ThumbTack Fund Report 3 – Aftermath Of Avenue Therapeutics (ATXI)

It’s only been 3 weeks since the last report (, but TTF has been owning the markets so numbers have changed rather drastically. Plus I thought I’d share my updated thoughts on ATXI after their complete response letter carnage.

TTF fund cumulative money weighted return since inception in Feb 2020: +39.96%, YTD returns: +40.26%

Total deposits: USD 184,230.93

Current NAV: USD 231,017.94

Quantum gain: USD 46,787.01

MTD returns of +8.92% means that Oct 2020 has been 1 of the best months that I can remember. A +40.26% gain since inception in Feb 2020 also means that the almost -50% drop then is now a distant memory.

It’s interesting to note that that’s what we can expect with a highly concentrated portfolio. Win or lose, make or break, go high or go home kinda portfolio, every move is a high conviction one, with little of the dulling effects of diversification.

Negative cash levels in Sep has now reverted to a positive level, as I took on some cash margin to support my position in MELI.

MELI has since been divested, and cash levels went back into positive territory.

I don’t quite pay much attention to these, but IB puts them in the report. I guess it’s also good to have a bird’s eye view of which sector I’m putting funds to work, but since I’m more of a bottom up stock picker than a top down one, this doesn’t have much of a relevance to my thought process.

LOL what a ride.

From the dark days of -48.47% to the current +39.96%, this is like a typical Hollywood action movie, where the odds are initially stacked heavily against our protagonist… but u just know it’d have a happy ending.

This is what I pay the most attention to actually. Investing is always relative. As long as I can beat my benchmarks over the long run, I won’t do too badly. And these benchmarks are monsters. (Except for STI, that’s just there for the geographic relevance. LOL)


SPY has returned +8.69%

VT has returned +5.64%

STI has returned -19.83%

TTF has returned +39.96%.

Looking at the chart, Sept and Oct have been particularly good months. It’s not just the cumulative returns, but the gradient of the line in the chart. Particularly in Sept, where the blue line continued upwards while indices dipped. In Oct, the blue line continued raging upwards while the other indices rose modestly.

In my last report, TTF’s top 5 general list looked like this:

  1. Broadcom (AVGO)
  2. Bausch Health Companies (BHC)
  3. Frontage Holdings (HK listed)
  4. Mercadolibre Inc (MELI)
  5. Bed Bath & Beyond Inc (BBBY)

Currently, the list looks like this:

  1. Broadcom (AVGO)
  2. GameStop (GME)
  3. Bausch Health Companies (BHC)
  4. Frontage Holdings (HK listed – 1521)
  5. ??????

Having taken profit on MELI and BBBY, I’ve since channeled the funds to building a long position in GME. The list is position weighted, meaning AVGO remains my largest core holding, and that GME has announced it’s arrival in the list by jumping straight up to number 2.

I’ve high conviction in these 4 ideas, and nothing in my continuous due diligence has made me waver. AVGO will just keep chugging along, it’s kinda crazy to think that my average purchase price is ard USD 260 only.

BHC has jumped strongly in the past month, and I continue to hold my positions. There’s a lot a lot of upside from even current levels, and I’m just waiting for the divestment/div in specie of their eyecare segment.

Of the 4 positions, Frontage Holdings is the only 1 still currently in the red. I’m using the opportunity to continue to add though, as I think their next earnings release will provide a surprise to the markets. The company’s balance sheet is rock solid, earnings is poised to rise, FCF is and always has been positive, and management is executing on their expansion plans. The nearest catalyst I can think of would be the next earnings release, but that’s slated to be sometime in late March 2021, so it’s still some time away.

On a different note… effort really does produce results. I say this because my main fund’s performance, albeit still pretty respectable, is nowhere as satisfying as the 5 name concentrated TTF. This is because I’ve basically done absolutely nothing there, concentrating only on TTF.


About 1.5yrs ago, in May 2019, I wrote up an investing thesis on ATXI:

In my last post, just before PDUFA, I’ve updated that I’ve sold out my position completely:

That proven to be an inspired, albeit admittedly lucky, move as the company received a CRL instead of the much awaited FDA approval. It’s been a couple of weeks, and I’ve since had time to update my analysis on the latest developments.

The reasons given for the rejection are:

” The CRL stated that IV tramadol, intended to treat patients in acute pain who require an opioid, is not safe for the intended patient population. Specifically, if a patient requires an analgesic between the first dose of IV tramadol and the onset of analgesia, a rescue analgesic would be needed. The likely choice would be another opioid, which would result in opioid “stacking” and increase the likelihood of opioid-related adverse effects. Other than this potential safety concern, the FDA did not identify a safety signal in Avenue’s clinical development program. In addition, the CRL stated that the FDA requires an adequate terminal sterilization validation prior to NDA approval, which is planned for later this quarter.”

We’d set the terminal sterilization validation requirement aside, since that has more to do with CMC (Chemistry Manufacturing and Controls) and should be relatively easily resolved.

Hence, the main concern that FDA has is that when IV tramadol is administered, BEFORE analgesia kicks in, the clinician may end up having to give another analgesic that acts more rapidly, and this would likely be another opioid and hence, result in the patient taking more than 1 opioids (Tramadol is not exactly a full opioid, but yeah, it “stacks” with other opioids)

In other words, FDA’s main gripes are:

  1. The lag time between administration of IV Tramadol and the onset of analgesia
  2. Because of this delayed onset, there’s a need for another drug which would result in stacking. To paraphrase it, it means IV Tramadol is not suitable as a MONOTHERAPY for the given patient population in ATXI’s submission. Aka more than 1 drug is needed.

WELL, WELL……….. hate to be a smart alec but…. I TOLD YOU SO!

This is my email correspondence with Dr Lucy Lu from April 2019, and in fact, I’ve included that in my initial investing thesis (

Note that beside Dr Lucy Lu, board members Joseph Vazzano and Jaclyn Jaffe from parent company Fortress Biotech were also cc-ed in the correspondence.

Literally, all my concerns brought up, are the exact reasons stated by FDA in the CRL.

In my 1st question, I compared ATXI’s IV Tramadol submission to Recro Pharma’s IV Meloxicam rejection, and questioned the 30min onset of analgesia as a possible cause of concern.

My 2nd question was related to onset of analgesia as well, based on IV Tramadol studies on animal models.

My 3rd question was the suitability of IV Tramadol as a monotherapy in pain management, given these characteristics.

So what next?

Companies tend to be very tight lipped when it comes to announcing what’s in the CRLs, so as to not give away too much. My personal guess is that ATXI’s submitted patient population and indications for IV Tramadol are for those in the moderate – severe pain categories. This means that onset of analgesia is important.

This also means that there are still some levers for ATXI to pull to get this approved. They could run another study with different end points, they could resubmit with different indications, they could do a sub-analysis of the data from the 2 earlier clinical trials etc.

Therein lies the problem. As an investment, this was supposed to bank on Cipla’s buyout offer. But the buyout offer is contingent on a few conditions being met. 1 of which is the timeline. Now that ATXI has received a CRL, they must go through the appeal process and gain approval by April 2021. That’s a mere 6months from now, which would render new clinical trials out of the question if they were to meet this deadline. On top of that, another of the closing condition of the buyout offer includes IV Tramadol being approved for the indications that were submitted i.e. patients with moderate to severe pain. Both these closing conditions now look increasingly unlikely to be fulfilled in it’s current form.

Cipla has 2 choices: 1) Stop throwing good money after bad, and give up, aka let this offer lapse. They have already bought 1/3 of ATXI at a cost of USD6 per share in the 1st stage of the closing. This initial stake cost USD 35million, but would now be worth around half of that (based on the current share price). Still, USD 35mil is really pocket change for a company as big as Cipla, so I’d think this is still a very real possibility.

2) Try to push this through. This would involve extending deadlines, and most probably, accepting a narrower range of indications, certain restrictive wording in the labeling and perhaps, even more funding to support further studies.

To try to make sense of what possibly might happen going forward, I’d list out Recro Pharma’s experience with IV Meloxicam, just as a very loose guidance.

24/05/2018 – 1st Complete Response Letter. FDA’s interpretation of the data differs from Recro Pharma’s.

July 2018 – Dispute resolution meeting with FDA

September 2018 – Company resubmitted IV Meloxicam NDA. Changes in the revised submission include “incorporation of revised language relating to the product label and additional information relating to extractable and leachable items”

24/03/2019 – New PDUFA date

March 2019 – 2nd CRL received. Reasons in this 2nd CRL are given as the delayed onset and duration of IV Meloxicam. “Delayed onset fails to meet the prescriber expectations for IV drugs”. “Regulatory concerns about the role of IV Meloxicam as a monotherapy in acute pain management”

31/10/2019 – FDA suddenly grants approval to company’s appeal of the 2nd CRL, on the condition that company “must provide sufficient evidence of effectiveness and safety to support the NDA”. Company must also “agree upon labeling language”.

November 2019 – Acute care business was spun off from Recro Pharma into a separate entity

Too bad Recro Pharma did not reveal exactly how they managed to appeal the 2nd CRL. Still, we can see that it took 7 months (March 2019 to Oct 2019) before they were successful. This was taking into account that there was no new clinical trials done. Also, it is clear to me that they had to accept narrower indications, and perhaps, even certain language warning of the limitations of IV Meloxicam.

Both the increased timeline and the limited indications are going to be bugbears in closing the Cipla deal for ATXI. It also does not help ATXI’s cause that in the midst of the pandemic, I am almost certain that most of FDA’s resources would be diverted to emergency authorizations of Covid related drugs.

On top of that, there is also 1 key difference: Meloxicam is an NSAID whilst Tramadol is a schedule II, part-opioid drug. With the sensitivities around the opioid crisis, stacking becomes a big issue whilst it is less of an issue with Meloxicam. That is, the problem with Meloxicam lies in the clinician’s expectations of it’s efficacy, which is easier to resolve.

I’ve been asked in a couple of emails, (Which I haven’t really replied adequately cos like I said, I have only just recently completed updating my analysis of ATXI in the light of the recent developments), whether I will be buying back my shares again now, seeing that the share price has absolutely cratered (-68%)

Well, looking at the situation, my answer is an obvious no. I don’t think the shares are investable right now, until more information comes out. At the bare minimum, I’d need to see Cipla come back with continued support. Perhaps extend the timeline, and even then, that’s really weak support. Until that happens, the company could be embroiled in a multi months or even years battle to get approval, and even after approval, the entire thesis of a viable and concrete exit in the form of Cipla’s buyout, would no longer be valid.

I’d keep myself updated on the proceedings of ATXI, if anything, just to gain an insight on the entire ups and downs of the NDA process.

Alright, that’s the end of this post and my thoughts on the developments surrounding ATXI.



  1. Avenue announced today that they will resubmit their NDA in Feb2021 with a revised label. Interestingly, the company left a lot to the imagination by not disclosing what the label change was. I can only assume the label change is enough to break the agreed upon criteria in the Cipla agreement.


    1. Hi Andrew

      I got very lucky here cos I just started a new position in ATXI on the 09th Dec, a mere 8 days ago.
      It’s not a huge position, but the timing is as fortunate as it’d ever get.
      I was postulating that now that ATXI has been hung high and dry, and everyone’s exited and ran far away… the risk reward ratio is favorable again.
      As I was discussing with a reader via email, at this juncture, it’s like dry tinder. Any little flare can create a bon fire.
      My reason for restarting a position was that the Cipla deal would be revised, and that piece of news alone, would send the stock soaring.

      Also, I was expecting ATXI to announce a new set of clinical trials.
      The fact that they are not going to do that, but instead, attempt a resubmission in Feb, means that there’s no new clinical trial.
      This also means that the revised label would very very likely lead to a reduced indication.
      FDA’s rejection is mainly due to the delayed onset of analgesia with resulting stacking of opioids.
      If the label is changed to exclude those with severe pain profile, then it addresses FDA’s main issue.
      The irony is, their dosing regime is spread out over a longer duration. and actually has fewer side effects as compared to what’s used everywhere else in the world.
      But because it’s a smaller dose over a longer period, the onset is slower, hence FDA’s concerns.

      And if the indications are going to be narrowed, then yes, I’d think that would affect the Cipla agreement.
      But the share price has been hit so badly, I think even after the +30% rise tonight, if the Cipla agreement is still on track, even with revised, less lucrative take over terms, it’d still be a very very nice return.

      For now, I’m just basking in my fortunate timing!



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