Item 1.01 Entry into a Material Definitive Agreement.
On May 11, 2022, Avenue Therapeutics, Inc. (the "Company") entered into a stock
contribution agreement (the "Contribution Agreement") with its parent company
Fortress Biotech, Inc. ("Fortress"), pursuant to which Fortress agreed to
transfer ownership of 100% of its shares (common and preferred) in a private
subsidiary company of Fortress, Baergic Bio, Inc. ("Baergic"), to the Company.
Under the Contribution Agreement, Fortress also agreed to assign to Avenue
certain intercompany agreements existing between Fortress and Baergic, including
a Founders Agreement and Management Services Agreement. Consummation of the
transactions contemplated by the Contribution Agreement is subject to the
satisfaction of certain conditions precedent, including, inter alia: (i) the
closing of an equity financing by the Company resulting in gross proceeds of no
less than $7.5 million, (ii) the agreement by minority Avenue stockholder
InvaGen Pharmaceuticals Inc. ("InvaGen") to (A) have 100% of its shares in the
Company repurchased by the Company and (B) terminate certain of the agreements
into which it entered with the Company and/or Fortress in connection with
InvaGen's 2019 equity investment in the Company, which will eliminate certain
negative consent rights of InvaGen over the Company and restore certain rights
and privileges of Fortress in the Company (all upon terms to be agreed upon with
InvaGen), and (iii) the sustained listing of Avenue's common stock on NASDAQ.
If consummated, the transaction is anticipated to afford Baergic with greater
access to development funding. Evaluation and negotiation of the Contribution
Agreement was overseen, and execution of the Contribution Agreement was
approved, by special committees at the Avenue and Fortress levels, both of which
exclusively comprised independent and disinterested directors of the respective
companies' boards.
The summary of the Contribution Agreement set forth above does not purport to be
complete and is subject to and qualified in its entirety by reference to the
text of the Contribution Agreement, a copy of which will be filed in a
subsequent periodic report of the Company.
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
On May 16, 2022, the Company notified the Listing Qualifications Department of
The Nasdaq Stock Market LLC ("Nasdaq") that, on May 12, 2022, the Company
determined that Jay Kranzler, M.D., Ph.D. was not independent under Nasdaq
Listing Rules. Accordingly, Dr. Kranzler resigned from the Audit Committee of
the Company's Board of Directors (the "Board") on May 13, 2022. As a result, the
Company notified Nasdaq that it was no longer in compliance with Nasdaq Listing
Rule 5605(c)(2)(A) related to audit committee composition. Dr. Kranzler remains
a member of the Board.
Pursuant to Nasdaq Listing Rule 5605(c)(4), Nasdaq may grant the Company a cure
period to reestablish compliance with Nasdaq Listing Rule 5605. As disclosed in
Item 5.02 of this Current Report on Form 8-K below, subsequent to the date of
Dr. Kranzler's resignation from the Audit Committee, on May 16, 2022, the Board
appointed Faith L. Charles to fill the vacancy on the Audit Committee created by
Dr. Kranzler's resignation.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On May 16, 2022, the Board appointed Faith L. Charles as a director, with a term
expiring at the 2022 annual meeting of stockholders, to fill the vacancy on the
Board resulting from the previously disclosed resignation of Lucy Lu, M.D., and
to serve on the Board's audit committee. The Board determined that Ms. Charles
is independent under the listing standards of Nasdaq and applicable securities
rules and regulations with respect to service on the Company's board and audit
committee.
Faith L. Charles, 60, has been a corporate transactions and securities partner
at the law firm of Thompson Hine, LLP, since 2010. She leads Thompson Hine's
Life Sciences practice and co-heads the securities practice, advising public and
emerging biotech and pharmaceutical companies in the U.S. and internationally.
Ms. Charles negotiates complex private and public financing transactions,
mergers and acquisitions, licensing transactions and strategic collaborations.
She serves as outside counsel to a myriad of life sciences companies and is
known in the industry as an astute business advisor, providing valuable insights
into capital markets, corporate governance and strategic development. Since
March 2021, Ms. Charles has served on the Board of Directors, Audit Committee
and Nominating and Corporate Governance Committee of Abeona Therapeutics Inc., a
clinical-stage biopharmaceutical company developing cell and gene therapies for
life-threatening rare genetic diseases whose common stock is listed on the
Nasdaq. From 2018 until October 2021, Ms. Charles served on the Board of
Directors and as a member of the Audit Committee and Chair of the Compensation
Committee of Entera Bio Ltd., a publicly-traded biotechnology company. She also
serves on the Board of Board of Directors of several private life science
companies. Ms. Charles founded the Women in Bio Metro New York chapter and
chaired the chapter for five years. She currently serves on the national board
of Women in Bio. Ms. Charles is also a member of the board of Red Door Community
(formerly Gilda's Club New York City). She has been recognized as a Life
Sciences Star by Euromoney's LMG Life Sciences, has been named a BTI Client
Service All-Star, and was named by Crain's New York Business to the list of 2020
Notable Women in the Law. Ms. Charles holds a J.D degree from The George
Washington University Law School and a B.A. in Psychology from Barnard College,
Columbia University. Ms. Charles is a graduate of Women in Bio's Boardroom Ready
Program, an Executive Education Program taught by The George Washington
University School of Business.
Ms. Charles does not have any family relationships with any of the executive
officers or directors of the Company. There are no arrangements or
understandings between Ms. Charles and any other person pursuant to which she
was elected as a director of the Company. Ms. Charles does not have any direct
or indirect material interest in any transaction or proposed transaction
required to be reported under Item 404(a) of Regulation S-K.
Ms. Charles will participate in the Company's non-employee director compensation
program, which is described in the Company's Definitive Proxy Statement on
Schedule 14A, filed with the Securities and Exchange Commission on November 21,
2021. In addition, the Company will enter into its standard director
indemnification agreement with Ms. Charles.
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