Risks of High-Risk Biotech Offerings & Recovery Options for Investors
If you invested in Avenue Therapeutics, Inc. (OTC: ATXI) and are now facing losses, we may be able to help. The company has reportedly faced a series of financial and regulatory challenges, and many investors are questioning how this stock was ever deemed suitable for their portfolios. The White Law Group is investigating potential FINRA arbitration claims involving brokerage firms that may have unsuitably recommended Avenue Therapeutics investments to their clients.
About Avenue Therapeutics
Avenue Therapeutics is a clinical-stage pharmaceutical company developing therapies for neurological diseases. Although it was previously listed on the NASDAQ, the company was reportedly delisted and now trades on the OTC market under the symbol ATXI.
In October 2023, Avenue reportedly announced a $5 million public offering, pricing over 16 million units at $0.3006 per unit. Each unit consisted of:
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One share of common stock (or pre-funded warrant)
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One Series A warrant (5-year term)
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One Series B warrant (18-month term)
Avenue Therapeutics Stock Performance
The stock performance of Avenue Therapeutics has been dismal:
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52-week high: $11.55 (April 2024)
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Current price: ~$0.42 per share
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Market capitalization: ~$764,000
Investors who participated in this or prior offerings are likely facing substantial losses. The company has also reportedly suffered multiple regulatory setbacks, including failed FDA approvals and ongoing uncertainty around its lead drug candidates, according to reports.
National Securities Underwriting
In 2017, National Securities Corporation, a broker-dealer, was involved in an Avenue Therapeutics offering, according to SEC filings. In more recent years, Avenue Therapeutics has engaged other firms for its offerings. In October 2023, the company reportedly announced the closing of a $5.0 million public offering, with Maxim Group LLC acting as the sole placement agent.
If your broker-dealer recommended Avenue Therapeutics without adequate due diligence, you may have a claim for recovery.
Risks of Micro-Cap Biotech Stock Offerings
Investments like Avenue Therapeutics are often aggressively marketed to retail investors despite their high risk. Here are common issues:
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Extreme volatility: Prices can swing wildly on news or failed trials.
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Dilution risk: Offerings with warrants or pre-funded shares reduce existing shareholder value.
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Lack of revenue: Many of these companies operate without meaningful income.
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Unsuitability for conservative investors: Some advisors may pitch these stocks despite the client’s low risk tolerance.
Broker-dealers have a duty to recommend investments that are suitable for your financial profile. If they fail in this duty, you may be eligible for FINRA arbitration to recover damages.
FINRA Arbitration vs. Class Action
Investors seeking to recover losses from unsuitable stock recommendations have two main options. Here’s how FINRA arbitration compares to a class action lawsuit: While class actions can provide broad relief for large groups of investors, they typically take years to resolve and often result in minimal payouts. In contrast, FINRA arbitration is usually a faster and more individualized process, typically resolved in 12 to 16 months. It allows investors to seek compensation directly from the brokerage firm that recommended the investment, often resulting in higher recoveries than what might be available through a class action lawsuit. Because of this, most retail investors opt for FINRA arbitration when pursuing claims involving unsuitable investment recommendations.
Frequently Asked Questions – Avenue Therapeutics
1. Can I recover my losses from Avenue Therapeutics?
If your broker recommended Avenue Therapeutics without explaining the risks or performing adequate due diligence, you may be eligible to file a FINRA arbitration claim to seek compensation.
2. What if my broker was with National Securities?
National Securities was involved in Avenue’s earlier offerings and has a long history of regulatory issues. If your broker was affiliated with them, this could strengthen your claim.
3. What happens if Avenue Therapeutics goes bankrupt?
You can still pursue a claim against the brokerage firm, not the company itself. FINRA arbitration claims are typically filed against the financial advisor’s firm, which may be liable for supervisory failures or unsuitable recommendations.
Free Consultation with a Securities Attorney
If you’ve lost money investing in Avenue Therapeutics or other speculative biotech stocks, call The White Law Group at 888-637-5510 for a free consultation. We are a national securities fraud law firm helping investors recover losses through FINRA arbitration.
Visit www.whitesecuritieslaw.com to learn more or to speak with a securities attorney today.
