NKGen Biotech secures $5 million convertible loan

NKGen Biotech, Inc. (NASDAQ:NKGN), a micro-cap biotech company with a market value of $9 million, has entered into a material definitive agreement securing a convertible loan for up to $5 million with AlpineBrook Capital GP I Limited. This financial move, disclosed in a recent 8-K filing with the SEC, aims to bolster the company’s financial position, which InvestingPro analysis shows has been challenging with a weak financial health score and short-term obligations exceeding liquid assets.

On Monday, NKGen Biotech, alongside its subsidiary NKGen Operating Biotech, Inc., agreed to the terms of the loan, which includes an initial $1 million advance. The loan, bearing an annual interest rate of 12%, will be used exclusively to repay the company’s existing senior secured debt with East West Bank. The company’s stock, currently trading at $0.20, has experienced significant volatility, declining 92% over the past year.

In conjunction with the loan, NKGen Biotech issued a convertible promissory note to the lender. This note, which matures within a year of the full loan amount being disbursed or upon other specified conditions, allows the lender to convert the outstanding principal and accrued interest into NKGen Biotech’s common stock at a conversion price of $0.25 per share.

Furthermore, as part of the agreement, NKGen Biotech has already issued 333,333 shares of common stock and a warrant for an equal number of shares to the lender. The warrant, exercisable at $0.25 per share, is valid for five years. Additional shares and warrants will be provided to the lender corresponding to one-third of the amount of any future drawdowns from the loan.

This strategic financial arrangement reflects NKGen Biotech’s efforts to restructure its capital and secure funding for its operations. The transaction has been carried out in accordance with applicable securities laws, and the shares and warrants issued are exempt from registration under the Securities Act of 1933.

The details of the loan agreement, promissory note, and warrants are available in the exhibits attached to the SEC filing. This financial development is based on the company’s latest SEC filing and represents a significant step in NKGen Biotech’s financial management.

In other recent news, NKGen Biotech has transitioned to trading on the OTC Markets following its delisting from the Nasdaq Global Market due to non-compliance with the market value requirement. Despite this change, the company remains committed to its scientific endeavors, particularly in developing NK cell therapies for Alzheimer’s disease, with its investigational drug troculeucel receiving Fast Track designation from the FDA. This designation could expedite the drug’s development and review process, potentially accelerating its path to market. NKGen Biotech is also conducting a Phase 2a trial for troculeucel, with results expected by the end of 2025.

Additionally, NKGen Biotech has amended a forward purchase agreement and is moving forward with acquiring a controlling interest in NKMAX Co. Ltd., a biotech firm in South Korea. The company secured a $4.5 million convertible loan agreement with AlpineBrook Capital GP I Limited, which includes a convertible promissory note and warrants. This financial arrangement is intended to support NKGen Biotech’s ongoing operations and strategic initiatives.

Furthermore, NKGen Biotech recently regained compliance with Nasdaq’s listing standards by meeting the minimum market value of publicly held shares requirement. The company is actively focusing on completing enrollment in a Phase 2a Alzheimer’s clinical trial and aims to resume trading on Nasdaq once it meets the necessary listing requirements. These developments reflect NKGen Biotech’s ongoing efforts to advance its scientific and financial objectives in the biotech industry.

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