Avenue Therapeutics

Kurta Law is investigating broker recommendations of Avenue Therapeutics (ATXI). Shares of this stock are high-risk and volatile, which was clearly disclosed in the company’s prospectus. Recommendations of risky investments may be unsuitable for investors, depending on their risk profiles, and brokers who recommend unsuitable investments violate securities industry rules and regulations.

Investors who lost money as a result of broker misconduct may be able to recoup their losses by seeking out FINRA arbitration. Contact a securities attorney with your concerns by emailing info@kurtalawfirm.com or calling (877) 600-0098.

What is Avenue Therapeutics?

According to the prospectus, Avenue Therapeutics (ATXI) is a pharmaceutical company working to develop and manufacture intravenous Tramadol to treat postoperative acute pain in intensive care settings.

The company has been seeking FDA approval for several years, entering a formal dispute resolution request with the Office of Neuroscience of the FDA in July 2021 and receiving an Appeal Denied letter.

Avenue Therapeutics submitted a formal dispute resolution request with the Office of New Drugs (OND) of the FDA in August 2021. The OND of the FDA provided a response stating the need for “additional input from an Advisory Committee in order to reach a decision” on this dispute.

To the date of Avenue Pharamaceutical’s prospectus, it had not received FDA approval for intravenous Tramadol.

What are the Risks Associated with Avenue Therapeutics?

Investments in medical, pharmaceutical, and biotechnology companies are often high-risk. Avenue Pharmaceuticals states that it has “no significant current source of income” and has no expectation of generating income “until, and unless, we obtain approval from the FDA or other regulatory authorities.”

The prospectus also states that “there is substantial doubt about our ability to continue as a going concern” due to the company’s lack of funds and dependence on this offering and other methods of raising capital in the absence of income.

Share Price Volatility

The prospectus states that the trading price of Avenue Pharmaceuticals’ stock “has been and is likely to continue to be highly volatile,” noting that biotechnology companies have suffered “extreme volatility that has often been unrelated to [their] operating performance.”

Further, stockholders have previously filed class-action lawsuits against these companies due to these periods of extreme volatility. Any such litigation potentially filed against Avenue Pharmaceuticals could have significant financial repercussions.

Limited Market for Shares

According to the prospectus, the company cannot predict whether an active trading market will develop for their shares, and that may impair investors’ ability to sell their shares for a profit.

Additionally, Avenue Pharmaceuticals has received multiple letters from the Listing Qualifications Department of the Nasdaq Stock Market stating that it failed to meet its continuing listing requirements. The most recent letter, received on May 19, 2023, states that the company’s shares violated listing requirements by selling for less than $1.00.

Following a hearing, Avenue Pharmaceuticals was granted an extension through May 20, 2024, to achieve compliance by reaching a closing bid price of at least $1.00 per share for at least ten consecutive business days.

Delisting from Nasdaq could have a significant negative impact on investors’ ability to trade their shares and for the company to make other securities offerings in the future.

Aegis Capital Corp. Underwriting

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm.  

What Can I Do If I Suffered Losses?

If you lost money on your investment in Avenue Therapeutics, reach out for a consultation. Kurta Law securities attorneys have a proven track record of securing fair settlements for investors who suffer losses due to unsuitable recommendations or broker misconduct. Call (877) 600-0098 or email info@kurtalawfirm.com today.