Oxford Biodyn Regulatory News (OBD)

Oxford BioDynamics plc

Subscription raising £3.62 million, trading update, posting of circular

and

Notice of General Meeting

Oxford, UK - 25 October 2021 - Oxford BioDynamics Plc (AIM: OBD, "OBD", "the Company" and, together with its subsidiaries, "the Group"), a biotechnology company developing targeted clinical diagnostic tests for immune health using its EpiSwitch® 3D genomics technology, announces that it has raised £3.62 million (US$ 5 million) by way of a Subscription for 7,791,803 newly-issued ordinary shares of 1p each (the "Subscription Shares"), from leading US-based healthcare fund, Armistice Capital Master Fund Ltd ("Armistice Capital") at a price of 46.5 pence per Subscription Share ("Subscription Price").

In addition, the Company has agreed to issue Armistice Capital 7,791,803 warrants to subscribe for new ordinary shares ("Warrants"). The Warrants have an exercise price of 58.125 pence, representing a 25 per cent. premium to the Subscription Price.

Key features of the Subscription and Warrants

· The Subscription Price of 46.5 pence per New Ordinary Share is equal to the closing mid-market price on 22 October 2021

· The 7,791,803 Subscription Shares have been issued under existing shareholder authorities and represent 8.42% of the issued share capital immediately before the Subscription

· The Company will also issue to Armistice Capital, conditional on the approval of shareholders in a General Meeting, warrants to subscribe for 7,791,803 new ordinary shares. The Warrants are exercisable for cash between one and five years from the date of issue.

Rationale for Subscription and Warrant Issue and Use of Proceeds

OBD has achieved several key milestones this year as it has pursued its expanded strategic focus. Commercially, the Company has launched EpiSwitch® CST - its COVID-19 Severity Test - in the US and its EpiSwitch® Explorer Array Kits to the research community. In August 2021, OBD's EpiSwitch® diagnostics platform was awarded a prestigious US FNIH Partnership for Accelerating Cancer Therapies (PACT) Grant. The Group also recently moved into its purpose-built 24,000 sq. ft headquarters in Oxford, UK and its new commercial offices in Gaithersburg, MD, USA.

The proceeds of the Subscription of approximately £3.62 million (US$5 million) (before fees) will be used by the Company as working capital to accelerate the commercialization of the EpiSwitch® product line, particularly the EpiSwitch® CiRT Checkpoint Inhibitor Response Test for cancer. The Company intends to continue to focus on commercialization of its pipeline of molecular diagnostic tests in the US market, partnering with US commercial labs, establishing a US early adopter market of concierge physicians and oncologists for its first tests and setting the table for future clinical utility and market recognition. Furthermore, the Directors consider that the addition of Armistice Capital to the Company's significant shareholders will enhance OBD's recognition and standing in the important US financial market.

Current trading

During the year to 30 September 2021, the Group has focused on:

· Development and launch of its first proprietary products, the EpiSwitch® CST (COVID Severity Test) and the EpiSwitch® Explorer Array Kit

· Development of its next proprietary test, the EpiSwitch® CiRT (Checkpoint Inhibitor Response Test) for cancer

· Work with pharma customers in biomarker discovery and clinical development

· Research, both on internal proprietary projects and with academic and other partners

· Establishing an experienced US-based commercial and operations team

· Design, fit-out and commissioning of purpose-built UK HQ

EpiSwitch® CST

During the first half of 2021, OBD's product development and operations teams successfully worked remotely on technology transfer and operational logistics with our partner lab. Following this, through the third quarter of 2021, OBD and partner lab teams have carried out additional validation and reproducibility work to enable the lab to perform the test to clinical standards. Remote working and travel restrictions has meant that this work has taken longer than initially planned, by preventing OBD and partner lab teams from working side by side. Combined, these issues have delayed the availability and first sales of the CST test. The Group continues to see a market opportunity for EpiSwitch® CST as an important tool to assess personalized risk during and beyond the relaxation of COVID restrictions in the Group's initial markets.

As announced in June 2021, work with the Group's partner lab on EpiSwitch® CST during 2021 has provided invaluable on-the-ground experience that has already been applied in preparation for the launch of EpiSwitch® CiRT for cancer later in 2021.

EpiSwitch® CiRT

The EpiSwitch® CiRT is a blood-based predictive test of a patient's likely response to checkpoint inhibitor therapies, offering valuable insight for oncologists and payors alike. In 2019, in the US, approximately $14bn was spent on checkpoint inhibitor therapies, with 300,000 patients receiving treatment with these drugs.

However, on average fewer than one third of such patients are likely to benefit from this treatment. A significant proportion will experience an adverse reaction to the therapy, but some of these will see a clinical benefit if they continue after being treated for the reaction. As such, knowing the likelihood of response will assist doctors in deciding on the appropriate course of treatment, including for patients who show significant adverse reactions but who should be treated and encouraged to continue with checkpoint inhibitor therapies. Management believes both payors and patients will benefit from avoiding prolonged, expensive, ultimately ineffective treatment.

EpiSwitch® Explorer Array Kit

Several EpiSwitch® Explorer Array Kits have been distributed to R&D laboratories for evaluation purposes and the Group anticipates commercial orders in the short term, including from grant-funded academic partners.

Pharma and grant income

The Group's work with pharmaceutical companies has continued successfully through the year. The Board is optimistic about the possibility of further commercial projects with existing customers and collaborators. Business development engagement with potential customers, negatively impacted by the COVID-19 pandemic, is now increasing. In particular, the Board has noted significant attention generated by the award to the Company of $0.9m in grant funding from the US Foundation for the National Institutes of Health (FNIH) Partnership for Accelerating Cancer Therapies (PACT), announced in August 2021.

Expanded infrastructure

The Group moved into its purpose-built 24,000 sq. ft UK headquarters in September 2021, enabling scalable delivery of OBD's products and services into the future. In October 2021, the Group also moved into its new US office in Gaithersburg, MD, where its growing commercial team is based.

Product pipeline

The Group has used its EpiSwitch® platform to develop a comprehensive pipeline of deployable molecular diagnostic tests in several indications that may be suitable for commercialization over the medium term (2 to 5 years), following the Group's first proprietary tests, EpiSwitch® CST and EpiSwitch® CiRT. The Group has previously highlighted diagnostic/prognostic tests for early-stage detection and staging of prostate cancer and colorectal cancer and, in veterinary medicine, a diagnostic/prognostic test for canine lymphoma as potentially the most promising and lucrative of these. The pipeline also includes diagnostic, prognostic, predictive and monitoring tests in indications such as rheumatoid arthritis (RA), amyotrophic lateral sclerosis (ALS or motor neurone disease), multiple sclerosis (MS), lymphoma and other cancers.

Issue of Equity

The Company announces that it has today made an application to the London Stock Exchange for the admission to trading on AIM of 7,791,803 new ordinary shares of 1p each ("New Shares").

The New Shares are expected to be admitted to trading on AIM on 28 October 2021.

Following this admission, the Company's share capital and total voting rights will comprise 100,351,574 ordinary shares of 1p each and the Company does not hold any shares in treasury. Consequently, 100,351,574 is the figure which may be used by shareholders as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change to their interest in, Inspired under the FCA's Disclosure and Transparency Rules.

Posting of Shareholder Circular and Notice of General Meeting

The Directors have issued the Subscription Shares under the Company's existing shareholder authorities granted at the 2021 annual general meeting, but do not have the authority to allot any new Ordinary Shares that may be issued pursuant to the Warrant Instrument. Accordingly, the Board is seeking the approval of Shareholders to provide the authority to allot new Ordinary Shares in respect of the Warrant Instrument.

A circular to Shareholders ("Circular") will be posted on 26 October 2021 convening a general meeting of the Company to be held at 3140 Rowan Place, Oxford Business Park South, Oxford, OX4 2WB on 11 November 2021 at 10 am and will be available to download on the Company's website at www.oxfordbiodynamics.com/investors.

Should Shareholders wish to ask any questions in relation to the Resolutions, they are encouraged to contact the Company prior to the General Meeting by email to the Company Secretary at investorrelations@oxfordbiodynamics.com with the subject line "GM Question".

Dr Jon Burrows, CEO of Oxford BioDynamics plc, said:

"We welcome Armistice as a new investor in the Company. The US pharmaceutical and biotech markets dominate the global arena, supported by experienced and highly knowledgeable specialist investors.

"The travel restrictions caused by the pandemic have made development and commercial launch of products especially challenging and we are proud of what we have achieved to date. These new funds not only provide a solid foundation to support our continuing activities, particularly the imminent launch of our EpiSwitch® CiRT Checkpoint Inhibitor Response Test for cancer, but will also enable us to drive our expanded strategy onwards." 

-Ends-

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

For more information:

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Notes:

1. References to times in this document are to London time (unless otherwise stated).

2. The dates and times set out in the above timetable and in the rest of this document are indicative only and may be subject to change. If any such dates and times should change, the revised times and/or dates will be notified by announcement via RNS.

Introduction

The Company today announced that it has raised £3.62 million (US$5 million) (before expenses) by way of a Subscription by Armistice Capital through the issue of 7,791,803 Subscription Shares at the Subscription Price. The issue of the Subscription Shares has been executed under the Company's existing shareholder authorities granted at the 2021 AGM. Under the terms of the Securities Purchase Agreement, the Company has agreed to issue the Warrants to Armistice Capital pursuant to the Warrant Instrument. The issue of the Warrants to Armistice Capital is conditional on the Resolutions being passed by Shareholders at the General Meeting.

Further details of the terms of the Subscription and the Warrants are set out below under the headings "Details of the Subscription and Warrants" and "Use of proceeds".

The main purpose of this document is to set out the reasons for, and details of, the issue of the Warrants, to explain why the Directors consider that the issue of the Warrants is in the best interests of the Company and its Shareholders as a whole and to unanimously recommend that you vote in favour of the Resolutions to be proposed at the General Meeting, notice of which is set out at the end of the Circular to be posted to Shareholders on 26 October 2021.

Background to and reasons for the Subscription and the issue of the Warrants

Since the appointment of Dr Jon Burrows as CEO in March 2020, the Company has pivoted from a primary focus on research and development services to pursue an expanded strategy centred on the development and commercialization of proprietary laboratory developed tests, alongside its ongoing work with pharma supporting biomarker discovery and clinical development.

In March 2021, the Company launched its first commercial prognostic test, EpiSwitch® CST (Covid Severity Test) and the first commercially available microarray kit for high-resolution 3D genome profiling and biomarker discovery, the EpiSwitch® Explorer Array Kit.

The Company expects to launch its next proprietary test, a predictive immune response profile for immuno-oncology (IO) checkpoint inhibitor treatments, the EpiSwitch® CiRT (Checkpoint Inhibitor Response Test for cancer), later in 2021. The EpiSwitch® CST and EpiSwitch® CiRT are fully funded.

In September 2021, the Company completed its move to a new purpose-built headquarters in Oxford, UK. The 24,000 sq. ft facility includes expanded laboratory and office space to deliver OBD's product and services offerings in a scalable way. In October 2021, the Company's US executive and commercial team moved into its new office in Gaithersburg, MD.

The Company intends to use the net proceeds of the Subscription as working capital to accelerate the commercialization of the EpiSwitch® product line, particularly the EpiSwitch® CiRT. The Company intends to continue to focus on commercialization of its pipeline of molecular diagnostic tests in the US market, partnering with US commercial labs, establishing a US early adopter market of concierge physicians and oncologists for its first tests and setting the table for future clinical utility and market recognition.

The Warrants may be exercised beginning one (1) year following the date of issuance and for a period of five (5) years. The Directors have therefore not allocated funds arising on the exercise of the Warrants to any specific activities at this stage.

The Directors believe that the Group's expanded strategy will lead to the creation of material Shareholder value over the longer term. The funds raised in the Subscription will directly support this strategy in the short term. Furthermore, the Directors consider that the addition of Armistice Capital to the Company's significant Shareholders will significantly enhance the Company's recognition and standing in the important US financial market.

Information on Oxford BioDynamics

Oxford BioDynamics is a global biotechnology company advancing personalized healthcare by developing and commercializing precision medicine tests for life-changing diseases. The Company is headquartered in Oxford, UK. It also has a commercial team and office based in Gaithersburg, MD in the US and a reference laboratory in Penang, Malaysia. The Company's Ordinary Shares are admitted to trading on AIM.

In March 2021, the Company launched its first commercial prognostic test, EpiSwitch® CST and the first commercially available microarray kit for high-resolution 3D genome profiling and biomarker discovery, EpiSwitch® Explorer Array Kit. Its next product will be EpiSwitch® CiRT, a predictive immune response profile for immuno-oncology (IO) checkpoint inhibitor treatments, to be launched later in 2021. 

The Company has developed a proprietary 3D genomic biomarker platform, EpiSwitch®, which can build molecular diagnostic classifiers for prediction of response to therapy, patient prognosis, disease diagnosis and subtyping, and residual disease monitoring in a wide range of indications. The Company's EpiSwitch™ platform has proven highly accurate and demonstrated robust stratification of clinical outcome and prognosis.

Oxford BioDynamics has participated in more than 40 partnerships with big pharma and leading institutions including Pfizer, EMD Serono, Genentech, Roche, Biogen, Mayo Clinic, Massachusetts General Hospital and Mitsubishi Tanabe Pharma. The Group's pharma partnerships have demonstrated its ability to reduce its technology to practice for clinical applications.

The Company has created a valuable technology portfolio, including biomarker arrays, molecular diagnostic tests, bioinformatic tools for 3D genomics and the world's largest curated 3D genome knowledgebase comprising hundreds of millions of data points from over 10,000 samples in more than 30 human diseases.

The 3D configuration of the genome plays a crucial role in gene regulation. By mapping this architecture and identifying abnormal configurations, EpiSwitch® can be used to diagnose patients or determine how individuals might respond to a disease or treatment.

Built on over 10 years of research, EpiSwitch® is Oxford Biodynamics' award-winning, proprietary platform that enables screening, evaluation, validation and monitoring of 3D genomic biomarkers. The technology is fully developed, protected by a broad intellectual property portfolio comprising 18 patent families as well as extensive proprietary know-how, and is reduced to practice.

In addition to stratifying patients with respect to anticipated clinical outcome, EpiSwitch® data offer insights into systems biology and the physiological manifestation of disease that are beyond the scope of other molecular modalities. The technology has performed well in academic medical research settings and has been validated through its integration in biomarker discovery and clinical development with big pharma.

Details of the Subscription and Warrants

The Subscription has raised, in aggregate, £3.62 million (US$5 million) (before expenses) through the issuance of the Subscription Shares at the Subscription Price to Armistice Capital. The Subscription Shares represent approximately 8.42 per cent. of the Company's share capital prior to the issue of the Subscription Shares.

If exercised in full, the Ordinary Shares to be issued on exercise of the Warrants, before any further issuances of new Ordinary Shares, would represent approximately 7.2 per cent. of the Enlarged Share Capital.

The issuance of the Warrants is conditional upon the passing of the Resolutions.

The Securities Purchase Agreement

Pursuant to the terms of the Securities Purchase Agreement, Armistice Capital has agreed to purchase the Subscription Shares and the Warrants. The Securities Purchase Agreement provides for two closings:

- At the initial closing, which took place on 25 October 2021 ("Initial Closing"), Armistice Capital purchased the Subscription Shares at the Subscription Price. The initial closing was conditional on the satisfaction of certain conditions including the representations and warranties provided by the Company being accurate in all material respects on the closing date.

- At the second closing, which is expected to take place on 11 November 2021, the Company shall deliver the Warrants to Armistice Capital for no additional consideration. The second closing is conditional on the Resolutions being passed at the General Meeting.

The Securities Purchase Agreement contains certain customary warranties and representations given by the Company in favour of Armistice Capital in relation to the Company and its business, including that the Company has received deeds of irrevocable undertaking from holders of Ordinary Shares representing greater than 50% of the outstanding Ordinary Shares, pursuant to which such holders have irrevocably and unconditionally undertaken to vote in favour of the Resolutions. In addition, the Company has agreed to indemnify Armistice Capital in relation to certain liabilities including in respect of any liabilities arising as a result of breach of the representations or warranties given by the Company.

Pursuant to the Securities Purchase Agreement, the Company has granted Armistice Capital a pre-emptive right to acquire its pro-rata share of any further share issues by the Company. The pre-emptive right does not apply in respect of the issue of certain excluded securities, including but not limited to grants to employees or pursuant to any share option plan, or in respect of any pre-emptive issues to all shareholders of the Company. The pre-emptive right shall cease to apply on the earlier of two years from the date of the Initial Closing or the closing of an initial public offering by the Company in the US.

The Company is subject to certain other restrictions under the Securities Purchase Agreement, including prohibitions on subsequent equity issues by the Company for ninety (90) days following the date of the second closing, without the written consent of Armistice Capital, and issues of debt or equity instruments that are convertible into, exchangeable or exercisable for, or include the right to receive, additional Ordinary Shares at a price that can vary with future market prices of the Ordinary Shares ("variable rate transactions") for one (1) year following the date of the second closing, subject to certain exceptions.

Pursuant to the Securities Purchase Agreement, Armistice Capital has agreed to vote, or cause to be voted by proxy, all of the Subscription Shares that it holds on the record date for the General Meeting in favour of the resolution to authorise the Directors to allot up to 7,791,803 Ordinary Shares upon exercise of the Warrants issued pursuant to the Warrant Instrument, it being understood that Armistice Capital is under no obligation to continue to hold the Subscription Shares following the Initial Closing. 

Warrants

Pursuant to the Securities Purchase Agreement, the Company will, subject to Shareholder approval of the Resolutions, deliver the Warrants to Armistice Capital. The Warrants will be issued pursuant to the Warrant Instrument. The Warrant Instrument provides for the issue of Warrants in respect of up to 7,791,803 Ordinary Shares. The Warrants may be exercised for a period beginning one (1) year and ending five (5) years following the date of issuance. Each Warrant may be exercised at a price of 58.125 pence per new Ordinary Share, being a 25 per cent. premium to the Subscription Price per new Ordinary Share. The Warrant Instrument provides for cashless exercise in certain specified circumstances and contains customary adjustment provisions. The Warrants are non-transferable save for certain limited circumstances including to affiliates of Armistice Capital.

In the event of a Fundamental Transaction prior to the exercise of the Warrants, the warrant holder is entitled (i) to exercise the Warrants upon, or following, the closing of the Fundamental Transaction and receive the same consideration it would have received upon exercise of the Warrants in the context of a Fundamental Transaction, or (ii) as an alternative to obtaining the consideration it would have received upon exercise of the Warrants in the context of a Fundamental Transaction, to require the Company to purchase the Warrants at a value calculated following the methodology set out in the Warrant Instrument based on the Black Scholes Option Pricing Model obtained from Bloomberg, albeit in the same kind and proportion of consideration as other Shareholders are to receive pursuant to the Fundamental Transaction.

Lock-up arrangements

Pursuant to the Securities Purchase Agreement, the Company has entered into lock-up deeds with each of the Directors, whereby each of them has agreed not to dispose of any of their interests in the Ordinary Shares of the Company for a period of 90 days from 25 October 2021.

Use of proceeds

The Company intends to use the net proceeds of the Subscription as working capital to accelerate the commercialization of the EpiSwitch® product line, particularly the EpiSwitch® CiRT. The Company intends to continue to focus on commercialization of its pipeline of molecular diagnostic tests in the US market; partnering with US commercial labs, establishing a US early adopter market of concierge physicians and oncologists for its first tests and setting the table for future clinical utility and market recognition.

If exercised in full, the Warrants will raise an additional £4.53 million for the Company. The Warrants may be exercised for a period beginning one (1) year and ending five (5) years following the date of issuance. The Directors have therefore not allocated funds arising on the exercise of the Warrants to any specific activities at this stage.

Recommendation

The Directors consider the issue of Warrants to be in the best interests of the Company and its Shareholders as a whole and accordingly unanimously recommend Shareholders to vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do in respect of their beneficial holdings amounting, in aggregate, to 18,887,769 Ordinary Shares as at 22 October 2021 (being the last practicable date prior to the publication of this document), representing 20.41 per cent. of the Company's issued share capital prior to the issue of the Subscription Shares.

Notes to Editors

About Oxford BioDynamics PlcOxford BioDynamics Plc (AIM: OBD) is a global biotechnology company, advancing personalized healthcare by developing and commercializing precision medicine tests for life-changing diseases.

In March 2021, the Company launched its first commercial prognostic test, EpiSwitch® CST (Covid Severity Test) and the first commercially available microarray kit for high-resolution 3D genome profiling and biomarker discovery, EpiSwitch® Explorer Array Kit. Its next product will be EpiSwitch® CiRT (Checkpoint Inhibitor Response Test) for cancer, a predictive immune response profile for immuno-oncology (IO) checkpoint inhibitor treatments, to be launched later in 2021. 

The Company has developed a proprietary 3D genomic biomarker platform, EpiSwitch®, which can build molecular diagnostic classifiers for prediction of response to therapy, patient prognosis, disease diagnosis and subtyping, and residual disease monitoring in a wide range of indications.

Oxford BioDynamics has participated in more than 40 partnerships with big pharma and leading institutions including Pfizer, EMD Serono, Genentech, Roche, Biogen, Mayo Clinic, Massachusetts General Hospital and Mitsubishi Tanabe Pharma.

The Company has created a valuable technology portfolio, including biomarker arrays, molecular diagnostic tests, bioinformatic tools for 3D genomics and an expertly curated 3D genome knowledgebase comprising hundreds of millions of data points from over 10,000 samples in more than 30 human diseases.

OBD is headquartered in Oxford, UK and is listed on AIM of the London Stock Exchange. It also has a commercial team in the US and a reference laboratory in Penang, Malaysia.

For more information, please visit the Company's website, www.oxfordbiodynamics.com, or follow on Twitter or LinkedIn.

About EpiSwitch®The 3D configuration of the genome plays a crucial role in gene regulation. By mapping this architecture and identifying abnormal configurations, EpiSwitch® can be used to diagnose patients or determine how individuals might respond to a disease or treatment.

Built on over 10 years of research, EpiSwitch® is Oxford Biodynamics' award-winning, proprietary platform that enables screening, evaluation, validation and monitoring of 3D genomic biomarkers. The technology is fully developed, based on testing of over 10,000 samples in 30 disease areas, and reduced to practice.

In addition to stratifying patients with respect to anticipated clinical outcome, EpiSwitch® data offer insights into systems biology and the physiological manifestation of disease that are beyond the scope of other molecular modalities. The technology has performed well in academic medical research settings and has been validated through its integration in biomarker discovery and clinical development with big pharma.

Oxford BioDynamics is leveraging its leading technology to develop a pipeline of tests in a wide range of indications, such as immuno-oncology, oncology, and veterinary medicine, to follow the release of its EpiSwitch® CST (Covid Severity Test).