Kiromic BioPharma, Inc. (OTCQB:KRBP), a biotechnology company specializing in biological products, announced today that it has entered into a material definitive agreement involving the exchange of certain debt securities for equity.
The company, based in Houston, Texas, has reached an agreement with a note holder to exchange $2.4 million in senior secured convertible promissory notes, along with accrued interest, for 3,000 shares of newly designated Series E Convertible Voting Preferred Stock.
This transaction, which took place on Thursday, follows the company's filing of a Certificate of Designation with the Delaware Secretary of State, designating 6,000 shares of its authorized and unissued preferred stock as Series E Convertible Voting Preferred Stock. The newly issued preferred stock carries a 25% annual compounded dividend rate and confers voting rights equivalent to common stock on an as-if-converted basis.
In the event of a company liquidation or similar event, holders of the Series E Preferred Stock will have priority in payment, receiving the greater of a stipulated liquidation preference or the amount they would have received had their shares been converted to common stock immediately prior to such an event. The Series E Preferred Stock is also convertible into common stock based on a conversion price determined by a specified formula.
Kiromic BioPharma has not disclosed the specific identity of the note holder involved in the exchange. This strategic financial move is part of the company's broader efforts to manage its capital structure and obligations.
In other recent news, Kiromic BioPharma's lung cancer treatment, Deltacel™, has been granted Fast Track designation by the U.S. Food and Drug Administration (FDA). This regulatory milestone is aimed at accelerating the development and review of the therapy for patients with metastatic non-small cell lung cancer (NSCLC) who have not responded to standard treatments. Deltacel™ is currently undergoing a Phase 1 clinical trial, referred to as Deltacel-01, which targets stage 4 NSCLC patients.
The company has also secured $2M in convertible note financing, a part of its strategic effort to secure additional capital for its operations. Kiromic BioPharma has undergone significant financial restructuring, converting $7.2 million of its debt into equity and issuing a new senior secured convertible promissory note.
Promising results have been reported from its Deltacel phase 1 clinical trial for the treatment of stage 4 metastatic NSCLC, with one patient experiencing a 6.6% reduction in tumor size two months post-treatment.
InvestingPro Insights
Kiromic BioPharma's recent debt-to-equity swap reflects the company's efforts to manage its financial obligations, which is particularly relevant given its current financial position. According to InvestingPro data, KRBP has a market capitalization of just $2.16 million, indicating its small-cap status. This move to exchange debt for equity aligns with two key InvestingPro Tips: the company "operates with a significant debt burden" and is "quickly burning through cash."
The decision to issue preferred stock with a 25% annual compounded dividend rate is noteworthy, especially considering that KRBP "does not pay a dividend to shareholders" of common stock, as per another InvestingPro Tip. This preference for new equity holders could be seen as an attempt to attract capital in challenging circumstances.
Financial metrics from InvestingPro further illustrate KRBP's situation. The company's adjusted operating income for the last twelve months stands at -$22.34 million, while its EBITDA is -$20.11 million. These figures underscore the company's current unprofitability, which is consistent with the InvestingPro Tip stating that "analysts do not anticipate the company will be profitable this year."
For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips for KRBP, providing a deeper understanding of the company's financial health and market position.
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