Placing and Subscription
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596/2014 AS IT FORMS PART OF DOMESTIC LAW IN THE UNITED KINGDOM BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED ("UK MAR"). IN ADDITION, MARKET SOUNDINGS WERE TAKEN IN RESPECT OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.
Renalytix Plc
("Renalytix" or the "Company")
Placing and Subscription
Proposed conversion of existing debt into equity
Transfer from Nasdaq to OTCQX of American Depositary Shares
Board Appointment
Renalytix (NASDAQ: RNLX) (AIM: RENX), an artificial intelligence-enabled in vitro diagnostics company, focused on optimizing clinical management of kidney disease to drive improved patient outcomes and advance value-based care, today announces its intention to raise a minimum of £10 million gross proceeds through a placing ("Placing") and a subscription ("Subscription") (together, the "Fundraise") of new ordinary shares of £0.0025 each in the capital of the Company ("Ordinary Shares") at an issue price of 9 pence per new Ordinary Share (the "Issue Price") to new and existing institutional and other investors. Oberon Capital (a trading name of Oberon Investments Limited) is acting as sole bookrunner on the Placing.
In addition, certain Directors, the Company Secretary, the Proposed Director and the interim CFO ("Insiders") intend to participate in the Placing ("Insider Participation"). It is intended that the Insider Participation will comprise approximately, £244,000, in aggregate through the issue of 2,712,195 new Ordinary Shares at the Issue Price. The Directors and interim CFO participating in the Fundraise will be subject to a 6 month lock-in period. Further details will be announced as appropriate in due course. The Placing will be effected by way of an accelerated bookbuild (the "Bookbuild"), which will open with immediate effect, and the Placing is subject to the terms and conditions set out in Appendix I to this announcement (which forms part of this announcement, such announcement and Appendix I together being the "Announcement"). A further announcement confirming the closing of the Bookbuild and the aggregate number of new Ordinary Shares to be issued pursuant to the Placing and the Subscription is expected to be made in due course.
The Issue Price represents a discount of 2.7 per cent. to the closing middle market price of 9.25 pence per Ordinary Share on 27 September 2024, being the last business day prior to this Announcement.
The Company is also pleased to announce the appointment of Julian Baines MBE as Executive Chairman to the Company to be effective from the General Meeting, as well as the Company's intention to move it's USA listing from Nasdaq to the OTCQX. Further details of which are provided in this Announcement.
Placing Highlights
| • | The Company intends to raise a minimum of £10 million gross proceeds (c.US$13.3 million, assuming an exchange rate of £1 = $1.33), before expenses, pursuant to the Fundraise; |
| • | Insiders are to subscribe for up to 2,712,195 new Ordinary Shares in the Placing, raising approximately £244,000 in aggregate, before expenses. |
| • | Completion of the Fundraise beyond 39,799,078 Ordinary Shares, is conditional upon shareholder approval to enable the issue of additional new Ordinary Shares at the Issue Price beyond current allotment authorities granted at the general meeting of the Company held on 22 April 2024, which approval is due to be sought at a general meeting of the Company, to be held at such date and time to be fixed and announced by the Company in due course. The General Meeting is anticipated to be sometime this month. |
| • | The Company's existing cash resources and net proceeds from the Fundraise will be used to drive sales and marketing, to increase revenue with new customers, and for the Development support for electronic health record (" EHR ") integrations with new Health Systems, as well as general working capital purposes. |
Placing
The Ordinary Shares being issued pursuant to the Placing are to UK investors only.
The shares to be issued pursuant to the Placing (the "Placing Shares") are expected to be issued in two tranches, with the issuance of the first tranche of Ordinary Shares (the "EIS/VCT Placing Shares") to take place on or around 9 October 2024 and the issuance of the remainder of the Placing Shares (the "Non-EIS/VCT Placing Shares") to take place on or around 1 November 2024, subject to shareholder approval of (i) the allotment and issue of the Non-EIS/VCT Placing Shares, (ii) the disapplication of pre-emption rights in respect of the allotment and issue of the Non-EIS/VCT Placing Shares to be obtained by passing certain resolutions ("Resolutions") at a general meeting of the shareholders of the Company (the "General Meeting"), details of which will be announced in due course. The Placing Shares are subject to certain conditions set out in Appendix I to this Announcement.
Subscription
Ordinary Shares issued pursuant to the Subscription to investors in the U.S. will be issued pursuant to an exemption from registration with the U.S. Securities and Exchange Commission (the "SEC").
Pursuant to the Subscription Agreements, the Subscribers have agreed to subscribe for the Subscription Shares at the Issue Price, conditional on the Resolutions being passed at the General Meeting.
The Subscription Shares, when issued, will be fully paid and will rank pari passu in all respects with the existing Ordinary Shares in issue. It is expected that the Subscription Shares will be issued on or around 1 November 2024.
Background to and reasons for the Fundraise
The Company has achieved several significant milestones, which the Directors believe have put the Company in a strong position as the business transitions from its research and development phase into the commercial scale up phase. KidneyIntelX™, is the only kidney prognostic test that:
| • | is FDA approved; |
| • | has full Medicare reimbursement granted at $950 per test; |
| • | has recommendation in KDIGO Clinical Guidelines; |
| • | is available to approximately 14m US diabetic kidney disease (" DKD ") patients; and |
| • | is able to address the needs of approximately ~260 million DKD patients globally. |
Additionally, the Directors have refocused the business to deliver commercial sales growth and have taken various steps, including:
| • | the appointment of a new leadership with a track record of commercial success, including the appointment of Howard Doran as President in April 2024; |
| • | a revamped sales and customer service strategy to sustain new doctor on-boarding and retention; |
| • | the implementation of a sales-force-led or "direct-to-doctor" strategy, fully scalable under the Company's control; a significant expansion of patient access to testing sites; and |
| • | a significant expansion of patient access to testing sites; and |
| • | customer service improvements to facilitate ordering volume. |
As a result of the above steps, the Company is demonstrating quarter-over-quarter revenue growth and repeat doctor test ordering.
The Company discloses that AdvantageCare Physicians ("ACPNY"), one of the largest primary and specialty care practices in the New York area, is utilising kidneyintelX.dkd testing for prognosis of patients with diabetic kidney disease. The Company has begun to receive and process test orders from ACPNY this month.
The Directors believe that the proceeds of the Fundraise will take the Company to profitability and cash flow break-even in approximately 2 years. The Company is also taking other active steps to ensure the Company's success, which are outlined in detail below.
Debt restructuring
2.1 Convertible Bond
The Company has successfully renegotiated the terms of the £8.7 million amortizing senior convertible bond (the "Convertible Bond") held by a fund advised by Heights Capital Ireland LLC (the "Convertible Bond Investor"). Under the new terms, the Convertible Bond will be repaid and restructured as follows:
| • | Approximately £2.75 million of the Convertible Bond will be capitalised via issue to the Convertible Bond Investor of Ordinary Shares (the " Heights Conversion Shares "), at the Issue Price ; |
| • | in the event that the Company were to raise more than £12.5 million (net of costs) through the Fundraise, the next £2.5 million raised in the Fundraise (above the £12.5 million (net of costs)) would be payable to the Convertible Bond Investor (" Tranche 2 Payment "); and |
| • | the balance of the Convertible Bond will be restructured as a new unsecured convertible bond (the " New Convertible Bond "). |
The Heights Conversion Shares to be issued to the Convertible Bond Investor will represent up to 9.99 per cent. of the Enlarged Issued Share Capital.
The Convertible Bond Investor will be subject to the same lock-in provisions as the Directors and certain other significant investors, being 6 months, and in the event that the Tranche 2 Payment exceeds £2 million, the Convertible Bond Investor will agree to extend its lock-in period for a further 3 month period.
The New Convertible Bond will accrue interest at a rate of 5.5 per cent. per annum, if paid in cash, or 7.5 per cent. per annum, if rolled into the principal amount, at the discretion of the Company. The New Convertible Bond will have a maturity date of 31 July 2029 and may not be converted before 1 April 2026 except in the event that the Company undertakes a further qualifying equity issuance in the future, in which case the New Convertible Bond may be converted at the placing price thereunder (which will exclude securities properly issued to employees and other staff of the Company for bona fide remuneration and incentivisation purposes).
The New Convertible Bond can be redeemed as follows:
| 1. | at any time from 1 April 2026, a holder of the New Convertible Bond can redeem any or all of the New Convertible Bond at a conversion price (subject to usual adjustment provisions) equal to 250% of the Issue Price; |
| 2. | in the event of a change of control of the Company or if the Ordinary Shares cease to be admitted to trading on AIM or the Main Market of the London Stock Exchange (or if dealing in the Ordinary Shares is suspended, other than in connection with a corporate reorganisation, for a period of 60 dealing days or more) or in the event that less than 20% of the Company's issued share capital (including the Company's American Depositary Shares (" ADS ")) comprises free float, a holder of the New Convertible Bond can require the Company to redeem all but not some of their New Convertible Bond at a conversion price equal to 120% of the principal amount of the New Convertible Bond (together with accrued but unpaid interest); and |
| 3. | at any time, the Company can elect to redeem all, but not some, of the principal amount of the New Convertible Bond at a price equal to the greater of (i) the principal amount and all accrued but unpaid interest and (ii) the 'parity value' of the New Convertible Bond. For this purpose, the parity value is the product of: (a) such number of Ordinary Shares as would have been issued on conversion and the mean volume weighted average price of an Ordinary Share on the ten consecutive dealing days preceding the date on which such redemption is to occur. |
2.2 Accounts Payable
An accounts payable balance with a professional adviser of approximately $850,000 (the "Advisor Accounts Payable Balance") has been restructured such that 50% of the outstanding balance ($425,000) will convert to equity at the Issue Price as part of the Conversion Shares. The remaining 50% will be repaid as follows:
| • | $325,000 will be converted to a long term unsecured note, bearing interest at 5% p.a., rolled into the principal amount of the note. The principal and interest will be repaid on the earlier of: (i) 5 years from the initiation of the note; or (ii) such earlier time as the Company is acquired by another company. The Company has the right to redeem the note at any time (the " Advisor Loan Note "); and |
| • | the remaining balance will be settled in cash from operations following the closing of the Fundraising. |
Additionally, other accounts payable creditors to the value of approximately £650,000 have agreed to write-off their balances (the "Creditor Write-offs").
The Company believes that the restructuring of the Convertible Bond and the Advisor Accounts Payable Balance, the creation of the New Convertible Bond and the Advisor Loan Note and the Creditor Write-offs, along with some ancillary debt restructuring, will substantially reduce the Company's monthly cash burn and the Company estimates that this will remove more than 80 percent of the total forecasted cash obligations of the Company over the next 3 years (approximately £485,000 per month).
The Ordinary Shares issued pursuant to the debt restructuring in paragraph 2.1 and 2.2 (the "Conversion Shares") will be issued as part of the Second Admission.
Nasdaq delisting and transfer to OTCQX
As previously announced by the Company, the Company received written notice on 21 June 2024, from the Listing Qualifications Department of The Nasdaq Stock Market LLC, notifying the Company that it has not complied with Nasdaq's minimum closing bid price requirement for the Company's ADSs and the requirement to maintain a minimum market value of listed securities of $50,000,000, for continued listing on The Nasdaq Global Market ("Nasdaq"). The Company formally submitted a hearing request on 28 June 2024 to the Nasdaq Hearings Panel (the "Nasdaq Panel"), which stayed the suspension of the Company's securities pending the Nasdaq Panel's decision. The appeals hearing was held on 30 July 2024 and following a review of the Company's operating and financing plans, on 23 August 2024, the Nasdaq Panel responded with their decision to grant the Company additional time to regain compliance until 25 October 2024.
The Directors have considered the benefits of the Nasdaq listing against the cost of maintaining the listing and have decided to downlist the ADSs from Nasdaq, and apply to have the ADSs quoted on the OTCQX ® Best Market, which is the top-tier of the markets operated by OTC Markets Group ("OTC"). Accordingly, the Company expects to file a Form 25 with the United States Securities and Exchange Commission on or about 7 October 2024, and as a result, the Company expects that trading of its ADSs on Nasdaq will be suspended on or about 3 October 2024 and it's last official trading day on Nasdaq will be on or about 7 October 2024. Additionally, at its next testing date for Foreign Private Issuer ("FPI") status, the Company expects to qualify as an FPI. The Company anticipates that the transfer to OTC and acquisition of FPI status will provide significant savings of up to £1.9 million p.a. Given the cost savings from the debt restructuring, set out in paragraph 2, and the Nasdaq delisting referenced above, the Directors believe the Company's over-all cash burn rate can be reduced to £560,000 or less per month by the end of FY25.
The Company has also terminated its "At The Market" ADS Programme and cancelled its block admission on AIM for up to 51,356,400 new Ordinary Shares which became effective on 22 May 2024.
Use of Proceeds
The Company intends that the net proceeds of the Fundraise will be predominantly used for sales and marketing and general corporate and administrative expenses. Additionally, the Company will use approximately 10 per cent. of the net proceeds for development support of EHR integrations with new health systems.
Board Appointment
The Board are pleased to announce the appointment of Julian Baines MBE as Executive Chairman to the Company, to be effective from the General Meeting and subject to contract and completion of regulatory due diligence. Julian was the Non-Executive Chairman of the Company from March 2018 to June 2020. Christopher Mills, currently Non-Executive Chairman, intends to remain as a Non-Executive Director following Julian's appointment.
Julian has significant experience in the life science industry and was the CEO of EKF Diagnostics Holdings Plc ("EKF") and BBI Holdings plc. Julian rejoined the executive team at EKF as Executive Chairman on a short-term basis in February 2023. Julian is also currently Non-Executive Chairman of Verici Dx plc. Before joining EKF, he undertook a management buyout at BBI in 2000, a flotation on AIM in 2004 and was responsible for selling the business to Alere Inc. (now part of Abbott Laboratories) in 2008 for c. £85 million.
Current Trading and Future Prospects
The Company will later today announce its audited US GAAP financial results for the fiscal year ended 30 June 2024. Audited Full Year Fiscal 2024 Results in IFRS will be issued in due course.
Renalytix IFRS preliminary unaudited results records a total of $2.3 million in revenue for the financial year ended 30 June 2024 ("FY24") which was comprised of $2.1 million in revenue related to testing services, as well as $0.2 million related to pharmaceutical services revenue. Loss before tax, including loss from impairment of intangibles of $10.2 million and fair value adjustments to convertible debt of $3.75 million, for FY24 was $44.9 million. As at 30 June 2024, the Company has total assets of $7.3 million, including cash and cash equivalents of $4.7 million. Total net liabilities are negative at $8.5 million, and total equity and liabilities are $7.3 million.
There will be differences between US GAAP net losses and the IFRS preliminary unaudited results mainly relating to accounting treatment of impairment and amortisation of intangibles made under IFRS compared to US GAAP. A reconciliation will be provided in the IFRS audited annual report.
The IFRS preliminary unaudited results currently shows a reduction in net assets, which is as a result of a prudent accounting approach to impairment of the investment in the Company's subsidiaries and intangibles, and is deemed to be a serious loss of capital. The Directors note that this does not impact the current strategy of the Company and, following the Fundraise, the Company will be in a solvent and strong cash and balance sheet position. There is no cash or cashflow effect to these accounting adjustments and the Directors believe that following completion of the Fundraise, this will take the Company to profitability and cash flow break-even in approximately two years.
Turning to current trading, in 2024 new commercial leadership drove a series of customer improvements that are demonstrating adoption and repeat ordering. These include a significant expansion in patient blood draw options with Quest Dx and Exam One, a simplified test order requisition form to reduce doctor workload and a market informed Customer Services and Billing offering which improves end-to-end user experiences.
The Directors believe that the Company's commercial strategy is now delivering consistent and scalable results, with 400 direct-to-doctor orders received in Q3 2024 from 125 doctors. The Company expects the number of ordering doctors to increase to 225 in the fourth calendar quarter of 2024.
Additionally, the Directors believe the Company is reaching a growth inflection point with a major customer launch to approximately 10,000 patients and 140 new ordering doctors starting in September 2024.
Having considered a number of assumptions, the Directors currently have a reasonable belief that the Company has the potential to generate revenue of approximately $3.2 million in FY25, $8.5 million in FY26 and $17.5 million in FY27 comprising a mix Services, Enterprise and direct-to-doctor revenue, but with the vast majority of revenue being driven from direct-to-doctor growth. These estimates have been based on a 20 per cent. average quarterly projected growth, which excludes international sales, and is based on the relationship between the number of sales representatives and billable testing volume.
The Placing will be conducted by way of an accelerated bookbuilding process (the "Bookbuild") which will be launched immediately following this Announcement in accordance with the terms and conditions set out in Appendix I. The Placing Shares are not being made available to the public. Details of the final number of the Placing Shares and the approximate gross proceeds of the Fundraise will be announced as soon as practicable after the closing of the Bookbuild.
The Company's existing cash resources and net proceeds from the Fundraise will be used to fund sales and marketing, Development support for EHR integrations with new Health Systems and for working capital requirements.
Application will be made to the London Stock Exchange for admission of the EIS/VCT Placing Shares to trading on AIM ("First Admission"). First Admission is expected to occur at 8:00 a.m. on 9 October 2024.
Subject to the passing of the Resolutions at the General Meeting, completion of the allotment and issue of the Non-EIS/VCT Placing Shares, Subscription Shares and Conversion Shares will take place after the General Meeting. Application will be made to the London Stock Exchange for admission of the Non-EIS/VCT Placing Shares Subscription Shares and Conversion Shares to trading on ("Second Admission"). Subject to the passing of the Resolutions at the General Meeting, Second Admission is expected to occur at 8:00 a.m. on 1 November 2024.
The Placing Shares when issued, will be credited as fully paid and will rank on First Admission and/or Second Admission (as the case may be) pari passu in all respects with each other and with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of issue.
UK Product Governance Requirements
Solely for the purposes of the product governance requirements contained within Chapter 3 of the FCA Handbook Product Intervention and Product Sourcebook (the "UK Product Governance Requirements") and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the UK Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of: (a) retail investors, (b) investors who meet the criteria of professional clients and (c) eligible counterparties (each as defined in the FCA Handbook Conduct of Business Sourcebook); and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, distributors should note that: the price of the Ordinary Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the offer. In all circumstances Oberon Capital will only procure investors who meet the criteria of professional clients and eligible counterparties.
APPENDIX I
Bookbuild
Details of the Placing
The Placing Agreement contains customary undertakings and warranties given by the Company to the Bookrunner including as to the accuracy of information contained in this Announcement and to be contained in the Placing Document, to matters relating to the Company and its business and a customary indemnity given by the Company to the Bookrunner in respect of liabilities arising out of or in connection with the Placing, the First Admission and/or Second Admission (if applicable).
The Placing is conditional upon, inter alia:
| a) | the Company complying with its obligations under the Placing Agreement as they fall to be performed prior to Admission; and |
| b) | the obligations of the Bookrunner under the Placing Agreement not having been terminated in accordance with its terms prior to First Admission in respect of the First Tranche Placing shares or Second Admission in respect of the Second Tranche Placing Shares. |
Lock up
As part of the Placing, the Company has agreed that it will not issue or sell any Ordinary Shares for a period of 90 days after the date of this announcement without the prior written consent of the Bookrunner (not to be unreasonably withheld or delayed). That agreement is subject to certain customary carve-outs agreed between the Bookrunner and the Company.
Enterprise Investment Scheme ("EIS") and Venture Capital Trusts ("VCT")
The EIS/VCT Placing Shares to be issued pursuant to the Placing are intended to rank as "eligible shares" for the purposes of EIS and VCT investors and a "qualifying holding" for the purposes of an investment by VCTs, each pursuant to the relevant respective sections of the Income Tax Act 2007 (the "VCT Legislation").
The Company has obtained a written opinion from specialist tax advisers confirming that the EIS/VCT Placing Shares will rank as "eligible shares" for the purposes of the EIS and will be capable of being a "qualifying holding" for the purposes of VCT Legislation. However, no assurance has been obtained from HMRC that the Company is a qualifying company for the purposes of the EIS or that a subscription for EIS/VCT Placing Shares is a qualifying holding.
The status of the EIS/VCT Placing Shares as a qualifying holding for EIS and VCT purposes respectively will be conditional (amongst other things) on the qualifying conditions being satisfied throughout the period of ownership. There can be no assurance that the Company will conduct its activities in a way that will secure or retain qualifying status for VCT and/or EIS purposes (and indeed circumstances may arise where the Directors of the Company believe that the interests of the Company and the Group are not served by seeking to retain such status).
Neither the Company nor the Directors have given any warranties or undertakings that EIS reliefs or VCT reliefs will be granted in respect of the EIS/VCT Placing Shares. Neither the Company nor the Directors have given any warranties or undertakings that EIS reliefs or VCT reliefs, if granted, will not be withdrawn.
Application for admission to trading
Application will be made to the London Stock Exchange for the First Admission and the Second Admission respectively . It is expected that settlement of the First Tranche Placing Shares will take place on or around 9 October 2024 and First Admission will become effective and dealings in the First Tranche Placing Shares will commence at that time. It is expected that, subject to the passing of the Resolutions at the General Meeting, settlement of the Second Tranche Placing Shares will take place within two trading days after the General Meeting and that the Second Admission will become effective and dealings in the Second Tranche Placing Shares will commence at that time.
Participation in, and principal terms of, the Placing
| 7. | Each Placee's allocation will be confirmed to Placees orally or by email by the Bookrunner, and evidenced by a trade confirmation or contract note which will be dispatched as soon as practicable thereafter. The terms of this Appendix will be deemed incorporated by reference therein. The oral or email confirmation to such Placee will constitute an irrevocable legally binding commitment upon such person (who will at that point become a Placee) in favour of the Bookrunner and the Company, under which it agrees to acquire the number of Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Appendix and in accordance with the Company's Articles. Except as required by law or regulation, no press release or other announcement will be made by the Bookrunner, or the Company using the name of any Placee (or its agent), in its capacity as Placee (or agent), other than with such Placee's prior written consent. The Company and the Bookrunner will determine, in their absolute discretion, the allocation of Placing Shares between First Tranche Placing Shares and Second Tranche Placing Shares. |
Conditions of the Placing
The Bookrunner's obligations under the Placing Agreement in respect of the First Tranche Placing Shares are conditional on, inter alia:
| a) | the Placing Term Sheet having been agreed and duly signed by the Bookrunner and the Company on the Business Day following the date of the Placing Agreement (or by such later time/date as the Company and the Bookrunner may agree); |
| b) | the warranties contained in clause 10 and Schedule 1 of the Placing Agreement (" Warranties ") being true and accurate and not misleading (and remaining true and accurate and not misleading if they were repeated at First Admission |
| c) | the Company allotting the First Tranche Placing Shares in accordance with the Placing Agreement; |
| d) | the Company complying with its obligations under the Placing Agreement as they fall to be performed prior to First Admission; |
| e) | the Bookrunner not having terminated the Placing Agreement in accordance with its terms and conditions prior to First Admission; and |
| f) | First Admission occurring on or before 8.00 a.m. on 9 October 2024 (or such later date and/or time as the Bookrunner and the Company may agree, being no later than the First Long Stop Date). |
The Bookrunner's obligations under the Placing Agreement in respect of the Second Tranche Placing Shares are conditional on, inter alia:
| a) | First Admission having occurred; |
| b) | the Resolutions being passed at the General Meeting; |
| c) | the Warranties being true and accurate and not misleading at all times up to and immediately prior to Second Admission, as though they had been given and made on such dates by reference to the facts and circumstances then subsisting; |
| d) | the Company complying with its obligations under the Placing Agreement as they fall to be performed prior to Second Admission; |
| e) | the Bookrunner not having terminated the Placing Agreement in accordance with its terms and conditions prior to Second Admission; and |
| f) | Second Admission occurring on or before 8.00 a.m. on 1 November 2024 (or such later date and/or time as the Bookrunner and the Company may agree, being no later than the Second Long Stop Date). |
Right to terminate under the Placing Agreement
The Bookrunner is entitled in its absolute discretion, at any time before First Admission, acting in good faith and, to the extent reasonably practicable, following consultation with the Company, to terminate the Placing
Agreement by giving written notice to the Company (or by orally communicating the same to the Company) in the following circumstances:
| b) | any of the Warranties was, when given, untrue, inaccurate or misleading; |
| c) | any of the Warranties is not, or has ceased to be, true, accurate or not misleading (or would not be true, accurate or not misleading if then repeated) by reference to the facts subsisting at the time; or |
| d) | the Company fails to comply with any of its obligations under the Placing Agreement in any case which is material in the context of the Placing; or |
| e) | a matter having arisen in respect of which indemnification may be sought from the Company under the indemnity included in the Placing Agreement; or |
| f) | there has occurred a suspension or cancellation by the LSE of trading in the Company's securities; or |
| g) | a matter, fact, circumstance or event has arisen such that in the opinion of the Bookrunner, acting in good faith, a Supplementary Placing Announcement is required to be published; or |
| h) | there is introduced, or there is a public announcement of a proposal to introduce, any change in Market Rules or any other applicable law in the United Kingdom or the US, which does or is likely to prohibit or restrict the Placing, capital issues or stock markets or materially adversely affect the Group; or |
| i) | there has occurred, in the Bookrunner's opinion, acting in good faith, a Material Adverse Change. |
Additionally, if, at any time before First Admission, there has occurred:
| b) | a suspension of trading in securities generally on the LSE or generally on any stock exchange or trading in any stock exchange or over-the-counter market is materially disrupted or minimum or maximum prices have been established on any such exchange; or |
which, in the opinion of a Bookrunner, acting in good faith, would or would be likely to prejudice materially the Company or the Placing or makes it impracticable or inadvisable to proceed with the Placing then the Bookrunner may, acting in good faith and, to the extent reasonably practicable, following consultation with the Company, by notice in writing to the Company (or by orally communicating the same to the Company), terminate the Placing Agreement with immediate effect.
The Bookrunner is entitled in its absolute discretion, at any time before Second Admission, acting in good faith and, to the extent reasonably practicable, following consultation with the Company, to terminate the Placing Agreement by giving written notice to the Company (or by orally communicating the same to the Company) in the following circumstances:
| a) | any statement contained in any Placing Document is or has become or has been discovered to be untrue, misleading or inaccurate or any matter has arisen which would, if the Placing Documents were to be issued at that time, constitute an inaccuracy or omission therefrom which in the opinion of the Bookrunner, acting in good faith, is material in the context of the Placing of the Second Tranche Placing Shares or Second Admission or any of the transactions contemplated by the Placing Agreement; |
| b) | any of the Warranties was, when given, untrue, inaccurate or misleading; or |
| c) | any of the Warranties is not, or has ceased to be, true, accurate or not misleading (or would not be true, accurate or not misleading if then repeated) by reference to the facts subsisting at the time; or |
| d) | the Company fails to comply with any of its obligations under the Placing Agreement in any case which is material in the context of the Placing of the Second Tranche Placing Shares; |
| e) | a matter having arisen in respect of which indemnification may be sought from the Company under the indemnity included in the Placing Agreement; |
| f) | there has occurred a suspension or cancellation by the LSE of trading in the Company's securities; |
| g) | a matter, fact, circumstance or event has arisen such that in the opinion of the Bookrunner, acting in good faith, a Supplementary Placing Announcement is required to be published; or |
| h) | there is introduced, or there is a public announcement of a proposal to introduce, any change in Market Rules or any other applicable law in the United Kingdom or the US, which does or is likely to prohibit or restrict the Placing, capital issues or stock markets or materially adversely affect the Group; or |
| i) | there has occurred, in the Bookrunner's opinion, acting in good faith, a Material Adverse Change. |
Additionally, if, at any time after First Admission and before Second Admission, there has occurred:
| b) | a suspension of trading in securities generally on the LSE or generally on any stock exchange or trading in any stock exchange or over-the-counter market is materially disrupted or minimum or maximum prices have been established on any such exchange; or |
which, in the opinion of a Bookrunner, acting in good faith, would or would be likely to prejudice materially the Company or the Placing of the Second Tranche Placing Shares or makes it impracticable or inadvisable to proceed with the Placing of the Second Tranche Placing Shares then the Bookrunner may, acting in good faith and, to the extent reasonably practicable, following consultation with the Company, by notice in writing to the Company (or by orally communicating the same to the Company), terminate the Placing Agreement with immediate effect.
Following First Admission, the Placing Agreement will not be capable of termination or rescission by any party to it in so far as it relates to the Placing of the EIS/VCT Placing Shares and, following Second Admission, the Placing Agreement will not be capable of termination or rescission by any party in so far as it relates to the Placing of the Second Tranche Placing Shares.
No admission document or prospectus
Registration and settlement
Provided payment in full has been made, definitive legended share certificate(s) in respect of the Placing Shares shall be prepared by Link Group (the "Registrar") as soon as possible following the First Admission or Second Admission, as applicable. Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above the Sterling Overnight Index Average (SONIA) as determined by the Bookrunner.
Representations, warranties and further terms
| 3. | acknowledges that the Ordinary Shares are admitted to trading on AIM and the Company is therefore required to publish certain business and financial information in accordance with the AIM Rules for Companies (collectively, " UK Public Information "), which includes a description of the nature of the Company's business, the Company's most recent balance sheet and profit and loss account and similar statements published in preceding years and that the Placee is able to obtain or access such information or comparable information concerning any other publicly traded company without undue difficulty; |
| 6. | represents and warrants that it has neither received nor relied on any "inside information" as defined in the EU Market Abuse Regulation (Regulation 596/2014/EU) as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 (as amended and supplemented from time to time) (" UK MAR ") concerning the Company in accepting this invitation to participate in the Placing; |
| 11. | acknowledges that the Placing Shares are being offered and sold by or on behalf of the Company (i) to Non-US Placees in "offshore transactions" as defined in, and in accordance with, Regulation S and (ii) to a limited number of US Placees reasonably believed to be QIBs or Accredited Investors in transactions not involving a public offering within the meaning of Section 4(a)(2) of the Securities Act and which are exempt from or not subject to the registration requirements of the Securities Act and applicable US state securities laws. It and the prospective beneficial owner of the Placing Shares are, and at the time the Placing Shares are subscribed for will be, either: (i) outside the United States and subscribing for the Placing Shares in an "offshore transaction" as defined in, and in accordance with, Regulation S, and has agreed to be bound to the terms of the Non-US Investor Letter in the form provided to it by the Bookrunner or its affiliates; or (ii) a QIB or Accredited Investor which has agreed to be bound to the terms of the US Investor Letter in the form provided to it by the Bookrunner or its affiliates. In addition, with respect to (ii) above, it further acknowledges: (a) it is subscribing for the Placing Shares for its own account or for one or more accounts as to each of which it exercises sole investment discretion and each of which is a QIB; (b) it is subscribing for the Placing Shares for investment purposes only and not with a view to any distribution or for resale in connection with the distribution thereof, in whole or in part, in the United States; and (c) it has full power to make the acknowledgements, representations and agreements herein on behalf of each such account; |
| 12. | INTENTIONALLY LEFT BLANK |
| 16. | represents and warrants that the issue to it, or the person specified by it for registration as holder, of Placing Shares will not give rise to a liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer Placing Shares into a clearance system; |
| 17. | represents and warrants that: (i) it has complied with its obligations under the Criminal Justice Act 1993 and UK MAR; (ii) in connection with money laundering and terrorist financing, it has complied with its obligations under the Proceeds of Crime Act 2002 (as amended), the Terrorism Act 2000 (as amended), the Terrorism Act 2006 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on Payer) Regulations 2017 and any related rules, regulations or guidelines issued, administered or enforced by any government agency having jurisdiction in respect thereof; and (iii) it is not a person: (a) with whom transactions are prohibited under the Foreign Corrupt Practices Act of 1977 or any economic sanction programmes administered by, or regulations promulgated by, the Office of Foreign Assets Control of the US Department of the Treasury; (b) named on the Consolidated List of Financial Sanctions Targets maintained by HM Treasury of the United Kingdom; or (c) subject to financial sanctions imposed pursuant to a regulation of the European Union or a regulation adopted by the United Nations (together, the " Regulations "); and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations and has obtained all governmental and other consents (if any) which may be required for the purpose of, or as a consequence of, such purchase, and it will provide promptly to the Bookrunner such evidence, if any, as to the identity or location or legal status of any person which the Bookrunner may request from it in connection with the Placing (for the purpose of complying with such Regulations or ascertaining the nationality of any person or the jurisdiction(s) to which any person is subject or otherwise) in the form and manner requested by the Bookrunner on the basis that any failure by it to do so may result in the number of Placing Shares that are to be purchased by it or at its direction pursuant to the Placing being reduced to such number, or to nil, as the Bookrunner may decide in their sole discretion; |
| 19. | represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the EEA prior to First Admission or Second Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the EEA within the meaning of the EU Prospectus Regulation (including any relevant implementing measure in any member state); |
| 20. | represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the United Kingdom prior to First Admission or Second Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in the United Kingdom within the meaning of the UK Prospectus Regulation (including any relevant implementing measure in the United Kingdom); |
| 33. | the exercise by the Bookrunner of any right or discretion under the Placing Agreement shall be within the absolute discretion of the Bookrunner and the Bookrunner need not have any reference to the Placee and shall have no liability to the Placee whatsoever in connection with any decision to exercise or not to exercise any such right and each Placee agrees that it has no rights against the Bookrunner, the Company or any of their respective affiliates under the Placing Agreement pursuant to the Contracts (Rights of Third Parties) Act 1999 (as amended) or otherwise; |
APPENDIX II
DEFINITIONS
The following definitions apply throughout this Announcement unless the context requires otherwise:
| "Accredited Investor" | means an accredited investor as defined in Rule 501 under the Securities Act; |
| "Admission" | means the First Admission and/or the Second Admission (as the context requires); |
| " ADS " | American Depositary Shares; |
| "Advisor Accounts Payable Balance" | has the meaning given in paragraph 2.2 of this Announcement; |
| "Advisor Loan Note" | has the meaning given in paragraph 2.2 of this Announcement; |
| "AIM" | means the AIM market operated by the London Stock Exchange; |
| "AIM Rules" | means the AIM Rules for Companies and the AIM Rules for Nominated Advisers, together; |
| "Announcement" | means this announcement (including the appendices to this announcement); |
| "ACPNY" | AdvantageCare Physicians; |
| "Appendices" | means the appendices to this announcement; |
| "Articles" "Audited Full Year Fiscal 2024 Results" | means the articles of association of the Company in force at the date of this Announcement; means the audited full year fiscal results of the Company for the 2024 financial year; |
| "Board of Directors" | means the board of directors of the Company; |
| "Bookrunner" or "Oberon" | means the Company's broker, namely Oberon Investments Limited (trading as Oberon Capital) a company incorporated in England and Wales with company number 02198303, authorised and regulated by the FCA. |
| "COB Rules" | means the rules set out in the conduct of business sourcebook of the FCA Handbook; |
| "Company" or "Renalytix" | means Renalytix Plc, registered in England and Wales with number 11257655, whose registered office is at 2 Leman Street, London, United Kingdom, E1W 9US; |
| "Company Secretary" | Salim Hamir, who holds the role of Company Secretary to the Company |
| "Conversion" | the conversion of a certain proportion of the debt and accounts payable balance owed by the Company to the Converters into Conversion Shares; |
| "Convertible Bond" | has the meaning given in paragraph 2.1 of this Announcement; |
| "Convertible Bond Investor" | has the meaning given in paragraph 2.1 of this Announcement; |
| "Converters" | means the parties who are receiving Conversion Shares; |
| "Conversion Shares " | new Ordinary Shares issued pursuant to the Conversion, including the Heights Conversion Shares; |
| "Creditor Write-offs" | has the meaning given in paragraph 2.1 of this Announcement; |
| "DKD" | diabetic kidney disease; |
| "EEA" | means the European Economic Area; |
| "EHR" | electronic health record; |
| "EIS" | Enterprise Investment Scheme; |
| "EIS/VCT Placing Shares" | means the new Ordinary Shares, which are intended to qualify for the purpose of the EIS or VCT, to be allotted and issued to the relevant Placees at the Placing Price pursuant to the Placing in such total number as set out in the Placing Term Sheet which are proposed to be admitted to trading on AIM on First Admission; |
| "EU Prospectus Regulation" | means Regulation (EU) 2017/1129, as amended; |
| "FCA" | means the Financial Conduct Authority; |
| "FCA Handbook" | means the handbook of rules and guidance of the FCA made pursuant to FSMA; |
| "First Admission" | means the admission of the First Tranche Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules for Companies; |
| "FDA" | Food and Drug Administration; |
| "First Long Stop Date" | means such later date or time as the parties to the Placing Agreement may agree in writing but not later than 8:00 a.m. on 23 October 2024 in respect of the First Admission; |
| "First Tranche Placing Shares" | means the EIS/VCT Placing Shares; |
| "FPI" | has the meaning given in paragraph 3 of this Announcement; |
| "FSMA" | means the UK Financial Services and Markets Act 2000, as amended; |
| "General Meeting" | means a general meeting of the Shareholders of the Company, to be convened by the Company after the date of this Announcement; |
| "Group" | means the Company and its subsidiary undertakings from time to time and as at the date of this Agreement; |
| "Heights Conversion Shares" | has the meaning given in paragraph 2.1 of this Announcement; |
| "Insider Participation" | has the meaning given in the second paragraph of this Announcement; |
| "Insiders" | has the meaning given in the second paragraph of this Announcement; |
| "KDIGO Clinical Guidelines" | Kidney Disease: Improving Global Outcomes CKD Evaluation and Management clinic guidelines; |
| "London Stock Exchange" or "LSE" | means London Stock Exchange plc; |
| "Long Stop Date" | means the First Long Stop Date and/or the Second Long Stop Date (as the context requires); |
| "Market Rules" | means any law, regulation or stock or financial market rule, or policy statement, ruling, order or other regulatory instrument of any securities regulatory authority in the UK, the US or any other jurisdiction in which the Placing Shares are offered or sold, applicable to the Company or its Ordinary Shares, including, without limitation, the AIM Rules, the rules and regulations of the LSE, MAR, the DTRs, the US Securities Act and the US Exchange Act; |
| "MiFID II" | means the EU Directive 2014/65/EU on markets in financial instruments, as amended; |
| "MiFID II Product Governance Requirements" "Mount Sinai" | means the product governance requirements contained within: (a) MiFID II; (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures; means the Icahn School of Medicine at Mount Sinai; |
| "Nasdaq" | means The Nasdaq Global Market; |
| "Nasdaq Panel" | Nasdaq Hearings Panel; |
| "New Convertible Bond" | has the meaning given in paragraph 2.1 of this Announcement; |
| "Non-EIS/VCT Placing Shares" | means the new Ordinary Shares to be allotted and issued to the relevant Placees the Subscribers and the Converters at the Placing Price, subject to, inter alia , the passing of the Resolutions at the General Meeting, which are proposed to be admitted to trading on AIM on Second Admission; |
| "Non-US Placee" | means Placees other than US Placees; |
| "OTC" | OTCQX ® Best Market; |
| "Order" | means the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended; |
| "Ordinary Shares" | means the ordinary shares of nominal value £0.0025 each in the capital of the Company; |
| "Placees" | means persons to be procured by the Bookrunner who agree to subscribe for Placing Shares; |
| "Placing Document" | as defined in the Placing Agreement; |
| "Placing Price" or "Issue Price" | means 9 pence per Placing Share; |
| "Placing Shares" | means the new Ordinary Shares proposed to be allotted and issued by the Company as set out in the Placing Term Sheet fully paid up pursuant to the Placing in accordance with the terms of the Placing Agreement following the Bookbuild being the First Tranche Placing Shares and the Second Tranche Placing Shares; |
| "Proposed Director" | Julian Baines; |
| "QIB" | means qualified institutional buyer as defined in Rule 144A under the Securities Act; |
| "Regulation S" | means Regulation S promulgated under the Securities Act; |
| "Resolutions" | means the resolutions to be set out in the notice of General Meeting convened by the Company, to authorise the issue of the Second Tranche Placing Shares, the Subscription Shares and the Conversion Shares; |
| "Rule 144A" | means Rule 144A under the Securities Act; |
| "Second Admission" | means the admission of the Second Tranche Placing Shares, the to trading on AIM becoming effective in accordance with the AIM Rules for Companies; |
| "Second Long Stop Date" | means such later date or time as the parties to the Placing Agreement may agree in writing but not later than 8:00 a.m. on 13 November 2024 in respect of the Second Admission; |
| "Second Tranche Placing Shares" | means the conditional Non-EIS/VCT Placing Shares; |
| "Securities Act" | means the US Securities Act of 1933, as amended; |
| "Shareholders" | means holders of Ordinary Shares from time to time; |
| "Subscribers" | means those persons participating in the Subscription; |
| "Subscription" | the conditional subscription for the Subscription Shares pursuant to the terms of the Subscription Agreements; |
| " Subscription Agreements " | the conditional agreements in respect of the Subscription Shares; |
| " Subscription Shares " | the new Ordinary Shares being subscribed for at a subscription price per Ordinary Share equal to the Placing Price; |
| "Target Market Assessment" | means the product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II; |
| "Tranche 2 Payment" | has the meaning given in paragraph 2.1 of this Announcement; |
| "UK MAR" | means EU Market Abuse Regulation (Regulation 596/2014/EU) as it forms part of domestic law in the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (as amended and supplemented from time to time); |
| "UK Prospectus Regulation" | means the EU Prospectus Regulation, as amended by The Prospectus (Amendment etc.) (EU Exit) Regulations 2019, and which forms part of domestic law in the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (as amended and supplemented from time to time); |
| "United Kingdom" or "UK" | means the United Kingdom of Great Britain and Northern Ireland; |
| "US Exchange Act" | means the United States Securities Exchange Act of 1934, as amended; |
| "US Placee" | means Placees who are "U.S. persons" as defined in Regulation S; |
| "United States" or "US" | means the United States of America, its territories and possessions, any state of the United States and the District of Columbia; and |
| "VCT" | Venture Capital Trusts. |
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