Business Context and Reporting Period
This Form 8-K Current Report was filed by Aikido Pharma Inc. (not Dominari Holdings Inc.) on January 29, 2021, with a signature date of February 3, 2021. The filing discloses the entry into a material definitive agreement involving the purchase of a convertible promissory note from a third-party biotechnology company.
Key Financial Metrics and Transaction Details
- Transaction Type: Purchase of an 8% Convertible Promissory Note.
- Counterparty: Convergent Therapeutics, Inc.
- Principal Amount: $2,000,000.
- Purchase Price: $2,000,000 (paid in full).
- Interest Rate: 8% per annum, payable upon conversion or maturity.
- Maturity Date: After January 28, 2023, upon demand of a majority of note holders.
- Financial Impact: The filing does not provide updated consolidated revenue, profit, cash flow, or liquidity metrics for Aikido Pharma Inc. beyond the specific $2 million cash outflow for this transaction.
Material Changes and Contract Terms
The filing details the terms of the Convertible Note, which include:
- Conversion Trigger: Automatic conversion into securities offered in a "Qualified Financing" (anticipated to be preferred equity) at a rate equal to the lesser of 80% of the price paid by other investors or a "Capped Conversion Ratio."
- Change of Control: In the event of a change of control at Convergent, Aikido Pharma has the right to accelerate payment obligations or convert into equity at the Capped Conversion Ratio.
- Events of Default: Standard provisions allowing majority note holders to accelerate payment obligations.
Outlook, Management Commentary, and Risks
Management Commentary on Counterparty: The filing provides extensive background on Convergent Therapeutics, Inc., highlighting its focus on next-generation radiopharmaceutical therapy for prostate cancer. Key points include:
- Technology: Convergent holds exclusive rights to technology involving peptide receptor radionuclide therapy (PRRT) targeting prostate-specific membrane antigen (PSMA).
- Key Drug: CONV 01-α, a monoclonal antibody conjugated with 225 Ac (alpha particle emitter).
- Clinical Trials:
- Phase 1a/2a Single Ascending Dose Trial results expected in Q2 2021.
- Phase 1b/2a trial for multiple ascending doses began in August 2020.
- Dual therapy trials (combining CONV 01-α and PSMA I&T) anticipated to begin in February 2021.
Risks and Contingencies: The investment is contingent on Convergent's ability to secure a Qualified Financing or achieve a change of control to realize equity value. The filing notes that the description of the agreement is a summary and is qualified by the full text of the attached exhibits.
Investor Verification Checklist
- Verify the current cash position of Aikido Pharma Inc. to assess the impact of the $2 million cash outflow.
- Review the full text of the Securities Purchase Agreement (Exhibit 10.1) and Convertible Promissory Note (Exhibit 10.2) for specific definitions of "Qualified Financing" and "Capped Conversion Ratio."
- Monitor the progress of Convergent Therapeutics' clinical trials, specifically the Q2 2021 data release and the February 2021 dual therapy trial initiation.
- Confirm whether Convergent has secured additional financing or a change of control event that would trigger the note's conversion or acceleration.