Oncimmune Holdings PLC (AIM:ONC) said it is launching a proposed placing and subscription to raise gross proceeds of not less than £2.1mln, with certain directors intending to subscribe for £1.2mln of that total, and has issued upbeat comments on current trading.
The net proceeds of the capital raising will be used to retire a proportion of the company's existing debt facility, provide Oncimmune with additional near-term working capital, and also fund future collaborations in biomarker tool development.
Looking at current trading, Oncimmune said its pipeline of potential commercial contracts has continued to build since its last set of results, and, based on current and forecast trading, its directors anticipate total revenue for the 12 months ending 31 August 2023 will be in excess of £7.5mln, at which level the group will be broadly EBITDA breakeven for the same period.
The company said the recent restructuring of the EarlyCDT Lung product business has created an EBITDA-positive product business in the short term (before central overhead costs), and the Directors expect this business to become increasingly cash-generative over the next 2-3 years. The ImmunoINSIGHTS services business is in a commercial scale-up phase and, whilst expected to operate at a strong gross margin of approaching 80% for the year ended 31 August 2023, the timing of signing contracts and the recent recovery in pipeline growth and momentum mean that the business requires a modest further injection of working capital to meet its near-term needs, it added.
Furthermore, reducing the repayments of principal required in the short term under the IPF Facility will afford the business greater operational headroom during its anticipated phased growth, Oncimmune said.
Assuming £2.1mln is raised from the placing and subscription, and a proportion of the IPF Facility is repaid from the proceeds, Oncimmune said its net debt as of 31 August 2023 is anticipated to be approximately £6.8mln (£9.5mln as at 31 August 2022).
Placing and subscription details
The proposed placing and subscription of new ordinary shares of 1p each in the capital of the company will be at a price of 45p per share. The issue price represents a premium of approximately 5.1% to the closing middle market price of 42.8p of Oncimmune shares on 6 December 2022, being the last trading day prior to the release of the announcement.
The company also announced the proposed appointment of John Goold to its board as a non-executive director subject to the completion of customary due diligence by the company's nominated adviser.
The company said the share subscription is supported by written and verbal indications of support and subscription letters received from certain directors, the proposed director, and certain other investors and is now open for wider investor participation. It will remain open for up to three days and is expected to close to further orders no later than 11.00am on Monday 12 December 2022.
Over the following three days, the company said its management team will present a summary of the latest Oncimmune trading update to other existing shareholders and potential investors. Allocations will be finalised in due course and all orders whether relating to the subscription or the placing, may be subject to scale back in the event that there is excess demand for the capital raising as a whole.
The capital raising will proceed using the company's currently available authorities to allot up to 5,908,560 new ordinary shares on a non-preemptive basis.
Assuming only approximately £2.1mln is raised, 4,722,222 new ordinary shares would be issued, representing approximately 6.8% of the company's existing issued share capital and approximately 6.4%of the issued share capital as enlarged by the subscription.
The placing is being conducted by Singer Capital Markets Securities Limited, which is acting as joint broker and bookrunner, and WG Partners LLP who are acting as joint broker in relation to the placing, and will be launched immediately.