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Nature of Business
3 Months Ended
Mar. 31, 2022
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Nature of Business

1. Nature of Business

Allena Pharmaceuticals, Inc. (the “Company”) is a clinical stage company focused on developing non-absorbed oral enzyme therapeutics to treat metabolic conditions including hyperuricemia and gout. The Company was incorporated under the laws of the State of Delaware on June 24, 2011. The Company’s headquarters are in Newton, Massachusetts.

The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations, reliance on third party manufacturers, ability to transition from pilot-scale manufacturing to large-scale production of products and the need to obtain adequate additional financing to fund the development of its product candidates.

Liquidity and Going Concern

The Company had an accumulated deficit of $258.3 million at March 31, 2022 and will require substantial additional capital to fund operations. The future success of the Company is dependent on its ability to identify and develop its product candidates and ultimately upon its ability to attain profitable operations. At March 31, 2022, the Company had $8.9 million of cash and cash equivalents.
 

The Company’s available cash and cash equivalents as of March 31, 2022 are not sufficient to fund the Company’s current operating plan for at least the next twelve months following the filing of this Quarterly Report. The Company requires additional capital to sustain its operations, including its ALLN-346 development program. Management is exploring opportunities to secure additional funding through equity or debt financings or through collaborations, licensing transactions or other sources. In January 2022, the Company initiated a process to explore a range of strategic and financing alternatives to maximize stockholder value and has engaged the investment bank Stifel, Nicolaus & Company, Inc. ("Stifel") to act as strategic advisor for this process. Potential strategic alternatives that may be evaluated include a partnership or sale of ALLN-346, a sale or merger of the Company, or securing additional financing to enable further development of the Company's ALLN-346 program. There can be no assurance that this strategic review process will result in the Company pursuing any transaction or that any transaction, if pursued, will be completed. If the Company is unable to complete a transaction, it may be required to seek an in-court or out-of-court restructuring of its liabilities.
 

As part of the strategic process, the Compensation Committee of the Board of Directors approved a retention plan on January 28, 2022, available to all employees (the "Retention Plan"). Employees were required to execute retention agreements to receive payments and other considerations offered by the Retention Plan. Employees who executed a retention agreement received a salary adjustment equal to 6.5% retroactive to January 1, 2022, a restricted stock unit ("RSU") grant and a lump sum retention payment. A total of 2,998,500 RSUs were granted on February 1, 2022 under the Retention Plan. Lump sum retention payments totaling $3.0 million were made to employees in February 2022. If an employee resigns from the Company or is terminated for cause prior to June 30, 2022, the employee would be required to fully repay the lump sum retention payment received. If an employee resigns from the Company or is terminated for cause between July 1, 2022 and September 30, 2022, the employee would be required to repay 50% of the lump sum retention payment received.
 

During the first quarter of 2022, the Company made voluntary principal repayments of $5.0 million of the $10.0 million that was outstanding as of December 31, 2021 under the loan and security agreement with Pontifax Medison Finance (Israel) L.P. and Pontifax Medison Finance (Cayman) L.P. (together “Pontifax”) (the “Pontifax Agreement”). The outstanding principal balance as of the filing date of this Quarterly Report is $5.0 million. The Company also purchased Directors' & Officers' run-off insurance for $6.8 million in March 2022.
 

On March 18, 2022, the Company announced that it was terminating its URIROX-2 study and reloxaliase program and initiated the process of closing the URIROX-2 study with the CRO, investigative sites, patients and business partners. In connection with the termination of the reloxaliase program, the Company completed a workforce reduction of approximately 40% on March 31, 2022. In accordance with the terms of the Retention Plan, the employees terminated by the Company on

March 31, 2022 were not required to repay any portion of their lump sum retention payments originally received in February 2022.

On May 3, 2022, the Company entered into a securities purchase agreement with an investor, pursuant to which the Company agreed to issue, in a registered direct offering, an aggregate of 2,872.1376 shares of Preferred Stock (split evenly between the Series D Convertible Preferred Stock, par value $0.001 per share (“Series D Preferred Stock”), and Series E Convertible Preferred Stock, par value $0.001 per share (“Series E Preferred Stock” and together with the Series D Preferred Stock, the “Preferred Stock”)). The Company received net proceeds of approximately $2.3 million from the issuance and sale of the Preferred Stock, after deducting offering expenses and placement agent fees. The shares of Preferred Stock have a stated value of $1,000 per share and are convertible, following the date of the issuance thereof, into an aggregate of 8,975,430 shares of common stock of the Company upon the conversion of the Series D Preferred Stock and into an aggregate of 8,975,430 shares of common stock of the Company upon the conversion of the Series E Preferred Stock, in each case, at a conversion price of $0.16 per share. H.C. Wainwright & Co., LLC (“HCW”) was the exclusive placement agent for this offering. On May 5, 2022, the Preferred Stock investor converted all of its Series D Preferred Stock into 8,975,430 shares of common stock, and on May 9, 2022, the Preferred Stock investor converted all of its Series E Preferred Stock into 8,975,430 shares of common stock.

In a concurrent private placement, the Company also issued to the Preferred Stock investor unregistered warrants (the “2022 Common Warrants”) to purchase up to an aggregate of 22,438,575 shares of the Company’s common stock, at an exercise price of $0.1694 per share. The 2022 Common Warrants will become exercisable six months after the date of issuance, and will have a term of five years from the initial exercise date. The Company also issued to designees of HCW, in a concurrent private placement, warrants to purchase up to 1,256,561 shares of Common Stock (the “HCW Warrants”). The HCW Warrants are exercisable for $0.20 per share and will be exercisable six months after the date of issuance and have a term of five years from the commencement of sales pursuant to the registered direct offering.