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ATXI: 1Q:18 Update Confirms Timeline

Zacks Small Cap Research

By John Vandermosten, CFA


Avenue Therapeutics (ATXI) circulated a press release and their form 10-K with their first quarter 2018 financial results on May 3rd. Total expenses for the first quarter were $10.4 million, comprised of research and development expense of $9.4 million and general and administrative expense of $1.0 million. No revenues were reported. Net loss was ($10.4) million or ($1.03) per share.

R&D expense was $9.4 million in 1Q:18, a large increase from the $0.1 million in 1Q:17. The increase was due to the launch of the Phase III safety trial and orthopedic study last year. The amount was higher than our estimates of $4.8 million; however, we did anticipate a lot of variability in costs related to timing of payables and the cadence of the trial. Costs were ahead of the run rate due to a faster pace of surgeries in the existing trials.

G&A expenses were $986 thousand in the quarter, up from $371 thousand in the same quarter last year. The increase represents the addition of full time employees to the corporate roster, higher stock compensation costs, greater market research costs and expanded other expenses. This compares to our estimate of $2.2 million.

Interest income in the quarter was $48 thousand.

Cash balance stood at $15.0 million as of March 31, 2018 after 1Q:18 cash burn of ($6.8) million.

Avenue has maintained its timeline and continues to expect the bunionectomy study to report topline data in 2Q:18. If results from this study are favorable, the soft tissue study will be launched in the third quarter as previously expected.

Our estimates for cash burn in 2018 were approximately $28.5 million which we maintain despite a higher first quarter run rate. A variety of factors including a faster pace of surgeries and timing of payables contributed to the higher than forecast 1Q:18 result. This was partially offset by lower than expected G&A cost. Since our initial estimates, there has been additional clarity on the timing of expenses throughout the year and we raise our cost estimates for the second quarter and lower them for the third and fourth quarters, maintaining the overall expense rate for 2018.

Key Events

‣ Initiated Phase III Bunionectomy Study – 3Q:17
‣ Initiated Safety Study – 4Q:17
‣ Topline Readout from Phase III Bunionectomy Study – 2Q:18
‣ Initiate Phase III Abdominoplasty Study – 3Q:18


We update our model to reflect financial results for the first quarter and maintain our target price of $19.00 per share. Avenue maintains timing for the readout for the bunionectomy study and the start of its abdominoplasty study, both positives indicating the ship is on course.


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