Avenue Therapeutics (49Y) Risk Analysis

Under the terms of the Amended and Restated Founders Agreement, which became effective September 13, 2016, Fortress is entitled to receive a grant of shares of our common stock equal to 2.5% of the gross amount of any equity or debt financing. Additionally, the holders of Class A Preferred Stock, as a class, are to receive an Annual Stock Dividend, payable in shares of common stock in an amount equal to 2.5% of our fully-diluted outstanding capital stock as of the business day immediately prior to the date such dividend is payable. Fortress currently owns all outstanding shares of Class A Preferred Stock. These potential future share issuances to Fortress and any other holder of Class A Preferred Stock will dilute your holdings in our common stock and, if our value has not grown proportionately over the prior year, would result in a reduction in the value of your shares. The Amended and Restated Founders Agreement has a term of 15 years and renews automatically for subsequent one-year periods unless terminated by Fortress or upon a Change in Control (as defined in the Amended and Restated Founders Agreement).

Pursuant to the terms of the Class A Preferred Stock held by Fortress, Fortress is entitled to cast, for each share of Class A Preferred Stock held by Fortress, the number of votes that is equal to 1.1 times a fraction, the numerator of which is the sum of (A) the aggregate number of shares of outstanding common stock and (B) the whole shares of common stock into which the shares of outstanding the Class A Preferred Stock are convertible and the denominator of which is the aggregate number of shares of outstanding Class A Preferred Stock, or the "Class A Preferred Stock Ratio." Thus, Fortress will at all times have voting control of us. Further, for a period of ten (10) years from the date of the first issuance of shares of Class A Preferred Stock, the holders of record of the shares of Class A Preferred Stock (or other capital stock or securities issued upon conversion of or in exchange for the Class A Preferred Stock), exclusively and as a separate class, shall be entitled to appoint or elect the majority of our directors; however, the Company and Fortress waived application of this provision of the certificate of incorporation, and the holders of the Common Stock voted together with the holders of the Class A Preferred Stock for all directors, at our most recent annual meeting of stockholders, with the holders of the Class A Preferred Stock utilizing the super-voting rights described above. Accordingly, conflicts of interest may arise between Fortress and its affiliates, on the one hand, and us and our other stockholders, on the other hand. In resolving these conflicts of interests, Fortress may favor its own interests and the interests of its affiliates, over the interests of our other stockholders, which could cause a material adverse effect on our business, financial condition, and results of operations. This concentration of voting power may also have the effect of delaying, preventing, or deterring a change in control of us even when such a change may be in the best interests of all stockholders, could deprive our stockholders of an opportunity to receive a premium for their shares of common stock as part of a sale of us or our assets, and might affect the prevailing market price of our common stock.

The market for our common stock may have significant price volatility and we expect that our share price may continue to be volatile for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We have been and may, in the future, be the target of such litigation. Securities litigation could result in substantial costs and liabilities and could divert management's attention and resources.

OTC Pink Open Market securities are frequent targets of fraud or market manipulation, both because of their generally low prices and because OTC Pink Open Market reporting and compliance requirements are less stringent than those of the established stock exchanges such as the Nasdaq Capital Market. Patterns of fraud and abuse include: control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; "boiler room" practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons; excessive and undisclosed bid-ask differentials and mark-ups by selling broker-dealers; and wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

The SEC has adopted Rule 15g-9 under the Exchange Act, which generally defines a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is less than $5.00 per share and, therefore, it may be designated as a "penny stock" according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain certain financial information from the purchaser to determine that the purchaser is reasonably suitable to purchase the securities, and obtain from the purchaser a signed written agreement reflecting the details of such determination and the purchaser's financial situation, investment experience, and investment objectives. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of investors to sell their shares, and also hamper our ability to raise funds in the primary market for our shares of common stock. Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.

The OTC Pink Open Market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock. The trading price of our common stock is volatile and could fluctuate substantially due to a variety of factors, including quarterly operating results of other companies in the same industry, changes in general conditions in the economy and the financial markets, or other developments affecting the Company's competitors. These factors and market fluctuations may materially and adversely affect the market price of our common stock. As a result, you may not be able to resell your shares at an attractive price. In addition, price volatility may be greater if the public float and trading volume of our common stock is low.

Since March 17, 2025, our common stock has been listed 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, illiquid 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. Prior to Avenue's delisting from the Nasdaq Capital Market, our common stock had never traded on the OTC Pink Open Market. We may have more difficulty raising additional funding with our stock listed on the OTC Pink Open Market than we would if our stock were still listed and trading on the Nasdaq Capital Market.

On March 17, 2025, The Nasdaq Stock Market LLC ("Nasdaq") notified us that it had determined to delist our common stock and that trading of our securities would be suspended at the open of trading on March 19, 2025. On July 18, 2025, Nasdaq filed a Form 25 with the United States Securities and Exchange Commission (the "SEC") to remove our common stock from listing and registration. As a result, our common stock ceased to be registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is now deemed registered pursuant to Section 12(g) of the Exchange Act. The delisting of our common stock from the Nasdaq Capital Market has adversely affected, and may continue to adversely affect, the liquidity and market price of our common stock. Delisting may also impair the ability of our stockholders to sell or purchase shares of our common stock at the time and price they desire, reduce the number of investors willing or able to hold or acquire our common stock, and limit our ability to use our equity securities as consideration in strategic transactions. The delisting may also make it more difficult and more expensive for us to raise additional capital through public or private offerings of our securities. We may be required to structure any such financings on terms that are less favorable to us and more dilutive to our existing stockholders than if our common stock were still listed on a national securities exchange. If we are unable to raise capital when needed on acceptable terms, or at all, our business, financial condition and prospects could be materially and adversely affected.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, grants, and license and development agreements in connection with any collaborations. To the extent that we raise additional capital through the sale of equity, instruments exercisable for equity, or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. 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 programs, 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.

Our audited consolidated financial statements as of December 31, 2025 have been prepared under the assumption that we will continue as a going concern for the next twelve months. As of December 31, 2025, we had cash and cash equivalents of $2.9 million and an accumulated deficit of $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 successfully identify, evaluate, in-license or acquire, and subsequently develop and commercialize 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 sometimes share directors and/or officers with certain of our parent company, affiliates, related parties, or other companies with which we transact business, and such arrangements could create conflicts of interest in the future, including with respect to the allocation of corporate opportunities. While we believe that we have put in place policies and procedures to identify such conflicts, and that any existing agreements that may give rise to such conflicts and any such policies or procedures, were negotiated at arm's length in conformity with fiduciary duties, such conflicts of interest may nonetheless arise. The existence and consequences of such potential conflicts could expose us to lost profits, claims by our investors and creditors, and harm to our business, financial condition, and results of operations.