Kiromic BioPharma Enters Material Definitive Agreement, Swaps Debt for Equity
Kiromic BioPharma, a biotechnology company based in Houston, Texas, has announced a significant agreement involving the exchange of debt securities for equity. The company has reached a deal with a note holder to swap $2.4 million in senior secured convertible promissory notes for 3,000 shares of newly designated Series E Convertible Voting Preferred Stock.
This transaction, which occurred on Thursday, follows the company's filing of a Certificate of Designation, designating 6,000 shares of 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.
In the event of a liquidation, holders of the Series E Preferred Stock will have priority in payment. The stock is also convertible into common stock based on a specified formula.
Kiromic BioPharma's lung cancer treatment, Deltacel™, has been granted Fast Track designation by the FDA. The company has also secured $2M in convertible note financing and converted $7.2 million of debt into equity.
Analysis and Insights
Kiromic BioPharma's debt-to-equity swap reflects its efforts to manage financial obligations, especially given its small market capitalization of $2.16 million. The decision to issue preferred stock with a 25% dividend rate aligns with the company's unprofitability and cash burn rate.
Financial metrics show a negative adjusted operating income and EBITDA, indicating current unprofitability. Analysts do not expect profitability this year. For a more in-depth analysis, InvestingPro offers additional tips for understanding Kiromic BioPharma's financial health.