreement has an effective date of March 9, 2017, and a term of 15 years, which upon expiration automatically renews for successive one-year periods unless terminated by Avenue and Baergic or a Change in Control (as defined in the Avenue-Baergic Founders Agreement) occurs. As additional consideration under the Avenue-Baergic Founders Agreement, Baergic will also: (i) pay an equity fee in shares of common stock, payable within five (5) business days of the closing of any equity or debt financing for Baergic that occurs after the effective date of the Avenue-Baergic Founders Agreement and ending on the date when Avenue no longer has majority voting control in the Baergic’s voting equity, equal to two and one-half (2.5%) of the gross amount of any such equity or debt financing; and (ii) pay a cash fee equal to four and one-half percent (4.5%) of the Baergic’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, Baergic will pay a one-time change in control fee equal to five (5x) times the product of (A) net sales for the twelve (12) months immediately preceding the change in control and (B) four and one-half percent (4.5%). The Avenue-Baergic MSA has an effective date of March 9, 2017, pursuant to which Avenue renders management, advisory and consulting services to the Company. The MSA has an initial term of five years and is automatically renewed for successive five-year terms unless terminated in accordance with its provisions. Services provided under the MSA may include, without limitation, (i) advice and assistance concerning any and all aspects of the Baergic’s operations, clinical trials, financial planning and strategic transactions and financings and (ii) conducting relations on behalf of the Baergic with accountants, attorneys, financial advisors and other professionals (collectively, the “Avenue Services”). Baergic 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 Avenue, provided those services are offered at market prices. However, Baergic is not obligated to take or act upon any advice rendered from Avenue and Avenue shall not be liable for any of its actions or inactions based upon their advice. Pursuant to the Avenue-Baergic MSA and Baergic’s Certificate of Incorporation, Avenue and its affiliates, including all members of Baergic’s Board of Directors, will have no fiduciary or other duty to communicate or present any corporate opportunities to Baergic or to refrain from engaging in business that is similar to that of Baergic. In consideration for the Avenue Services, Baergic will pay Avenue an annual consulting fee of $0.5 million (the “Avenue-Baergic 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 Avenue-Baergic Annual Consulting Fee shall be increased to $1.0 million for each calendar year in which Baergic has net assets in excess of $100 million at the beginning of the calendar year. Secondment Agreement with Journey Effective June 1, 2021, the Company, InvaGen, Fortress and Journey entered into a secondment agreement for a certain Avenue employee to be seconded to Journey. During the secondment, Journey had 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 lasted until the employee’s services were needed again by the Company which was December 1, 2021. The amounts reimbursable to Avenue were zero and $0.2 million for the years ended December 31, 2022 and December 31, 2021, respectively. The amounts were recorded as a reduction in research and development expenses on the Company’s consolidated statements of operations. The amount due to the Company as of December 31, 2021 that is related to this secondment agreement is $90,000 and is included in “Other receivables – related party” on the Company’s consolidated balance sheets. Acquisition of Baergic On May 11, 2022, the Company entered into the Contribution Agreement with Fortress related to the Company’s acquisition of Baergic, on the terms and subject to the satisfaction of conditions described above in Note 1 – Organization, Plan of Business Operations. Evaluation and negotiation of the Contribution Agreement was overseen, and execution of the Contribution Agreement was approved, by special committees at the Avenue and Fortress levels, both of which exclusively comprised independent and disinterested directors of the respective companies’ boards. The Company believes that the terms of the Contribution Agreement is at least as favorable as the terms that the Company would have been able to obtain with a disinterested party. The transaction was accounted for as an asset acquisition between entities under common control. As such, the transaction was recorded at carryover basis, with all assets, liabilities and non-controlling interests measured at their historical carrying values. The consolidated financial statements of the Company include the consolidated results of operations for Avenue and Baergic since the acquisition date on November 8, 2022. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 2021 Accounts payable $ 129 $ 304 Accrued employee compensation 199 24 InvaGen contingent fee 208 — Accrued contracted services and other 413 123 Accounts payable and accrued expenses $ 949 $ 451 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021, there was no litigation against the Company. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Stockholders' Equity | Note 7 — Stockholders’ Equity Class A Preferred Shares On September 13, 2016, 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 Annual Stock 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). 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 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. Pursuant to the reverse stock split by the Company in September 2022, the Class A Preferred Stock has a Conversion Ratio of 15 Class A Preferred to one share of Common Stock. Common Stock As of December 31, 2022, the Company’s authorized capital stock consists of 20,000,000 shares of common stock, with $0.0001 par value (see Note 1). 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. In November 2021, the Company, pursuant to an underwritten public offering, sold 149,252 shares of its common stock at a price of $20.10 per share for gross proceeds of approximately $3.0 million. After deducting underwriting discounts and commissions and other expenses, net proceeds from this underwritten public offering were $2.6 million. In December 2021, the Company, pursuant to an underwritten public offering, sold 127,340 shares of its common stock at a price of $16.05 per share for gross proceeds of approximately $2.0 million. 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. This 45-day purchase option was not exercised. After deducting underwriting discounts and commissions and other expenses, net proceeds from this underwritten public offering were $1.8 million. Pursuant to the October 2022 Offering, the Company sold 2,652,065 units (“Units”) and 984,300 pre-funded units (“Pre-funded Units”). Each Unit consisted of one share (a “Share”) of the Company’s common stock, par value $0.0001 per share (“Common Stock”), and one warrant to purchase one share of Common Stock (each, a “Warrant” and, collectively, the “Warrants”), and each Pre-funded Unit consisted of one pre-funded warrant to purchase one share of Common Stock (each, a “Pre-funded Warrant” and collectively, the “Pre-funded Warrants”) and one Warrant. The Units were sold at a price of $3.30 per Unit, and the Pre-Funded Units were sold at a price of $3.2999 ($3.30 less $0.0001, the exercise price of the Pre-funded Warrants). The Warrants are immediately exercisable upon issuance and are exercisable for a period of five years after the issuance date. The Shares, the Pre-funded Warrants and the Warrants were immediately separable upon issuance and were issued separately. The Underwriter was granted a 45-day option to purchase up to an aggregate of (i) 545,454 additional Shares and/or Pre-funded Units, representing 15% of the Shares and Pre-funded Warrants sold in the Offering, and/or (ii) Warrants to purchase 545,454 additional Shares, representing 15% of the Warrants sold in the Offering, which it initially exercised, in part, electing to purchase 545,454 Warrants at a purchase price of $0.01 per Warrant. The Company consummated the transactions contemplated by the Offering and the Underwriting Agreement, including the partial exercise of the Underwriter’s option, on October 11, 2022. Prior to the closing date of the Offering, investors in certain of the Pre-funded Warrants, pursuant to the terms thereof, elected to exercise 949,900 Pre-funded Warrants. Accordingly, at the closing, the Company issued 949,900 fewer Pre-funded Warrants and, in lieu thereof, the corresponding 949,900 shares of Common Stock. The Company received net proceeds from the Offering of $10.3 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. Pursuant to the Founders Agreement, the Company issued 90,909 shares of common stock to Fortress related to the October 2022 offering, which is equivalent to 2.5% of the gross amount of the offering. The Company recorded the expense of $0.3 million in research and development on the record date and issued the shares on January 1, 2023. 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 and an amendment to the plan to increase the number of authorized shares issuable to 266,666 shares was approved by our stockholders in December 2021. 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 266,666 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 Total shares available for the issuance of stock-based awards under the Company’s 2015 Incentive Plan was 122,489 shares at December 31, 2022. Restricted Stock Units and Restricted Stock Awards The following table summarizes restricted stock unit and award activity for the year ended December 31, 2022: Weighted Number of Units and Average Grant Awards Date Fair Value Unvested balance at December 31, 2020 75,993 $ 89.40 Granted 55,977 13.95 Forfeited (29,174) 119.70 Vested (8,378) 74.55 Unvested balance at December 31, 2021 94,418 $ 56.25 Forfeited (666) 13.95 Vested (80,615) 40.83 Unvested balance at December 31, 2022 13,137 $ 12.17 For the years ended December 31, 2022, and 2021 stock-based compensation expenses associated with the amortization of restricted stock units and restricted stock awards for employees and non-employees were approximately $0.6 million and $0.4 million, respectively. For the years ended December 31, 2022, and 2021, the weighted average grant date fair value of restricted stock units and awards granted was zero and $13.95, respectively. For the years ended December 31, 2022, and 2021, the weighted average grant date fair value of restricted stock units and awards forfeited was $13.95 and $119.70, respectively. The total fair value of restricted stock units and awards that vested during the years ended December 31, 2022, and 2021 was $3.3 million and $0.6 million, respectively. At December 31, 2022, 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 1.96 years. This amount does not include, as of December 31, 2022, 3,333 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 awards containing performance conditions will be measured as of the grant date and recorded if and when it is probable that the performance condition will be achieved. Stock Warrants The following table summarizes the warrant activity for the years ended December 31, 2021 and 2022: Weighted Aggregate Average Exercise Intrinsic Value Warrants Price (in thousands) Outstanding, December 31, 2020 1,056 $ 9.4231 $ 84 Exercised (59) 0.0015 — Outstanding, December 31, 2021 997 $ 9.9807 $ 11 Granted 5,166,119 2.6713 — Exercised (1,029,200) 0.1441 — Outstanding, December 31, 2022 4,137,916 $ 3.3016 $ 1 Upon the exercise of warrants, the Company will issue new shares of its common stock. Public Offering Warrant Liabilities In October 2022, the Company sold 2,652,065 units (“Units”) and 984,300 pre-funded units (“Pre-funded Units”). Each Unit consisted of one share (a “Share”) of the Company’s common stock (“Common Stock”), and one warrant to purchase one share of Common Stock (each, a “Warrant” and, collectively, the “Warrants”), and each Pre-funded Unit consisted of one pre-funded warrant to purchase one share of Common Stock (each, a “Pre-funded Warrant” and collectively, the “Pre-funded Warrants”) and one Warrant. The Units were sold at a price of $3.30 per Unit, and the Pre-Funded Units were sold at a price of $3.2999 ($3.30 less $0.0001, the exercise price of the Pre-funded Warrants). Net proceeds from the offering were $10.3 million after deducting underwriting discounts and commissions and other transaction costs. We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each consolidated balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a gain or loss on the consolidated statements of operations. The fair value of the warrants was estimated using a Monte Carlo simulation approach (see Note 2). The Company deemed the October 2022 Warrants to be classified as liabilities on the consolidated balance sheet as they contain terms for redemption of the underlying security that are outside of the Company’s control. The Warrants were recorded at the time of closing at a fair value of $8.3 million, determined by using the Monte Carlo simulation approach. The Company revalued the October 2022 Warrants at December 31, 2022 using the Monte Carlo simulation approach. This resulted in a decrease in common stock warrant liability of $5.6 million, with an offsetting gain recorded to change in fair value of common stock warrant liabilities in the consolidated statements of operations. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021. 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, 2022 2021 Statutory federal income tax rate 21 % 21 % State taxes, net of federal tax benefit 10 % 13 % State rate change (1) % 0 % Stock-based compensation (22) % (11) % Other 3 % 0 % Credits 4 % 0 % None-deductible items (12) % 0 % Section 162(m) disallowance (3) % 0 % Change in fair value of warrant liability 48 % 0 % Change in valuation allowance (49) % (23) % Income taxes provision (benefit) 0 % 0 % The components of the net deferred tax asset as of December 31, 2022 and 2021 are the following (in thousands): As of December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 25,660 $ 23,719 Stock compensation and other 42 293 In process research and development 1,603 1,162 Accruals and reserves 64 6 Business interest expense disallowance 122 — Section 174 capitalization 622 — Tax credits 2,859 2,640 Total deferred tax assets 30,972 27,820 Less valuation allowance (30,972) (27,820) 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 $31.0 million and $27.8 million was recorded as of December 31, 2022 and 2021, respectively. As of December 31, 2022, the Company had federal and state net operating loss carryforwards of approximately $78.3 million and $139.7 million, respectively. Approximately $63.8 million of the federal net operating loss carryforwards and $1.9 million of the state net operating loss carryforwards can be carried forward indefinitely. The remaining $14.5 million of federal and $137.8 million of state net operating loss carryforwards will begin to expire, if not utilized, by 2034 and 2034, respectively. The Company has $2.9 million of research and development credit carryforwards, which will begin to expire, if not utilized, in 2034. 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. The Company has not performed a Section 382 analysis as of December 31, 2022. 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 consolidated financial statements, that have been recorded on the Company’s consolidated financial statements for the periods ended December 31, 2022 and 2021. 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, 2022 and 2021. The federal and state tax returns for the years ended December 31, 2019, 2020, and 2021 are currently open for examination under applicable federal and state income tax statues of limitations. The company is not currently under examination. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events | |
Subsequent Events | Note 9 — Subsequent Events January 2023 Registered Offering and Private Placement On January 27, 2023, the Company entered into a Registered Direct and Private Placement agreement with a single institutional investor for the sale of 448,000 shares of common stock at a price per share of $1.55, and pre-funded warrants to purchase 1,492,299 shares of common stock, at a price per pre-funded warrant of $1.549. The pre-funded warrants have an exercise price of $0.001 per share and became exercisable upon issuance and remain exercisable until exercised in full. In a concurrent Private Placement, the Company also agreed to issue to the same investor warrants to purchase 1,940,299 shares of common stock (“PIPE Warrants”). The PIPE Warrants had an offering price of $0.125 per PIPE Warrant to purchase one share of common stock. The PIPE Warrants have an exercise price of $1.55 per share and are exercisable six months after issuance and will expire three years from the date on which the PIPE Warrants become exercisable. The Company received gross proceeds of $3.25 million total from both offerings. AnnJi License Agreement On February 28, 2023, the Company entered into a license agreement with AnnJi Pharmaceutical Co. Ltd., whereby the Company obtained an exclusive license (the “License Agreement”) from AnnJi to intellectual property rights pertaining to the molecule known as JM17, which activates Nrf1 and Nrf2, enhances androgen receptor degradation and underlies AJ201, a clinical product candidate currently in a Phase 1b/2a clinical trial in the U.S. for the treatment of spinal and bulbar muscular atrophy (“SBMA”), also known as Kennedy’s Disease. Under the License Agreement, in exchange for exclusive rights to the intellectual property underlying the AJ201 product candidate, the Company will pay an initial cash license fee of $3.0 million, of which $2.0 million is payable within 60 days and $1 million is payable within 180 days after the effective date of the License Agreement. The license provided under the License Agreement is exclusive as to all oral forms of AJ201 for use in all indications (other than androgenetic alopecia and Alzheimer’s disease) in the United States, Canada, the European Union, the United Kingdom and Israel. The License Agreement also contains customary representations and warranties and provisions related to confidentiality, diligence, indemnification and intellectual property protection. The Company will initially be obligated to obtain both clinical and commercial supply of AJ201 exclusively through AnnJi. The Company is also obligated to issue shares of its common stock under the Subscription Agreement and make additional payments over the course of the License Agreement including: reimbursement payments of up to $10.8 million in connection with the product’s Phase 1b/2a clinical trial, up to $14.5 million in connection with certain development milestones pertaining to the first indication in the U.S., up to $27.5 million in connection with certain drug development milestones pertaining to additional indications and development outside the U.S., up to $165 million upon the achievement of certain net sales milestones ranging from $75 million to $750 million in annual net sales, and royalty payments based on a percentage of net sales ranging from mid-single digits (on annual net sales at or below $50 million) to the low double digits (on annual net sales equal to or greater than $300 million), which are subject to potential diminution in certain circumstances. In connection with the signing of the License Agreement, the Company will issue 831,618 shares of its common stock to AnnJi (“First Tranche Shares”) and then will issue an additional 276,652 shares of common stock upon enrollment of the eighth patient in the ongoing Phase 1b/2a SBMA clinical trial (“Second Tranche Shares”). The Company and AnnJi entered into a subscription agreement, dated as of February 28, 2023, that provides for the issuance of First Tranche Shares, which contains customary representations and warranties of the Company and AnnJi, respectively, and is subject to customary closing conditions. The Company and AnnJi will enter into a subsequent subscription agreement, in substantially the same form as the Subscription Agreement, with respect to the issuance of the Second Tranche Shares. Also in connection with execution of the License Agreement, the Company entered into a registration rights agreement with AnnJi. Pursuant to the Registration Rights Agreement, the Company will be required to file, on or prior to August 28, 2023, a registration statement with the U.S. Securities and Exchange Commission to register the resale of the Consideration Shares. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The Company’s consolidated 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’s consolidated financial statements include the accounts of the Company and the accounts of the Company’s subsidiary. All intercompany balances and transactions have been eliminated. The accompanying consolidated financial statements include the accounts of the Company’s subsidiary. For consolidated entities where the Company owns less than 100% of the subsidiary, the Company records net loss attributable to non-controlling interests in its consolidated statements of operations equal to the percentage of the economic or ownership interest retained in such entities by the respective non-controlling parties. The Company continually assesses whether changes to existing relationships or future transactions may result in the consolidation or deconsolidation of partner companies. |
Use of Estimates | Use of Estimates The preparation of consolidated 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 consolidated 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, 2022 and 2021 consisted of cash in institutions in the United States. The Company maintains its cash and cash equivalent balances with high-quality financial institutions and, consequently, the Company believes that such funds are currently adequately protected against credit risk. At times, portions of the Company’s cash and cash equivalents may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. As of December 31, 2022, the Company had not experienced losses on these accounts, and management believes the Company is not exposed to significant risk on such accounts. The Company’s cash equivalents and investments may comprise money market funds that are invested in U.S. Treasury obligations, corporate debt securities, U.S. Treasury obligations and government agency securities. Credit risk in these securities is reduced as a result of the Company’s investment policy to limit the amount invested in any single issuer and to only invest in securities of a high credit quality. The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. |
Other Receivables - Related Party | Other Receivables – Related Party Other receivables consist of amounts due from Journey Medical Corporation (“Journey”), a consolidated entity under Fortress, and are recorded at the invoiced amount. |
Accounts Payable and Accrued Expenses - Related Party | Accounts Payable and Accrued Expenses – Related Party In the normal course of business, Fortress pays for certain expenses on behalf of the Company. Such expenses are record as accounts payable and accrued expenses – related party and are recorded at the invoiced amount and reimbursed to Fortress in the normal course of business. |
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 on our consolidated statements of operations. |
Warrant liability | Warrant Liability We have issued freestanding warrants to purchase shares of our common stock in connection with financing activities (Warrants as described in Note 7). Our outstanding common stock warrants issued in connection with the equity financing completed in October 2022 (“October Public Offering”) are classified as liabilities in the balance sheet as they contain terms for redemption of the underlying security that are outside our control. We use a Monte Carlo simulation approach to value warrants, which requires management to estimate inputs including expected volatility and expected term, and is most significantly impacted by the volatility of our common stock price. These inputs are inherently subjective and require significant analysis and judgment to develop. The fair value of all warrants is re-measured at each financial reporting date with any changes in fair value being recognized in change in fair value of warrant liabilities, a component of other income (expense), in the consolidated statements of operations and comprehensive income (loss). We will continue to re-measure the fair value of the warrant liabilities until exercise or expiration of the related warrant on October 10, 2027. The key inputs for the Monte Carlo simulation for the year ending December 31, 2022 were as follows: October 11, December 31, 2022 2022 Stock price $ 2.84 $ 1.16 Risk-free interest rate 4.14 % 4.02 % Expected dividend yield — — Expected term in years 5.00 4.78 Expected volatility 90 % 93 % |
Fair value measurements | Fair Value Measurements The Company follows accounting guidance on fair value measurements for financial assets and liabilities measured at fair value on a recurring basis. Under the accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. Level 3: Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as accounts payable, accrued expenses and other current liabilities. Liabilities measured at fair value on a recurring basis as of December 31, 2022 were as follows (in thousands): December 31, 2022 Level 1 Level 2 Level 3 Liabilities: Warrant liabilities $ 2,609 $ — $ — $ 2,609 The warrant liability was initially measured at $8.3 million as of October 11, 2022. For the year ended December 31, 2022, there was a $5.6 million decrease in fair value of the warrant liability primarily driven by the decrease in the Company’s stock price. |
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 on February 16 (“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 record date to December 31 and 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. As a result of the consummation of the Share Repurchase Agreement on October 31, 2022, the Waiver Agreement was terminated and the right to dividends of the Company’s Common Stock was restored. The Annual Stock Dividend terminates upon conversion of the Class A Preferred shares or a Change of Control as defined in the Third Amended and Restated Certificate of Incorporation. Pursuant to the Third Amended and Restated Certificate of Incorporation, the Company issued 231,316 shares of common stock to Fortress for the Annual Stock Dividend, representing 2.5% of the fully-diluted outstanding equity of the Company on January 1, 2023. This was shown in the consolidated statements of stockholders’ equity at December 31, 2022, as part of additional paid-in capital. The Company recorded an expense of approximately $268 thousand in research and development related to these issuable shares during the year ended December 31, 2022. |
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 Company accounts for forfeitures as they occur. 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 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 2019 through 2021 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, 2022 and 2021. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. |
Non-Controlling Interests | Non-Controlling Interests Non-controlling interests in consolidated entities represent the component of equity in consolidated entities held by third parties. Any change in ownership of a subsidiary while the controlling financial interest is retained is accounted for as an equity transaction between the controlling and non-controlling interests. |
Net Loss Per Share | Net Loss Per Share Loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding, excluding unvested restricted stock and stock options and preferred shares, during the period. Dividends declared are paid and set aside among the holders of shares of common stock and Class A Preferred stock pro-rata on an as-if-converted basis. 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, 2022 2021 Unvested restricted stock units/awards 13,137 94,418 Common stock issuable 322,225 — Warrants 4,137,916 — Class A Preferred shares 16,666 16,666 Total potential dilutive effect 4,489,944 111,084 |
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, |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Significant Accounting Policies | |
Schedule of key inputs for the Monte Carlo simulation of warrant liabilities | October 11, December 31, 2022 2022 Stock price $ 2.84 $ 1.16 Risk-free interest rate 4.14 % 4.02 % Expected dividend yield — — Expected term in years 5.00 4.78 Expected volatility 90 % 93 % |
Schedule of liabilities measured at fair value on a recurring basis | Liabilities measured at fair value on a recurring basis as of December 31, 2022 were as follows (in thousands): December 31, 2022 Level 1 Level 2 Level 3 Liabilities: Warrant liabilities $ 2,609 $ — $ — $ 2,609 |
Schedule of potential common shares not included in the computation of diluted net loss per share | For the Years Ended December 31, 2022 2021 Unvested restricted stock units/awards 13,137 94,418 Common stock issuable 322,225 — Warrants 4,137,916 — Class A Preferred shares 16,666 16,666 Total potential dilutive effect 4,489,944 111,084 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Payable and Accrued Expenses | |
Schedule of accounts payable and accrued expenses | Accounts payable, accrued expenses and other liabilities consisted of the following (in thousands): As of December 31, 2022 2021 Accounts payable $ 129 $ 304 Accrued employee compensation 199 24 InvaGen contingent fee 208 — Accrued contracted services and other 413 123 Accounts payable and accrued expenses $ 949 $ 451 |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Schedule of restricted stock unit and award activity | The following table summarizes restricted stock unit and award activity for the year ended December 31, 2022: Weighted Number of Units and Average Grant Awards Date Fair Value Unvested balance at December 31, 2020 75,993 $ 89.40 Granted 55,977 13.95 Forfeited (29,174) 119.70 Vested (8,378) 74.55 Unvested balance at December 31, 2021 94,418 $ 56.25 Forfeited (666) 13.95 Vested (80,615) 40.83 Unvested balance at December 31, 2022 13,137 $ 12.17 |
Schedule of warrant activity | The following table summarizes the warrant activity for the years ended December 31, 2021 and 2022: Weighted Aggregate Average Exercise Intrinsic Value Warrants Price (in thousands) Outstanding, December 31, 2020 1,056 $ 9.4231 $ 84 Exercised (59) 0.0015 — Outstanding, December 31, 2021 997 $ 9.9807 $ 11 Granted 5,166,119 2.6713 — Exercised (1,029,200) 0.1441 — Outstanding, December 31, 2022 4,137,916 $ 3.3016 $ 1 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 2021 Statutory federal income tax rate 21 % 21 % State taxes, net of federal tax benefit 10 % 13 % State rate change (1) % 0 % Stock-based compensation (22) % (11) % Other 3 % 0 % Credits 4 % 0 % None-deductible items (12) % 0 % Section 162(m) disallowance (3) % 0 % Change in fair value of warrant liability 48 % 0 % Change in valuation allowance (49) % (23) % Income taxes provision (benefit) 0 % 0 % |
Schedule of deferred tax assets | The components of the net deferred tax asset as of December 31, 2022 and 2021 are the following (in thousands): As of December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 25,660 $ 23,719 Stock compensation and other 42 293 In process research and development 1,603 1,162 Accruals and reserves 64 6 Business interest expense disallowance 122 — Section 174 capitalization 622 — Tax credits 2,859 2,640 Total deferred tax assets 30,972 27,820 Less valuation allowance (30,972) (27,820) Deferred tax assets, net of valuation allowance $ — $ — |
Organization, Plan of Busines_2
Organization, Plan of Business Operations (Details) | 1 Months Ended | |||||||||
Sep. 23, 2022 USD ($) shares | Sep. 22, 2022 shares | Jul. 25, 2022 Vote shares | Feb. 08, 2019 USD ($) $ / shares shares | Jul. 31, 2022 USD ($) shares | Dec. 31, 2022 USD ($) shares | Oct. 31, 2022 shares | May 11, 2022 USD ($) | Dec. 31, 2021 USD ($) shares | Nov. 12, 2018 USD ($) | |
Organization, Plan of Business Operations | ||||||||||
Reverse stock split ratio | 15 | |||||||||
Reduction in common shares authorized | 20,000,000 | 949,900 | 20,000,000 | |||||||
Voting power | 99 | |||||||||
Percentage of voting power of the company's capital stock held by holders, signed the written consent | 73% | |||||||||
Accumulated deficit | $ | $ 80,551,000 | $ 76,999,000 | ||||||||
Cash received instead of reverse stock split | $ | $ 9,580 | |||||||||
General and administrative expense | ||||||||||
Organization, Plan of Business Operations | ||||||||||
Business combination, consideration transferred | $ | $ 1,900,000 | |||||||||
Invagen Pharmaceuticals Inc [Member] | ||||||||||
Organization, Plan of Business Operations | ||||||||||
Percentage of shares repurchased | 100% | |||||||||
Minimum | ||||||||||
Organization, Plan of Business Operations | ||||||||||
Reverse stock split ratio | 10 | |||||||||
Reduction in common shares authorized | 20,000,000 | 20,000,000 | ||||||||
Maximum | ||||||||||
Organization, Plan of Business Operations | ||||||||||
Reverse stock split ratio | 20 | |||||||||
Reduction in common shares authorized | 50,000,000 | 50,000,000 | ||||||||
Invagen Pharmaceuticals Inc [Member] | ||||||||||
Organization, Plan of Business Operations | ||||||||||
Percentage of repurchase of ownership interest | 100% | |||||||||
Invagen Pharmaceuticals Inc [Member] | ||||||||||
Organization, Plan of Business Operations | ||||||||||
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned | $ | $ 35,000,000 | |||||||||
Percentage of equity interest agreed to acquire in first stage | 33.30% | |||||||||
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned, Remaining Purchase Amount | $ | $ 180,000,000 | |||||||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 388,888 | |||||||||
Business Acquisition, Share Price | $ / shares | $ 90 | |||||||||
Business acquisition shares acquisition for net proceeds | $ | $ 31,500,000 | |||||||||
Invagen Pharmaceuticals Inc [Member] | Invagen Pharmaceuticals Inc [Member] | ||||||||||
Organization, Plan of Business Operations | ||||||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 33.30% | |||||||||
Common Shares | ||||||||||
Organization, Plan of Business Operations | ||||||||||
Number of shares held by holders of Company's stock, signed the written consent | 9,423,429 | |||||||||
Number of votes per share | Vote | 1 | |||||||||
Number of fraction shares in new common stock | 1 | |||||||||
Common Shares | Invagen Pharmaceuticals Inc [Member] | Minimum | ||||||||||
Organization, Plan of Business Operations | ||||||||||
Percentage of repurchase of ownership interest | 75% | |||||||||
Common Shares | Invagen Pharmaceuticals Inc [Member] | ||||||||||
Organization, Plan of Business Operations | ||||||||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 388,888 | |||||||||
Class A Preferred Shares | ||||||||||
Organization, Plan of Business Operations | ||||||||||
Number of shares held by holders of Company's stock, signed the written consent | 250,000 | |||||||||
Voting power | 1.1 | |||||||||
Fortress | Contribution Agreement | ||||||||||
Organization, Plan of Business Operations | ||||||||||
Ownership percentage transferred | 100% | |||||||||
Fortress | Contribution Agreement | Minimum | ||||||||||
Organization, Plan of Business Operations | ||||||||||
Proceeds from equity financing | $ | $ 7,500,000 |
Significant Accounting Polici_4
Significant Accounting Policies - Key assumptions used in Monte Carlo simulation of Warrant Liability (Details) | Dec. 31, 2022 Y $ / shares | Oct. 11, 2022 $ / shares Y |
Stock price | ||
Key assumptions used in Monte Carlo simulation | ||
Warrant Liability | $ / shares | 1.16 | 2.84 |
Risk-free interest rate | ||
Key assumptions used in Monte Carlo simulation | ||
Warrant Liability | 0.0402 | 0.0414 |
Expected term in years | ||
Key assumptions used in Monte Carlo simulation | ||
Warrant Liability | Y | 0.0478 | 0.0500 |
Expected volatility | ||
Key assumptions used in Monte Carlo simulation | ||
Warrant Liability | 0.93 | 0.90 |
Significant Accounting Polici_5
Significant Accounting Policies - Liabilities measured at fair value on a recurring basis (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Oct. 11, 2022 |
Liabilities: | ||
Warrant liabilities | $ 2,609 | $ 8,300 |
Recurring | ||
Liabilities: | ||
Warrant liabilities | 2,609 | |
Recurring | Level 3 | ||
Liabilities: | ||
Warrant liabilities | $ 2,609 |
Significant Accounting Polici_6
Significant Accounting Policies - Anti-dilutive Securities (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Significant Accounting Policies | ||
Total potential dilutive effect | 4,489,944 | 111,084 |
Unvested restricted stock units/awards | ||
Significant Accounting Policies | ||
Total potential dilutive effect | 13,137 | 94,418 |
Common shares issuable | ||
Significant Accounting Policies | ||
Total potential dilutive effect | 322,225 | |
Warrants | ||
Significant Accounting Policies | ||
Total potential dilutive effect | 4,137,916 | |
Class A Preferred shares | ||
Significant Accounting Policies | ||
Total potential dilutive effect | 16,666 | 16,666 |
Significant Accounting Polici_7
Significant Accounting Policies - Additional Information (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Jan. 01, 2023 | Oct. 31, 2022 | Sep. 30, 2016 | Dec. 31, 2022 | Oct. 11, 2022 | Dec. 31, 2021 | |
Short-term investments with an original maturity | three months | |||||
Warrant liability | $ 2,609,000 | $ 8,300,000 | ||||
Decrease in fair value of warrant liability | 5,600,000 | |||||
Number of new shares issued | 545,454 | 250,000 | ||||
Dividend rate, percentage | 2.50% | |||||
Research and development - licenses acquired | 268,000 | |||||
Amounts accrued for the payment of interest and penalties | $ 0 | $ 0 | ||||
Subsequent events | ||||||
Common Stock Dividends, Shares | 231,316 | |||||
Mustang | Subsequent events | ||||||
Annual Stock Dividend, Percentage of the fully-diluted outstanding equity | 2.50% |
License_Supplier Agreements (De
License/Supplier Agreements (Details) - USD ($) $ in Millions | 1 Months Ended | |||
Oct. 29, 2018 | Feb. 17, 2015 | Dec. 31, 2019 | Jun. 17, 2015 | |
Term of agreement | 5 years | |||
Revogenex License | ||||
Contractual Obligation, Maximum Future Payments | $ 3 | |||
Baergic Licenses | ||||
Development milestone payments | $ 81.5 | |||
Commercial and sales based milestone payments | $ 151 | |||
Baergic Licenses | AZ | ||||
Percentage of equity fee | 20% | |||
Baergic Licenses | CCHMC | ||||
Percentage of equity fee | 5% | |||
Upfront Payment | Baergic Licenses | AZ | ||||
Payments to acquire in process research and development | $ 3 | |||
Upfront Payment | Baergic Licenses | CCHMC | ||||
Payments to acquire in process research and development | 0.2 | |||
IV Tramadol | Fortress Biotech Inc | Upfront Payment | ||||
Payments to acquire in process research and development | 2 | |||
IV Tramadol | Fortress Biotech Inc | Additional Payment | ||||
Payments to acquire in process research and development | $ 1 | |||
Polpharma | ||||
Payments to acquire in process research and development | $ 2 | |||
New Drug Application | Revogenex License | ||||
Payments to acquire in process research and development | $ 1 |
Related Party Agreements (Detai
Related Party Agreements (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Sep. 13, 2016 | Feb. 17, 2015 | Jun. 26, 2017 | Feb. 17, 2015 | Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Agreements | ||||||
Agreement description terms | (i) issue annually to Fortress, on the anniversary date of the Fortress-Avenue Founders Agreement, shares of common stock equal to two and one half percent (2.5%) of the fully-diluted outstanding equity of Avenue; (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%). | |||||
Other receivables - related party | $ 90,000 | |||||
Fortress Avenue Founder Agreement | ||||||
Related Party Agreements | ||||||
Amended founders agreements terms | 15 years | |||||
Number of shares exchanged | 166,027 | |||||
Automatic renewal term of agreement | 1 year | |||||
Fortress Avenue Founder Agreement | Class A common shares | ||||||
Related Party Agreements | ||||||
Number of shares exchanged | 155,555 | |||||
Fortress Avenue Founder Agreement | Class A Preferred Shares | ||||||
Related Party Agreements | ||||||
Number of shares exchanged | 250,000 | |||||
Fortress | ||||||
Related Party Agreements | ||||||
Reimbursable amount | $ 200,000 | |||||
Fortress | Other receivables - related party | ||||||
Related Party Agreements | ||||||
Other receivables - related party | $ 90,000 | |||||
Asset Management Income | ||||||
Related Party Agreements | ||||||
Annual consulting fee | $ 500,000 | |||||
Increase in annual consulting fee | $ 1,000,000 | |||||
Excess in net assets value | $ 100,000,000 | 100,000,000 | ||||
Automatic renewal term of agreement | 5 years | |||||
Fortress Biotech Inc | ||||||
Related Party Agreements | ||||||
Debt accumulated for expenses | $ 3,000,000 | $ 3,000,000 |
Related Party Agreements - Baer
Related Party Agreements - Baergic (Details) $ in Millions | 12 Months Ended | |||
Mar. 09, 2017 USD ($) item | Feb. 17, 2015 | Dec. 31, 2022 USD ($) | Nov. 08, 2022 | |
Related Party Transaction [Line Items] | ||||
Term of agreement | 5 years | |||
Avenue-Baergic Founders Agreement | ||||
Related Party Transaction [Line Items] | ||||
Term of agreement | 15 years | |||
Automatic renewal term of agreement | 1 year | |||
Baergic Bio, Inc. | ||||
Related Party Transaction [Line Items] | ||||
Percentage of equity fee | 2.50% | |||
Equity fee received | $ 10.5 | |||
Baergic Bio, Inc. | Avenue-Baergic Founders Agreement | ||||
Related Party Transaction [Line Items] | ||||
Threshold period for additional consideration of equity fee | 5 days | |||
Percentage of additional consideration of equity fee | 2.50% | |||
Percentage of cash fee on annual net sales | 4.50% | |||
Threshold period for cash fee at the end of each calendar year | 90 days | |||
Number of times of one-time change in control fee | item | 5 | |||
Period of net sales immediately preceding the change in control for one-time fee | 12 months | |||
Percentage considered for the calculation of one-time fee | 4.50% | |||
Baergic Bio, Inc. | Avenue-Baergic Management Services Agreement | ||||
Related Party Transaction [Line Items] | ||||
Term of agreement | 5 years | |||
Automatic renewal term of agreement | 5 years | |||
Annual consulting fee | $ 0.5 | |||
Increase in annual consulting fee | 1 | |||
Excess in net assets value | $ 100 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accounts Payable and Accrued Expenses | ||
Accounts payable | $ 129 | $ 304 |
Accrued employee compensation | 199 | 24 |
InvaGen contingent fee | 208 | |
Accrued contracted services and other | 413 | 123 |
Accounts payable and accrued expenses | $ 949 | $ 451 |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted stock units and awards (Details) - Restricted stock unit and award - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stockholders' Equity | ||
Unvested balance at beginning | 94,418 | 75,993 |
Number of Units and Awards, Granted | 55,977 | |
Forfeited | (666) | (29,174) |
Vested | (80,615) | (8,378) |
Unvested balance at end | 13,137 | 94,418 |
Unvested balance at beginning, Weighted average grant date fair value (in dollars per share) | $ 56.25 | $ 89.40 |
Weighted Average Grant Date Fair Value, Granted | 0 | 13.95 |
Forfeited, Weighted average grant date fair value (in dollars per share) | 13.95 | 119.70 |
Vested, Weighted average grant date fair value (in dollars per share) | 40.83 | 74.55 |
Unvested balance at end, Weighted average grant date fair value (in dollars per share) | $ 12.17 | $ 56.25 |
Stockholders' Equity - Warrant
Stockholders' Equity - Warrant activity (Details) - Warrant - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stockholders' Equity | |||
Unvested balance at beginning | 997 | 1,056 | |
Warrants, Exercise | (1,029,200) | (59) | |
Warrants, Granted | 5,166,119 | ||
Unvested balance at end | 4,137,916 | 997 | |
Weighted Average Exercise Price, Outstanding at beginning | $ 9.9807 | $ 9.4231 | |
Weighted Average Exercise Price, Outstanding at end | 3.3016 | 9.9807 | |
Weighted Average Grant Date Fair Value, Granted | 2.6713 | ||
Weighted Average Exercise Price, Exercised | $ 0.1441 | $ 0.0015 | |
Aggregate Intrinsic Value | $ 1 | $ 11 | $ 84 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||||
Oct. 31, 2022 | Dec. 31, 2021 | Nov. 30, 2021 | Sep. 30, 2016 | Dec. 31, 2022 | Dec. 31, 2021 | Sep. 13, 2016 | |
Stockholders' Equity | |||||||
Preferred Stock, shares authorized | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | |||
Preferred Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Common Stock, shares authorized | 949,900 | 20,000,000 | 20,000,000 | 20,000,000 | |||
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Number of Warrants issued per unit | $ 3.30 | ||||||
Period of time granted to underwriters to purchase additional shares | 45 days | ||||||
Number of new shares issued | 545,454 | 250,000 | |||||
Exercisable period of warrants | 5 years | ||||||
Number of units issued | 127,340 | 149,252 | |||||
Price per share | $ 0.01 | $ 16.05 | $ 20.10 | $ 16.05 | |||
Net proceeds from this underwritten public offering | $ 2,000 | $ 3,000 | |||||
Net proceeds from this underwritten public offering | $ 1,800 | $ 2,600 | |||||
Number of days granted options to purchase underwriter | 45 days | ||||||
Percentage of additional shares issued to underwriters | 15% | ||||||
Share based compensation | $ 649 | $ 442 | |||||
Research and development | $ 300 | $ 2,698 | 1,254 | ||||
Fortress | |||||||
Stockholders' Equity | |||||||
Annual Stock Dividend, Percentage of the fully-diluted outstanding equity | 2.50% | ||||||
2015 Incentive Plan | |||||||
Stockholders' Equity | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 266,666 | ||||||
Expiration period | 10 years | ||||||
Number of shares available to be issued | 122,489 | ||||||
October 2022 Public Offering | |||||||
Stockholders' Equity | |||||||
Common Stock, par value (in dollars per share) | $ 0.0001 | ||||||
Exercise price of warrants | $ 3.30 | ||||||
Net proceeds from this underwritten public offering | $ 10,300 | ||||||
Number of shares issued upon warrants | 545,454 | ||||||
Percentage of shares issued to underwriters upon warrants | 15% | ||||||
Fortress Notes | |||||||
Stockholders' Equity | |||||||
Number of new shares issued | 90,909 | ||||||
Restricted stock unit and award | |||||||
Stockholders' Equity | |||||||
Share based compensation | $ 600 | $ 400 | |||||
Weighted Average Grant Date Fair Value, Granted | $ 0 | $ 13.95 | |||||
Forfeited, Weighted average grant date fair value (in dollars per share) | $ 13.95 | $ 119.70 | |||||
Total fair value of restricted units and awards vested | $ 3,300 | $ 600 | |||||
Unrecognized stock-based compensation expense | $ 100 | ||||||
Unrecognized stock-based compensation expense, remaining weighted-average vesting period | 1 year 11 months 15 days | ||||||
Shares of restricted stock outstanding which are performance-based and vest upon achievement of certain corporate milestones | 3,333 | ||||||
Options | 2015 Incentive Plan | |||||||
Stockholders' Equity | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award | 10 years | ||||||
Class A Preferred Shares | |||||||
Stockholders' Equity | |||||||
Preferred Stock, shares outstanding | 250,000 | 250,000 | 250,000 | 250,000 | |||
Preferred Stock, par value (in dollars per share) | $ 0.0001 | ||||||
Pre-funded Units | |||||||
Stockholders' Equity | |||||||
Number of Warrants issued per unit | $ 3.30 | ||||||
Number of shares to be purchased for each unit | 3.2999 | ||||||
Exercise price of warrants | $ 0.0001 | ||||||
Number of new shares issued | 545,454 | ||||||
Number of units issued | 949,900 | ||||||
Percentage of additional shares issued to underwriters | 15% | ||||||
Number of Warrants exercised | 949,900 | ||||||
Pre-funded Units | October 2022 Public Offering | |||||||
Stockholders' Equity | |||||||
Number of Warrants issued per unit | $ 1 | ||||||
Issue price per unit | 3.2999 | ||||||
Number of new shares issued | 1 | ||||||
Number of units issued | 984,300 | ||||||
Units | October 2022 Public Offering | |||||||
Stockholders' Equity | |||||||
Common Stock, par value (in dollars per share) | $ 0.0001 | ||||||
Issue price per unit | 3.30 | ||||||
Number of new shares issued | 1 | ||||||
Number of units issued | 2,652,065 | ||||||
Number of shares issued per unit | 1 |
Stockholders' Equity - Public O
Stockholders' Equity - Public Offering Warrant Liabilities (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Oct. 31, 2022 | Dec. 31, 2021 | Nov. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stockholders' Equity | |||||
Number of units issued | 127,340 | 149,252 | |||
Number of Warrants issued per unit | $ 3.30 | ||||
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Net proceeds from this underwritten public offering | $ 2,000 | $ 3,000 | |||
Change in fair value of warrant liabilities | $ (5,580) | $ 0 | |||
October 2022 Public Offering | |||||
Stockholders' Equity | |||||
Exercise price of warrants | 3.30 | ||||
Common Stock, par value (in dollars per share) | $ 0.0001 | ||||
Net proceeds from this underwritten public offering | $ 10,300 | ||||
Fair value of warrants | $ 8,300 | ||||
Change in fair value of warrant liabilities | $ 5,600 | ||||
October 2022 Public Offering | Warrant | |||||
Stockholders' Equity | |||||
Number of Warrants issued per unit | $ 1 | ||||
Number of shares to be purchased for each unit | 1 | ||||
October 2022 Public Offering | Pre-funded warrants | |||||
Stockholders' Equity | |||||
Number of shares to be purchased for each unit | $ 1 | ||||
Pre-funded Units | |||||
Stockholders' Equity | |||||
Number of units issued | 949,900 | ||||
Number of Warrants issued per unit | $ 3.30 | ||||
Number of shares to be purchased for each unit | 3.2999 | ||||
Exercise price of warrants | $ 0.0001 | ||||
Pre-funded Units | October 2022 Public Offering | |||||
Stockholders' Equity | |||||
Number of units issued | 984,300 | ||||
Number of Warrants issued per unit | $ 1 | ||||
Issue price per unit | 3.2999 | ||||
Units | October 2022 Public Offering | |||||
Stockholders' Equity | |||||
Number of units issued | 2,652,065 | ||||
Number of shares issued per unit | 1 | ||||
Issue price per unit | 3.30 | ||||
Common Stock, par value (in dollars per share) | $ 0.0001 |
Income Taxes - Federal rates (D
Income Taxes - Federal rates (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Statutory federal income tax rate | 21% | 21% |
State taxes, net of federal tax benefit | 10% | 13% |
State tax rate change | (1.00%) | 0% |
Stock-based compensation | (22.00%) | (11.00%) |
Other | 3% | 0% |
Credits | 4% | 0% |
Non-deductible items | (12.00%) | 0% |
Section 162(m) disallowance | (3.00%) | 0% |
Change in fair value of warrant liability | 48% | 0% |
Change in valuation allowance | (49.00%) | (23.00%) |
Income taxes provision (benefit) | 0% | 0% |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax asset (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 25,660 | $ 23,719 |
Stock compensation and other | 42 | 293 |
In process research and development | 1,603 | 1,162 |
Accruals and reserves | 64 | 6 |
Business interest expense disallowance | 122 | 0 |
Section 174 capitalization | 622 | 0 |
Tax credits | 2,859 | 2,640 |
Total deferred tax assets | 30,972 | 27,820 |
Less valuation allowance | (30,972) | (27,820) |
Deferred tax assets, net of valuation allowance | $ 0 | $ 0 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Valuation allowance | $ 31 | $ 27.8 |
Research Tax Credit Carryforward | ||
Income Taxes | ||
Research and development credit carryforwards | 2.9 | |
Domestic Tax Authority | ||
Income Taxes | ||
Operating loss carryforwards | $ 78.3 | |
Operating loss carry forward, expire period | 2034 | |
State and Local Jurisdiction | ||
Income Taxes | ||
Operating loss carryforwards | $ 139.7 | |
Operating loss carry forward, expire period | 2034 | |
Indefinite Carryforward | Domestic Tax Authority | ||
Income Taxes | ||
Operating loss carryforwards | $ 63.8 | |
Indefinite Carryforward | State and Local Jurisdiction | ||
Income Taxes | ||
Operating loss carryforwards | 1.9 | |
Carryforward Not Utilized | Domestic Tax Authority | ||
Income Taxes | ||
Operating loss carryforwards | 14.5 | |
Carryforward Not Utilized | State and Local Jurisdiction | ||
Income Taxes | ||
Operating loss carryforwards | $ 137.8 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | ||||
Jan. 27, 2023 | Oct. 31, 2022 | Dec. 31, 2021 | Nov. 30, 2021 | Sep. 30, 2016 | |
Subsequent Events | |||||
Shares of common stock sold | 545,454 | 250,000 | |||
Exercisable period of warrants | 5 years | ||||
Net proceeds from this underwritten public offering | $ 1,800 | $ 2,600 | |||
Subsequent events | PIPE Warrants | |||||
Subsequent Events | |||||
Warrants to purchase shares of common stock | 1 | ||||
Subsequent events | January 2023 Private Offering | |||||
Subsequent Events | |||||
Shares of common stock sold | 448,000 | ||||
Net proceeds from this underwritten public offering | $ 3,250 | ||||
Subsequent events | January 2023 Private Offering | Pre-funded warrants | |||||
Subsequent Events | |||||
Price per share | $ 1.55 | ||||
Warrants to purchase shares of common stock | 1,492,299 | ||||
Price per warrant | $ 1.549 | ||||
Exercise price of warrants | 0.001 | ||||
Subsequent events | January 2023 Private Offering | PIPE Warrants | |||||
Subsequent Events | |||||
Price per share | 1.55 | ||||
Price per warrant | $ 0.125 | ||||
Number of shares per warrant | 1,940,299 | ||||
Exercisable period of warrants | 6 months | ||||
Expiration term of warrant | 3 years |
Subsequent Events - AnnJi Licen
Subsequent Events - AnnJi License Agreement (Details) - Subsequent events - AnnJi License Agreement $ in Millions | Feb. 28, 2023 USD ($) shares |
Subsequent Events | |
Initial cash license fee | $ 3 |
Maximum reimbursement payments in connection with the clinical trial | 10.8 |
Maximum amount payable in connection with development milestones of first indication in the U.S | 14.5 |
Maximum payables with milestones pertaining to additional indications and development outside the U.S | 27.5 |
Maximum amount upon the achievement of certain net sales milestones | 165 |
Maximum annual net sales for royalty payments | 300 |
Minimum annual net sales for royalty payments | $ 50 |
Issue of shares in connection with the signing of the License Agreement | shares | 831,618 |
Issue of additional shares of common stock upon enrollment of the eighth patient | shares | 276,652 |
Minimum | |
Subsequent Events | |
Threshold period for license fee | 60 days |
Annual net sales for milestone payment | $ 75 |
Maximum | |
Subsequent Events | |
Threshold period for license fee | 180 days |
Annual net sales for milestone payment | $ 750 |
License fee payable within 60 days | |
Subsequent Events | |
Initial cash license fee | 2 |
License fee payable within 180 days | |
Subsequent Events | |
Initial cash license fee | $ 1 |