Kiromic BioPharma, Inc., a Delaware-based biotechnology company specializing in biological products, has entered into a financial agreement involving a secured convertible promissory note, according to a recent SEC filing. On July 3, 2024, the company, operating under the OTC QB Market with the ticker symbol KRBP, issued a 25% Senior Secured Convertible Promissory Note to an accredited investor for a principal amount of $2 million.
The note carries a 25% annual interest rate and is set to mature on July 3, 2025, when both the principal and accrued interest will become due. The investor has the option to convert the note into shares of Kiromic BioPharma's common stock starting September 30, 2024, at a conversion price of 90% of the 5-day volume-weighted average price (VWAP) preceding the conversion notice, subject to a 19.99% beneficial ownership limitation.
In the event of default, including bankruptcy or failure to pay on the maturity date, the interest rate will increase to 27% per annum or the maximum permitted by law, whichever is lower. The note is secured by the company’s fixtures, equipment, and specified intellectual property, with certain exceptions as detailed in the agreement.
This agreement follows Kiromic BioPharma's issuance of other promissory notes totaling $10.8 million, as well as the company's holding of Series C and Series D Convertible Voting Preferred Stock. The issuance of the note was made under the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.
The transaction's details were outlined in the company's Form 8-K filed with the SEC on July 10, 2024, and the agreement took effect on July 3, 2024. This financial move represents a strategic effort by Kiromic BioPharma to secure additional capital for its operations. The information in this article is based on the company's SEC filing.
In other recent news, Kiromic BioPharma has undertaken significant financial restructuring, converting a portion of its debt into equity and issuing a new senior secured convertible promissory note.
The company reclassified $7.2 million in senior secured convertible promissory notes into 8,837.58 shares of Series D Convertible Voting Preferred Stock, alongside the creation of a new 25% senior convertible promissory note. The new note is secured by all of the company's rights, titles, and interests in fixtures, equipment, and specified intellectual property.
Furthermore, 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). Stable disease and favorable safety outcomes were observed 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. These are recent developments in Kiromic's ongoing efforts to develop effective treatments for serious conditions like NSCLC.
InvestingPro Insights
Kiromic BioPharma's recent financial maneuver to secure a convertible promissory note comes at a critical time for the company. According to InvestingPro data, Kiromic BioPharma has a market capitalization of just $3.73 million and is grappling with significant challenges. The company's operating income shows a substantial loss of $20.28 million for the last twelve months as of Q1 2024. Furthermore, the data indicates a negative price-to-earnings (P/E) ratio, which reflects the company's inability to generate net income in the recent period.
InvestingPro Tips suggest that Kiromic BioPharma operates with a significant debt burden and is quickly burning through cash, which may explain the need for the high-interest convertible note. The company also suffers from weak gross profit margins and analysts do not anticipate profitability this year. On a more positive note, there has been a significant return over the last week, although the stock price movements remain quite volatile.
For investors considering Kiromic BioPharma, these insights could be crucial in making an informed decision. For a deeper analysis, there are additional InvestingPro Tips available that could provide further clarity on the company's financial health. To explore these tips and gain a comprehensive understanding of Kiromic BioPharma's potential, use coupon code UK10 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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