ATXI 10-K & 10-Q changes, risk factors and insider trading

We currently have no drug products for sale, but we are developing threetwo drug product candidates, AJ201,ATX-04 and IV tramadol and BAER-101.tramadol. We are dependent on the success of our current or future product candidates,candidates and cannot guarantee that these product candidates will receive regulatory approval or be successfully commercialized.

OurWe do not currently have any drug products approved for commercial sale. Accordingly, our business success depends on our ability to obtain regulatory approval for, and to successfully commercialize, market and sell our current or future product candidates, and any significant delays in obtaining approval to commercialize, market and sell our current or future product candidates will have a substantial adverse impact on our business and financial condition.

If the applications for any of our current or future product candidates are approved, our ability to generate revenues from such product candidates will depend on our ability to:

We may not receive regulatory approval for our current or future product candidates, or their approvals may be delayed, which would have a material adverse effect on our business and financial condition.

Our current product candidatescandidates, and other future product candidates and the activities associated with their development and with their commercialization, if approved, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale, and distribution, are subject to premarket approval and comprehensive regulation by the FDA, DEA, and other regulatory agencies in the United States and potentially foreign governmental authorities. Failure to obtain marketing approval for our current or future product candidates will prevent us from commercializing oursuch product candidates. We have not received approval to market any of our product candidates from regulatory authorities in any jurisdiction. We have only limited experience in conducting preclinical and clinical studies and filing and supporting the applications necessary to gain marketing approvals and expect to continue to rely on third party contract research organizations as well as consultants and vendors to assist us in the process. Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities.

Our current and future product candidates must meet FDA’s standards for safety and efficacy, but may be determined not to be effective, to be only moderately effective, to not be safe for use in its intended population, or may prove to have undesirable or unintended side effects, toxicities, or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use.

If we experience delays in obtaining approval or if we fail to obtain approval of any of our product candidatescurrent or any future product candidates, the commercial prospects for oursuch product candidates may be harmed and our ability to generate revenue will be materially impaired, thereby negatively impacting our business, financial condition, and results of operations.

In addition, even if we were to obtain approval, the approval of the indication for any of our current or future product candidates by such regulatory authorities may, among other things, be more limited than we request. Such regulatory authorities may not approve the price we intend to charge for our product, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. These regulatory authorities may also require the label to contain warnings, contraindications, or precautions that limit the commercialization of that product. Our third-party suppliers may be subject to inspections by the FDA that identifies deficiencies in their manufacturing facilities and concludes they are not operating in compliance with CGMP requirements, which in turn, may force us to identify, qualify, and rely upon additional suppliers. Any of these scenarios could compromise the commercial prospects for our product candidates,current or any future product candidates.

If serious adverse or unacceptable side effects are identified during the development of our current or future product candidates, we may need to abandon or limit our development of some of our current or future product candidates.

If our product candidatescurrent or future product candidates are associated with undesirable side effects in clinical trials or have characteristics that are unexpected, we may need to abandon their development or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe, or more acceptable from a risk-benefit perspective. In our industry, many compounds that initially showed promise in early-stage testing have later been found to cause undesirable side effects that prevented further development of the compound. In the event that our preclinical or clinical trials reveal a high and unacceptable severity and prevalence of side effects, our trials could be delayed, suspended, or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development or deny approval of our product candidatescurrent or future product candidates for any or all targeted indications. The FDA could also issue a letter requesting additional data or information prior to making a final decision regarding whether or not to approve a product candidate. The number of requests for additional data or information issued by the FDA in recent years has increased and resulted in substantial delays in the approval of several new drugs. Undesirable side effects caused by our product candidatescurrent or future product candidates could also result in the inclusion of serious risk information in our product labeling, application of burdensome post-market requirements, or the denial of regulatory approval by the FDA or other regulatory authorities for any or all targeted indications, and in turn, prevent us from commercializing and generating revenues from the sale of our current or future product candidates. Drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial and could result in potential product liability claims.

Any of these events could prevent us from achieving or maintaining marketing approval and market acceptance of our product candidatescurrent or future product candidates or could substantially increase our development and commercialization costs and expenses, which in turn could delay or prevent us from generating significant revenues from its sale.

We may incorporate artificial intelligence (“AI”) solutions into our business, and applications of AI may become important in our operations over time. Our competitors or other third parties may incorporate AI into their businesses more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. There are also significant risks involved in developing and deploying AI, and there can be no assurance that the usage of AI will enhance the development of our current or future product candidates or be beneficial to our business, including our efficiency or profitability. For example, any AI-related efforts, particularly those related to generative AI, could subject us to risks related to harmful content, inaccuracies, bias, discrimination, intellectual property infringement or misappropriation, defamation, data privacy, cybersecurity, and sanctions and export controls, among others. It is also uncertain how various laws will apply to content generated by AI. We are subject to the risks of new or enhanced governmental or regulatory scrutiny, litigation, or other legal liability, ethical concerns, negative consumer perceptions as to automation and AI, or other complications that could adversely affect our business, reputation, or financial results.

We have a limited operating history. We have focused primarily on in-licensing and developing IV tramadol, BAER-101AJ201 until April 2025, and AJ201until November 2025, BAER-101, with the goal of supporting regulatory approval for these product candidates.approval. We have incurred losses since our inception in February 2015.

Our short operating history makes it difficult to evaluate our business and prospects.

We were incorporated on February 9, 2015, and until our acquisition of Baergic had only been conducting operations with respect to IV tramadol since February 17, 2015. Wewe have not yet demonstrated an ability to successfully obtain regulatory approvals, manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, any predictions about our future performance may not be as accurate as they could be if we had a history of successfully developing and commercializing pharmaceutical products.

In addition, as a young business, we may encounter unforeseen expenses, difficulties, complications, delays, and other known and unknown factors. We will need to expand our capabilities to support commercial activitiesdevelopment and thecommercial recent acquisitions of AJ201 and BAER-101.activities. We may not be successful in adding such capabilities.

Our audited consolidated financial statements as of December 31, 20242025 have been prepared under the assumption that we will continue as a going concern for the next twelve months. As of December 31, 2024,2025, we had cash and cash equivalents of $2.6$2.9 million and an accumulated deficit of $102.6$105.5 million. As a result of our financial condition and other factors described herein, there is substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern will depend on our ability to resolvesuccessfully theidentify, ongoingevaluate, disputein-license withor theacquire, licensorand ofsubsequently onedevelop ofand ourcommercialize additional product candidates and obtain additional funding, as to which no assurances can be given. We continue to analyze various alternatives, including potentially obtaining lines of credit, debt or equity financings, or other arrangements, including the sale or out-licensing of one or more of our product candidates. Our future success depends on our ability to raise capital and/or implement the various strategic alternatives discussed above. We cannot be certain that these initiatives or raising additional capital, whether through selling additional debt or equity securities or obtaining a line of credit or other loan, will be available to us or, if available, will be on terms acceptable to us. If we issue additional securities after the closing of this offering to raise funds, these securities may have rights, preferences, or privileges senior to those of our common stock, and our current shareholders may experience dilution. If we are unable to obtain funds when needed or on acceptable terms, we may be required to curtail our current development programs, cut operating costs, forego future development and other opportunities, or even terminate our operations.

We have not generated any product related revenues to date. To obtain revenues from sales of our current or future product candidates, we must succeed, either alone or with third parties, in developing, obtaining regulatory approval for, manufacturing, and marketing products with commercial potential. We may never succeed in these activities, and we may not generate sufficient revenues to continue our business operations or achieve profitability.

Our operations have consumed substantial amounts of cash since inception. We expect to significantly increase our spending to advance the clinical development and potential regulatory approval of our current or future product candidates and launch and commercialize any additional product candidates for which we receive regulatory approval, including building our own commercial organizations to address certain markets. Even after the completion of future offerings, we may require additional capital for the further development and potential commercialization of our current or future product candidates, as well as to fund our other operating expenses and capital expenditures, and cannot provide any assurance that we will be able to raise funds to complete the development of our products.

We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back, or discontinue the development or commercialization of one or more of our current or future product candidates. We may also seek collaborators for our current or future product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available. Any of these events could significantly harm our business, financial condition, and prospects.

In order to carry out our business plan and implement our strategy, we may need to obtain additional financing and may choose to raise additional funds through strategic collaborations, licensing arrangements, public or private equity or debt financing, bank lines of credit, asset sales, government grants, or other arrangements. We cannot be sure that any additional funding, if needed, will be available on terms favorable to us or at all. Furthermore, any additional equity or equity-related financing may be dilutive to our stockholders, and debt or equity financing, if available, may subject us to restrictive covenants and significant interest costs. If we obtain funding through a strategic collaboration or licensing arrangement, we may be required to relinquish our rights to our current or future product candidates or marketing territories.

If we raise additional funds through collaborations, strategic alliances, or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programsprograms, or current or future product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product development or future commercialization efforts or grant rights to develop and market any potential product candidates that we would otherwise prefer to develop and market ourselves.

OurSince March 17, 2025, our common stock ishas currentlybeen quoted for tradinglisted on the OTC Pink Open Market, an over-the-counter market, under the symbol “ATXI.” The OTC Pink Open Market is a thinly traded market and lacks the liquidity of certain other public markets with which some investors may have more experience. We may not ever be able to regain satisfaction of the listing requirements for our common stock to be listed on a national securities exchange, which is often a more widely traded and liquid market. Some of the factors which may delay or prevent the re-listing of our common stock on a more widely-traded and liquid market include the following: our stockholders’ equity may be insufficient; the market value of our outstanding securities may be too low; our net income from operations may be too low; our common stock may not be sufficiently widely held; we may not be able to secure market makers for our common stock; and we may fail to meet the rules and requirements mandated by the relevant exchanges and markets to have our common stock listed. Should we fail to satisfy the listing standards of a national exchange, or our common stock is otherwise rejected for listing, and remains listed on the OTC Pink Open Market or is suspended from the OTC Pink Open Market, the trading price of our common stock could suffer and be subject to increased volatility and the trading market for our common stock may be less liquid, making it difficult or impossible to sell shares of our common stock.

There is only a limited, liquidilliquid public trading market for our common stock. There can be no assurance that a liquid market for our common stock will continue. Therefore, investors may not be able to liquidate their investment or liquidate it at a price paid by investors equal to or greater than their initial investment in our common stock. Moreover, holders of our common stock may not find purchasers for their shares should they decide to sell the common stock held by them at any particular time, if ever. Our common stock should be purchased only by investors who have no immediate need for liquidity in their investment and who can hold our common stock, possibly for a prolonged period of time.

Additionally,Prior to Avenue's delisting from the Nasdaq Capital Market, our common stock hashad never traded on the OTC Pink Open Market,Market. and weWe may have more difficulty raising additional funding with our stock listed on suchthe exchangeOTC Pink Open Market than we would if our stock were still listed and trading on the Nasdaq StockCapital Market LLC.Market.

If any of our current or future product candidates are approved and our contract manufacturers fail to produce the products in the volumes that we require on a timely basis, to produce the products according to the applicable quality standards and requirements, or to comply with stringent regulations applicable to pharmaceutical drug manufacturers, we may face delays in the commercialization of that product candidate, if approved, lose potential revenues, or be unable to meet market demand.

In order to meet anticipated demand for IV tramadol, if this product candidate is approved, we currently have one manufacturer to provide us clinical and commercial supply of IV tramadol in accordance with the CGMP requirements. We also may plan to qualify a backup manufacturer, in order to ensure an alternative source and to mitigate any potential supply issues. We have sufficient drug substance for BAER-101 on hand to execute our planned near-term studies and are in process of identifying future manufacturers. AnnJi, from whom we license the intellectual property underlying AJ201, previously committed to provide us with limited supplies of this product candidate, but we will need to secure longer-term manufacturing sources to complete development and, if approved, commercialization of this product candidate. See “Item 1. Business – Product Candidates Under Development – AJ201 – AnnJi Dispute” and “Item 1A. Risk Factors” for more information regarding a dispute regarding this license agreement. Failure to secure such sources could have a material adverse effect on our ability to pursue theseour product candidates.

All of our contract manufacturers must comply with strictly enforced federal, state and, where applicable, foreign regulations, including CGMP requirements enforced by the FDA through its inspectional authority over facilities under the Federal Food Drug and Cosmetics Act (the "FDCA"), as well as requirements for controlled substance handling and security requirements enforced by DEA, and while we exercise oversight of our suppliers, we have limited direct control over their compliance with these regulations, as reflected in day-to-day operations. Any failure to comply with applicable regulations may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall, or withdrawal of product approval, and would limit the availability of our current or future product candidates, if approved. Any quality or compliance issue, manufacturing defect, or error discovered after products have been produced and distributed could result in even more significant consequences, including costly recall procedures, re-stocking costs, damage to our reputation, and potential for product liability claims.

If the commercial manufacturers upon whom we rely to manufacture our current or future product candidates we may in-license fail to deliver sufficient commercial quantities on a timely basis, at commercially reasonable prices, we would likely be unable to meet demand for any current or future product candidates for which we obtain regulatory approval, and we would lose potential revenues, which could have a material adverse effect on our business, financial condition, and results of operations.

We have relied on third party contract research organizations and clinical research organizations to conduct some of our preclinical studies and all of our clinical trials for IV tramadol, BAER-101, AJ201, and any other future product candidates. We expect to continue to rely on third parties, such as contract research organizations, clinical research organizations, clinical data management organizations, medical institutions, and clinical investigators, to conduct preclinical studies and clinical trials. The agreements with these third parties might terminate for a variety of reasons, including a failure to perform by the third parties. If we need to enter into alternative arrangements, that could delay our product development activities.

The third parties with whom we have contracted to help perform our preclinical studies or clinical trials may also have relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or conduct our preclinical studies or clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for our current or future product candidates and will not be able to, or may be delayed in our efforts to, potentially successfully commercialize our current or future product candidates, if approved.

We contract with third parties for the manufacture of our product candidates for preclinical and clinical testing and expect to continue to do so for potential commercialization. This reliance on third parties increases the risk that we will not have sufficient quantities of our current or future product candidates or products for which we obtain regulatory approval or such quantities at an acceptable cost, which could delay, prevent, or impair our development or commercialization efforts.

We do not own any manufacturing facilities or employ any manufacturing personnel. We rely, and expect to continue to rely, on third-party manufacturers to manufacture our current and future product candidates for preclinical and clinical testing, as well as for commercial manufacture, once any of our current or future product candidates receives marketing approval. This reliance on third parties increases the risk that we will not have sufficient quantities of our current or future product candidates or products for which we obtain regulatory approval or such quantities at an acceptable cost or quality, which could delay, prevent, or impair our development or potential commercialization efforts.

The facilities used by our contract manufacturers to manufacture our current or future product candidates are subject to registration requirements, and inspection by the FDA. A pre-approval inspection may be conducted after the submission of an application to the FDA. Although we will have oversight over our suppliers and manufacturers, we do not directly control the manufacturing operations and processes at these facilities, and therefore, rely on our contract manufacturers to ensure full compliance with CGMP regulations with respect to the day-to-day operations related to the manufacture of our current or future product candidates. Third-party manufacturers may, following an inspection, be subject to a Form FDA-483 or similar inspectional findings, or a Warning or Untitled Letter, or may not otherwise be able to comply with the CGMP regulations or similar regulatory requirements outside the United States. The failure of our third-party manufacturers to comply with applicable regulations directly impacts our compliance and could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions, and criminal prosecutions, any of which could significantly and adversely affect supplies of our products.

We also expect to rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our distributors could delay clinical development or marketing approval of our current or future product candidates or potential commercialization of our products, producing additional losses and depriving us of potential product revenue.

As part of our strategy to mitigate development risk, we seek to develop product candidates with a validated mechanism of action, and we utilize biomarkers to assess potential clinical efficacy early in the development process. This strategy necessarily relies upon clinical data and other results obtained by third parties that may ultimately prove to be inaccurate, unreliable, or unacceptable to regulatory authorities. Further, such clinical data and results may be based on products or product candidates that are significantly different from our product candidatescurrent or future product candidates. If the third-party data and results we rely upon prove to be inaccurate, unreliable, not acceptable by regulatory authorities, or not applicable to our product candidatescurrent or future product candidate,candidates, we could make inaccurate assumptions and conclusions about oursuch product candidates and our research and development efforts could be compromised and called into question during the review or any marketing applications we submit.

For any of our current or future product candidates classified as controlled substances, we and our suppliers, manufacturers, contractors, customers, and distributors are required to obtain and maintain applicable registrations from state, federal, and foreign law enforcement and regulatory agencies and comply with state, federal, and foreign laws and regulations regarding the manufacture, use, sale, importation, exportation, and distribution of controlled substances. There is a risk that DEA regulations may limit the supply of the compounds used in clinical trials for our current or future product candidates and the ability to produce and distribute our products for which we obtain regulatory approval in the volume needed to both meet commercial demand and build inventory to mitigate possible supply disruptions.

Regulations associated with controlled substances govern manufacturing, labeling, packaging, testing, dispensing, production and procurement quotas, recordkeeping, reporting, handling, shipment, and disposal. These regulations increase the personnel needs and the expense associated with development and commercialization of product candidates including controlled substances. The DEA, and some states, conduct periodic inspections of registered establishments that handle controlled substances. Failure to obtain and maintain required registrations or comply with any applicable regulations could delay or preclude us from developing and commercializing our current or future product candidates, if approved, containing controlled substances and subject us to enforcement action. The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to revoke those registrations. In some circumstances, violations could lead to criminal proceedings. Because of their restrictive nature, these regulations could limit commercialization of any of our current or future product candidates, if approved, that are classified as controlled substances, which would have a material adverse effect on our business, financial condition, cash flows and results of operations, and could cause the market value of our Securitiessecurities to decline.

While we acquired BAER-101 in connection with our acquisition of Baergic, and rights to AJ201 from AnnJi, weWe continue to pursue regulatory approval for IV tramadol. However, in light of recently disclosed developments, there is doubt about our ability to obtain regulatory approval for IV tramadol. In December 2019, we submitted an NDA for IV tramadol and received the First CRL from the FDA in October 2020. In February 2021, we resubmitted the NDA for IV tramadol. The FDA assigned a PDUFA goal date of April 12, 2021 for the resubmitted NDA for IV tramadol. On June 14, 2021, we announced that we had received the Second CRL from the FDA regarding our NDA for IV tramadol. We submitted an FDRR with the Office of Neuroscience of the FDA on July 27, 2021. On August 26, 2021, we received an Appeal Denied Letter from the Office of Neuroscience of the FDA in response to the FDRR submitted on July 27, 2021. On August 31, 2021, we submitted an FDRR with the Office of New Drugs of the FDA. On October 21, 2021, we received a written response from the Office of New Drugs of the FDA stating that the OND needs additional input from an Advisory Committee in order to reach a decision on the FDRR. On February 15, 2022, we had our Advisory Committee meeting with the FDA. In the final part of the public meeting, the Advisory Committee voted yes or no on the following question: “Has the Applicant submitted adequate information to support the position that the benefits of their product outweigh the risks for the management of acute pain severe enough to require an opioid analgesic in an inpatient setting?” The results were 8 yes votes and 14 no votes. On March 18, 2022, we received an Appeal Denied Letter from the Office of New Drugs in response to the FDRR.

Following the Type A Meeting, we submitted a request to the FDA and were granted a Type C Meeting to discuss a proposed study protocol to assess the risk of respiratory depression related to opioid stacking on IV tramadol relative to an approved opioid analgesic. In January 2024, we announced that we reached final agreement with the FDA on the Phase 3 safety study protocol and statistical analysis approach, including the primary endpoint, for IV tramadol. If the FDA does not approve, or significantly delays the approval of, IV tramadol, it could cause a material adverse effect on our business, financial condition, and results of operations.

Even if one or more of our current or future product candidates receives regulatory approval, which may not occur, it will remain subject to substantial regulatory scrutiny.

Our current product candidatescandidate and any other product candidates we may license or acquire will also be subject to ongoing regulatory and compliance requirements, including regular inspections by the FDA and other regulatory authorities, following any such approval. These requirements relate to, among others, labeling, packaging, storage, advertising, promotion, record-keeping and submission of safety and other post-market information and reports, registration and listing requirements, ongoing CGMP requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping of the drug.

The FDA’s policies, as well as policies of the DEA, which has jurisdiction over controlled substances and opioids, including IV tramadol, may change and additional government regulations may be enacted that could prevent, limit, or delay regulatory approval of our product candidate. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained. We do not know what impact any changes made by the newU.S. presidential administrationgovernment will have on our business. Such actions may impact the development and commercialization of drug products and could materially harm our business and financial condition.

A pharmaceutical product candidate cannot be marketed in the United States or many other countries until we have completed a rigorous and extensive regulatory review processes, including obtaining the approval of a brand name. Any brand names we intend to use for our current or future product candidates will require approval from the FDA regardless of whether we have secured a formal trademark registration from the U.S. Patent and Trademark Office (the “USPTO”). The FDA typically conducts a review of proposed product brand names, including an evaluation of potential for confusion with other product names. The FDA may also object to a product brand name if it believes the name inappropriately implies medical claims. If the FDA objects to any of our proposed product brand name, we may be required to adopt an alternative brand name for our product candidate. If we have to adopt an alternative brand name, we would lose the benefit of our existing trademark applications for such product candidate and may be required to expend significant additional resources in an effort to identify a suitable product brand name that would qualify under applicable trademark laws, not infringe the existing rights of third parties, and be acceptable to the FDA. We may be unable to build a successful brand identity for a new trademark in a timely manner, or at all, which would limit our ability to potentially commercialize our product candidate, if approved.

Any regulatory approval is limited to the specific labeled indication(s) for which a product is deemed to be safe and effective by the FDA. In addition to the FDA approval required for new formulations, any new indication for an approved product also requires FDA approval. If we are not able to obtain FDA approval for any desired future indications for our current or future product candidates, our potential ability to effectively market and sell oursuch product candidates may be reduced and our business may be adversely affected.

Avenue Therapeutics, Inc. (“Avenue” or the “Company”) is a specialty pharmaceutical company focused on the development and commercialization of therapies for the treatment of neurologic diseases. Our product candidates include AJ201are ATX-04, a selective β2-adrenergic agonist for thePompe treatment of spinaldisease, and bulbar muscular atrophy (“SBMA”, also known as Kennedy’s Disease), an intravenous formulation of tramadol (“IV tramadol”), a schedule IV opioid for the treatment of post-operative acute pain, and BAER-101 for the treatment of epilepsy and panic disorders.pain. We may in the future acquire additional product candidates.

We are a majority-controlled subsidiary of Fortress. For related party transactions, see Note 4 to our audited consolidated financial statements included herein.

Under the AnnJi License Agreement, in exchange for exclusive rights to the intellectual property underlying the AJ201 product candidate, we paid an initial cash license fee of $3.0 million,million. The Company issued shares of whichits $2.0common stock equivalent to $1.2 million was paid on April 27, 2023 and $1.0 million was paid on September 8, 2023. We are also obligated to make additional payments over the course of the AnnJi License Agreement including reimbursement payments of up to $10.8 million in connection with the product’s Phase 1b/2a clinical trial.

On March 17, 2025, The Nasdaq Stock Market LLC (“Nasdaq”) notified the Company that the Nasdaq Hearings Panel (the “Panel”) has determined to delist the Company’s common stock due to a violation of Nasdaq Listing Rule 5550(b)(1), which requires companies listed on The Nasdaq Capital Market to maintain stockholders’ equity of at least $2,500,000. As a result, trading of the Company’s common stock was suspended from Nasdaq at the open of trading on March 19, 2025. On July 18, 2025, we were formally delisted when Nasdaq filed Form 25 with the United States Securities and Exchange Commission (the “SEC”). As a result, the common stock of the Company ceased to be registered pursuant to Section 12(b) of the Securities Act and was immediately deemed registered pursuant to Section 12(g) of the Securities Act.

Our discussion and analysis of our financial condition and results of operations are based on our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of these audited consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our audited consolidated financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses and stock-based compensation. We base our estimates on historical experience, known trends and events and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

See Note 2 to our audited consolidated financial statements included herein for a full description of recent accounting pronouncements including the respective expected dates of adoption and expected effects on results of operations and financial condition.

We are a “smaller reporting company,” meaning that either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) the market value of our shares held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700 million. As a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K, have reduced disclosure obligations regarding executive compensation, and smaller reporting companies are permitted to delay adoption of certain recent accounting pronouncements discussed in Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

For the years ended December 31, 20242025 and 2023,2024, research and development expenses were $6.6$1.0 million and $6.1$6.6 million, respectively. The $0.5$5.6 million increasedecrease primarily reflects ana increasedecrease of $0.6$5.2 million in pre-clinical and clinical trialdevelopment expenses,costs $0.1for AJ201, prior to its return to AnnJi, $0.2 million in personnel costs and $0.1 milliondecrease in non-cash stock compensation costs, offset$0.1 by amillion decrease of $0.2 million in Fortress-Avenuepersonnel Master Services Agreement ("MSA") feescosts, and $0.1 million decrease in IV tramadol supplymanufacturing expenses.

We expect our research and development activities to remain flat or decreaseincrease as we continue to advance our portfolio, reflecting costs associated with the following:

For the years ended December 31, 20242025 and 2023,2024, general and administrative expenses were $4.6$3.7 million and $4.2$4.6 million, respectively. The $0.5$0.9 million increasedecrease primarily reflects an increase of $0.4 million in payments to InvaGen, $0.2 million in personnel costs and $0.1 million in operational expenses, offset by a decrease of $0.1$0.5 million in professional fees and $0.1$0.4 million in MSAnon-cash fees.stock compensation costs.

Interest income was $0.2$0.1 million and $0.1$0.2 million for the years ended December 31, 20242025 and 2023,2024, respectively. The increase in interest income was due to an increased average balance in our cash and cash equivalents.

The loss on common stock warrant liabilities was $0 and $0.8 million and $0 for the twelve monthsyear ended December 31, 20242025 and 2023,2024, respectively. TheIn new2024, the Series A common stock warrants, new Series B common stock warrants, new Series C common stock warrants and new Series D common stock warrants had a fair value of $0.8 million allocated to the liability classified warrants to purchase shares of our common stock originally issued in October 2022 and January 2023 at the time of issuance as a cost of inducement, which was recorded as a loss on settlement of common stock warrant liabilities.

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 balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations. The fair value of the warrants was estimated using the Black-Scholes Model. (see Note 8 to our audited consolidated financial statements included herein).

At December 31, 2024,2025, we had $2.6$2.9 million in cash and cash equivalents as compared to $1.8$2.6 million at December 31, 2023.2024. To date, we have funded our operations primarily with proceeds from various public and private offerings of our common and preferred stock. We expect that our expenses maywill increase substantiallycompared forto theour foreseeablemost futurerecent fiscal year as we continue to execute onadvance our productcandidates through clinical development planand ultimately regulatory approval, and seek opportunities to license or acquire additional products. Our development plan for certain products is also under evaluation – see “Item 1. Business – Product Candidates Under Development – AJ201 – AnnJi Dispute” and “Item 1A. Risk Factors” for more information regarding the dispute on one of our products. We will require additional financing to carry out our business plan and implement our strategy, and continue to analyze various alternatives, including potentially obtaining lines of credit, debt or equity financings, or other arrangements.financings. We cannot be sure that any additional funding, if needed, will be available on terms favorable to us or at all. Our common stock was suspended from trading on the Nasdaq Capital Market on March 17, 2025 and subsequently has been formally delisted as of July 18, 2025. Since March 18, 2025, our common stock has been quoted on the over-the-counter market (OTCID) under the symbol “ATXI”. The delisting may make it more difficult for us to obtain additional funding. For example, we are no longer eligible to use our shelf registration statement on Form S-3, which means we cannot access our ATM facility under the At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co. LLC dated May 10, 2024. If we obtain funding through a strategic collaboration or licensing arrangement, we may be required to relinquish our rights to our product candidates or marketing territories. Without additional capital, we do not expect our cash will be sufficient to fund our projected operating requirements or allow us to fund our operating plan for more than 12 months from the date of issuance of the accompanying consolidated financial statements. We regularly evaluate market conditions, our liquidity profile, and various financing alternatives for opportunities to enhance our capital structure.

Net cash provided by financing activities for the year ended December 31, 20242025 was $9.8$2.1 million, primarily due to $8.2$2.1 million in net proceeds from the inducement offer letter agreements we entered into in January 2024 and April 2024 and $1.6 million in net proceeds received from the sale of common stock issued pursuant to the AtATM the Market Offering Agreement we entered into with H.C. Wainwright & Co. in May 2024.Agreement.

Net cash provided by financing activities for the year ended December 31, 20232024 was $7.5$9.8 million, primarily relateddue to $3.8$8.2 million in net proceeds from the inducement offer letter agreements we entered into in January 2024 and April 2024 and $1.6 million in net proceeds received from the sale of ourcommon securitiesstock inpursuant to the NovemberATM 2023 Public Offering, $3.1 million in proceeds from the sale of our securities in the January 2023 Registered Direct Offering and Private Placement, and $0.6 million in proceeds from the sale of our securities in the September 2023 Private Placement.Agreement.

Our net loss for the threesix months ended MarchJune 31,30, 2026 and 2025 was approximately $0.7$1.4 million and $1.9$1.5 million, respectively. As of MarchJune 31,30, 2026, we had an accumulated deficit of approximately $106.2$106.9 million. Substantially all our net losses resulted from costs incurred for research and development, and general and administrative purposes.

We are a “smaller reporting company,” meaning that either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) the market value of our shares held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700 million. As a smaller reporting company, we chose to present only the two most recent fiscal years of audited financial statements in the 2025 Form 10-K, have reduced disclosure obligations regarding executive compensation and certain other matters, and smaller reporting companies are permitted to delay adoption of certain recent accounting.accounting standards.

At MarchJune 31,30, 2026, we had an accumulated deficit of $106.2$106.9 million. While we may in the future generate revenue from a variety of sources, including license fees, milestone payments, research and development payments in connection with strategic partnerships and/or product sales, our product candidates are still in development and may never be successfully developed or commercialized. Accordingly, we expect to continue to incur substantial losses from operations for the foreseeable future, and there can be no assurance that we will ever generate significant revenues.

Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025

For the three months ended MarchJune 31,30, 2026 and 2025, research and development expenses were $0.2 million and $0.4$0.2 million, respectively.respectively, Thereflecting decreaseincreased ofconsulting $0.2costs millionoffset was associated withby a $0.1 million decrease in personnel related costs, and $0.1 million one-time costs incurred related to the termination of the AnnJi License Agreement in 2025.expenses.

For the three months ended MarchJune 31,30, 2026 and 2025, general and administrative expenses were $0.5 million and $1.5$0.9 million, respectively. The decrease of $1.0$0.4 million is related to a decrease of $0.8$0.3 million in legal expenses due to costs incurred related to the AnnJi License Agreement termination in 2025, a $0.1 million decrease in professional fees, and a $0.1 million decrease in personnel-related costs, including salaries, severance, benefits and stock-based compensation.compensation, and a $0.1 million decrease in professional fees.

Interest income was $18,000$17,000 and $32,000$31,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

There was no material change in fair value for the three months ended June 30, 2026. The change in fair value of warrant liabilities was a gain of approximately $1,000 and $15,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively.2025. Warrants to purchase common stock that are required to be classified as a liability are valued at fair market value at each reporting period. The change in the fair value of warrant liabilities was primarily due to the fluctuation in our stock price.

At MarchJune 31,30, 2026, we had $2.4$1.9 million in cash and cash equivalents. To date, we have funded our operations primarily with proceeds from various public and private offerings of our common stock. We expect that our expenses will continue for the foreseeable future as we continue to advance our product candidates through clinical development and ultimately regulatory approval, and seek opportunities to license or acquire additional products. We will require additional financing to carry out our business plan and implement our strategy, and continue to analyze various alternatives, including potentially obtaining lines of credit, debt or equity financings. We cannot be sure that any additional funding, if needed, will be available on terms favorable to us or at all. Since March 2025, our common stock has been quoted on the over-the-counter market ("OTCID") under the symbol “ATXI”. Being listed on the OTCID may make it more difficult for us to obtain additional funding. For example, we are no longer eligible to use our shelf registration statement on Form S-3, which means we cannot access our ATM facility under the At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co. LLC dated May 10, 2024. If we obtain funding through a strategic collaboration or licensing arrangement, we may be required to relinquish our rights to our product candidates or marketing territories. Without additional capital, we do not expect our cash will be sufficient to fund our projected operating requirements or allow us to fund our operating plan for more than 12 months from the date of issuance of the accompanying unaudited consolidated financial statements. We regularly evaluate market conditions, our liquidity profile, and various financing alternatives for opportunities to enhance our capital structure.

Cash Flows for the ThreeSix Months Ended MarchJune 31,30, 2026 and 2025

Net cash and cash equivalents used in operating activities was $0.4$0.9 million for the threesix months ended MarchJune 31,30, 2026, primarily comprised of our $0.7$1.4 million net loss, partially offset by increases of $0.2$0.4 million in operating assets and liabilities and $0.1 million in share-based compensation.

Net cash and cash equivalents used in operating activities was $1.2$1.4 million for the threesix months ended MarchJune 31,30, 2025, primarily comprised of our $1.9$1.5 million net loss,loss and a decrease of $0.8 million in receivables from AnnJi, partially offset by $0.2 million in share-based compensation, $0.1 million for common shares issued to Fortress and an increase of $0.4$0.5 million in operating assets and liabilities.liabilities and $0.4 million in share-based compensation.

During the threesix months ended MarchJune 31,30, 2026, no net cash and cash equivalents was used in or provided by financing activities.

Net cash and cash equivalents provided by financing activities was $2.1 million for the threesix months ended MarchJune 31,30, 2025 primarily due to $2.1 million in net proceeds from the sale of common stock pursuant to the ATM Agreement.

We are party to a share repurchase agreement with InvaGen, which requires us to pay InvaGen seven and a half percent (7.5%) of the proceeds of future financings, as defined in the agreement, up to $4.0 million in aggregate. For the threesix months ended MarchJune 31,30, 2025, the Company made payments totaling $0.2 million to InvaGen. No such payments were made during the threesix months ended MarchJune 31,30, 2026. Approximately $1.4 million in aggregate has been paid to InvaGen under the share repurchase agreement as of MarchJune 31,30, 2026.