Allarity Therapeutics, Inc. (NASDAQ: ALLR) is a clinical-stage pharmaceutical company dedicated to developing personalized cancer treatments using its proprietary, drug-specific patient selection technology, the Drug Response Predictor (DRP®). The company's lead drug candidate, stenoparib, is a dual inhibitor of the poly-ADP-ribose polymerase (PARP) and tankyrase enzymes, positioning it as a potentially differentiated therapy for various cancer indications.
Company History and Milestones
Allarity Therapeutics was founded in September 2004, initially focusing on conducting research and development activities, including drug discovery and preclinical studies. The company has dedicated substantial resources to establishing and maintaining its intellectual property portfolio, manufacturing clinical and research material, hiring personnel, raising capital, and providing general and administrative support for these operations.
Since its inception, Allarity has recorded very limited revenue from collaboration activities or any other sources. The company has primarily funded its operations through convertible notes and the issuance and sale of its ordinary shares. Allarity has consistently incurred net losses each year, with net losses of $10.2 million and $11.9 million for the years ended December 31, 2023 and 2022, respectively. As of September 30, 2024, the company had an accumulated deficit of $111.5 million.
In 2017, Allarity entered into an exclusive license agreement with Eisai Inc. for the global rights to develop and commercialize stenoparib, marking a significant milestone in the company's history. Since then, Allarity has been dedicated to advancing stenoparib through clinical trials, leveraging its DRP® platform to identify the patient populations most likely to benefit from the treatment.
The company faced significant challenges in 2022 and 2023. In 2022, Allarity recognized a $17.6 million impairment charge related to its intangible assets. This was followed by a $9.7 million impairment charge in the third quarter of 2024 after the company halted enrollment in the ongoing Phase 2 trial of stenoparib. Additionally, in 2023, Allarity received a termination notice from Novartis related to a material breach of their license agreement, resulting in all liabilities due to Novartis becoming immediately payable.
Despite these setbacks, Allarity has achieved several important milestones. In 2021, the company completed a reverse merger and uplisting to the Nasdaq Capital Market. It has also made progress in the development of stenoparib, including commencing a Phase 2 clinical trial for the treatment of advanced, recurrent ovarian cancer in 2019. Furthermore, Allarity has established intellectual property protection for its DRP® companion diagnostic technology, which is being used to identify patients most likely to benefit from stenoparib.
In 2024, Allarity strengthened its leadership team with several key appointments, including the addition of Jeremy R. Graff, Ph.D., as President and Chief Development Officer, and Jose Iglesias, M.D., as Consultant Chief Medical Officer. These experienced industry veterans have been brought on to accelerate the clinical development of stenoparib and guide the company's strategic initiatives.
Financial Overview
As of September 30, 2024, Allarity reported a cash balance of $18.5 million, which the company believes will be sufficient to fund its operations and planned capital expenditures into 2026. This cash position represents a significant improvement from the company's previous financial situation, with the strengthening of its balance sheet primarily attributable to the successful completion of an at-the-market (ATM) equity offering program.
For the nine months ended September 30, 2024, Allarity reported a net loss of $17.1 million, compared to a net loss of $10.2 million for the same period in 2023. The increase in net loss was largely driven by a $9.7 million impairment charge related to the company's intangible assets, as well as higher research and development expenses associated with the advancement of the stenoparib program.
In the most recent quarter, Allarity reported no revenue and a net loss of $12.2 million. Research and development expenses for the first nine months of 2024 decreased slightly to $4.3 million from $4.5 million in the same period of 2023. This decrease was mainly due to lower manufacturing and supply costs, as well as reductions in personnel-related expenses and contractor/consultant fees, partially offset by increased research study costs.
General and administrative expenses also decreased from $7.8 million in the first nine months of 2023 to $6.0 million in the same period of 2024. The decrease was primarily attributable to lower financing costs, insurance expenses, and professional fees, partially offset by an increase in public reporting company costs.
Allarity's financial performance has been heavily influenced by its investment in the development of stenoparib, which has been the primary focus of the company's research and development efforts. As the company continues to progress stenoparib through clinical trials, it expects to continue incurring significant expenses, which may result in ongoing net losses in the near term.
Liquidity
Allarity's liquidity position has improved significantly following the successful completion of its ATM equity offering program. The company's cash balance of $18.5 million as of September 30, 2024, provides a runway into 2026, allowing the company to focus on advancing its clinical programs without immediate financial pressure.
The company's current ratio and quick ratio both stand at 2.75, indicating a healthy short-term liquidity position. These ratios suggest that Allarity has sufficient current assets to cover its short-term liabilities.
However, it's important to note that Allarity may still need to raise additional capital in the future to fund its ongoing operations and research and development activities, particularly if the development of stenoparib takes longer or requires more resources than anticipated.
Stenoparib: Allarity's Lead Drug Candidate
Stenoparib is Allarity's lead drug candidate, a differentiated dual inhibitor of the PARP and tankyrase enzymes. The company is currently evaluating stenoparib in a Phase 2 clinical trial for the treatment of advanced, recurrent ovarian cancer, with the goal of advancing the drug candidate and its companion DRP® diagnostic toward regulatory approval.
In its latest update, Allarity reported that two patients in the ongoing Phase 2 trial have now exceeded 17 months on stenoparib treatment, highlighting the potential for the drug to provide durable clinical benefit in a heavily pre-treated patient population. This extended treatment duration is particularly encouraging, as ovarian cancer patients with advanced, recurrent disease typically have a poor prognosis and limited treatment options.
Allarity's DRP® technology plays a crucial role in the development of stenoparib, as it allows the company to identify the patient populations most likely to respond to the treatment. By pre-screening patients using the DRP® companion diagnostic, Allarity aims to maximize the clinical benefit of stenoparib and optimize its chances of success in regulatory approval.
In 2024, Allarity announced plans to expand its Phase 2 clinical trial of stenoparib in ovarian cancer, capitalizing on the promising data from the ongoing study. The company intends to refine the DRP® patient selection criteria and optimize the dose of stenoparib to further enhance its efficacy in this patient population.
Under the license agreement with Eisai, Allarity is required to make various milestone payments upon the achievement of certain development and regulatory milestones, as well as royalty payments based on annual sales of stenoparib. The agreement also provides Eisai with an option to reacquire the rights to stenoparib during a specific timeframe following the successful completion of a Phase 2 clinical trial.
Regulatory and Compliance Matters
Allarity has faced several regulatory and compliance challenges throughout its history. In 2024, the company received a Wells Notice from the Securities and Exchange Commission (SEC) relating to disclosures about meetings with the FDA regarding the Dovitinib New Drug Application (NDA) that was submitted in 2021. The SEC Staff has made a preliminary determination to recommend an enforcement action alleging certain securities law violations. Allarity is cooperating with the SEC in this matter.
Additionally, in 2024, the company received a letter from Nasdaq indicating that it had not complied with the exchange's minimum bid price requirement, which could have resulted in the delisting of Allarity's shares.
However, the company was able to regain compliance with the Nasdaq listing requirements by obtaining shareholder approval for a reverse stock split, which was implemented in September 2024. This decisive action allowed Allarity to maintain its Nasdaq listing, a critical milestone for the company as it continues to advance its clinical programs and seek regulatory approvals.
Outlook and Risks
As Allarity Therapeutics moves forward, the company's success will be largely dependent on the continued development and potential regulatory approval of stenoparib. The company's ability to effectively utilize its DRP® technology to identify the optimal patient populations for the drug will be a key factor in its clinical and commercial success.
Risks facing Allarity include the inherent challenges of drug development, such as the potential for clinical trial failures, regulatory setbacks, and competition from other PARP inhibitors and cancer therapies. Additionally, the company's reliance on a single drug candidate, stenoparib, means that any setbacks or delays in its development could have a significant impact on Allarity's overall performance.
Furthermore, Allarity's financial position, while improved, remains fragile, and the company may need to raise additional capital in the future to fund its ongoing operations and research and development activities. The company's ability to successfully navigate these financial and operational challenges will be crucial to its long-term prospects.
Conclusion
Allarity Therapeutics is a clinical-stage pharmaceutical company dedicated to developing personalized cancer treatments using its proprietary DRP® technology. The company's lead drug candidate, stenoparib, is a promising dual PARP/tankyrase inhibitor that has shown encouraging results in a Phase 2 clinical trial for advanced, recurrent ovarian cancer.
Despite facing several challenges throughout its history, including regulatory and compliance issues, Allarity has strengthened its leadership team and financial position in recent years. As the company continues to advance stenoparib and its DRP® companion diagnostic toward regulatory approval, investors will closely monitor the drug's clinical progress and the company's ability to navigate the complex landscape of drug development and commercialization.