OncoCyte Corporation (NASDAQ:OCX), a biotechnology firm specializing in cancer diagnostics, has announced a private placement agreement expected to generate approximately $15.8 million in gross proceeds. The agreement, made with certain accredited investors, involves the sale of over 5 million common shares and pre-funded warrants.
The transaction, dated April 11, 2024, includes common shares priced at $2.9164 each and pre-funded warrants at $2.9163, with an exercise price of $0.0001 per share. These pre-funded warrants allow purchase of up to 342,888 shares of OncoCyte's common stock. The closing of the private placement is scheduled for around April 15, 2024, contingent on standard closing conditions.
In accordance with the securities purchase agreement, OncoCyte has provided customary representations, warranties, and agreements. The company has also agreed to customary indemnification obligations, including those under the Securities Act of 1933, as well as other obligations and termination provisions.
The private placement includes a cap on ownership, where investors, together with their affiliates, cannot exercise the pre-funded warrants if it would result in ownership exceeding 4.99% of OncoCyte's outstanding common stock. This limit can be increased to 9.99% with 61 days' prior notice to the company.
Furthermore, OncoCyte has entered into a registration rights agreement with the investors, committing to file a registration statement with the SEC for the resale of the common shares and the shares underlying the pre-funded warrants within 30 days. The company aims to have the registration statement declared effective as promptly as possible, and no later than 60 days from the agreement date, or 75 days in the event of a full SEC review.
The net proceeds from this private placement are earmarked for general corporate purposes and working capital. Additionally, around $5 million of the proceeds will be used to redeem the company's outstanding Series A Redeemable Convertible Preferred Stock, which is due for redemption on April 15, 2024.
Needham & Company, LLC served as the exclusive placement agent for the transaction.
The information in this article is based on a press release.
InvestingPro Insights
OncoCyte Corporation's (NASDAQ:OCX) recent private placement agreement is a strategic move to bolster its financial position and fuel its growth initiatives. As investors consider the potential of OncoCyte's stock, they may find the InvestingPro Tips particularly insightful. For instance, while OncoCyte holds more cash than debt on its balance sheet, analysts are wary of the company's quick cash burn. Moreover, they anticipate a sales decline in the current year and do not expect the company to turn a profit this year either.
When it comes to the company's financial health, the InvestingPro Data reveals a market capitalization of $23.91 million USD and a negative price-to-earnings (P/E) ratio of -0.36, reflecting the company's current lack of profitability. The revenue for the last twelve months as of Q3 2023 stood at $1.46 million USD, which indicates a significant growth of 216.48%, showcasing the company's ability to increase sales despite profitability challenges.
Investors may also consider the InvestingPro Tips that OncoCyte's liquid assets exceed its short-term obligations, suggesting a level of financial flexibility in the near term. However, the company's valuation implies a poor free cash flow yield, which could be a concern for those looking for immediate returns on investment. It's also noted that OncoCyte does not pay a dividend, which may influence investors seeking regular income from their holdings.
For those interested in a deeper analysis, there are additional InvestingPro Tips available on the OncoCyte profile on InvestingPro, which can provide a more comprehensive look at the company's financials and market position. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and uncover the full spectrum of insights that could guide your investment decisions.
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