Avenue Therapeutics Sells New Equity, Dilution Risk for ATXI Holders

TL;DR

**ATXI just sold more stock, expect dilution.**

AI Summary

Avenue Therapeutics, Inc. (ATXI) filed an 8-K on January 8, 2024, reporting a material definitive agreement and unregistered sales of equity securities on January 5, 2024. This filing indicates the company is raising capital through new stock issuance, which could dilute existing shareholders' ownership. This matters to investors because while it provides the company with necessary funds, it also increases the total number of shares outstanding, potentially impacting the stock's value per share.

Why It Matters

This filing signals Avenue Therapeutics is raising capital, which is crucial for operations but could dilute the value of existing shares due to the issuance of new equity.

Risk Assessment

Risk Level: medium — The issuance of new equity without a clear, immediate positive catalyst often leads to share dilution, posing a medium risk to current shareholders.

Analyst Insight

A smart investor would monitor subsequent filings for details on the terms of the equity sale, including the number of shares issued and the price, to assess the full impact of dilution and the company's use of proceeds.

Key Players & Entities

• Avenue Therapeutics, Inc. (company) — the registrant filing the 8-K
• ATXI (company) — the trading symbol for Avenue Therapeutics, Inc.
• Nasdaq Capital Market (company) — the exchange where ATXI common stock is traded
• January 5, 2024 (date) — date of the earliest event reported
• January 8, 2024 (date) — date the 8-K was filed

FAQ

Key Financial Figures

• $0.0001 — f the Company's common stock, par value $0.0001 per share (the " Common Stock "), origi
• $1.55 — 2023 Warrants had an exercise price of $1.55 per share, and the November 2023 Warran
• $0.3006 — 2023 Warrants had an exercise price of $0.3006 per share. Pursuant to the Inducement
• $5.0 million — gregate gross proceeds of approximately $5.0 million from the exercise of the Existing Warra
• $15,000 — arrants in an aggregate amount of up to $15,000. The resale of the shares of Common St

Filing Documents

• tm242240d1_8k.htm (8-K) — 43KB
• tm242240d1_ex4-1.htm (EX-4.1) — 106KB
• tm242240d1_ex4-2.htm (EX-4.2) — 106KB
• tm242240d1_ex10-1.htm (EX-10.1) — 45KB
• tm242240d1_ex10-2.htm (EX-10.2) — 45KB
• tm242240d1_ex99-1.htm (EX-99.1) — 13KB
• tm242240d1_ex99-1img01.jpg (GRAPHIC) — 34KB
• 0001104659-24-002318.txt ( ) — 669KB
• atxi-20240105.xsd (EX-101.SCH) — 3KB
• atxi-20240105_lab.xml (EX-101.LAB) — 33KB
• atxi-20240105_pre.xml (EX-101.PRE) — 22KB
• tm242240d1_8k_htm.xml (XML) — 3KB

01

Item 1.01 Entry into a Material Definitive Agreement. On January 5, 2024, Avenue Therapeutics, Inc. (the "Company ") entered into (i) an inducement offer letter agreement (the " January 2023 Investor Inducement Letter ") with a certain investor (the " January 2023 Investor ") in connection with certain outstanding warrants to purchase up to an aggregate of 1,940,299 of the Company's common stock, par value $0.0001 per share (the " Common Stock "), originally issued to the January 2023 Investor on January 31, 2023 (the " January 2023 Warrants ") and (ii) an inducement offer letter agreement (the " November 2023 Investor Inducement Letter Agreement " and, together with the January 2023 Investor Inducement Letter, the " Inducement Letters ") with certain investors (the " November 2023 Investors " and, together with the January 2023 Investor, the " Holders ") in connection with certain outstanding warrants to purchase up to an aggregate of 14,600,000 shares of Common Stock, originally issued to the November 2023 Investors on November 2, 2023 (the " November 2023 Warrants " and, together with the January 2023 Warrants, the " Existing Warrants "). The January 2023 Warrants had an exercise price of $1.55 per share, and the November 2023 Warrants had an exercise price of $0.3006 per share. Pursuant to the Inducement Letters, (i) the January 2023 Investor agreed to exercise for cash its January 2023 Warrants at a reduced exercise price of $0.3006 per share and (ii) the November 2023 Investors agreed to exercise for cash their November 2023 Warrants at the existing exercise price of $0.3006 in consideration for the Company's agreement to issue in a private placement (x) new Series A Common Stock purchase warrants (the " New Series A Warrants ") to purchase up to 16,540,299 shares of Common Stock (the " New Series A Warrants Shares ") and (y) new Series B Common Stock Purchase Warrants (the " New Series B Warrants " and, together with the New Series A Warrants, the " New W

02

Item 3.02 Unregistered Sales of Equity Securities. The offer and sale of the New Warrants and the New Warrant Shares have not been registered under the Securities Act and were offered pursuant to the exemption from registration provided in Section 4(a)(2) under the Securities Act. The description of the New Warrants under Item 1.01 of this Form 8-K is incorporated by reference herein.

03

Item 3.03 Material Modifications to Rights of Security Holders. The disclosure set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference into this Item 3.03 in its entirety.

01 Other Events

Item 8.01 Other Events. The Company issued a press release on January 5, 2024 announcing the entering into of the Inducement Letter, a copy of which is attached as Exhibit 99. 1 hereto.

Financial Statements and Exhibits

Financial Statements and Exhibits. (d) Exhibits EXHIBIT INDEX Exhibit No. Description 4.1 Form of New Series A Warrant (January 2024). 4.2 Form of New Series B Warrant (January 2024). 10.1 Form of January 2023 Investor Inducement Letter. 10.2 Form of November 2023 Investor Inducement Letter. 99.1 Press Release, dated January 5, 2024. 104 Cover Page Interactive Data File (embedded within Inline XBRL document)

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AVENUE THERAPEUTICS, INC. (Registrant) Date: January 8, 2024 By: /s/ David Jin David Jin Interim Principal Financial Officer and Chief Operating Officer

View Full Filing

View this 8-K filing on SEC EDGAR