Allarity Therapeutics, Inc. (NASDAQ:ALLR) is a clinical-stage biopharmaceutical company focused on developing highly targeted anti-cancer drug candidates. The company's lead drug candidate is the poly-ADP-ribose polymerase (PARP) inhibitor stenoparib, or Stenoparib.

Allarity Therapeutics has faced some recent challenges, including a material breach of its license agreement with Novartis for the drug dovitinib, leading to the termination of that program. However, the company remains focused on advancing its lead candidate Stenoparib through clinical trials.

Business Overview

Allarity Therapeutics is leveraging its proprietary Drug Response Predictor (DRP®) platform to identify patient populations where discontinued drug assets can be revived and developed further. The DRP® technology allows the company to match drug candidates to the specific patient populations most likely to respond to them, increasing the chances of clinical success.

The company's lead drug candidate, Stenoparib, is a PARP inhibitor that is being evaluated for the treatment of various cancer indications. Stenoparib is currently in clinical development, with an ongoing Phase 2 trial in ovarian cancer. Allarity is also exploring the potential of Stenoparib in other cancer types.

In addition to Stenoparib, Allarity previously had two other drug candidates in its pipeline - dovitinib and IXEMPRA. However, the dovitinib program has been terminated due to the license agreement breach with Novartis, and the IXEMPRA program is no longer a focus for the company.

Financials

For the full year 2023, Allarity Therapeutics reported no revenue, a net loss of $11.9 million, and negative operating and free cash flows of $12.7 million each. The company's cash position as of March 31, 2024, was $312,000, which is insufficient to fund its current operations and planned capital expenditures for the next 12 months.

In the first quarter of 2024, Allarity reported a net loss of $3.8 million, compared to a net loss of $3.4 million in the same period of 2023. Research and development expenses increased by $743,000, primarily due to higher manufacturing and supplies costs, research study expenses, and contractor/consultant expenses. General and administrative expenses decreased by $171,000, mainly due to lower insurance, audit, and legal costs.

Liquidity

Allarity Therapeutics' current cash position and negative cash flows raise substantial doubt about the company's ability to continue as a going concern. To address this, the company has taken steps to raise additional capital, including entering into an at-the-market (ATM) equity offering program in March 2024 to sell up to $22 million in common stock.

As of March 31, 2024, the company had sold 6,792 shares of common stock for net proceeds of $40,000 under the ATM program. Subsequent to the quarter end, the company has sold an additional 8,259,150 shares for net proceeds of $15.6 million. While these capital raises have provided some relief, Allarity still does not have sufficient funds to finance its operations and planned capital expenditures for the next 12 months.

Management is actively pursuing additional funding through public equity, private equity, debt financing, collaboration partnerships, or other sources. However, there are no assurances that the company will be successful in raising the necessary capital on commercially favorable terms, or at all. The failure to raise additional capital could have a significant negative impact on Allarity's business, operations, and ability to develop its product candidates.

Stenoparib Clinical Development

Stenoparib, Allarity's lead drug candidate, is a PARP inhibitor being evaluated for the treatment of various cancer indications. The company is currently conducting a Phase 2 clinical trial of Stenoparib in ovarian cancer patients.

In May 2023, Allarity announced an amendment to its exclusive license agreement with Eisai for Stenoparib. The amendment postponed a $850,000 payment due to Eisai until the completion of a $10 million financing, expected by the end of May 2024. This provides the company with additional time and flexibility to secure the necessary funding to advance the Stenoparib program.

Allarity is also exploring the potential of Stenoparib in other cancer types. The company has agreed to make various milestone payments to Eisai upon the successful completion of clinical trials and regulatory approvals for Stenoparib, which could total up to $94 million. Additionally, Allarity will owe Eisai royalties on annual sales of Stenoparib, ranging from 5% to 15% depending on the level of sales.

Nasdaq Delisting Challenges

In early 2024, Allarity Therapeutics faced challenges related to maintaining its Nasdaq listing. The company received notifications from Nasdaq regarding non-compliance with the minimum bid price and equity rules.

However, on March 12, 2024, Nasdaq granted the company's request to continue its listing, subject to the requirement that Allarity demonstrate compliance with the bid price and equity rules by April 24, 2024. The company subsequently regained compliance with the bid price rule and has communicated to Nasdaq its belief that it has also achieved compliance with the equity rules, pending confirmation from Nasdaq.

Navigating Regulatory Challenges

Allarity Therapeutics has also faced regulatory challenges related to its drug candidates. In January 2023, the company received a request from the SEC to produce documents as part of an investigation into the company's submissions, communications, and meetings with the FDA regarding its new drug application (NDA) for dovitinib.

The SEC investigation is ongoing, and the company is cooperating fully. The disclosure of the SEC request also prompted Nasdaq to request additional information from Allarity. While the investigation is still in the fact-finding stage, any potential regulatory issues could have a significant impact on the company's operations and future prospects.

Risks and Challenges

Allarity Therapeutics, like many biotechnology companies, faces a variety of risks and uncertainties that could impact its business and financial performance. These include the risks of failure in preclinical studies and clinical trials, the need to obtain regulatory approvals for its drug candidates, the ability to successfully commercialize its products, dependence on key personnel and collaboration partners, protection of intellectual property, and the ability to secure additional capital to fund operations.

The company's reliance on a single lead drug candidate, Stenoparib, also presents a concentration risk. Any setbacks or delays in the development or commercialization of Stenoparib could have a significant adverse effect on Allarity's overall prospects.

Conclusion

Allarity Therapeutics is a clinical-stage biopharmaceutical company with a promising oncology pipeline, led by its PARP inhibitor candidate Stenoparib. However, the company faces significant challenges, including a material breach of its license agreement with Novartis, regulatory investigations, and a precarious financial position.

To overcome these obstacles, Allarity will need to successfully raise additional capital, continue the clinical development of Stenoparib, and navigate the regulatory landscape. The company's ability to execute on its strategy and deliver value for shareholders will be critical in the coming years.

Investors should closely monitor Allarity's progress in addressing its liquidity concerns, advancing Stenoparib through clinical trials, and resolving any regulatory issues. The company's success in these areas will be key to determining its long-term viability and growth potential in the highly competitive oncology market.