The Allarity Therapeutics Inc (NASDAQ: ALLR) stock price soared 120.8% after filing a report with the US Securities and Exchange Commission (SEC) regarding changes to a letter agreement between it and 3i LP, which holds outstanding shares of Series A Convertible Preferred Stock in Allarity.
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The change in the letter agreement was regarding the change in the definition of the conversion price of the preferred stock into common/ordinary shares to refer to the lower of the closing price on the trading date immediately preceding the Conversion Date or the average of the common stock’s closing price for the five trading days before the Conversion Date.
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Investors cheered the change in the definition of the conversion price to the lower value between the two dates, which will ensure that the preferred shares are converted in a manner that does not disadvantage existing ordinary shareholders.
However, while many were celebrating today’s announcement, a closer look at the budget estimates published by the company towards the bottom of the release shows that the firm has an annual budget of over $16.75 million, which it intends to fund via raising additional capital.
There are no guarantees that the company will raise the monies needed to fund its operations for the year. The company could easily find itself in financial distress if it cannot raise the amount needed to keep operating for the next twelve months.
Allarity has a promising pipeline of drugs in the early and mid-clinical trial stages. The company’s Dovinitib drug candidate is a pan-tyrosine kinase inhibitor developed to treat renal cell carcinoma (RCC) as a lead indication, followed by breast cancer, hepatic cell carcinoma, gastrointestinal stromal tumours and endometrial cancer as possible secondary indications.
Stenoparib is another drug candidate being developed by Allarity to treat ovarian cancer and is in stage two clinical trials, unlike Dovinitib, which is in phase 1a/b clinical trials. Lastly, IXEMPRA is a treatment for metastatic breast cancer targeted at the European market in phase 2 trials.
As a value investor, I would like to see Allarity successfully fundraising as soon as possible.
*This is not investment advice.
Allarity Therapeutics (ALLR) stock price chart.
The Allarity Therapeutics (ALLR) stock price soared 120.8% to trade at $0.5604, from Friday’s closing price of $0.2538.
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