Oncimmune Holdings PLC Proposed placing to raise up to £5.3m (8894R)

TIDMONC

RNS Number : 8894R

Oncimmune Holdings PLC

26 September 2017

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND, NEW ZEALAND OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN ONCIMMUNE HOLDINGS PLC OR ANY OTHER ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION, SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH ANY INVESTMENT DECISION IN RESPECT OF ONCIMMUNE HOLDINGS PLC. MEMBERS OF THE PUBLIC SHALL NOT BE ELIGIBLE TO TAKE PART IN THE PROPOSED PLACING, WHICH IS TO BE LIMITED TO PERSONS SELECTED BY ZEUS CAPITAL AND WHO CONFIRM THEIR PARTICIPATION BY ENTERING INTO A PLACING CONFIRMATION LETTER WITH ZEUS CAPITAL AS AGENT OF THE COMPANY IN A PRESCRIBED FORM.

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Oncimmune Holdings plc ("Oncimmune" or the "Company")

Proposed placing to raise up to GBP5.3m

Oncimmune Holdings plc (AIM: ONC.L), a leading early cancer detection company developing and commercialising its proprietary EarlyCDT(R) platform technology, announces a proposed placing to raise up to GBP5.3 million, (GBP5.0 million net of estimated expenses), by way of the conditional placing ("Placing") of up to 4,416,666 new ordinary shares ("Placing Shares") at a price of 120 pence per share (the "Issue Price") with existing and new institutional investors. The Placing Shares to be issued pursuant to the proposed Placing will represent approximately 7.96 per cent. of the Enlarged Issued Share Capital of the Company. The Placing Shares will rank pari passu in all other respects with the Company's Existing Ordinary Shares.

The Placing Shares are being offered by way of an accelerated bookbuild ("Bookbuild") on the Company's behalf by the Company's sole bookrunner, Zeus Capital Limited ("Zeus Capital"). The Bookbuild will be launched immediately following this announcement. The timing of the closing of the Bookbuild, the final number and allocation of Placing Shares to be issued at the Placing Price are to be determined at the discretion of the Company and Zeus Capital. A further announcement will be made following closing of the Placing, confirming the final details of the fundraising.

The Board believes that the Net Proceeds of the Placing of approximately GBP5.0 million, along with the Company's existing cash and cash equivalents, would provide sufficient capital to strengthen its balance sheet to support the completion of major distribution deals in the following areas:

   --     USA for EarlyCDT(R)-Lung; 
   --     China for EarlyCDT(R)-Lung and 
   --     "Fingerprint" - a personalised autoantibody profiling approach 

Following completion of the major distribution deals, the cash will be used for:

   --     R&D 
   --     Additional NHS studies to accelerate adoption 
   --     Additional markers for lung test in the US to enhance its "pulmonology test" 
   --     Validation and launch of liver test 
   --     Further validation of fingerprinting 
   --     Marketing to general practices in the US 

In addition, the Board intends to progress development of its other products (ovarian tests) through to commercial launch, which it considers to be another key step for the Company.

Geoffrey-Hamilton Fairley, Oncimmune's Chief Executive Officer said:

"This proposed fundraise will allow us to continue to deliver on the growth strategy laid out at the time of our IPO involving generating revenue from multiple products, regions and partners and we have already made significant progress in delivering on this. We are confident that Oncimmune is well placed to create and deliver value from our core autoantibody platform in the medium and long term."

For further information:

Oncimmune Holdings plc

Geoffrey Hamilton-Fairley, Chief Executive Officer

[e-mail]

Zeus Capital Limited (Nominated Adviser and Broker)

Giles Balleny, Phil Walker, Hugh Kingsmill Moore

[phone]

Media enquiries:

Consilium Strategic Communications

Chris Gardner, Matthew Neal, Lindsey Neville

[e-mail]

[phone]

   1.    Background to and reasons for the Placing 

1.1. Background

Oncimmune is a leading early cancer detection company developing and commercialising its proprietary EarlyCDT(R) platform technology. Oncimmune has pioneered the development of autoantibody tests that can detect cancer up to four years earlier than other methods and can be applied to a very wide range of solid tumour types. The Company's first product, EarlyCDT(R)-Lung, was launched in 2012, as a CLIA test in the USA and since then over 150,000 commercial tests have been sold. EarlyCDT(R)-Lung is available through physicians in the US and also privately in the UK and other regions. EarlyCDT(R)-Lung is being used in the largest ever randomised trial for the early detection of lung cancer using biomarkers. The NHS Scotland ECLS study of 12,210 high-risk smokers is fully recruited and in the final follow up stage. EarlyCDT(R) tests for liver and ovarian cancer are in development.

Oncimmune is headquartered in Nottingham, United Kingdom with testing facilities in the US and joined AIM in May 2016 under the ticker ONC.L. For more information visit www.Oncimmune.com

1.2. Progress since the IPO

The Company continues to make good progress against the commercialisation plans outlined at the IPO. Oncimmune's strategy remains to improve significantly the outcomes of cancer patients through early detection of the disease and enhance treatment pathways. Detecting early stage disease has two key benefits: better survival for the patients and significantly lower cost of treatment as most of these early stage patients do not need expensive chemotherapy. The Company intends, to develop, and make commercially available and widely accessible, accurate early cancer detection tests for multiple cancer types.

EarlyCDT(R)-Lung

In the US, Oncimmune has continued to work to identify an optimal sales and marketing cycle where a physician re-orders the EarlyCDT(R)-Lung test without the need (and expense) of a repeat sales visit.

Oncimmune currently has 14 distributors for EarlyCDT(R)-Lung in the US. It has ongoing discussions with a number of pulmonology distributors including one where a preliminary distribution agreement has been signed. Under the terms of the distribution agreements, the distributor pays Oncimmune c.50% of reimbursement fee (selling price) with each test reimbursed by Medicare for c.$123 per test. The process to sell "in network" is underway with insurers.

As stated in Oncimmune's business update in June 2017, the Company will invest further in sales support and marketing to support its distributors whilst ensuring that its partners deliver high quality and long-term sales as the Company gains confidence in this approach gaining traction. The Company remains cautious, however, in terms of near term revenue growth from this channel as positioning of the test is key to long-term success.

Preliminary Pulmonary Distribution Partnership

Alongside Oncimmune's focus on maximising sales from its existing customer base, the Company has now also entered a preliminary distribution partnership with a major US pulmonology sales force. This followed a detailed research study which verified the clinical attractiveness of using the EarlyCDT(R)-Lung test in aiding in the risk assessment of indeterminate pulmonary nodules. The partnership is expected to run until the end of February 2018 and if successful should lead to a distribution agreement covering a significant proportion of the pulmonologists in the US. The Company is also exploring further pulmonology distribution channels in the US with other parties.

Indeterminate nodules - growths in the lung which may or may not be malignant - are a major concern for pulmonologists. There are currently more than 1.5m patients with pulmonary nodules per annum in the US and the number is expected to grow rapidly with the expected increased adoption of CT screening for high risk patients in the US. Sales of EarlyCDT(R)-Lung to pulmonologists have been forecast to be greater than $400m by 2021[1].

EarlyCDT(R)-Lung test has the potential to enhance significantly current risk assessment protocols recommended in guidelines in the US. By providing a simple blood test that is highly specific (and complementary to CT's sensitivity), it can assist in placing patients into the appropriate clinical pathway and help to reduce the number of patients who are in the 'watch and wait' category. Data published in the Journal of Thoracic Oncology from Vanderbilt University showed that a positive EarlyCDT(R)-Lung test indicates that a nodule is two to three times more likely to be cancer.

Asian and European Distribution

Outside of the US, Oncimmune is progressing well. The Company's Asian business has four distribution agreements in place which provide GBP5.6m in minimum payment guarantees over the next five years. The kits will be distributed to hospitals throughout the region for c.$350 to $450 for 10 tests and the current cost of goods per 10 tests for Oncimmune is less than $100. There is a manufacture tender underway from suppliers in Europe and Asia with a target of a single digit dollar cost.

The Company has recently announced its first distribution agreements for its EarlyCDT(R)- Lung kit in Europe with exclusive agreements for Denmark, Norway and Sweden with an aggregate minimum sales commitment of approximately GBP0.5m.

The Company expects to sign more distribution contracts in Asia and Europe during the upcoming months, with several of these arrangements also likely to include guaranteed minimum payments that would add to the Company's confidence in its chosen distributors and enhance revenue visibility/predictability.

Oncimmune's particular focus for the Asian market has been set on China, where lung cancer remains the number one killer of both men and women, with over 700,000 new cases of lung cancer diagnosed annually. The Company has entered into discussions with several diagnostic companies for collaboration opportunities including licensing and registration, marketing commercialisation, distribution and local manufacturing.

R&D and Trials

The development and completion of a kit version of the EarlyCDT(R)-Lung test was a key part of the Company's commercial growth strategy and R&D plan laid out at the time of its IPO. The CE Mark for EarlyCDT(R)-Lung test in an ELISA kit format was received in May 2017. The kit has the advantage of running on already well established ELISA-96 well-microplate-instruments that hospitals worldwide have as standard equipment in their laboratories. This milestone made possible the Asian and European distribution agreements described above with the potential for further expansion into world markets.

Beyond the kit, the R&D programme continues to progress. The Company has laid the foundations for the commercial panel for the EarlyCDT(R)-Liver test, and remains on track for commercial sales in H1 2018, with EarlyCDT(R)-Ovarian thereafter. Data showing that a panel of autoantibodies could detect hepatocellular carcinoma with high sensitivity and specificity was recently presented at an international liver cancer conference.

Interim data from the NHS Lung Cancer Screening Trial was also recently presented at the European 27th International Congress of the European Respiratory Society (ERS) in Milan. The results remain encouraging, most notably that over 75% of the patients being diagnosed have early stage cancers (stage 1 & 2) as opposed to the vast majority in normal practice presenting with late stage cancer - which is generally incurable. Now fully recruited, with 12,210 patients, this is the largest randomised control trial using biomarkers ever conducted in lung cancer. The final study results, including the control arm, will be published after all patients have completed two years of follow up CT scans and these are expected in 2019.

Personalised Medicine & Companion Diagnostics

In companion diagnostics, the Company recently announced the presentation of data on the use of Oncimmune's autoantibody technology to successfully predict disease recurrence in subjects undergoing immunotherapy with Scancell Holding plc's SCIB1 immunotherapy for malignant melanoma.

The collaborative study, which also included a team at the University of Nottingham, developed a method using a panel of seven tumour associated autoantibodies to predict disease recurrence in patients with resected Stage III/IV melanoma treated with SCIB1. Whilst Phase I/II trials with SCIB1 have been highly encouraging, this additional information potentially enables the identification of patients prior to commencement of therapy who are most likely to respond to treatment in future clinical trials with SCIB1.

Oncimmune is running a number of further studies alongside drug development programs and expects to be able to announce results from these in the next 12 months. The Company expects that this will support the development of this area as a separate business unit.

Finally, in the second half of 2017 Oncimmune expects to announce results relating to the second generation of tests from its autoantibody platform where patients can be their own control and thus testing is significantly more accurate. The Company believes this autoantibody "fingerprint" will bring new levels of performance and lead to a pan-cancer test which could complement the global vision of some major companies currently investing heavily in developing personalised medicine platforms and services.

In conclusion, Oncimmune continues to deliver on its plan to create value from its core autoantibody platform and the board is increasingly confident that the Company is well placed to execute that plan and deliver value in the medium and long term.

1.3. Current trading and prospects

Unaudited revenues for the year 31 May 2017 were GBP0.215m and cash at the year-end was GBP5.075m. The Company continues to manage cash and costs tightly and cash at 31 August was over GBP3.0m. 2017 has seen the Company achieve a number of milestones including:

-- The Company's receipt in May of the CE Mark for the EarlyCDT(R)-Lung kit, with first commercial batches expected to be shipped by no later than the end of October 2017.

-- Oncimmune's Asian business signing four distribution agreements which provide minimum payment guarantees of over GBP5.6m over the next five years, highlighting the Company's ability to expand and create revenue in world markets.

-- The recent signing of a first distribution agreements for the EarlyCDT(R)-Lung kit in Europe with agreements for Denmark, Norway and Sweden with an aggregate minimum sales commitment of approximately GBP500,000

-- The Company's recently announced four-month preliminary distribution partnership with a major US pulmonary sales force for the use of EarlyCDT(R)-Lung in assessing indeterminate lung nodules, which if successful, should lead to a distribution agreement for U.S. pulmonologists.

-- The publication of data relating to the EarlyCDT(R)-Liver panel at the International Liver Cancer Association showing that a panel of 10 autoantibodies could detect hepatocellular carcinoma with high sensitivity and specificity

1.4. Reasons for the Placing

The Placing is necessary for the Company to strengthen its balance sheet to complete major distribution deals in the following areas:

   --     USA for EarlyCDT(R)-Lung; 
   --     China for EarlyCDT(R)-Lung; and 
   --     "Fingerprint" - a personalised autoantibody profiling approach 

Following completion of the major distribution deals the cash is to be used for:

   --     R&D - 
   --     Additional NHS studies to accelerate adoption 
   --     Additional markers for lung test in the US to enhance its "pulmonology test" 
   --     Validation and launch of liver test 
   --     Further validation of fingerprinting 
   --     Marketing to general practices in the US 

In addition, the Board intends to progress development of its other products (ovarian tests) through to commercial launch, which it considers to be another key step for the Company.

The Placing is critical to help secure a strong commercial position for Oncimmune at an important stage of the Company's growth.

Maintaining the strength of the Company's balance sheet is key to commercially engage with its existing customers and attract additional major distribution deals. As Oncimmune's multiple revenue streams and geographical footprint begins to gain traction, it is essential to continue to strengthen Oncimmune's position in this sector, having the financial strength to develop the relevant Kits and bring through the platform technology to market over the long term.

   2.    Key elements of the Placing 

2.1. Placing

The Company is proposing to raise up to GBP5.3 million, (GBP5.0 million net of estimated expenses), by way of the conditional placing of up to 4,416,666 Placing Shares at the Issue Price with existing and new institutional investors. The Placing Shares to be issued pursuant to the Placing will represent approximately 7.96 per cent. of the Enlarged Share Capital. The Placing Shares will rank pari passu in all other respects with the Existing Ordinary Shares. The Issue Price represents a discount of 4.00 per cent. to the mid-market closing price on 25 September 2017 (being the Latest Practicable Date).

The Company currently has authority to allot 5,077,400 ordinary shares on a non-pre-emptive basis. Pursuant to the Placing, 4,416,666 shares under this authority will have been issued, leaving authority for the Company to issue a further 660,734 shares on a non-pre-emptive basis. This authority will expire on the date of the Company's next Annual General Meeting.

The Company has received non-binding indications of interest from potential investors for the Placing during a pre-marketing process which is also described in paragraph 4 of this announcement.

Assuming that the Placing completes, application will be made for admission of the Placing Shares to trading on AIM, with Admission expected to become effective and dealings to commence in the Placing Shares at 8.00 a.m. on 3 October 2017.

A further announcement will be made to confirm its completion in due course.

   3.    Enterprise Investment Scheme and Venture Capital Trusts 

As part of the Placing, the Company is offering up to GBP3 million worth of Placing Shares ("VCT/EIS Placing Shares") which the Company believes should qualify as VCT/EIS investments. The Directors believe that the VCT/EIS Placing Shares should be eligible (subject to the circumstances of investors) for tax reliefs under EIS and for investment by VCTs.

The Company has applied for, but not, as at the date of this announcement, received, advance assurance from HM Revenue & Customs. Although the Company currently expects to satisfy the relevant conditions for EIS and VCT investment, and the Directors are not aware of any subsequent change in the qualifying conditions or the Company's circumstances that would prevent the VCT/EIS Placing Shares from being eligible EIS and VCT investments on this occasion, neither the Directors nor the Company give any warranty or undertaking that relief will be available in respect of any investment in the VCT/EIS Placing Shares pursuant to this announcement, nor do they warrant or undertake that the Company will conduct its activities in a way that qualifies for or preserves its status.

Companies can raise up to GBP5 million from State Aid investment sources, including under the combined EIS and from VCTs, in any 12 month period. As the rules governing EIS and VCT reliefs are complex and interrelated with other legislation, if Shareholders, or any potential investors are in any doubt as to their tax position, require more detailed information than the general outline above, or are subject to tax in a jurisdiction other than the United Kingdom, they should consult their professional adviser.

   4.    Market Abuse Regulation 

Market Soundings, as defined in the Market Abuse Regulation ("MAR"), were taken in respect of the proposed Placing with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a Market Sounding are no longer in possession of inside information relating to the Company and its securities.

DEFINITIONS

The following definitions apply throughout this announcement unless the context requires otherwise:

"Admission" the admission of the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules

"AIM" the market of that name operated by the London Stock Exchange

"AIM Rules" the provisions of the London Stock Exchange entitled "AIM Rules for Companies" as amended or reissued from time to time governing, amongst other things, admission to AIM and the continuing obligations of AIM companies

"Board" the board of Directors of the Company as at the date of this announcement

    "Company" or "Oncimmune"               Oncimmune Holdings plc 

"Directors" the Directors of the Company as at the date of this announcement

"EIS" Enterprise Investment Scheme

"Enlarged Issued Share Capital" the issued share capital of the Company as enlarged by the issue of the Placing Shares

"Existing Ordinary Shares" the 51,049,404 Ordinary Shares in issue, comprising the whole of the issued share capital of the Company, as at the date of this announcement

"FCA" the Financial Conduct Authority of the United Kingdom

"FSMA" Financial Services and Markets Act 2000 (as amended)

   "Issue Price"                                                    120 pence per new Ordinary Share 

"Latest Practicable Date" the latest date practicable prior to the publication of this announcement, being 25 September 2017

"Net Proceeds" the Gross Proceeds of the Placing net of expenses

"Ordinary Shares" ordinary shares of 1p each in the capital of the Company

"Placees" the persons with whom Placing Shares are to be placed

"Placing" the conditional placing of the Placing Shares

"Placing Shares" the new Ordinary Shares which are the subject of the Placing

"Prospectus Rules" the rules made for the purposes of Part V of FSMA in relation to offers of securities to the public and admission of securities to

   "Shareholder(s)"                                           holder(s) of Ordinary Shares 

"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland

"US" or USA" the United States of America and all of its territories and possession

   "VCT"                                                                     Venture Capital Trust 

"Zeus Capital" Zeus Capital Limited of 82 King Street, Manchester, M2 4WQ, being the Company's Nominated Adviser and Broker

Forward-looking statements

This announcement contains statements about Oncimmune Holdings plc that are or may be deemed to be "forward-looking statements".

All statements, other than statements of historical facts, included in this announcement may be forward-looking statements. Without limitation, any statements preceded or followed by, or that include, the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "should", "anticipates", "estimates", "projects", "would", "could", "continue" or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include, without limitation, statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects and (ii) business and management strategies and the expansion and growth of the operations of Oncimmune Holdings plc.

These forward-looking statements are not guarantees of future performance. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of any such person, or industry results, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. Investors should not place undue reliance on such forward-looking statements and, save as is required by law or regulation (including to meet the requirements of the AIM Rules, the Prospectus Rules and/or the FSMA), Oncimmune Holdings plc does not undertake any obligation to update publicly or revise any forward-looking statements (including to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based). All subsequent oral or written forward-looking statements attributed to Oncimmune Holdings plc or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements contained in this announcement are based on information available to the Directors of Oncimmune Holdings plc at the date of this announcement, unless some other time is specified in relation to them, and the posting or receipt of this announcement shall not give rise to any implication that there has been no change in the facts set forth herein since such date.

[1] Health Advances, Boston 2014

This information is provided by RNS

The company news service from the London Stock Exchange

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September 26, 2017 12:12 ET (16:12 GMT)