HOUSTON, TX – Kiromic BioPharma, Inc. (OTCQB:KRBP), a company specializing in biological products, announced on Monday that it has entered into an agreement to convert a portion of its debt into equity and issue a new senior secured convertible promissory note.
The company entered into an Exchange Agreement on June 21, 2024, with a note holder to reclassify $7.2 million in senior secured convertible promissory notes, including accrued interest totaling $1,637,580, into 8,837.58 shares of Series D Convertible Voting Preferred Stock with an aggregate stated value of $8,837,580.
In conjunction with the conversion, Kiromic BioPharma also agreed to reclassify the right to convert accrued interest on previously converted notes into a new 25% senior convertible promissory note. This new non-cash transaction created a note with a principal amount of $1,239,703, bearing interest at 25% per annum and maturing on June 20, 2025. The note is convertible into common stock at an initial price of $2.50 per share, subject to a beneficial ownership limitation of 19.99%.
The new note is secured by all of the company's rights, titles, and interests in fixtures, equipment, and specified intellectual property, barring certain exceptions. This obligation is senior to all subordinated debt and equity securities of the company as of June 21, 2024, but the company may incur or guarantee additional indebtedness that could be senior, pari passu, or junior to the obligations under the new note.
Additionally, on June 24, 2024, Kiromic BioPharma filed a Certificate of Designation with the Delaware Secretary of State designating 20,000 shares of preferred stock as Series D Preferred Stock. This stock accrues dividends at an annual rate of 25%, compounded annually, and has preferential rights in the event of a company liquidation. The Series D Preferred Stock also has voting rights and is convertible into common stock at a set conversion price.
Following these transactions, the note holder holds five promissory notes with a total value of $10.8 million, 14,000 shares of Series C Convertible Voting Preferred Stock, and 16,837.58 shares of the Series D Preferred Stock.
This financial restructuring comes as Kiromic BioPharma, incorporated in Delaware and headquartered in Houston, continues to develop its portfolio of biological products. The information in this article is based on a press release statement from the company filed with the SEC.
In other recent news, Kiromic BioPharma has reported promising results from its Deltacel phase 1 clinical trial for the treatment of stage 4 metastatic non-small cell lung cancer (NSCLC). The therapy, which includes two intravenous infusions of Deltacel combined with low-dose radiation, has demonstrated stable disease and favorable safety outcomes in the first cohort of patients. Notably, one patient experienced a 6.6% reduction in tumor size two months post-treatment.
Based on these findings, Kiromic plans to apply for FDA Fast Track Designation by the end of the second quarter, which could expedite the review process of the drug. The Beverly Hills Cancer Center, where the trial is being conducted, has also expressed optimism regarding the initial safety and efficacy observed.
These developments follow the company's announcement of preliminary results indicating tumor stabilization in a patient with NSCLC. The trial's Safety Monitoring Committee has recommended maintaining the initial cell dose level for the next patient cohort, influenced by the observed safety, tolerability, and signs of anti-tumor activity of Deltacel.
These are recent developments in Kiromic's ongoing efforts to develop effective treatments for serious conditions like NSCLC. The company continues to leverage its proprietary artificial intelligence engine in developing cell therapies focusing on immuno-oncology.
InvestingPro Insights
In light of Kiromic BioPharma's recent financial restructuring, it's important to consider the company's current financial health and stock performance. According to InvestingPro data, Kiromic BioPharma has a market capitalization of just $3.16 million, reflecting its relatively small size in the biopharma industry. The company is grappling with an operating income deficit of -$20.28 million as of the last twelve months up to Q1 2024, indicative of the challenges it faces in achieving profitability.
InvestingPro Tips highlight that Kiromic BioPharma operates with a significant debt burden and is quickly burning through cash, which aligns with the company's need to convert debt into equity to improve its balance sheet. The stock has also experienced considerable volatility, with a dramatic six-month price total return of 332.69%, yet it has also seen a substantial one-month price total return decline of -29.69%.
For investors considering Kiromic BioPharma's stock, these insights suggest caution due to the company's financial instability and stock volatility. Those seeking a deeper analysis can find additional InvestingPro Tips for Kiromic BioPharma at https://www.investing.com/pro/KRBP, with a total of 14 tips available. For a more comprehensive investment evaluation, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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