Acura Pharmaceuticals, Inc. (OTC Market: ACUR), a pharmaceutical company specializing in the development of abuse-deterrent drugs, has entered into several amended agreements to extend financial and development deadlines, according to a recent 8-K filing with the Securities and Exchange Commission.
On Monday, Acura announced that it had received loans totaling $200,000 from Abuse Deterrent Pharma, LLC (AD Pharma) on October 11 and October 28, 2024. These loans add to the existing debt under the November 10, 2022, Amended Consolidated and Restated Secured Promissory Note, bringing the principal balance to $6,719,279 with approximately $463,000 in accrued interest as of October 31, 2024. The loans carry a 5.25% interest rate, which can increase to 7.5% in the event of overdue payments.
The company has disclosed that without additional financing by mid-November 2024, it may have to significantly reduce operations or seek bankruptcy protection, potentially leading to a total loss of shareholder value.
In a separate agreement, Acura extended the deadline for the Food and Drug Administration's (FDA) acceptance of a New Drug Application (NDA) for LTX-03, a product candidate utilizing Acura's LIMITx technology, from October 31, 2024, to February 28, 2025. AD Pharma can terminate this agreement at any time or take ownership of LTX-03's intellectual property if the NDA is not accepted by the FDA by the extended deadline.
Additionally, the maturity date of the aforementioned Amended Note has been changed from October 31, 2024, to February 28, 2025, with all principal and interest due at that time.
Acura also reported an amendment to a warrant agreement, originally issued to John Schutte and later assigned to AD Pharma, extending the expiration date from October 31, 2024, to February 28, 2025. The warrant allows AD Pharma to purchase 10 million shares of Acura’s common stock.
As of October 31, 2024, AD Pharma directly owns approximately 65% of Acura's outstanding common stock, not including the warrant to purchase additional shares. Mr. Schutte, the managing partner and investor in AD Pharma, directly owns about 13% of Acura's outstanding common stock.
In other recent news, Acura Pharmaceuticals has secured additional financing to sustain its operations. The company entered into a new financial agreement with Abuse Deterrent Pharma (AD Pharma), receiving a loan of $150,000. This adds to previous loans of $100,000 and $125,000, bringing the total principal balance owed to AD Pharma to approximately $6.5 million, with accrued interest of around $433,000. The loan carries an interest rate of 5.25%, with a maturity date set for October 31, 2024.
Simultaneously, Acura Pharmaceuticals has secured extensions on loans and agreements vital to its operations. The company received loans totaling $275,000 from AD Pharma in early June 2024, and two new loan agreements totaling $250,000 in July 2024. Without additional financing, the company may need to scale back or terminate operations, potentially leading to a complete loss of shareholder value.
AD Pharma, controlled by Mr. Schutte, holds approximately 65% of Acura's outstanding common stock. These are recent developments as the company actively seeks additional financing to maintain its operations and product development.
InvestingPro Insights
Acura Pharmaceuticals' recent financial maneuvers and deadline extensions reflect a company navigating significant challenges. InvestingPro data provides additional context to the company's current situation. Despite a staggering 1-year price total return of 149,900%, Acura's market capitalization stands at a mere $0.13 million, indicating extreme volatility and potentially speculative trading.
The company's negative P/E ratio of -0.06 aligns with the financial struggles outlined in the article, particularly the need for additional financing to avoid potential bankruptcy. This metric underscores the urgency of Acura's efforts to secure FDA acceptance for its LTX-03 product.
An InvestingPro Tip notes that Acura Pharmaceuticals is expected to be unprofitable this year, which corroborates the company's precarious financial position described in the article. This insight, along with 10 additional tips available on InvestingPro, could provide investors with a more comprehensive understanding of Acura's prospects and risks.
The next earnings date is set for November 11, 2024, which will be a critical juncture for investors to reassess the company's financial health and progress on its development milestones. Given the extended deadlines and the company's warning about potential operational reductions, this upcoming earnings report will likely be pivotal for Acura's future.
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