Note 6 - Convertible Promissory Note Due to Novartis |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Convertible Promissory Note [Text Block] |
6. Convertible promissory note due to Novartis
On April 12, 2022, Allarity Denmark re-issued a Convertible Promissory Note (the “Novartis Promissory Note”) to Novartis Pharma AG, a company organized under the laws of Switzerland (“Novartis,” and together with Allarity Therapeutics Europe ApS (“Allarity Europe”), the “License Parties”) in the principal amount of $1.0 million. The Novartis Promissory Note was re-issued pursuant to an amendment of the license agreement, with an effective date of March 30, 2022 (the “First Amendment”), entered into by and between the License Parties, which amended the License Agreement dated April 6, 2018 (the “Original Agreement”) previously entered into by the License Parties relating to the Compound (as defined in the Original Agreement). The First Amendment amends and restates Section 11.7 of the Original Agreement to add the revised Note to the list of enforceable claims in the second paragraph of Section 11.7 making the revised Note enforceable under New York law as a legal obligation of Allarity Denmark ApS (formerly OV-SPV2 ApS). All other provisions of the Original Agreement and Novartis Promissory Note were unchanged and remain in full force and effect. The Novartis Promissory Note pays simple interest on the outstanding principal amount from the date until payment in full, which interest shall be payable at the rate of 5% per annum. Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed.
The roll forward of the Novartis Promissory Note as of December 31, 2025 and 2024 is as follows:
On January 26, 2024, the Company received a termination notice from Novartis due to a material breach of the Original Agreement. Accordingly, under the terms of the Original Agreement, the Company ceased all development and commercialization activities with respect to all licensed products, all rights and licenses granted by Novartis to the Company reverted to Novartis; and all liabilities due to Novartis became immediately due and payable inclusive of interest which is continuing to accrue at 5% per annum. As of December 31, 2025, the liability is recorded as a current liability on the Company's consolidated balance sheets as follows: $3.6 million in accounts payable, $0.5 million of interest recorded as accrued expenses, and $1.4 million in convertible promissory notes and accrued interest.
The Company recorded $0.2 million to interest expense for the each of the years ended December 31, 2025 and 2024.
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