10-K
1
tm2140561_10k.htm
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
For the Fiscal Year
Ended December 31, 2020
or
For the Transition Period
from to
.
Commission File Number 001-38114
AVENUE
THERAPEUTICS, INC.
(Exact name of registrant as specified in its
charter)
1140 Avenue of the Americas, Floor 9, New
York NY 10036
(Address of principal executive offices and
zip code)
(781) 652-4500
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section 12(b)
of the Act:
(Title of Class) Trading Symbol(s) (Name of exchange on which registered)
Common Stock, par value $0.0001 per share ATXI Nasdaq Global Market
Securities registered pursuant to section
12(g) of the Act: None.
Indicate by check mark if the registrant is
a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
No ☒
Indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes ☒
No ☐
Indicate by check mark whether the registrant
has submitted every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒
No ☐
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions
of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging
growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant has filed a report
on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
No ☒
The aggregate market value of the voting stock
held by non-affiliates of the registrant the last business day of the registrant’s most recently completed second fiscal
quarter: $72,342,650 based upon the closing sale price of our common stock of $10.77 on that date. Common stock held by each officer
and director and by each person known to own in excess of 5% of outstanding shares of our common stock has been excluded in that
such persons may be deemed to be affiliates. The determination of affiliate status in not necessarily a conclusive determination
for other purposes.
Indicate the number of shares outstanding of
each of the registrant’s classes of common stock, as of the latest practicable date.
Class of Common Stock Outstanding Shares as of March 17, 2021
AVENUE THERAPEUTICS, INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
Page
PART I
Item 1. Business 4
Item 1A. Risk Factors 19
Item 1B. Unresolved Staff Comments 43
Item 2. Properties 43
Item 3. Legal Proceedings 43
Item 4. Mine Safety Disclosures 43
PART II
Item 8. Financial Statements and Supplementary Data 48
Item 9A. Controls and Procedures 48
Item 9B. Other Information 48
PART III
Item 10. Directors, Executive Officers and Corporate Governance 49
Item 11. Executive Compensation 53
Item 14. Principal Accountant Fees and Services 60
PART IV
Item 15. Exhibits, Financial Statement Schedules 61
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING
STATEMENTS
Certain matters discussed
in this report may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended (the “Securities
Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and involve known and unknown
risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different
from the future results, performance or achievements expressed or implied by such forward-looking statements. The words “anticipate,”
“believe,” “estimate,” “may,” “expect” and similar expressions are generally intended
to identify forward-looking statements. Our actual results may differ materially from the results anticipated in these forward-looking
statements due to a variety of factors, including, without limitation, those discussed under the captions “Risk Factors,”
and elsewhere in this report. All written or oral forward-looking statements attributable to us are expressly qualified in their
entirety by these cautionary statements. Such forward-looking statements include, but are not limited to, statements about our:
• expectations for increases or decreases in expenses;
• our use of clinical research centers and other contractors;
• acceptance of our products by doctors, patients or payors;
• our ability to compete against other companies and research institutions;
• our ability to secure adequate protection for our intellectual property;
• our ability to attract and retain key personnel;
• availability of reimbursement for our products;
• the volatility of our stock price;
• expected losses; and
• expectations for future capital requirements.
The forward-looking statements
contained in this report reflect our views and assumptions as of the effective date of this report. Except as required by law,
we assume no responsibility for updating any forward-looking statements.
We qualify all of our forward-looking
statements by these cautionary statements.
SUMMARY RISK FACTORS
Our business is subject to risks of which
you should be aware before making an investment decision. The risks described below are a summary of the principal risks associated
with an investment in us and are not the only risks we face. You should carefully consider these risk factors, the risk factors
described in Item 1A, and the other reports and documents that we have filed with the Securities and Exchange Commission (“SEC”).
Risks Pertaining to Our Potential Merger
with InvaGen Pharmaceuticals, Inc. (“InvaGen”)
Risks Pertaining to the Influence of
Fortress Biotech, Inc. (“Fortress”)
• Fortress controls a voting majority of our common stock.
Risks Pertaining to Our Business and Influence
Risks Pertaining to Our Finances
Risks Pertaining to Reliance on Third Parties
Risks Pertaining to Regulatory Approval
Risks Pertaining to the Commercialization
of Product Candidates
Risks Pertaining to Intellectual Property
and Potential Disputes Thereof
PART I
Item 1. Business
OVERVIEW
We are a specialty pharmaceutical
company that seeks to develop and commercialize our product principally for use in the acute/intensive care hospital setting. Our
current product candidate is intravenous (IV) Tramadol, for the treatment of post-operative acute pain. Under the terms of certain
agreements described herein, we have an exclusive license to develop and commercialize IV Tramadol in the United States. In 2016,
we completed a pharmacokinetic (PK) study for IV Tramadol in healthy volunteers as well as an end of phase 2 (EOP2) meeting with
the U.S. Food and Drug Administration (FDA). In the third quarter of 2017, we initiated a Phase 3 development program of IV Tramadol
for the management of post-operative pain. In December 2019, we submitted a New Drug Application (NDA) for IV Tramadol and received
a Complete Response Letter (CRL) from the FDA in October 2020. In February 2021, we resubmitted the NDA for IV Tramadol. The FDA
assigned a Prescription Drug User Fee Act (PDUFA) goal date of April 12, 2021 for the resubmitted IV Tramadol NDA. To date, we
have not received approval for the sale of our product candidate in any market and, therefore, have not generated any sales revenue
from our product candidate.
Recent Developments
On
November 12, 2018, we entered into a Stock Purchase and Merger Agreement (SPMA) with InvaGen Pharmaceuticals, Inc. (InvaGen), and
Madison Pharmaceuticals Inc. (Merger Sub), pursuant to which we agreed to the sale of the Company in a two-stage transaction, the
details of which are summarized below. Recently, InvaGen has communicated to us that it believes two Material Adverse Effects (as
defined in the SPMA) have occurred, which raise substantial doubt as to whether or not the merger will be consummated.
In October 2020, InvaGen
communicated to us that it believes a Material Adverse Effect (as defined in the SPMA) has 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 our NDA
in February 2021 (details of which are below), InvaGen communicated to us that it believes the proposed label for IV Tramadol would also
constitute a Material Adverse Effect on the purported basis that the proposed label under certain circumstances would make the product
commercially unviable, and in addition that the indication that the FDA approves may fail to satisfy a condition precedent to InvaGen’s
obligation to consummate the second stage closing of the SPMA. While we disagree with InvaGen’s assertions, it is possible InvaGen
could attempt to avoid its obligation to consummate the merger, terminate the SPMA, and/or pursue monetary claims against us.
Over the past several
months, we have communicated with InvaGen relating to its assertions that Material Adverse Effects have occurred. Nevertheless,
InvaGen has communicated to us its desire to consider all options on the proposed merger, including the option to not consummate
the merger. As a result, the possible timing and likelihood of the completion of the merger are uncertain, and, accordingly, there
can be no assurance that such transaction will be completed on the expected terms, anticipated schedule, or at all.
Background
On June 26, 2017, we completed
an initial public offering (IPO) of our common stock, resulting in net proceeds of approximately $34.2 million after deducting
underwriting discounts, and other offering costs.
We used the proceeds
from our IPO to initiate our first Phase 3 trial of IV Tramadol in patients with moderate-to-severe pain following bunionectomy,
which had its first patient dosed in September 2017. In May 2018, we announced the study met its primary endpoint and all key secondary
endpoints.
In December 2018, we initiated
the second Phase 3 trial in patients with moderate-to-severe pain following abdominoplasty upon successful completion of the bunionectomy
study. In June 2019, we announced the study met its primary endpoint and all key secondary endpoints.
In December 2017, we initiated
an open-label safety study, which was completed during the second quarter of 2019. The results showed that IV Tramadol is well-tolerated
with a side effect profile consistent with known pharmacology.
In December 2019,
we submitted an NDA pursuant to Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act (FDCA). In February 2020, the FDA
accepted our NDA submission and set a PDUFA goal date of October 10, 2020. On October 12, 2020, we announced that we had received
a CRL from the FDA regarding our NDA. In November 2020, we had a Type A Meeting with the FDA to discuss issues raised in the CRL.
On February 12, 2021, we resubmitted the NDA to the FDA for IV Tramadol. The NDA resubmission follows the receipt of official minutes
from a Type A meeting with the FDA, which was conducted following receipt of the CRL. The NDA resubmission included revised language
relating to the proposed product label and a report relating to terminal sterilization validation. The FDA assigned a PDUFA goal
date of April 12, 2021 for the resubmitted NDA for IV Tramadol.
On November 12, 2018,
we entered into the SPMA with InvaGen pursuant to which InvaGen agreed to purchase, for $35 million, common shares representing
33.3% of the fully diluted capitalization of the Company (the Stock Purchase Transaction) and subsequently acquire the remaining
issued and outstanding capital stock of the Company for $180 million, subject to certain reductions, in a reverse subsidiary merger
transaction (the Merger Transaction). Pursuant to the terms and subject to the conditions set forth in the SPMA, InvaGen will, at
second closing, hold 100% of the issued and outstanding equity interests of the Company. Consummation of the Merger Transaction is
conditioned upon, among other things, FDA approval of IV Tramadol by April 30, 2021, its labeling and scheduling and the absence of any Risk
Evaluation and Mitigation Strategy restrictions in effect with respect to IV Tramadol, as well as the filing and expiration of any
waiting period applicable to the acquisition under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which
filing both parties completed on March 12, 2021.
The aggregate consideration
to be paid by InvaGen under the SPMA is $215 million in cash (a portion of which was already paid in connection with the Stock
Purchase Transaction as described below), subject to certain potential reductions, which InvaGen intends to have sufficient immediately
available funds to pay. In addition, we are subject to certain lock-up restrictions and agreed not to (subject to customary exceptions),
during the period commencing at the signing of the SPMA until the Merger Transaction, issue, buy, sell, or otherwise subject to
a security interest, pledge, hypothecation, mortgage or lien, any securities of the Company.
The SPMA was approved by a majority of our stockholders,
including a majority of our non-affiliated stockholders, at our special shareholder meeting on February 6, 2019. On February 8,
2019, the Company and InvaGen consummated the Stock Purchase Transaction whereby InvaGen acquired 5,833,333 shares of our common
stock at $6.00 per share for total gross consideration of $35.0 million, representing a 33.3% stake in our capital stock on a fully
diluted basis.
As described above, in October
2020, InvaGen communicated to us that it believes a Material Adverse Effect (as defined in the SPMA) has occurred due to the impact of
the COVID-19 pandemic on potential commercialization and projected sales of IV Tramadol, which means it is possible InvaGen could attempt
to avoid its obligation to consummate the second stage closing under the SPMA, terminate the SPMA, and/or pursue monetary claims against
us. We disagree with InvaGen’s assertion that a Material Adverse Effect has occurred and we have advised InvaGen of our position.
Additionally, in connection with the resubmission of our NDA in February 2021, InvaGen communicated to us that it believes the proposed
label for IV Tramadol under certain circumstances would 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, and in addition that the indication
that the FDA approves may fail to satisfy a condition precedent to InvaGen’s obligation to consummate the second stage closing of
the SPMA. We have notified InvaGen that we disagree with InvaGen’s assertions. Nevertheless, InvaGen may seek to avoid its
obligation to consummate the second stage closing under the SPMA, terminate the SPMA, and/or pursue monetary claims against us.
Over the past several months,
we communicated with InvaGen relating to its assertions that Material Adverse Effects have occurred. Nevertheless, InvaGen has communicated
to us its desire to consider all options on the proposed merger, including the option to not consummate the merger. This indicates that
InvaGen may attempt to avoid its obligations under the SPMA to consummate the merger, terminate the SPMA, and/or pursue monetary claims
against Avenue. As a result, the possible timing and likelihood of the completion of the merger are uncertain, and, accordingly, there
can be no assurance that such transaction will be completed on the expected terms, anticipated schedule, or at all. During the pendency
of any dispute regarding these matters, we may be, and so long as the SPMA remains in place we will be, prohibited from engaging in a
change-of-control transaction, selling our rights to IV Tramadol, or effecting an equity or debt financing, in each case without the
prior written consent of InvaGen.
In the event that we do not
receive FDA approval for IV Tramadol by April 30, 2021, InvaGen will have the right to terminate the SPMA and will have no further obligations
to consummate the second stage closing under the SPMA. In the event that InvaGen does not exercise its right to terminate the SPMA, certain
restrictions relating to financings and strategic alternatives could exist through October 31, 2021, the time at which we can terminate
the SPMA. In the event of termination of the SPMA, InvaGen will retain certain rights pursuant to the Stockholder’s Agreement between
us and InvaGen. These rights exist as long as InvaGen maintains at least 75% of the common shares acquired in the first stage closing.
Certain actions relating to equity issuances and changes to capital stock are restricted without the prior written consent of InvaGen
during this time.
4
We may need to obtain
additional capital through the sale of debt or equity financings or other arrangements to fund our operations and research and
development activity; however, there can be no assurance that we will be able to raise needed capital under acceptable terms, if
at all. The sale of additional equity may dilute existing stockholders and newly issued shares may contain senior rights and preferences
compared to currently outstanding shares of common stock. Issued debt securities may contain covenants and limit our ability to
pay dividends or make other distributions to stockholders. If we are unable to obtain such additional financing, future operations
would need to be scaled back or discontinued.
We are a majority controlled
subsidiary of Fortress.
CORPORATE INFORMATION
Avenue Therapeutics, Inc.
was incorporated in Delaware on February 9, 2015. Our executive offices are located at 1140 Avenue of the Americas, Floor 9, New
York, NY 10014. Our telephone number is (781) 652-4500, and our email address is info@avenuetx.com.
We maintain a website
with the address www.avenuetx.com. We make available free of charge through our Internet website our annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these reports, as soon as reasonably practicable
after we electronically file such material with, or furnish such material to, the SEC. We are not including the information on
our website as a part of, nor incorporating it by reference into, this report. Additionally, the SEC maintains a website that
contains annual, quarterly, and current reports, proxy statements, and other information that issuers (including us) file electronically
with the SEC. The SEC’s website address is http://www.sec.gov.
OUR STRATEGY
Our primary objective
is to establish IV Tramadol as an invaluable part of a treating physician’s repertoire of available pharmaceutical options
for the management of postoperative pain. The key elements of our strategy include:
The U.S. Postoperative Pain
Market
We are currently focused
on developing our proprietary product candidate, IV Tramadol, for the management of postoperative acute pain. Even though the postoperative
pain market is entrenched with low cost, generic pain relievers, we believe that there still remains a significant unmet medical
need for safer and better-tolerated painkillers, which are also referred to as analgesics.
According to Decision
Resources’ Acute Pain Report of October 2014, or the 2014 Pain Report, sales of analgesics delivered via parenteral routes
(IV, subcutaneous, and intramuscular injections) for the management of acute pain totaled approximately $965 million in the United
States in 2013. According to the 2014 Pain Report, there were over ten million select common inpatient procedures performed, all
of which likely required postoperative pain management, in the United States in 2013. According to IMS Health, injectable analgesics
sold approximately $1 billion in the United States in 2017.
The major goal in
the management of postoperative pain is minimizing the dose of medications to lessen side effects while still providing adequate
pain relief for analgesia. This is best accomplished with multimodal and preemptive analgesia. An effective pain relief program
should be individualized for the particular patient, operation, and circumstances. In clinical practice, as there is no standard
set of guidelines to manage postoperative pain, hospitals and even hospital units have their own practice guidelines that are often
based on physicians’ prescribing practices. These local guidelines are rooted in physician experience as it relates to anticipated
severity of pain due to a particular surgical procedure, and are often modified with consideration to things like staffing limitations,
availability of specific drugs and/or formulations, access to patient controlled analgesia, or PCA, systems, and formulary restrictions.
Thus, treatment regimens vary widely from hospital to hospital, physician to physician and patient to patient.
5
Understanding the
range of available interventions and considering the type of surgery is essential to safe and effective pain management. The general
consensus among pain management practitioners is that use of more than one modality (i.e., molecules with different mechanisms
or with different routes of administration) is optimal for successful postoperative pain management. The most commonly prescribed
agents in the immediate postoperative pain market are typically acetaminophen, or APAP, NSAIDS, and opioid analgesics. APAP and
NSAIDs are not sufficiently effective as the sole agent for pain management after major surgery in most patients. However, when
used in conjunction with opioids, APAP and NSAIDs offer substantial benefits as the quality of analgesia is often improved or enhanced
due to their differentiated mechanism of action. Nevertheless, the substantial side effects associated with these agents represent
an important concern for patients and physicians to address. NSAIDS in particular have their own serious side effects, including
increased post-surgery bleeding, peptic ulcer disease and renal impairment, and is associated with hepatic side effects.
Traditional
opioids offer safe and effective postoperative pain control and can be used in combination with other agents and techniques. However,
the side effects of opioids, such as morphine, include sedation, dizziness, nausea, vomiting, constipation, physical dependence,
tolerance, and respiratory depression. Physical dependence and addiction are clinical concerns that may prevent proper prescribing
and, in turn, inadequate pain management. Less common side effects include delayed gastric emptying, hyperalgesia, immunologic
and hormonal dysfunction, muscle rigidity, and myoclonus. Importantly, they are Schedule II opioids and carry a high abuse potential.
Therefore, there is
still unmet medical need in the post-surgical setting. We believe that IV Tramadol, if approved, can fill this unmet need. If approved,
we believe that IV Tramadol will be an effective alternative to traditional opioids but carry a lower potential for abuse because
tramadol is a Schedule IV opioid in the U.S.
According to the Drug
Enforcement Administration (DEA) definition, substances classified as Schedule II have “a high potential for abuse, with
use potentially leading to severe psychological or physical dependence” and substances classified as Schedule IV are “drugs
with lower potential for abuse than Schedule II and consist of preparations containing limited quantities of certain narcotics.”
The table below summarizes
the available intravenous analgesic options in postoperative pain management currently available in the United States.
Available Classes Pain Levels Common Limitations & Contraindications
IV narcotics Moderate to severe Strong sedation
Respiratory depression
Constipation
Risk of dependence
IV NSAIDS Mild to severe Post-op bleeding risk
GI side effects
Renal impairment
IV acetaminophen Mild to moderate Hepatic impairment
Our Product Candidate
Tramadol, a synthetic
dual-acting opioid, is a centrally acting analgesic with weak opioid agonist properties. It also works via the inhibition of serotonin
and noradrenaline re-uptake and blocking nociceptive impulses at the spinal level. These opioid and non-opioid modes of action
are synergistic, essentially providing “multimodal therapy” with the use of a single drug. Tramadol is also commonly
combined with APAP or NSAIDS in clinical practice. Tramadol has a well-established efficacy and safety profile and has been used
throughout the world for more than 30 years. In the United States, tramadol is approved and marketed as an oral agent indicated
in adults for the management of pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate.
Tramadol was first approved in the United States in 1995, under the trade name Ultram® immediate release tablet (Ortho-McNeil-Janssen).
Ultracet®, a combination product containing tramadol and acetaminophen, is also marketed in the United States (Ortho-McNeil-Janssen).
According to Symphony Health Solutions, approximately 30 million scripts for tramadol and tramadol-containing drugs were filled
in retail pharmacies in the United States in 2020.
Tramadol has low potential
for abuse and addiction and is currently classified by the DEA as a Schedule IV controlled substance.
For comparison, other opioids which have a high potential for abuse, including meperidine, morphine, hydromorphone and oxycodone,
are all classified as Schedule II controlled substances.
The clinical trials
from our development program are summarized below:
6
Advantages of IV Tramadol
Parenteral tramadol
is approved and used for the management of postoperative acute pain throughout much of the world. Parenteral formulations include
IV, intramuscular, or IM, and subcutaneous, or SC, formulations. Based on our review of IMS Health data from 2014 to 2016, we believe
that parenteral tramadol accounts for approximately 10% of the total IV analgesics used in Europe. During the 10-year period from
2010 to 2019, approximately 370 million doses of parenteral tramadol was used in Europe, according to data from IQVIA (a 3rd
party data provider). There is no parenteral formulation currently approved in the United States.
We believe that the
introduction of an IV formulation of tramadol in the United States will address many of the shortcomings of opioids, APAP and NSAIDs
currently used in the postoperative setting.
We administered IV
Tramadol over approximately 15 minutes in our Phase 3 trials. We believe that our method of administration of IV Tramadol may provide
significant benefits such as reduced side effects, compared to previously approved methods of administration of IV Tramadol in
Europe, which is typically accomplished via a slow push over 2 to 3 minutes. In addition, our IV Tramadol dosing regimen produces
a similar Cmax (maximal blood level) and AUC (overall systemic exposure) to those of oral tramadol at steady state, which we believe
ensures an easy transition from IV to oral therapy in the post-surgical setting.
Based on the trials
done in Europe and on the data generated with oral tramadol, we believe that IV Tramadol, if approved, will be an attractive option
for physicians who treat postoperative pain in the U.S., due to the following attributes:
We believe that IV
Tramadol, if approved, will be a useful and effective tool in the management of acute postoperative pain. Its potential advantages
compared to current standard-of-care agents, along with the known efficacy, safety and tolerability profile for oral tramadol support
the use of IV Tramadol in this setting. We believe that the risks associated with the use of IV Tramadol will be benign compared
to other opioids, and consistent with that of the currently marketed oral tramadol products. Consequently, with the industry trend
toward multimodal therapy and away from Schedule II narcotics, we believe that, if approved, IV Tramadol’s unique profile
could position it to become an invaluable part of a treating physician’s repertoire of available pharmaceutical options in
the management of postoperative pain.
Clinical Development History
Revogenex, the previous
Sponsor and Licensor, completed multiple nonclinical PK and toxicology studies in dogs, a Phase 1 dose proportionality study and
a thorough QT/QTc (TQT) study of IV Tramadol in healthy volunteers, or the TQT Study. The dose proportionality study was designed
to compare maximum exposure and cumulative exposures of IV Tramadol to that of oral tramadol, and to assess the dose proportionality
of IV Tramadol in healthy adult volunteers. The TQT Study was done to evaluate whether IV Tramadol has the potential to affect
the “corrected QT interval”, or QTc, in healthy volunteers. The QTc represents electrical depolarization and repolarization
of the heart ventricles. A lengthened QTc is a marker for the potential of ventricular arrhythmias. The results of these studies
are consistent with tramadol’s known toxicology profile, pharmacokinetics and pharmacology.
PK Study for IV Tramadol
In general, Phase
2 clinical trials include initial proof-of-concept efficacy studies, dose-finding studies, and initial safety assessments in the
target (i.e., to-be-treated) population. We did not conduct Phase 2 clinical trials for IV Tramadol because tramadol is a known
analgesic, and oral tramadol is labeled “for the management of pain severe enough to require an opioid analgesic and for
which alternative treatments are inadequate” in the United States. Instead, we completed pharmacokinetic (PK) simulations
and conducted a pharmacokinetic and safety study in healthy volunteers, in order to select a Phase 3 dose and dosing regimen designed
to achieve exposure to tramadol similar to that provided by oral tramadol. In 2016, we completed a PK study for IV Tramadol in
healthy volunteers. A PK study generally involves dosing an experimental medicine in healthy volunteers and taking a series of
blood measurements from the study participants to understand how the body handles the drug. A PK study provides information on
important parameters such as systemic exposure, maximal and minimal levels of drug concentration in the blood and their time courses.
The PK study we conducted was used to select a dose and dosing regimen of IV Tramadol that achieves similar exposure to that provided
by oral tramadol at steady state.
7
The PK study was designed
as a three-way cross over study in 18 healthy volunteers. Each subject in the study served as his/her own control and received
oral tramadol as well as two different doses of IV Tramadol. Based on the results of the PK study, we decided to use a 50 mg dose
in our pivotal Phase 3 program.
Our Clinical Development
Strategy for IV Tramadol
At our EOP2 meeting
with FDA, we discussed Phase 3 program requirements for IV Tramadol and confirmed the key elements of the Phase 3 program design.
We conducted two pivotal Phase 3 trials to evaluate the safety and efficacy of IV Tramadol, and one additional safety study. All
three trials enrolled patients who required IV analgesia following surgery. Over 1,000 patients were enrolled in the Phase 3 program.
We believe that the design of our Phase 3 program is consistent with the design of Phase 3 programs for other analgesics being
developed.
Postoperative pain
following bunionectomy (orthopedic surgery model). The first Phase 3 trial was conducted in patients undergoing
bunionectomy surgery, which is considered an orthopedic surgical model. 409 patients were randomized and treated in a 1:1:1 ratio
to one of two doses of IV Tramadol, or placebo, for 48 hours. The primary efficacy endpoint was Sum of Pain Intensity Difference
over 48 hours (SPID 48), which is a measure of the overall effectiveness of the drug in reducing pain intensity during the 48-hour
period. This trial commenced in the third quarter of 2017. In May 2018, we announced the trial met its primary endpoint and all
key secondary endpoints.
Postoperative pain
following abdominoplasty (soft tissue model). The second Phase 3 safety and efficacy trial was conducted in patients
undergoing abdominoplasty surgery, which is considered a soft-tissue surgical model. 370 patients were randomized and treated in
a 3:3:2 ratio to IV Tramadol, placebo or a standard-of-care comparator arm. The primary efficacy endpoint was Sum of Pain Intensity
Difference over 24 hours (SPID 24). The trial commenced in December 2018. In June 2019, we announced the trial met its primary
endpoint and all key secondary endpoints.
Open-label safety
study. We initiated the safety study in December 2017 and ran this study concurrently with the two Phase 3 trials.
251 patients were enrolled in the safety study, which had an open label, single arm design. We completed this study in May 2019
and the results showed that IV Tramadol was well-tolerated in multiple surgical models with a side effect profile consistent with
known pharmacology.
In December 2019, we submitted
a 505(b)(2) NDA, for IV Tramadol pursuant to Section 505(b)(2) of the FDCA. In February 2020, the FDA accepted our NDA submission
and set a PDUFA goal date of October 10, 2020. On October 12, 2020, we announced that we had received a CRL from the FDA regarding
our NDA. In November 2020, we had a Type A Meeting with the FDA to discuss issues raised in the CRL. On February 12, 2021, we resubmitted
the NDA to the FDA with revised labeling relating to the proposed product label and a report relating to terminal sterilization
validation. The FDA assigned a PDUFA goal date of April 12, 2021.
License Agreement with Revogenex
Ireland Ltd.
Effective as of February
17, 2015, Fortress obtained a worldwide (with the exception of Canada, Central America and South America with respect to 50 mg
and 100 mg IV Tramadol HCl injections) exclusive license to make, market and sell IV Tramadol pursuant to an agreement with Revogenex,
a privately held company in Dublin, Ireland, or the License Agreement. Under the terms of the License Agreement, Fortress paid
Revogenex an up-front licensing fee of $2.0 million upon execution and an additional $1.0 million on June 17, 2015. A $1.0 million
milestone payment was due upon NDA submission in December 2019 which was incurred by us. There is also an additional milestone
totaling $3.0 million due upon the FDA approval of IV Tramadol. Additional high single-digit to low double-digit royalty payments
on net sales of licensed products are due. Royalties will be paid on a product-by-product and country-by-country basis until the
expiration in each country of the valid patent claim. In return, Fortress obtained the exclusive worldwide rights to three U.S.
patents related to the “Intravenous Administration of Tramadol”: U.S. Patent No. 8,895,622 (the ’622 patent),
which issued on November 25, 2014; U.S. Patent No. 9,561,195 (the ’195 patent), which issued on February 7, 2017; and U.S.
Patent No. 9,566,253 (the ’253 patent), which issued on February 14, 2017 (all with the exception of Canada, Central America
and South America with respect to 50 mg and 100 mg IV Tramadol HCl injections). Additionally, Fortress acquired the rights to an
open U.S. Investigational New Drug Application pertaining to IV Tramadol, as well as all supporting documentation and relevant
correspondence with the FDA. Further, under the License Agreement, Fortress assumed the rights and obligations of Revogenex under
its current manufacturing agreement with Zaklady Farmaceutyczne Polpharma (Polpharma), or the Manufacturing Agreement. Fortress
transferred all its rights and obligations under the License Agreement and the Manufacturing Agreement to us pursuant to an Asset
Transfer Agreement, dated as of May 13, 2015.
The License Agreement
will terminate on a product-by-product and country-by-country basis upon the expiration of the last licensed patent right, unless
the agreement is earlier terminated. In addition to standard early termination provisions, the License Agreement may also be terminated
early by: (i) Revogenex if the FDA does not issue an approval or otherwise issues a “not approvable” notice for the
NDA within 27 months after the NDA has been filed with the FDA (December 2019), although this termination right will be tolled
if we are using commercial reasonable efforts in our negotiations with the FDA for approval and if we receive a “not approvable”
notice (October 2020), we will have a 15 month period to correct any issues and re-submit the NDA for approval, (ii) us if we reasonably
determine prior to NDA approval that the development of IV Tramadol is not economically viable, or (iii) either Revogenex or us
(provided we are using or have used commercially reasonable efforts to commercialize IV Tramadol) if, after the third anniversary
date of the commercial launch, we fail to achieve annual net sales with respect to IV Tramadol of at least $20 million in any given
calendar year, with certain exceptions.
8
Competition
The pharmaceutical
industry is characterized by rapidly advancing technologies, intense competition and a strong emphasis of proprietary products.
We face competition and potential competition from a number of sources, including pharmaceutical and biotechnology companies, generic
drug companies, drug delivery companies and academic and research institutions. In addition, companies that are active in different
but related fields represent substantial competition for us. Many of our competitors have significantly greater capital resources,
larger research and development staffs and facilities and greater experience in drug development, regulation, manufacturing and
marketing than we do. These organizations also compete with us to recruit qualified personnel, attract partners for joint ventures
or other collaborations, and license technologies that are competitive with ours. To compete successfully in this industry, we
must identify novel and unique drugs or methods of treatment and then complete the development of those drugs as treatments before
our competitors do so.
We believe that IV
Tramadol, if approved, will compete with a number of opioid and non-opioid drugs that are currently available for the management
of acute pain or in development. The most commonly used opioids in the postoperative and acute pain settings are morphine, hydromorphone
and fentanyl. The non-opioid drugs used in this setting include Ofirmev (IV acetaminophen) and IV formulations of NSAIDs such as
Dyloject (diclofenac), Toradol (ketorolac), Anjeso (meloxicam) and Caldolor (ibuprofen). In addition, we also expect to compete
with agents such as Exparel, a liposome injection of bupivacaine indicated for administration into the surgical site to produce
postsurgical analgesia.
In addition
to approved products, there are a number of product candidates in development for the management of acute pain. In addition to
reformulations and fixed-dose combination products of already available therapies, there are also several novel agents in clinical
development such as HTX-011 (Heron Therapeutics, Inc.), NTM-001 (Neumentum, Inc.) and CA-008 (Concentric Analgesics, Inc.).
Intellectual Property and
Patents
General
Our goal is to obtain,
maintain and enforce patent protection for our proprietary technologies, including methods of treatment, to preserve our trade
secrets, and to operate without infringing on the proprietary rights of other parties, both in the United States and in other countries.
Our policy is to actively seek to obtain, where appropriate, the broadest intellectual property protection possible for our product
candidates, proprietary information and proprietary technology through a combination of contractual arrangements and patents in
the United States.
Patents and other
proprietary rights are crucial to the development of our business. We will be able to protect our proprietary technologies from
unauthorized use by third parties only to the extent that our proprietary rights are covered by valid and enforceable patents,
are supported by regulatory exclusivity or are effectively maintained as trade secrets. We have several patents and patent applications
related to our proprietary technology, but we cannot guarantee the scope of protection of the issued patents, or that such patents
will survive a validity or enforceability challenge, or that any of the pending patent applications will issue as patents.
Generally, patent
applications in the United States are maintained in secrecy for a period of 18 months or more. The patent positions of biotechnology
and pharmaceutical companies are highly uncertain and involve complex legal and factual questions. Therefore, we cannot predict
the breadth of claims allowed in biotechnology and pharmaceutical patents, or their enforceability. To date, there has been no
consistent policy regarding the breadth of claims allowed in biotechnology patents. Third parties or competitors may challenge
or circumvent our patents or patent applications, if issued. If our competitors prepare and file patent applications in the United
States that claim technology also claimed by us, we may have to participate in interference proceedings declared by the USPTO to
determine priority of invention, which could result in substantial cost, even if the eventual outcome is favorable to us. In the
case of inventorship contests relating to patent applications filed on or after March 16, 2013, we may have to participate in derivation
proceedings initiated at the Patent Trial and Appeal Board (PTAB), which could also result in substantial cost. Because of the
extensive time required for development, testing and regulatory review of a potential product, it is possible that before we commercialize
any of our products, any related patent may expire or remain in existence for only a short period following commercialization,
thus reducing any advantage of the patent. However, the life of a patent covering a product that has been subject to regulatory
approval may have the ability be extended through the patent restoration program, although any such extension could still be minimal.
If a patent is issued
to a third party containing one or more preclusive or conflicting claims, and those claims are ultimately determined to be valid
and enforceable, we may be required to obtain a license under such patent or to develop or obtain alternative technology, neither
of which may be possible. In the event of litigation involving a third-party claim, an adverse outcome in the litigation could
subject us to significant liabilities to such third party, require us to seek a license for the disputed rights from such third
party, and/or require us to cease use of the technology. Moreover, our breach of an existing license or failure to obtain a license
to technology required to commercialize our products may seriously harm our business. We also may need to commence litigation to
enforce any patents issued to us or to determine the scope and validity of third party proprietary rights. Litigation would involve
substantial costs.
IV Tramadol
Pursuant to the License
Agreement described above, we have exclusive, worldwide commercialization rights to all Revogenex patents, including patent applications,
divisionals, continuations, and continuations-in-part, that are directed to IV tramadol (with the exception of Canada, Central
America, or South America with respect to 50 mg and 100 mg IV tramadol HCl injections). Currently, this includes U.S. Patent No.
8,895,622 (“the ’622 patent”), U.S. Patent No. 9,561,195 (“the ’195 patent”), U.S. Patent
9,566,253 (“the ’253 patent”), U.S. Patent No. 9,962,343 (“the ’343 patent”), U.S. Patent
No. 10,406,122 (“the ’122 patent”), U.S. Patent No. 9,693,949 (“the ’949 patent”), U.S. Patent
9,968,551 (“the ’551 patent”), U.S. Patent No. 9,980,900 (“the ’900 patent”), U.S. Patent
No. 10,022,321 (“the ’321 patent”), U.S. Patent No. 10,537,521 (“the ’521 patent”), U.S. Patent
No. 10,624,842 (“the ’842 patent”), U.S. Patent No. 10,751,279 (the ‘279 patent), U.S. Patent No. 10,729,644
(the ‘644 patent), and any related patent applications or future patents, including divisionals, continuations, and continuations-in-part.
9
The ’622 patent
is directed to and claims methods of: treating pain by administering a therapeutically effective dose of tramadol intravenously
over a time period from 10 minutes to about 45 minutes (i.e., the rate of IV Tramadol administration); treating pain in humans
by intravenously administering tramadol in solution at a range of concentrations over the same time period; treating acute pain
in humans by administering IV Tramadol over 10 to 30 minutes, such that at least one side effect is reduced; and treating acute
postoperative pain by administering tramadol to a human patient intra-operatively at wound closure, or from first demand of analgesia
postoperatively, intravenously over a time period from 10 to 30 minutes, in conjunction with administering further tramadol doses
post-operatively and administering a different intravenous opioid analgesic which is not tramadol. Further claims of the ’622
patent are directed to various effective doses, including 50 mg. These methods of treatment may provide significant benefits (e.g.,
reduced side effects) over previously approved methods of administration of IV Tramadol, in which the dose was typically accomplished
over a two to three-minute period. Additional claims of the ’622 patent focus on the intravenous administration of tramadol
over 15 (±2) minutes, which represents the preferred method of administration that we will be pursuing in obtaining approval
of our product through the FDA. The ’622 patent further describes and claims pharmacokinetic properties of our proprietary
method of treatment (e.g., Tmax, Cmax and AUC), which are different from the previously achieved pharmacokinetics of prior IV tramadol
formulations, such as Tramal® solution for injection (available outside the U.S.). This patent is scheduled to expire on October
20, 2032, absent possible regulatory patent term extensions.
In view of additional
prior art discovered after the issuance of the ’622 patent, we have focused efforts on obtaining further patent coverage
for the technology. Pursuant to the License Agreement, we have exclusive commercialization rights to all continuation patent filings
of the ’622 patent. As a first step, we have prosecuted further claims in multiple continuation patent applications of the
’622 patent, in which extensive searches were conducted and all information known to be material to patentability was brought
to the attention of the USPTO. The goal was to obtain further patent claims which patentably differentiate over the prior art.
To date, our efforts have resulted in the issuance of the ’195 patent, which issued from U.S. Application Serial No. 14/550,279
on February 7, 2017; the ’253 patent, which issued from U.S. Application Serial No. 14/713,775 on February 14, 2017; the
’343 patent, which issued from U.S. Application Serial No. 14/550,279 on May 8, 2018; and the ’122 patent, which issued
from U.S Application Serial No. 15/972,684 on September 10, 2019; all of which are entitled “Intravenous Administration of
Tramadol,” and all of which contain the same disclosure (specification) as that of the ’622 patent. The ’195,
’253, ’343 and ’122 patents are scheduled to expire on the same day as the expiration of the ’622 patent
(October 20, 2032 absent possible regulatory patent term extensions).
The ’253 patent
includes claims directed to a method of treating moderate to severe acute pain in a human patient by a dose of about 50 mg of IV
Tramadol over a time period from 10 minutes to 20 minutes and administering further doses of tramadol at two to six-hour time intervals
(each dose being administered intravenously over the same time period).
The ’343 patent
includes claims directed to similar subject matter but varies from the ’253 patent in that it specifically claims treating
acute post-operative pain. There is also a continuation patent application pending with the USPTO.
The ’195 patent
includes claims directed to a method of treating moderate to severe acute pain by administering to a human patient a dose of about
50 mg of IV Tramadol over 10 to 20 minutes, and administering further doses of IV Tramadol at two to six hour time intervals to
treat pain in said patient, (each dose administered over 10 to 20 minutes), such that the Cmax does not exceed the Cmax of 100
mg oral tramadol administered every six hours for nine doses. The term Cmax refers to the maximum plasma concentration of tramadol
achieved during a dosing interval. The claims of the ’195 patent therefore further focus on a goal of the technology — that
the blood plasma levels of tramadol resulting from our 50 mg intravenous dose to a patient would not be significantly greater than
the blood plasma level of the blood plasma levels of tramadol that are already routinely experienced by patients in the United
States who are administered oral doses of 100 mg tramadol. Tramadol hydrochloride is approved in the United States for oral administration
in an amount from 50 to 100 mg administered every four to six hours, not to exceed 400 mg/day.
The ’122 patent
includes claims directed to a method of treating moderate to severe acute pain or acute post-operative pain by administering to
a human patient undergoing an operation a dose of about 50 mg of tramadol at about 2 to about 6 hour time intervals for at least
about 48 hours to treat pain in said patient, wherein each dose of tramadol is administered intravenously over a time period from
10 minutes to 20 minutes, such that the patient is treated for acute postoperative pain. Further claims call for at least one dose
of tramadol to be administered over 15 (±2) minutes.
The ’253, ’195,
’343 and ’122 patents include further claims to the treatment method, including also administering one or more doses
of an IV opioid analgesic that is not tramadol as rescue medicine to the patient to treat breakthrough pain. The claims are further
directed to the use of the treatment method for postoperative pain, and claims in the ’195, ’343, and ’122 patents
are also directed to the treatment method resulting in a reduction in a side-effect associated with tramadol therapy selected from
nausea, vomiting, or both.
We believe that the
administration of a 50 mg IV Tramadol dose over the prolonged time interval is efficacious and also may advantageously lead to
a lower incidence of side effects and increased drug tolerability. Additionally, we believe that the claims of these patents patentably
differentiate over all prior art that we are aware of and which was made of record with the USPTO.
The License Agreement
also grants us the exclusive commercialization rights to the ’949 patent and any related patent applications or future patents,
including divisionals, continuations, and continuations-in-part. The ’949 patent is directed to an IV Tramadol dosing regimen