UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ANNUAL REPORT PURSUANT TO SECTION
13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
☐TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-41160
ALLARITY THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
24 School Street, 2nd Floor, Boston, MA 02108
(Address of principal executive offices) (Zip Code)
(401)426-4664
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section 12(b)
of the Act:
Title of Each Class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.0001 per share ALLR The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of June 30, 2022, the last business day of
the registrant’s most recently completed second fiscal quarter, the registrant’s aggregate market value of its common stock
held by non-affiliates as of such date was $10,592,706.
As of March 8, 2023, the registrant had 30,000,000
shares of common stock outstanding.
Documents incorporated by reference: None.
Table
of Contents
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS ii
NOTE
PART I 1
ITEM 1. BUSINESS 4
ITEM 1A. RISK FACTORS 97
ITEM 1B. UNRESOLVED STAFF COMMENTS 156
ITEM 2. PROPERTIES 156
ITEM 3. LEGAL PROCEEDINGS 156
ITEM 4. MINE SAFETY DISCLOSURES 156
PART II
ITEM 6. [RESERVED] 158
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 172
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 172
ITEM 9A CONTROLS AND PROCEDURES 174
ITEM 9B. OTHER INFORMATION 175
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENTS INSPECTIONS 175
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 176
ITEM 11. EXECUTIVE COMPENSATION 186
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 199
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 200
FINANCIAL STATEMENTS F-1
When used herein, unless the context requires
otherwise, references to the “Company,” “we,” “our” and “us” refer to Allarity Therapeutics,
Inc., a Delaware corporation.
i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form
10-K (the “Annual Report”) contains forward-looking statements that involve substantial risks and uncertainties. We make such
forward-looking statements pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act, Section 21E of
the Securities Exchange Act of 1934, as amended, and other federal securities laws. All statements, other than statements of historical
fact, contained in this Annual Report. including statements regarding our strategy, future preclinical studies and clinical trials, future
financial position, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,”
“believe,” “contemplate,” “could,” “estimate,” “expect,” “intend,”
“seek,” “may,” “might,” “plan,” “potential,” “predict,” “project,”
“target,” “aim,” “should,” ‘will” “would,” or the negative of these words
or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain
these words. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject
to risks and uncertainties. If one or more of these risk factors or uncertainties materialize, or if any underlying assumptions prove
incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed
or implied by these forward-looking statements. Furthermore, we operate in a competitive and rapidly changing environment. New risks and
uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact
on the forward-looking statements contained in this Annual Report. Given these uncertainties, you should not place undue reliance on these
forward-looking statements. Forward-looking statements relating to Allarity in this Annual Report include, but are not limited to, statements
about:
● our ability to satisfy the Nasdaq continued listing requirements;
● our plans to develop and commercialize its drug candidates;
● our ability to generate any revenue or become profitable;
● the unknown consequences of a request for documents from the SEC;
● the market price of our common stock has been and may continue to be volatile;
ii
● our ability to retain key employees, consultants and advisors;
● the impact of governmental laws and regulations;
● any future currency exchange and interest rates; and
These forward-looking statements
are based on information available as of the date of this report, and current expectations, forecasts and assumptions, and involve a number
of risks and uncertainties. We do not assume any obligation to update any forward-looking statements, Accordingly, forward-looking statements
should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking
statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or
otherwise, except as may be required under applicable securities laws.
iii
PART I
ITEM 1.
BUSINESS
Overview
We are a clinical-stage, precision
medicine pharmaceutical company actively advancing a pipeline of in-licensed oncology therapeutics for patients with difficult-to-treat
cancers. Our clinical program includes three anti-cancer assets in mid-stage clinical development and one anti-cancer asset in early-stage
clinical development. Our programs and partnerships leverage our proprietary, highly accurate Drug Response Predictor (DRP®)
technology to refine patient selection and improve clinical outcomes. Our DRP® technology has been broadly validated across
an extensive array of therapies and tumor types with a high degree of accuracy for matching the right patient to the right drug. By identifying
those patients who will and who will not respond, the DRP® companion diagnostics have the potential to transform cancer
therapeutic development across many indications by increasing clinical success rates with trials involving a fewer number of patients
and improve patient outcomes by matching them to the right drug.
Our pipeline currently consists
of three mid-stage clinical candidates for cancer and one anti-cancer asset in early-stage clinical development. We are focused on the
clinical development of three priority programs: dovitinib in combination with stenoparib for the second-line or later treatment of metastatic
ovarian cancer, stenoparib as a monotherapy for ovarian cancer, and IXEMPRA® as a monotherapy for metastatic breast cancer.
In addition, Allarity is supporting the development of one additional clinical asset through business development activities. Each Allarity
pipeline program is being co-developed with a drug specific DRP® companion diagnostic to select and treat patients most
likely to benefit from treatment.
While we have not yet successfully
received regulatory or marketing approval for any of our therapeutic candidates or companion diagnostics, and while we believe that our
approach has the potential to reduce the cost and time of drug development through the identification and selection of patient populations
more likely to respond to therapy, our strategy involves risks and uncertainties that differ from other biotechnology companies that focus
solely on new therapeutic candidates that do not have a history of failed clinical development. By utilizing our DRP® platform
to generate a drug-specific companion diagnostic for each of our therapeutic candidates, if approved by the FDA, we believe our therapeutic
candidates have the potential to advance the goal of personalized medicine by selecting the patients most likely to benefit from each
of our therapeutic candidates and avoid the treatment of non-responder patients. All of our therapeutic candidates are clinical stage
assets and the FDA has not yet approved any of our therapeutic candidates or any of our DRP® companion diagnostics. As
used in this report, statements regarding the use of our proprietary DRP® companion diagnostics or our proprietary DRP®
platform or our observations that a therapeutic candidate may have anti-cancer or anti-tumor activity or is observed to be well tolerated
in a patient population should not be construed to mean that we have resolved all issues of safety and/or efficacy for any of our therapeutic
candidates or DRP® companion diagnostic. Issues of safety and efficacy for any therapeutic candidate or companion diagnostic
may only be determined by the U.S. FDA or other applicable regulatory authorities in jurisdictions outside the United States.
Our clinical and commercial
development team is advancing our pipeline of targeted oncology therapeutic candidates, all of which have previously succeeded at least
through Phase 1 clinical trials demonstrating that the therapeutic candidate is well tolerated. Our three priority assets, dovitinib,
stenoparib, and IXEMPRA® (ixabepilone) are all former drug candidates of large pharmaceutical companies.
Our most advanced therapeutic
candidate, dovitinib, is a selective inhibitor of several classes of tyrosine kinases, including FGFR and VEGFR, and was formerly developed
by Novartis Pharmaceuticals through Phase 3 clinical trials in numerous indications. We submitted an NDA with the FDA on December 21,
2021, for the third line treatment of metastatic renal cell carcinoma (mRCC or kidney cancer) in patients selected by our Dovitinib-DRP®
companion diagnostic. Prior to submission of the NDA, we submitted a Pre-Market Approval (PMA) application to the FDA for approval of
our dovitinib-specific DRP® companion diagnostic for use to select and treat patients likely to respond to dovitinib. On
February 15, 2022, we received Refusal to File (RTF) letters for both our dovitinib NDA and our DRP®-Dovitinib companion
diagnostic PMA. The FDA has asserted that neither our NDA or PMA meets the regulatory requirements to warrant a complete agency review.
The primary grounds of rejection asserted by the FDA relates to our use of prior Phase 3 clinical trial data, generated by Novartis in
a “superiority” endpoint study against sorafenib (Bayer), to support a “non-inferiority” endpoint and superiority
in connection with the DRP®-Dovitinib companion diagnostic. Based upon the reasons given in the RTF letters and a subsequent
Type C meeting with the FDA on May 31, 2022, we anticipate that the FDA will require a prospective Phase 3 clinical trial as well as additional
dose optimization studies before regulatory approval of Dovitinib as a monotherapy and its companion diagnostic Dovitinib-DRP for the
treatment of third-line mRCC can be obtained. While we have decided that the costs, risks and potential benefits of conducting these studies
for dovitinib as a monotherapy for mRCC are no longer the best path toward commercial success, we continue to evaluate other potential
Phase 1b/2 clinical trials for dovitinib combined with other approved drugs in the mRCC space and in other indications. For example, subject
to funding we anticipate commencing a stenoparib in combination with dovitinib Phase 1b/2 clinical trial for second-line or later treatment
of metastatic ovarian cancer and/or other solid tumors. Our decision to advance dovitinib as a combination therapy and not as a monotherapy
is based on our belief that both the science and the market for oncology therapies has shifted towards combination therapies and away
from monotherapies for multiple indications of cancer. We further believe that our DRP®-Dovitinib companion diagnostic
is tumor agnostic and our retrospective analysis of the clinical data generated in the Novartis clinical studies for mRCC will also support
a companion diagnostic for dovitinib in second-line or later treatment of metastatic ovarian cancer, as well as other indications.
1
Our second priority therapeutic
candidate is stenoparib (formerly E7449), a novel inhibitor of the key DNA damage repair enzyme poly-ADP-ribose polymerase (PARP), which
also has an observed inhibitory action against Tankyrases, another important group of DNA damage repair enzymes. Stenoparib was formerly
developed by Eisai, Inc. (Eisai) through Phase 1 clinical trials, and we are currently advancing a Phase 2 clinical trial of this therapeutic
candidate for the treatment of ovarian cancer at trial sites in the U.S. and Europe together with its stenoparib-specific DRP®
companion diagnostic, for which the FDA has previously approved an Investigational Device Exemption (IDE) application. In addition, subject
to funding, we anticipate commencing a stenoparib in combination with dovitinib Phase 1b/2 Clinical Trial for second-line or later treatment
of metastatic ovarian cancer and/or other solid tumors.
Our third priority therapeutic
candidate is IXEMPRA® (ixabepilone), a selective microtubule inhibitor, which has been shown to interfere with cancer cell
division, leading to cell death. IXEMPRA® (ixabepilone) was formerly developed and brought to market by Bristol-Myers Squibb,
is currently marketed and sold in the U.S. by R-PHARM US LLC, for the treatment of metastatic breast cancer treated with two or more prior
chemotherapies. We are currently advancing IXEMPRA®, together with its drug-specific DRP® companion diagnostic,
in a Phase 2 European clinical trial for the same indication, with the goal of eventually submitting an application for Marketing Authorization
(MA) with the European Medicine Agency (EMA) to market IXEMPRA®, together with its drug-specific DRP® companion
diagnostic, in the European market.
We have in-licensed the intellectual
property rights to develop, use and market our two most advanced therapeutic candidates, dovitinib and stenoparib. Consequently, we must
perform all of the obligations under these license agreements, including the payment of substantial development milestones payments and
royalty payments on future sales in the event we receive marketing approval for dovitinib or stenoparib in the future. If we fail to perform
our obligations under our license agreements, we may lose the intellectual property rights to these therapeutic candidates which will
have a material adverse effect on our business.
Our focused approach to address
major unmet needs in oncology leverages our management’s expertise in discovery, medicinal chemistry, manufacturing, clinical development,
and commercialization. As a result, we have created substantial intellectual property around the composition of matter for our new chemical
entities. The foundations of our approach include:
2
The following chart summarizes
our therapeutic candidate pipeline:
Implications of Being an Emerging Growth Company
and a Smaller Reporting Company
We are an “emerging
growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we intend to take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth
companies” including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from
the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take
advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting
standards.
Additionally, we are a “smaller
reporting company” as defined in Item 10(f)(1) of Regulation S-K. Even after we no longer qualify as an emerging growth company,
we may still qualify as a “smaller reporting company,” which would allow us to continue to take advantage of many of the same
exemptions from disclosure requirements, including presenting only the two most recent fiscal years of audited financial statements and
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We may continue to be a
smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual
revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates
is less than $700 million. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our
financial statements with other public companies difficult or impossible.
3
Corporate Information
Our former parent, Allarity
Therapeutics A/S, was founded in Denmark in 2004 by our chief scientific officer, Steen Knudsen, Ph.D., and our Director and Senior Vice
President of Investor Relations, Thomas Jensen, both of whom were formerly academic researchers at the Technical University of Denmark
working to advance novel bioinformatic and diagnostic approaches to improving cancer patient response to therapeutics. On May 20, 2021,
we entered a Plan of Reorganization and Asset Purchase Agreement (the “Recapitalization Share Exchange”), between us, Allarity
Acquisition Subsidiary, our wholly owned Delaware subsidiary (“Acquisition Sub”), and Allarity Therapeutics A/S, an Aktieselskab
organized under the laws of Denmark. Pursuant to the terms of the Recapitalization Share Exchange, our Acquisition Sub acquired substantially
all of the assets and liabilities of Allarity Therapeutics A/S in exchange for shares of our common stock on December 20, 2021, and our
common stock began trading on the Nasdaq Global Market on that same day. See section titled “BUSINESS — Recapitalization
Share Exchange, Asset Acquisition and Financing.”
Our principal executive offices
are located at 24 School Street, 2nd Floor, Boston, MA 02108 and our telephone number is (401) 426-4664. Our corporate website
address is www.allarity.com. Information contained on or accessible through our website is not a part of this report, and the inclusion
of our website address in this report is an inactive textual reference only.
Allarity and its subsidiaries
own or have rights to trademarks, trade names and service marks that they use in connection with the operation of their business. In addition,
their names, logos and website names and addresses are their trademarks or service marks. Other trademarks, trade names and service marks
appearing in this report are the property of their respective owners. Solely for convenience, in some cases, the trademarks, trade names
and service marks referred to in this report are listed without the applicable ®, TM and SM symbols,
but they will assert, to the fullest extent under applicable law, their rights to these trademarks, trade names and service marks.
BUSINESS
This Annual Report contains
estimates, projections and other information concerning our industry, our business and the markets for our therapeutic candidates, including
data regarding the estimated size of such markets and the incidence of certain medical conditions. We obtained the industry, market and
similar data set forth in this Annual Report from our internal estimates and research and from academic and industry research, publications,
surveys and studies conducted by third parties, including governmental agencies. In some cases, we do not expressly refer to the sources
from which this data is derived. Information that is based on estimates, forecasts, projections, market research or similar methodologies
is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are
assumed in this information. While we believe our internal research is reliable, such research has not been verified by any third party.
Overview
We are a clinical stage pharmaceutical
company targeting some of the greatest unmet needs in oncology by developing differentiated and novel therapeutic candidates together
with our proprietary DRP® companion diagnostics in a precision medicine approach. Our business strategy includes a focus
on leveraging our proprietary DRP® companion diagnostics platform to streamline the drug development process and to identify
patients that will benefit from therapeutic candidates that other biotechnology or pharmaceutical companies have abandoned or shelved
after initiating clinical trials under an IND application filed with the FDA, including candidates that have failed to achieve statistical
significance on the original endpoints established in their clinical trials. We use our proprietary DRP® companion diagnostics
platform to advance therapeutic candidates by targeting and evaluating patient sub-populations having gene signatures, determined by our
DRP® companion diagnostics platform, that will potentially correlate with drug efficacy and patient response to treatment.
While we have not yet successfully received regulatory or marketing approval for any of our therapeutic candidates or companion diagnostics,
and while we believe that our approach has the potential to reduce the cost and time of drug development through the identification and
selection of patient populations more likely to respond to therapy, our strategy involves risks and uncertainties that differ from other
biotechnology companies that focus solely on new therapeutic candidates that do not have a history of failed clinical development. By
utilizing our DRP® platform to generate a drug-specific companion diagnostic for each of our therapeutic candidates, if
approved by the FDA, we believe our therapeutic candidates have the potential to advance the goal of personalized medicine by selecting
the patients most likely to benefit from each of our therapeutic candidates and avoid the treatment of non-responder patients. All of
our therapeutic candidates are clinical stage assets and the FDA has not yet approved any of our therapeutic candidates or any of our
DRP® companion diagnostics. As used in this report, statements regarding the use of our proprietary DRP®
companion diagnostics or our proprietary DRP® platform or our observations that a therapeutic candidate may have anti-cancer
or anti-tumor activity or is observed to be well tolerated in a patient population should not be construed to mean that we have resolved
all issues of safety and/or efficacy for any of our therapeutic candidates or DRP® companion diagnostic. Issues of safety
and efficacy for any therapeutic candidate or companion diagnostic may only be determined by the U.S. FDA or other applicable regulatory
authorities in jurisdictions outside the United States.
4
Our Corporate History
We were founded in Denmark
in 2004 by our chief scientific officer, Steen Knudsen, Ph.D., and our Director and Senior Vice President of Investor Relations, Thomas
Jensen, both of whom were formerly academic researchers at the Technical University of Denmark working to advance novel bioinformatic
and diagnostic approaches to improving cancer patient response to therapeutics. On May 20, 2021, we entered a Plan of Reorganization and
Asset Purchase Agreement (the “Recapitalization Share Exchange”), between us, Allarity Acquisition Subsidiary, our wholly
owned Delaware subsidiary (“Acquisition Sub”), and Allarity Therapeutics A/S, an Aktieselskab organized under the laws of
Denmark. Pursuant to the terms of the Recapitalization Share Exchange, our Acquisition Sub acquired substantially all of the assets and
liabilities of Allarity Therapeutics A/S in exchange for shares of our common stock on December 20, 2021, and our common stock began trading
on Nasdaq on that same day. See “BUSINESS - Recapitalization Share Exchange, Asset Acquisition and Financing.” Concurrently,
on December 21, 2021, we completed a private placement of our Series A Preferred Stock and a warrant to purchase additional shares of
our common stock for an aggregate purchase price of $20.0 million.
Our Business
Our DRP® companion
diagnostic platform has been retrospectively validated by us using retrospective observational studies in 35 clinical trials that
were conducted or sponsored by other companies. The FDA considers a retrospective observational study to be one in which the study identifies
the population and determines the exposure/treatment from historical data (i.e. data generated prior to the initiation of the study) with
the variables and outcomes of interest determined at the time the study is designed. See, Framework for FDA’s Real-World Evidence
Program, page 6 (December 2018), https://www.fda.gov/media/120060/download. The FDA has accepted our retrospective validation
in support of two Investigational Device Exemption (“IDE”) applications to conduct clinical trials, one with respect to LiPlaCis®
and one with respect to stenoparib. However, while retrospective studies guide our clinical development of our companion diagnostics,
prospective clinical trials may be required in order to receive a PMA from the FDA.
We submitted a New Drug Application
(NDA) to the U.S. Food and Drug Administration (FDA) for our therapeutic candidate, dovitinib, a second-generation “pan”-tyrosine
kinase inhibitor (TKI), on December 21, 2021, for the third line treatment of mRCC in patients selected by our Dovitinib-DRP®
companion diagnostic. Subsequently the FDA determined that our NDA was not sufficiently complete to permit a substantive review and therefore
or NDA was not accepted for filing. The primary grounds of rejection asserted by the FDA relates to our use of prior Phase 3 clinical
trial data, generated by Novartis in a “superiority” endpoint study against sorafenib (Bayer), to support a “non-inferiority”
endpoint in connection with the DRP® Dovitinib companion diagnostic. We anticipate that the FDA will require a prospective
Phase 3 clinical trial as well as additional dosage studies before regulatory approval of Dovitinib as a monotherapy and its companion
diagnostic Dovitinib-DRP can be obtained. While we have decided that the costs, risks and potential benefits of conducting these studies
for dovitinib as a monotherapy for mRCC are no longer the best path toward commercial success, we continue to evaluate other potential
Phase 1b/2 clinical trials for dovitinib combined with other approved drugs in the mRCC space and in other indications. For example, subject
to funding we anticipate commencing a stenoparib in combination with dovitinib Phase 1b/2 clinical trial for second-line or later treatment
of metastatic ovarian cancer and/or other solid tumors. Our decision to advance dovitinib as a combination therapy and not as a monotherapy
is based on our belief that both the science and the market for oncology therapies has shifted towards combination therapies and away
from monotherapies for multiple indications of cancer. We further believe that our DRP®-Dovitinib companion diagnostic
is tumor agnostic and our retrospective analysis of the clinical data generated in the Novartis clinical studies for mRCC will also support
a companion diagnostic for dovitinib in second-line or later treatment of metastatic ovarian cancer, as well as other indications.
While we have suffered delays
due to the COVID-19 pandemic, we continue to expand patient enrollment in our ongoing Phase 2 clinical trials for our two other priority
programs, stenoparib, a novel inhibitor of the key DNA damage repair enzyme poly-ADP-ribose polymerase (PARP), and IXEMPRA®
(ixabepilone), a selective microtubule inhibitor. We also intend to opportunistically acquire other promising oncology assets, which have
undergone prior clinical trials by other pharmaceutical companies with clinical data that helps us evaluate whether these candidates will
be well tolerated in the tested patient population, and in some cases, have observed anti-cancer or anti-tumor activity that would support
additional clinical trials using our DRP® platform.
5
Our clinical and commercial
development team is advancing our pipeline of targeted oncology therapeutic candidates, all of which have previously succeeded at least
through Phase 1 clinical demonstrating that the therapeutic candidate is well tolerated. Our three priority assets, dovitinib, stenoparib,
and IXEMPRA® (ixabepilone) are all former drug candidates of large pharmaceutical companies.
Our most advanced therapeutic
candidate, dovitinib, is a selective inhibitor of several classes of tyrosine kinases, including FGFR and VEGFR, and was formerly developed
by Novartis Pharmaceuticals through Phase 3 clinical trials in numerous indications. As mentioned above, we submitted an NDA with the
FDA on December 21, 2021, for the third line treatment of mRCC in patients selected by our Dovitinib-DRP® companion diagnostic.
Prior to submission of the NDA, we submitted a Pre-Market Approval (PMA) application to the FDA for approval of our dovitinib-specific
DRP® companion diagnostic for use to select and treat patients likely to respond to dovitinib. On February 15, 2022, we
received RTF letters for both our dovitinib NDA and our DRP®-Dovitinib companion diagnostic PMA. The FDA has asserted that
neither our NDA or PMA meets the regulatory requirements to warrant a complete agency review. The primary grounds of rejection asserted
by the FDA relates to our use of prior Phase 3 clinical trial data, generated by Novartis in a “superiority” endpoint study
against sorafenib (Bayer), to support a “non-inferiority” endpoint and superiority in connection with the DRP®-Dovitinib
companion diagnostic. We anticipate that it will be necessary to conduct a new prospective Phase 3 clinical trial, as well as additional
dosing studies, to gain approval of dovitinib in the U.S. as a monotherapy for mRCC. While we have decided that the costs, risks and potential
benefits of conducting these studies for dovitinib as a monotherapy for mRCC are no longer the best path toward commercial success, we
continue to evaluate other potential Phase 1b/2 clinical trials for dovitinib combined with other approved drugs in the mRCC space and
in other indications. For example, subject to funding we anticipate commencing a stenoparib in combination with dovitinib Phase 1b/2 clinical
trial for second-line or later treatment of metastatic ovarian cancer and/or other solid tumors. Our decision to advance dovitinib as
a combination therapy and not as a monotherapy is based on our belief that both the science and the market for oncology therapies has
shifted towards combination therapies and away from monotherapies for multiple indications of cancer. We further believe that our DRP®-Dovitinib
companion diagnostic is tumor agnostic and our retrospective analysis of the clinical data generated in the Novartis clinical studies
for mRCC will also support a companion diagnostic for dovitinib in second-line or later treatment of metastatic ovarian cancer, as well
as other indications.
Our second priority therapeutic
candidate is stenoparib (formerly E7449), a novel inhibitor of the key DNA damage repair enzyme poly-ADP-ribose polymerase (PARP), which
also has an observed inhibitory action against Tankyrases, another important group of DNA damage repair enzymes. Stenoparib was formerly
developed by Eisai, Inc. (Eisai) through Phase 1 clinical trials, and we are currently advancing a Phase 2 clinical trial of this therapeutic
candidate for the treatment of ovarian cancer at trial sites in the U.S. and Europe) together with its stenoparib-specific DRP®
companion diagnostic, for which the FDA has previously approved an Investigational Device Exemption (IDE) application. As mentioned above,
subject to funding we anticipate commencing a stenoparib in combination with dovitinib Phase 1b/2 clinical trial for second-line or later
treatment of metastatic ovarian cancer and/or other solid tumors.
Our third priority therapeutic
candidate is IXEMPRA® (ixabepilone), a selective microtubule inhibitor, which has been shown to interfere with cancer cell
division, leading to cell death. IXEMPRA® (ixabepilone) was formerly developed and brought to market by Bristol-Myers Squibb,
is currently marketed and sold in the U.S. by R-PHARM US LLC, for the treatment of metastatic breast cancer treated with two or more prior
chemotherapies. We are currently advancing IXEMPRA®, together with its drug-specific DRP® companion diagnostic,
in a Phase 2 European clinical trial for the same indication, with the goal of eventually submitting an application for Marketing Authorization
(MA) with the European Medicine Agency (EMA) to market IXEMPRA®, together with its drug-specific DRP® companion
diagnostic, in the European market.
We have in-licensed the intellectual
property rights to develop, use and market our two lead therapeutic candidates, dovitinib and stenoparib. Consequently, we must perform
all of the obligations under these license agreements, including the payment of substantial development milestones payments and royalty
payments on future sales in the event we receive marketing approval for dovitinib or stenoparib in the future. If we fail to perform our
obligations under our license agreements, we may lose the intellectual property rights to these therapeutic candidates which will have
a material adverse effect on our business.
6
Our focused approach to address
major unmet needs in oncology leverages our management’s expertise in discovery, medicinal chemistry, manufacturing, clinical development,
and commercialization. As a result, we have created substantial intellectual property around the composition of matter for our new chemical
entities. The foundations of our approach include:
7
The following chart summarizes
our therapeutic candidate pipeline:
Recapitalization Share Exchange, Asset Acquisition and Financing
We were previously known as
Oncology Venture A/S and changed our name to Allarity Therapeutics A/S on October 7, 2020. On April 6, 2021, we incorporated Allarity
Therapeutics, Inc., a Delaware corporation, for the purposes of undertaking a recapitalization share exchange, a private placement of
our preferred stock with an institutional investor (the “PIPE Financing”), and migrating the trading in our shares from the
Nasdaq First North Growth Market: Stockholm to Nasdaq in the U.S. On May 20, 2021, we entered into a Plan of Reorganization and Asset
Purchase Agreement (the “Recapitalization Share Exchange”), which was amended and restated on September 23, 2021, between
us, Allarity Acquisition Subsidiary, our wholly owned Delaware subsidiary (“Acquisition Sub”), and Allarity Therapeutics A/S,
an Aktieselskab organized under the laws of Denmark (“Allarity Therapeutics A/S, or Allarity A/S”), subject to the
approval of the Recapitalization Share Exchange at an Extraordinary General Meeting (the “EGM”) of the shareholders of Allarity
A/S. The shareholders of Allarity A/S approved the Recapitalization Share Exchange at the EGM on November 22, 2021. On December 17, 2021
and in connection with the Recapitalization Share Exchange, we entered into the Asset Purchase Agreement with our Acquisition Sub and
Allarity A/S, pursuant to which Allarity A/S agreed to sell, and our Acquisition Sub agreed to purchase, all of Allarity A/S’ assets
and certain specified liabilities in connection with Allarity A/S’ Business (as defined in the Asset Purchase Agreement), for an
aggregate purchase price of 8,075,824 shares of our common stock, plus the assumption of the specified liabilities.
On December 20, 2021, we consummated
the transactions contemplated in the Asset Purchase Agreement, pursuant to which our Acquisition Sub acquired substantially all of the
assets and assumed substantially all of the liabilities of Allarity A/S. In connection with the closing, our Acquisition Sub acquired
substantially all of the assets and liabilities of Allarity A/S in exchange for shares of our common stock issued pursuant to a Registration
Statement on Form S-4 (SEC File No. 333-258968), which was declared effective on November 5, 2021. Upon the closing of the Recapitalization
Share Exchange, all of the shareholders of Allarity A/S became our shareholders, owning substantially the same percentage ownership in
us as they owned in Allarity A/S. All of the business previously owned by Allarity A/S is owned and conducted by us through our Acquisition
Sub.
Because we were formed as
a “business combination related shell company” as defined in SEC Rule 405 for the purposes of undertaking our Recapitalization
Share Exchange, Allarity Therapeutics A/S, our former parent who became our predecessor upon consummation of the Recapitalization Share
Exchange, was deemed to be the accounting acquirer in the Recapitalization Share Exchange. While we are the legal acquirer of Allarity
Therapeutics A/S in the Recapitalization Share Exchange, because Allarity Therapeutics A/S is deemed to be the accounting acquirer, the
historical consolidated financial statements of Allarity Therapeutics A/S became our historical consolidated financial statements upon
the consummation of the Recapitalization Share Exchange.
8
The Private Placement (PIPE Financing)
Concurrently with the execution
of the Recapitalization Share Exchange on May 20, 2021, we entered into a Securities Purchase Agreement (“SPA”) and related
agreements with an institutional investor (the “Investor”) wherein we agreed to sell, and the Investor agreed to purchase,
20,000 shares of our Series A Preferred Stock and a warrant to purchase additional shares of our common stock (the “PIPE Warrant”)
for an aggregate purchase price of $20 million with a closing conditioned upon the consummation of our Recapitalization Share Exchange
and a listing of our common stock on Nasdaq. Simultaneously with the execution of the SPA, we also entered into a Registration Rights
Agreement (“RRA”) with the Investor wherein we agreed to register a number of shares of our common stock equal to the maximum
number of shares of our common stock that could be issued upon conversion of the Series A Preferred Stock using a conversion price equal
to 20% of $80,000,000 divided by the number of shares of common stock then outstanding (the “Floor Price”) price plus 125%
of the shares of common stock issuable upon exercise of the PIPE Warrant, or a maximum of 12,618,590 shares of our common stock. Such
shares were registered for resale on a Registration Statement on Form S-1 originally filed with the SEC on September 13, 2021 (SEC File
No. 333-259484), which was declared effective on December 20, 2021. Under the terms of the RRA, if we fail to maintain the effectiveness
of the registration statement beyond defined allowable grace periods set forth in the RRA, we will incur certain registration delay payments
equal to 2% of the Investor’s investment upon our failure to maintain the effectiveness of the registration statement and every
30 days thereafter. Failure to maintain the effectiveness of the registration statement also constitutes a “triggering event”
under the Certificate of Designations for the Series A Preferred Stock that would result in the accrual and payment of a dividend and
provide the Investor the right to have its remaining Series A Preferred Stock redeemed for a premium of a minimum of 125% of the Conversion
Amount of the Series A Preferred Stock, as more specifically described below.
Simultaneously with the closing
of its Recapitalization Share Exchange, we closed on the PIPE Investment pursuant to the SPA. On December 20, 2021, we issued 20,000 shares
of Series A Preferred Stock at $1,000 per share and a common stock purchase warrant to purchase 2,018,958 shares of common stock at an
initial exercise price of $9.9061 to the Investor for an aggregate purchase price of $20 million. Each share of Series A Preferred Stock
has a right to convert into shares of our common stock at an initial fixed conversion price of $9.9061. However, if (i) the price of our
shares of common stock trade below $9.9061 (a “Price Failure”) for a specified period of time; or (ii) in the event that the
sum of (x) the aggregate daily dollar trading volume (as reported on Bloomberg) of our common stock on Nasdaq during the 10 trading day
period ending on the trading day immediately preceding such date of determination, divided by (y) 10, is less than $1,500,000 (a “Volume
Maximum Failure”), each share of Series A Preferred Stock is entitled to convert at a price equal to 90% of the sum of the two lowest
VWAPs during the ten (10) trading day period immediately preceding delivery divided by two (the “90% Conversion Price”), but
not less than the Floor Price, or, at the time of such Price Failure or Volume Maximum Failure, the sum of the average daily U.S. Dollar
volume for our common stock during the 10 days previous to conversion divided by 10 is less than $2,000,000 (a “Volume Alternate
Failure”), then each share of Series A Preferred Stock is entitled to convert at the lower of the fixed conversion price or a price
equal to 80% of the sum of the two lowest VWAPs during the 10 trading day period immediately preceding delivery divided by two (the “80%
Conversion Price”), but not less than the Floor Price (such 90% Conversion Price or 80% Conversion Price, as the case may be, the
“Alternate Conversion Price”). If certain defined “Triggering Events” defined in the Certificate of Designations
occur, such as a breach of the Registration Rights Agreement, suspension of trading, or our failure to convert the Series A Preferred
Stock into common stock when a conversion right is exercised, failure to issue our common stock when the PIPE Warrant is exercised, failure
to declare and pay to any holder any dividend on any dividend date, certain defaults on our debts or contractual obligations, or upon
a “bankruptcy triggering event” (as defined in the Certificate of Designations), then we may be required to pay a dividend
that is added to the stated value on the Series A Preferred Stock in the amount of 18% per annum, but paid quarterly in cash, so long
as the triggering event is continuing, or to redeem the Series A Preferred Stock for cash in an amount of a minimum of 125% of the Conversion
Amount (as defined in the Certificate of Designations) of the Series A Preferred Stock or 125% of the Conversion Amount of the Series
A Preferred Stock would be entitled to convert into our common stock at the Alternate Conversion Price. In the event that we experience
a “Change of Control” (as defined in the Certificate of Designations) we may also be required to redeem the Series A Preferred
Stock for cash at a minimum of 125% of their Conversion Amount. In addition, if thirty days after our common stock commences trading on
Nasdaq the sum of the average daily dollar volume for the 10 days previous to conversion divided by 10 is less than $2,500,000, then the
Series A Preferred Stock shall be entitled to a one-time dividend equal to an 8% increase in the stated value of the Series A Preferred
Stock, or an $80 increase per share in stated value, resulting in a stated value of $1,080 per share of Series A Preferred Stock. This
dividend was paid during the first quarter of 2022. The Certificate of Designations of Series A Convertible Preferred Stock of Allarity
Therapeutics, Inc. was filed as Exhibit 3.4 to the Company’s Registration Statement on Form S-1, as amended, filed with the SEC
on September 13, 2021.
On May 4, 2022, the Company
and the Investor entered into a Forbearance Agreement and Waiver, dated April 27, 2022, wherein the Investor confirmed that no Triggering
Event as defined under the Certificate of Designations has occurred prior to April 27, 2022, that a Triggering Event under Section 5(a)(ii)
will and has occurred on April 29, 2022, and that in consideration for the Registration Delay Payments the Company is obligated to pay
under the RRA, and additional amounts the Company is obligated to pay under the Certificate of Designations and the Investor’s legal
fees incurred in the preparation of the Forbearance Agreement and Waiver in the aggregate of $538,823 paid upon execution of the Forbearance
Agreement and Waiver, and so long as the Company pays the Registration Delay Payments that become due and payable under the RRA after
the execution of the Forbearance Agreement and Waiver, the Investor has agreed to forbear exercising any rights or remedies that it may
have under the Certificate of Designations that arises as a result of a Triggering Event under Section 5(a)(ii) of the Certificate of
Designations and Section 4(c)(ii) of the PIPE Warrant until the earlier to occur of (i) the date immediately prior to the date of occurrence
of a Bankruptcy Triggering Event, (ii) the date of occurrence of any other Triggering Event under Section 5(a) of the Certificate of Designations
(excluding any Triggering Event arising solely as a result of Section 5(a)(ii) of the Certificate of Designations and Section 4(c)(ii)
of the PIPE Warrant), (iii) the time of any breach by the Company under the Forbearance Agreement and Waiver, (iv) the Resale Availability
Date as defined therein and (v) June 4, 2022, which was subsequently extended to June 20, 2022 (such period, the “Forbearance Period”).
Provided that the Company is not in breach of its obligations under Forbearance Agreement and Waiver, effective as of the Trading Day
immediately following the Resale Availability Date, the Investor agrees to waive any rights or remedies that it may have under the Certificate
of Designations that arises as a result of a Triggering Event under Section 5(a) of the Certificate of Designations and Section 4(c)(ii)
of the PIPE Warrant that may have arisen prior to the date of the Forbearance Agreement and Waiver. The Resale Availability Date was achieved
on June 6, 2022, resulting in the Investor waiving any rights or remedies that it may have under the Certificate of Designations that
arises as a result of a Triggering Event under Section 5(a) of the Certificate of Designations and Section 4(c)(ii) of the PIPE Warrant
that may have arisen prior to the date of the Forbearance Agreement and Waiver.
9
On June 6, 2022, we entered
into that certain First Amendment to the Forbearance Agreement and Waiver with 3i, LP (the “Amendment”) to extend the forbearance
period date under subsection 5 of Section 2 of the Forbearance Agreement and Waiver dated April 27, 2022 (the “Original Agreement”)
from June 4, 2022, to June 20, 2022. In addition, the parties agreed that the forbearance period of June 20, 2022 may also be extended
for an additional fifteen (15) days to July 5, 2022, provided that, on June 20, 2022 the Company will remove the restrictive legend on
441,005 shares of common stock of the Company issued in connection with the conversion of certain shares of Series A Preferred Stock (“Conversion
Shares”) by 3i, LP pursuant to the conversion notice dated May 2, 2022, and 3i, LP is able to sell the Conversion Shares free
of restrictions (including volume restrictions) pursuant to SEC Rule 144(b)(1)(i).
On
December 9, 2022, the Company and 3i, LP entered into a letter agreement which provided that pursuant to Section 8(g) of the Certificate
of Designations for the Series A Preferred Stock, the parties agreed that the Conversion Price (as defined in such Certificate of Designations)
was modified to mean the lower of: (i) the Closing Sale Price (as defined in the Certificate of Designations) on the trading date immediately
preceding the Conversion Date (as defined in the Certificate of Designations) and (ii) the average Closing Sale Price of the common stock
for the five trading days immediately preceding the Conversion Date, for the Trading Days (as defined in the Certificate of Designations)
through and until the Company and 3i agree to terminate that definition.
Bridge Loan
On
November 22, 2022, the Company entered into a Secured Note Purchase Agreement with 3i, LP (the “Secured Note Purchase Agreement”)
for a bridge loan to extend the Company’s cash runaway beyond December 31, 2022, in order to provide the Company with more time
to complete the process of amending its Certificate of Incorporation to increase it authorized share capital and proposed reverse stock
split to facilitate additional capital investments (the “Bridge Loan”). Under the Secured Note Purchase Agreement, the Company
has authorized the sale and issuance of three 3i Promissory Notes, with the first note in an aggregate principal amount of $350,000 to
be issued at closing (which was received in November 2022); the second note in the principal amount of $1,666,640 to be issued at closing
and which represents the payment of $1,666,640 due to 3i, LP in Alternative Conversion Floor Amounts, as defined in the Certificate of
Designations, that began to accrue on July 14, 2022; and the third note in an aggregate principal amount of $650,000 with respect to a
new loan to be funded upon the Company filing a registration statement with SEC in connection with a registered offering. As of December
31, 2022, all of the notes have been issued and are outstanding. Each 3i Promissory Note matures on January 1, 2024, carries an interest
rate of 5% per annum, and is secured by all of the Company’s assets pursuant to the Security Agreement. In addition, 3i, LP may
exchange the 3i Promissory Notes for the Company’s common stock, or other equity security, at an exchange price equal to the lowest
price per share of the equity security sold to other purchasers, rounded down to the nearest whole share, if the Company concludes a future
equity financing prior to the maturity date or other repayment of the 3i Promissory Notes. In addition, each 3i Promissory Note and interest
earned thereon may be redeemed by the Company at its option or the holder may demand redemption if the Company obtains gross proceeds
of at least $5 million in a financing in an amount of up to 35% of the gross proceeds of the financing.
Amendment to the Certificate of Designation of Series A Preferred
Stock
On November 22, 2022, the
Company amended Section 12 of the Certificate of Designation of Series A Preferred Stock to provide for voting rights. Subject to a 9.99%
beneficial ownership limitation, the holders of Series A Preferred Stock were granted the right to vote on all matters presented to the
stockholders for approval together with the shares of common stock, voting together as a single class, on an “as converted”
basis using the “Conversion Price” (initially $9.9061 per share before any adjustment) (rounded down to the nearest whole
number and using the record date for determining the stockholders of the Company eligible to vote on such matters), except as required
by law (including without limitation, the DGCL) or as otherwise expressly provided in the Company’s Certificate of Incorporation
or the Certificate of Designations of Series A Preferred Stock. The voting rights described above expired on February 28, 2023.
Modification to Conversion Price of Series
A Preferred Stock
On
December 9, 2022, the Company and 3i, LP, the holder of outstanding shares of Series A Preferred Stock, entered into a letter agreement
which provided that pursuant to Section 8(g) of the Certificate of Designations, the parties agreed that the Conversion Price (as defined
in such Certificate of Designations) was modified to mean the lower of: (i) the Closing Sale Price (as defined in the Certificate of Designations)
on the trading date immediately preceding the Conversion Date (as defined in the Certificate of Designations) and (ii) the average Closing
Sale Price of the common stock for the five trading days immediately preceding the Conversion Date, for the Trading Days (as defined in
the Certificate of Designations) through and inclusive of January 19, 2023.On January 23, 2023, the Company and 3i, LP amended
the Letter Agreement to provide the term Conversion Price will be in effect until terminated by the Company and 3i, LP.
Establishment of Series B Preferred Stock
On November 22, 2022, the
Company’s Board of Directors established the Series B Preferred Stock, par value $0.0001 per share (“Series B Preferred Stock”).
Each share of Series B Preferred Stock has 400 votes and is subject to certain redemption rights and voting limitations. See description
in exhibit titled “Description of Capital Stock – Series B Preferred Stock.”
10
Issuance of Series B Preferred Stock Dividend
Effective December 5, 2022,
the Company issued a stock dividend to be distributed as follows to stockholders of record as of close of business on December 5, 2022:
(i) 0.016 shares of Series B Preferred Stock for each outstanding share of common stock; and (ii) 1.744 shares of Series B Preferred Stock
for each outstanding share of Series A Preferred Stock. An aggregate of 190,786 shares of Series B Preferred Stock were issued as a stock
dividend
Annual Stockholder Meeting and Redemption of
Series B Preferred Stock
On February 3, 2023, we held
our previously adjourned annual meeting of stockholders (the “Annual Meeting”). Nine proposals were submitted to our stockholders
for a vote at the Annual Meeting including a proposal to increase the number of authorized shares and a proposal to effect a reverse stock
split. Upon conclusion of the Annual Meeting, all of the 190,786 shares of Series B Preferred Stock were automatically redeemed, with
the holders of the Series B Preferred Stock only having a right to receive the purchase price for the redemption, which was $0.01 per
share of Series B Preferred Stock. In addition, the proposals to increase the number of authorized shares and to effect a reverse stock
split did not pass by the requisite shareholder vote at the Annual Meeting. In light of our financing needs and our obligations to 3i,
L.P., as holder of the Series A Preferred Stock and PIPE Warrant, we conducted a private placement offering pursuant to which we issued
50,000 shares of Series C Preferred Stock.
Establishment of Series C Preferred Stock and
Sale of Series C Preferred Stock
On February 24, 2023, the
Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Redeemable Preferred Stock (the
“Series C COD”) with the Delaware Secretary of State designating 50,000 shares of its authorized and unissued preferred stock
as Series C Preferred Stock with a stated value of $27.00 per share. On February 28, 2023, the Company filed a Certificate of Amendment
to the Series C COD (the “COD Amendment”) to clarify the terms of conversion price and floor price based on definitions provided
in the Series C COD (the COD Amendment, together with the Series C COD, the “COD”). Each share of Series B Preferred Stock
has 620 votes and is subject to certain redemption rights and voting limitations. See description in exhibit titled “Description
of Capital Stock - Series C Preferred Stock.”
On February 28, 2023, we entered
into a Securities Purchase Agreement (the “SPA”) with 3i, L.P. for the purchase and sale of 50,000 shares of Series C Convertible
Redeemable Preferred Stock, par value of $0.0001 per share of Series C Preferred Stock at a purchase price of $24.00 per share, for a
subscription receivable in the aggregate amount equal to the total purchase price of $1.2 million (the “Series C Offering”).
The Shares are convertible into shares of the Company’s common stock, subject to the terms of the COD. The conversion price for
the Series C Preferred Stock is initially equal the lower of: (i) $0.182, which is the official closing price of the Common Stock on the
Nasdaq Global Market (as reflected on Nasdaq.com) on the Trading Day (as defined in the COD) immediately preceding the Original Issuance
Date (as defined in the COD); and (ii) the lower of: (x) the official closing price of the Common Stock on the Nasdaq Global Market (as
reflected on Nasdaq.com) on the Trading Day immediately preceding the Conversion Date or such other date of determination; and (y) the
average of the official closing prices of the Common Stock on the Nasdaq Global Market (as reflected on Nasdaq.com) for the five (5) Trading
Days immediately preceding the Conversion Date (as defined in the COD) or such other date of determination, subject to adjustment herein
(the “Conversion Price”), with the Conversion Price being no less than $0.0370 (the “Floor Price”). In the event
that the Conversion Price on a Conversion Date would have been less than the applicable Floor Price if not for the immediately preceding
sentence, then on any such Conversion Date the Company will pay the Holder an amount in cash, to be delivered by wire transfer out of
funds legally and immediately available therefor pursuant to wire instructions delivered to the Company by the Holder in writing, equal