Allarity Therapeutics has received notice from the Securities and Exchange Commission that an enforcement action is pending regarding FDA meetings the biotech had surrounding the new drug application for cancer therapy dovitinib.
The company said in a regulatory filing dated July 19 that a 'Wells notice' has been received from the SEC, which is a letter from the agency sent at the conclusion of an investigation that warns that enforcement action will be brought. According to Allarity, the letter stated that SEC staff has recommended that the agency file an enforcement action that would allege violations of federal securities laws.
Allarity said that the notice involves actions that were conducted prior to fiscal year 2022. The company also said that three former officers have received similar notices from the agency as well, all regarding the same conduct. Allarity is continuing to cooperate with the SEC and “maintains that its actions were appropriate,” according to the regulatory filing.
The drug in question is dovitinib, which Allarity attempted to gain approval for in metastatic renal cell carcinoma. An application for the drug was submitted to the FDA in December 2021. Two months later the FDA responded with a refusal to file letter meaning the agency would not review the application because significant deficiencies were identified.
Allarity met with the agency about the refusal to file a letter hoping to convince regulators to reverse their decision. But the FDA held fast saying that, under its Project Optimus guidelines, the company would need to conduct a new dosing study for the drug before launching any future phase 3 trials that would allow for the submission of another application.
An additional trial would have significantly delayed late-stage clinical development, increasing cost time and market risk for advancing the drug to be used as a monotherapy. And so, Allarity’s board shut down development of dovitinib and shifted its focus to combination therapies.
One of the combinations Allarity evaluated was dovitinib along with its PARP inhibitor stenoparib, which the biotech considered as a treatment for metastatic ovarian cancer. However, earlier this year Allarity ditched the plan to go all in on combination therapies and moved to focus solely on stenoparib.
Based on Friday's filing, it's not clear exactly what part of the dovitinib saga has triggered the SEC to take action.
The small-molecule, pan-tyrosine kinase inhibitor was obtained from Novartis in 2018. The Swiss pharma has since rescinded the rights to the cancer drug after Allarity failed to keep up with payments as required. Earlier this year, Novartis notified the biotech that the license would be terminated based on material breach for lack of financial payment. The financial terms were never disclosed.
Now it seems that Allarity’s conduct surrounding the refusal to file meetings with the FDA will continue to drag on the biotech’s future. The biotech first heard of the SEC's investigation in January, When a request was received to produce documents related to submissions communications and meetings with the FDA around the new drug application for dovitinib.
Allarity has also been struggling to find consistent leadership. CEO James Cullem was fired from the company in December 2023, accusing the board of directors of “acts and omissions … that I consider directly injurious to the company, its shareholders and its creditors.” The board dismissed Cullem’s claims.
Cullem had been in place since June 2022 when he took over from Steve Carchedi. Allarity is now helmed by board member Thomas Jensen.
In a separate disclosure issued Monday, Allarity touted a “significantly improved” financial situation, including a strong cash balance of $20 million as of July 19. The cash puts the company's runway into 2026 with its current burn rate. Allarity also announced the pausing of an at-the-market offering of its shares.
Other efforts to shore up the financial situation include consolidating the company's common stock, eliminating variable priced convertible securities, streamlining operations and cutting costs and focusing on stenoparib. Allarity is also proposing a reverse stock split to regain compliance with Nasdaq requirements. Allarity's shares are currently listed at 16 cents.