Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-220769
PROSPECTUS SUPPLEMENT
(To
Prospectus dated October 2, 2017)
9,333,334
Shares
Common
Stock
We
are offering 9,333,334 shares of our common stock.
Our
common stock is listed on the NYSE American under the symbol “OCX.” The last reported sale price of our common stock
on February 8, 2019 was $4.00 per share.
We
are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012, or the JOBS
Act, and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus supplement,
the accompanying prospectus and our filings with the Securities and Exchange Commission.
Investing
in our securities involves a high degree of risk. See “Risk Factors” beginning on page S-6 of this prospectus supplement,
as well as the documents incorporated by reference in this prospectus supplement, for a discussion of the factors you should carefully
consider before deciding to purchase our common stock.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
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Per
Share
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Total
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Public offering price
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$
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3.75000
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$
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35,000,002
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|
Underwriting discounts and commissions
(1)
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$
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0.25688
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$
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2,397,500
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Proceeds, before expenses, to us
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$
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3.49312
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$
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32,602,502
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(1)
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See
“Underwriting” beginning on page S-20 of this prospectus supplement for additional information regarding underwriting
compensation.
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We
have granted the underwriters an option for a period of 30 days to purchase up to an additional 1,400,000 shares of common
stock at the public offering price.
The
underwriter expects to deliver the shares of common stock on or about February 12, 2019.
Sole
Book-Running Manager
Piper Jaffray
Co-Manager
Janney Montgomery Scott
Prospectus
Supplement dated February 8, 2019
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
document is in two parts. The first part is the prospectus supplement, including the documents incorporated by reference, which
describes the specific terms of this offering. The second part, the accompanying prospectus, including the documents incorporated
by reference, provides more general information. Generally, when we refer to this prospectus, we are referring to both parts of
this document combined. Before you invest, you should carefully read this prospectus supplement, the accompanying prospectus,
all information incorporated by reference herein and therein, as well as the additional information described under “Where
You Can Find Additional Information” on page S-26 of this prospectus supplement. These documents contain information you
should consider when making your investment decision. This prospectus supplement may add, update or change information contained
in the accompanying prospectus. To the extent there is a conflict between the information contained in this prospectus supplement,
on the one hand, and the information contained in the accompanying prospectus or any document incorporated by reference therein
filed prior to the date of this prospectus supplement, on the other hand, you should rely on the information in this prospectus
supplement. If any statement in one of these documents is inconsistent with a statement in another document having a later date—for
example, a document filed after the date of this prospectus supplement and incorporated by reference in this prospectus supplement
and the accompanying prospectus—the statement in the document having the later date modifies or supersedes the earlier statement.
You
should rely only on the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus
and in any free writing prospectuses we may provide to you in connection with this offering. We have not, and the underwriters
have not, authorized any other person to provide you with any information that is different. If anyone provides you with different
or inconsistent information, you should not rely on it. We are offering to sell, and seeking offers to buy, shares of our common
stock only in jurisdictions where offers and sales are permitted. The distribution of this prospectus supplement and the offering
of the common stock in certain jurisdictions may be restricted by law. Persons outside the United States who come into possession
of this prospectus supplement must inform themselves about, and observe any restrictions relating to, the offering of the common
stock and the distribution of this prospectus supplement outside the United States. This prospectus supplement does not constitute,
and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any securities offered by this
prospectus supplement by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation.
We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference herein or in the accompanying prospectus were made solely for the benefit of the parties
to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should
not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were
accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as
accurately representing the current state of our affairs.
MARKET,
INDUSTRY AND OTHER DATA
This
prospectus contains estimates, projections and other information concerning our industry, our business and the markets for our
products, including data regarding the estimated size of those markets and their projected growth rates, as well as market research,
estimates and forecasts prepared by our management. We obtained the industry, market and other data throughout this prospectus
from our own internal estimates and research, as well as from publicly available information, industry publications and research,
surveys and studies conducted by third-parties, including governmental agencies.
Information
that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties
and actual events or circumstances may differ materially from events and circumstances that are assumed in this information based
on various factors, including those discussed under the heading “Risk Factors” and elsewhere in this prospectus. We
believe that these sources and estimates are reliable but have not independently verified them and cannot guarantee their accuracy
or completeness. We caution you not to give undue weight to such projections, assumptions and estimates.
PROSPECTUS
SUPPLEMENT SUMMARY
This
summary highlights selected information about us, this offering and information appearing elsewhere in this prospectus supplement,
in the accompanying prospectus and in the documents we incorporate by reference. This summary is not complete and does not contain
all the information you should consider before investing in our securities pursuant to this prospectus supplement and the accompanying
prospectus. Before making an investment decision, to fully understand this offering and its consequences to you, you should carefully
read this entire prospectus supplement and the accompanying prospectus, including “Risk Factors” beginning on page
S-6 of this prospectus supplement, the financial statements and related notes, and the other information incorporated by reference
herein, including our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our other filings with the
Securities and Exchange Commission, or the SEC, that we file from time to time.
Unless
the context otherwise requires, all references in this prospectus to “OncoCyte,” “we,” “us,”
“our,” “the Company” or similar words refer to OncoCyte Corporation, together with our consolidated subsidiaries.
Overview
Our
mission is to develop highly accurate, easy to administer, non-invasive molecular diagnostic tests to improve the standard of
care for cancer diagnosis to better meet the needs of patients, physicians and payers. Our initial focus is developing
confirmatory diagnostics, utilizing novel liquid biopsy technology, for use to help confirm suspicious imaging results
with an initial focus on lung nodules. In the future, we may study whether our technology and interrogation approach could
have applications in other intended uses, indications or therapeutic areas both inside and outside oncology. Our lead product
is DetermaVu™, which is a laboratory-developed blood test we are developing in our clinical laboratory as a non-invasive
confirmatory diagnostic test to aid in the diagnosis of lung cancer. DetermaVu™ is being developed using proprietary sets
of gene expression markers in a test that we have designed and are in the process of validating as an aid in identifying suspicious
lung nodules which may help make decisions about invasive biopsies.
Our
liquid biopsy diagnostic tests, for which DetermaVu™ currently is our sole product candidate, will be confirmatory diagnostics
and are being developed to help reduce false positive results associated with current screening imaging and diagnostic
protocols. These new tests are intended to help:
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Reduce
unnecessary and sometimes risky procedures, as well as lower the cost of care through the avoidance of more expensive diagnostic
procedures, including invasive biopsies;
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Improve
the quality of life for cancer patients by reducing the anxiety associated with non-definitive diagnoses; and
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Improve
health outcomes through avoidance of unnecessary invasive procedures
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Our
strategic focus is to develop diagnostic tests that are supportive clinical tools in areas of high unmet need, including
lung cancer, breast cancer and bladder cancer detection. We have prioritized our efforts on DetermaVu™ and lung cancer
because we believe that lung cancer has one of the greatest unmet needs. In addition, we may in the future develop additional
diagnostics in the lung cancer field.
We believe there are many people
who would benefit from a diagnostic test such as DetermaVu
TM
. The U.S. Preventive Services Task Force recommended in
2013 that individuals aged 55 to 80 years who have a 30 pack-year smoking history and currently smoke or have quit within the
previous 15 years should be screened annually for lung cancer. We estimate that there are about 7 million such individuals in
the United States. In addition, approximately 5 million people undergo incidental scans outside of screening each
year. Given the prevalence and gravity of lung cancer, we believe a noninvasive aid to support patient care and diagnostic
treatment decisions would attract meaningful market interest.
We
plan to develop any initial tests with a focus on the U.S. market as a category of diagnostics called “laboratory-developed
tests” and plan to market any tests we develop under that regulatory framework. As this area of law and regulation is evolving,
we may have to adjust our future development and marketing plans and may need to pursue U.S. Food and Drug Administration premarket
review and clearance or approval of our tests.
Recent Developments
On January 29, 2019, we announced
positive results from our key R&D Validation study, demonstrating the accuracy of DetermaVu™, our confirmatory liquid
biopsy test for lung nodules suspicious for cancer that is intended to provide clinicians and doctors with information
that can aid in patient care and diagnosis.
The
R&D Validation study demonstrated a sensitivity of 90% (95% CI 82%-95%) and specificity of 75% (95% CI 68%-81%) of DetermaVu™
on a prospectively collected cohort of 250 patient blood samples that were blinded to laboratory operators. Sensitivity is the
percentage of malignant nodules that are correctly identified and specificity is the percentage of benign nodules correctly identified
(with correct identification in our study confirmed by biopsy results or serial imaging). A 95% confidence interval
(CI) suggests that there is a 95% chance that final test performance will be within the stated range.
We believe the results show
that DetermaVu
TM
exceeds the needs of clinicians and payers because its high specificity could help better inform
clinical decisions, which could help avoid unnecessary invasive biopsies, related complications and their costs. Based
on the results of the R&D Validation study, we believe that DetermaVu
TM
can become a best-in-class
lung cancer confirmatory liquid biopsy diagnostic test to help aid in clinical decision-making about lung nodules identified
through screening imaging protocols. We plan to make DetermaVu
TM
commercially available through our clinical laboratory
in the second half of 2019, with the goal of helping fundamentally change the way lung cancer is diagnosed.
Notably, we obtained these
results without including any clinical factors in the OncoCyte-designed DetermaVu™ algorithm, underscoring what we believe
is the biological strength of this laboratory-developed test. DetermaVu™ measures biomarkers of the immune system’s
response to cancer to differentiate between suspicious and likely benign lung nodules in early stage lung cancer. Specifically,
DetermaVu™ has been designed for use in patients with lung nodules ranging from 5-30mm in size detected initially in a computerized
tomography (CT) scan or incidentally through other imaging. Because clinical data points, such as lung nodule size, provide a
significant amount of the diagnostic power for liquid biopsy lung cancer tests developed by other companies, we believe the superior
accuracy range we have seen, to date, for DetermaVu™ independent of any clinical factors reinforces its strength as a confirmatory
diagnostic tool for aiding early lung cancer detection, and provides physicians with significant biologic information
that has not been available prior to DetermaVu™.
We believe DetermaVu™
has the potential to significantly reduce U.S. healthcare costs each year by eliminating unnecessary invasive biopsies, which,
according to an analysis of Medicare data, cost on average $14,634 each. In addition, DetermaVu™ may improve health outcomes
by providing information that may help avoid invasive biopsies and the complications that arise in up to 24% of such procedures,
and deaths that occur in a small number of cases. An article in JAMA Internal Medicine in 2017 that studied over 2,000 patients
in the Veterans Affairs system concluded that the majority of patients screened for lung cancer (which included, among other patient
selection criteria, current and former smokers) required follow up tracking of nodules, but few patients had a confirmed diagnosis
of lung cancer. A new publication in the same journal in January 2019 that attempts to quantify the severity of these findings
suggests that the risks relating to invasive procedures used in lung nodule diagnosis may be greater in the real-world setting
than those previously reported in clinical trials. A large retrospective study consisting of a nationally representative sample
of 344,510 patients (selected without regard to smoking status) aged between 55 and 77 years who underwent invasive diagnostic
procedures following a positive finding in low-dose computed tomography, among other inclusion criteria, estimated a complication
rate of approximately 24% for those age 65 or older, and 22% for those in the age range of 55 to 64. Complication costs varied
by patient type, with the mean incremental costs being $6,320 for minor complications and $56,845 for major complications. The
article also suggests that these complication rates may be hindering uptake in screening.
In clinical practice, physicians
could use a DetermaVu™ blood test to help determine whether or not a patient’s lung nodule in the 5-30mm range
should be biopsied for cancer. If the DetermaVu™ test indicates a likely benign result, we believe clinicians or
doctors could choose to monitor the patient through serial imaging (follow-up low-dose computed tomography) rather
than ordering a biopsy. With 75% specificity (the percentage of benign nodules correctly identified in the R&D validation
study), we anticipate that physicians could use DetermaVu™ to help prevent up to three quarters of unnecessary invasive
biopsies and their associated complications and, in rare instances, deaths. Currently, for many patients, a
lung biopsy has a higher likelihood of leading to a serious complication than of confirming lung cancer. These anticipated reduced
costs and potential for improved patient outcomes highlight DetermaVu™’s value proposition for payers such as Medicare
and health insurance companies.
The R&D Validation study
utilized the optimized biomarkers and algorithm that were previously identified in our recently completed algorithm development
study, based on 700 patient samples. The R&D Validation study used a blinded set of 250 samples, including samples
from 44 clinical sites, to validate the classifier performance.
R&D
Validation Study Highlights
:
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DetermaVu™
demonstrated sensitivity of 90% (95% CI 82%-95%), and specificity of 75% (95% CI 68%-81%) in a prospectively collected cohort
of 250 patient blood samples including patients with nodules of 5 to 30 mm that were blinded to laboratory operators, and
without the use of clinical factors such as nodule size.
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Results
are the first ever in a blinded prospective study to confirm our approach of utilizing the immune system’s response
to early stage cancer to provide a robust biological signal in blood that supports physicians in differentiating between malignant
and benign lung nodules.
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Results
are consistent with earlier studies that led to our selection of biomarkers included in DetermaVu™, without
requiring the use of clinical factors such as nodule size, further confirming the strength and robustness of the biomarkers
in the assay.
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We believe our immune system
interrogation approach overcomes significant challenges and limitations associated with aiding early stage lung cancer detection
using other liquid biopsy approaches, such as circulating tumor cell and cell free DNA detection, which have failed to demonstrate
sensitivity and specificity characteristics comparable to those seen in the DetermaVu™ R&D Validation study, particularly
in early stage lung cancer patients.
Next
Steps
Having
achieved successful R&D Validation utilizing the robust clinical grade and reproducible Thermo Fisher Ion GeneStudio
S5 next-generation sequencing platform, we are working to complete the remaining steps to make DetermaVu™ commercially available
in the second half of 2019.
The
remaining steps to having a diagnostic that can be offered to patients are:
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Analytical
Validation – a series of studies, as specified in guidelines for labs under the Clinical Laboratory Improvement
Amendments of 1988, or CLIA, to establish the analytical performance of the test system, based on the Thermo Fisher Ion
GeneStudio S5 next-generation sequencing platform’s operating performance.
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CLIA
Validation – which consists of running approximately 100 samples, previously run in the R&D Validation study,
in the CLIA laboratory using the systems that are now validated analytically. The intent would be to demonstrate that the
systems as being run in the CLIA lab are providing the equivalent results to those observed in the R&D Validation study.
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Clinical
Validation – an analysis of running approximately 350 prospectively collected, blinded samples in the CLIA
laboratory. The results of the Clinical Validation will establish the assay’s performance in the CLIA laboratory using the
fully validated test systems.
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In addition
to these steps, we plan to conduct a post-launch Clinical Utility study for the purpose of meeting the reimbursement
requirements of public and commercial payers, including Medicare, insurance companies and integrated delivery networks.
This Clinical Utility study design will be part of the data package that will be submitted to Medicare in 2020 in hopes of receiving
a coverage decision in 2020, and the results of the Clinical Utility trial will be part of the data package provided to
commercial payers.
Commercial
Focus
Our
commercial focus will be on pulmonologists.
With the increased focus of health care workers
and advocacy groups on earlier diagnoses, we believe that more high-risk patients will be screened for lung cancer.
Many of these patients see, or will be referred for follow up with, a pulmonologist. The American Association
of Medical Colleges estimates that there are approximately 4,830 practicing pulmonologists in the United States. We believe
that a specialty sales force can cover the number of practicing pulmonologists.
Corporate
Information
We
were incorporated in September 2009 in the state of California. Our principal executive offices are located at 1010 Atlantic Avenue,
Suite 102, Alameda, California 94501. Our telephone number is (510) 775-0515. Our website is
www.oncocyte.com
. Information
contained on, or that can be accessed through, our website, is not, and shall not be deemed to be, incorporated in this prospectus
supplement or considered a part thereof.
THE
OFFERING
Common
Stock offered by us
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9,333,334
shares
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Common
stock to be outstanding immediately after this offering
(1)
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49,997,830
shares (or 51,397,830 shares if
the underwriters exercise in full their option to purchase additional shares of common stock).
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Option
to purchase additional common stock
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We
have granted the underwriters an option to purchase up to 1,400,000 additional
shares of common stock from us at the offering price. The underwriters can exercise this
option at any time, but not more than once, within 30 days following the effective date
of the purchase agreement between us and the underwriters.
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Use
of proceeds
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We
expect to receive net proceeds from this offering of approximately $32.1 million
(or $37.0 million if the underwriters exercise their option to purchase additional
shares of common stock in full), after deducting the underwriting discounts and commissions
and the expenses of this offering payable by us. We currently intend to use the net proceeds
from this offering to support DetermaVu™ commercialization efforts and additional
clinical studies to support reimbursement and adoption, to initiate future product development,
and for general corporate and working capital purposes. See “Use of Proceeds.”
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Risk
factors
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Investing
in our common stock involves a high degree of risk. See “Risk Factors” beginning on page S-6 of this prospectus
supplement and page 4 of the accompanying prospectus, as well as the documents and other information incorporated by reference
in or included in this prospectus supplement, for a discussion of the risks you should carefully consider before investing
in our common stock.
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NYSE
American symbol for our common stock
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OCX
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(1)
The number of shares of our common stock to be outstanding immediately after this offering as shown above is based on 40,664,496
shares of our common stock outstanding as of September 30, 2018, and excludes:
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4,035,339
shares of our common stock issuable upon exercise of warrants outstanding as of September 30, 2018, with a weighted-average
exercise price of $3.70 per share;
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4,540,000
shares of our common stock issuable upon exercise of options outstanding under our 2010 Stock Option Plan as of September
30, 2018, with a weighted-average exercise price of $2.94 per share, of which options to acquire 575,000 shares of our common
stock have been exercised for net proceeds to us of $942,500 subsequent to September 30, 2018;
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●
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230,000
shares of our common stock issuable upon exercise of options outstanding under our 2018 Equity Incentive Plan as of September
30, 2018, with a weighted-average exercise price of $2.40 per share; and
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●
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4,770,000
shares of our common stock available for future grants under our 2018 Equity Incentive Plan as of September 30, 2018.
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RISK
FACTORS
Investing
in our securities involves a high degree of risk and uncertainty. You should carefully consider these risk factors, together with
all of the other information included or incorporated by reference in this prospectus supplement and the accompanying prospectus,
as modified and superseded, before you decide to invest in our securities. The occurrence of any of the following risks could
harm our business. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our operations.
You should also refer to the other information contained in this prospectus supplement, the accompanying prospectus and the documents
incorporated by reference into this prospectus supplement and the accompanying prospectus, including our financial statements
and the notes to those statements and the information set forth in the section entitled “Special Note Regarding Forward-Looking
Statements.”
Risks
Related to our Business Operations
We
have limited capital, marketing, and sales resources and no distribution resources for the commercialization of DetermaVu™.
If
we are successful in completing the remaining steps of Analytical Validation, CLIA Validation, and Clinical Validation for DetermaVu™,
we will need to build our own marketing and sales capability, which will require the investment of significant financial and management
resources to recruit, train, and manage a sales force and build-out a health care regulatory compliance program. In the alternative,
due to our limited capital resources, we may need to enter into marketing arrangements with other diagnostic companies for DetermaVu™.
Under such marketing arrangements we may license marketing rights to one or more other companies or to one or more joint venture
companies formed to market DetermaVu™, and we might receive only a royalty on sales of DetermaVu™ or an equity interest
in a joint venture company. As a result, our revenues from the sale of DetermaVu™ may be substantially less than the amount
of revenues and gross profits that we might receive if we were to market DetermaVu™ ourselves.
We
may experience delays in conducting the additional validation studies necessary for the commercialization of DetermaVu™,
or we may encounter unanticipated results or findings.
Having concluded our R&D
validation study, our next step prior to commercialization of DetermaVu™ will be to conduct an analytical validation study,
and, assuming successful completion, a CLIA validation and clinical validation study thereafter. Clinical validation is the final
step prior to commercial launch of a laboratory-developed test, or LDT, and we are targeting completion of a clinical validation
during the second half of 2019. If these studies are completed successfully, we plan to commercialize or to arrange for the commercialization
of the test as a laboratory-developed test to be run solely in our clinical laboratory in Alameda, CA. Until we perform these
studies, we will not know whether we can successfully complete the development of DetermaVu™. We have limited experience
conducting analytical and clinical validation and have not yet performed a clinical utility demonstration in
our lab. We may not be able to successfully complete this testing for DetermaVu™ or any other test we may develop.
While we plan to make DetermaVu
TM
commercially available in the second half of 2019, there can be no assurance that
there will be no delays in the successful completion of the clinical validation study and commercialization of DetermaVu™,
due to any number factors some of which may not be within our control. Any delays in the successful completion of the additional
validation studies for DetermaVu™ could cause us to incur significant additional costs and delay the completion of development
and commercial launch of DetermaVu™. We may encounter unanticipated results or finding in the studies subsequent to our
R&D validation study; our earlier test results may not be predictive of future test results with DetermaVu™ or any other
future candidate tests. We have performed only limited R&D work for any other test or for any other intended patient population
outside of lung cancer, and we have conducted no R&D work outside of cancer. Our immune system interrogation approach and
technology may not ultimately have application in any other population, and we may be unable to identify any future candidates
and tests for any other cancer or any other disease population.
Our
testing of DetermaVu™ is conducted in a single, CLIA-certified laboratory. Our operations as a clinical laboratory
are subject to oversight by the Centers for Medicare & Medicaid Services, or CMS, under the Clinical Laboratory Improvement
Amendments, or CLIA, as well as certain state agencies, and any failure to maintain our CLIA or applicable state permits and licenses
may affect our ability to commercialize DetermaVu
TM
.
We
are subject to CLIA, a federal law regulating clinical laboratories that perform testing on specimens derived from humans for
the purpose of providing information for the diagnosis, prevention or treatment of disease. Our clinical laboratory must be certified
under CLIA in order for us to perform testing on human specimens. CLIA is intended to ensure the quality and reliability of clinical
laboratories in the United States by mandating specific standards in the areas of personnel qualifications, administration, and
participation in proficiency testing, patient test management, quality control, quality assurance and inspections. We have a current
certificate under CLIA to perform routine chemistry. To renew this certificate, we are subject to survey and inspection every
two years. Moreover, CLIA inspectors may make periodic inspections of our clinical laboratory outside of the renewal process.
In
addition, our proprietary test must also be recognized as part of our accredited programs under CLIA so that we can offer it in
our laboratory. A laboratory that is certified as “high complexity” under CLIA, may develop, manufacture, validate
and use proprietary tests referred to as LDTs. The U.S. Food and Drug Administration, or FDA, defines LDTs as an
in vitro
diagnostic
test that is designed, manufactured and used within a single laboratory, or a laboratory with a single CLIA certificate. CLIA
requires that a laboratory establish certain performance characteristics relating to analytical validity, including accuracy,
precision, analytical specificity, analytical sensitivity and establishment of a reference range, for any LDT that has not received
FDA clearance or approval prior to release of any test results from such LDT. The laboratory’s analytical validation of
such LDT is reviewed during its routine biennial survey. The CLIA program does not address the clinical validity of any test.
The regulatory and compliance standards applicable to such testing may change over time and any such changes could have a material
adverse effect on our business. The CLIA regulations would apply to the use of DetermaVu™ in our clinical laboratory.
The
law also requires us to maintain a state laboratory license to conduct testing in that state. Our laboratory is located in California
and must maintain a California state license. California laws establish standards for day-to-day operation of our clinical laboratory,
including the training and skills required of personnel and quality control. In addition, several other states require that we
hold licenses to test specimens from patients in those states. For example, Maryland is just one of several states that require
out-of-state laboratories to have a state laboratory license to perform diagnostic tests on samples originating from Maryland
residents. Other states may have similar requirements or may adopt similar requirements in the future. Additionally, both New
York and Washington State are exempt from CLIA and have their own stricter clinical laboratory regulatory programs. We could be
required to comply with those states’ programs in the event we accept specimens from New York or Washington. We do not have
immediate plans to market our tests for commercial use in the European Union and as a result, at this time we do not believe we
are subject to EU or EU member state post-market regulations related to our tests.
If
we were to lose our CLIA certification or California laboratory license, whether as a result of a revocation, suspension or limitation,
we would no longer be able to offer our tests, which would limit our revenue and harm our business. If we were to lose our license
in other states where we are required to hold licenses, we would not be able to test specimens from those states. If we perform
testing on samples originating in a state where we require a license, but do not currently have one, we could be subject to fines,
sanctions, and may be denied permits or licenses in the future.
If
our laboratory facilities become damaged or inoperable, or we are required to vacate any facility, our ability to provide services
and pursue our research and development and commercialization efforts may be jeopardized.
We
do not have any clinical laboratory facilities outside of our facility in Alameda, California. Our facility and equipment could
be harmed or rendered inoperable by natural or man-made disasters, including fire, flooding and power outages, which may render
it difficult or impossible for us to perform our tests or provide laboratory services for some period of time. The inability to
perform our tests or the backlog of tests that could develop if any of our facilities is inoperable for even a short period of
time may result in the loss of customers or harm to our reputation or relationships with key researchers, collaborators, and customers,
and we may be unable to regain those customers or repair our reputation in the future. Furthermore, our facilities and the equipment
we use to perform our research and development work could be costly and time-consuming to repair or replace.
Additionally,
a key component of our research and development process involves using biological samples and the resulting data sets and medical
histories, as the basis for our diagnostic test development. In some cases, these samples are difficult to obtain. If the parts
of our laboratory facilities where we store these biological samples are damaged or compromised, our ability to pursue our research
and development projects, commercialization of DetermaVu™, as well as our reputation, could be jeopardized. We carry insurance
for damage to our property and the disruption of our business, but this insurance may not be sufficient to cover all of our potential
losses and may not continue to be available to us on acceptable terms, if at all.
Further,
if our laboratory becomes inoperable we may not be able to license or transfer our proprietary technology to a third-party, with
established state licensure and CLIA certification under the scope of which our diagnostic tests could be performed following
validation and other required procedures, to perform the tests. Even if we find a third-party with such qualifications to perform
our tests, such party may not be willing to perform the tests for us on commercially reasonable terms. Moreover, we believe our
test is currently subject to enforcement discretion by the FDA because we believe the test currently qualifies as an LDT. If,
however, we are required to find a third-party laboratory to conduct our testing services, we believe this would change
our status and the FDA would consider such test offered through a third-party to then be a medical device subject to
active FDA regulation and enforcement. In that case, we may be required to obtain premarket clearance or approval prior to offering
our tests, which would be time-consuming and costly and could result in delays in our ability to sell or offer our tests.
If
the FDA takes the position that DetermaVu™ is not within the scope of its policy on enforcement discretion for laboratory-developed tests, or otherwise determines that it will seek to actively regulate DetermaVu™, responding to such a regulatory
position could lead to delays in commercialization, or (if encountered after commercialization) requirements to halt the commercial
provision of our test until FDA marketing authorization is obtained, or enforcement action from the FDA.
Although
we believe we are within the scope of the FDA’s policy on enforcement discretion for laboratory-developed tests , the initial
commercialization and continued commercial availability of an LDT is subject to uncertainty given the FDA’s latitude in
interpreting and applying its laws and policies. For example, although the FDA has historically exercised enforcement discretion
over most LDTs, it does not consider tests to be subject to this enforcement discretion if they were or are designed or manufactured
completely, or partly, outside of the laboratory that offers and uses them, or if they are offered “over-the-counter”
(as opposed to being available to patients only when prescribed by a health care provider). Even for tests that appear to fall
within FDA’s previously stated policy on enforcement discretion, the FDA may decide to regulate certain LDTs on a case-by-case
basis at any time.
In
December 2018 the FDA Commissioner and the Director of the Center for Devices and Radiological Health (CDRH) expressed
significant concerns regarding disparities between some LDTs and in vitro diagnostics that have been reviewed and cleared or
approved by FDA. If the FDA were to determine that our tests are not within the policy for LDTs for any reason, including new
rules, policies, or guidance, or due to changes in statute, our tests may become subject to FDA requirements, including
pre-market review. If required, the regulatory marketing authorization process may involve, among other things, successfully
completing additional clinical trials and submitting a pre-market clearance (510(k)) submission or filing a
de novo
or
pre-market approval application with the FDA. If pre-market review and approval is required by the FDA, we may need to incur
additional expenses or require additional time to seek it, or we may be unable to satisfy FDA standards, and our tests may
not be cleared or approved on a timely basis, if at all, and the labeling claims permitted by the FDA may not be consistent
with our currently planned claims or adequate to support adoption of and reimbursement for our tests. Ongoing compliance with
FDA regulations would increase the cost of conducting our business, and subject us to inspection by and the regulatory
requirements of the FDA, for example registration and listing, adherence to good manufacturing practices under the Quality
System Regulation, and medical device reporting, and enforcement action in the event we fail to comply with these
requirements. Our laboratory is operating under CLIA and is not currently operating as a device manufacturing facility
following FDA’s Quality System Regulation. Because these standards differ, we may face challenges establishing
FDA-compliant quality systems or be unable to do so. If after commercialization under the LDT framework our tests are
allowed to remain on the market but there is uncertainty about the regulatory status of our tests, including questions that
may be raised if competitors object to our regulatory positioning as an LDT, we may encounter ongoing regulatory and
legal challenges and related costs. Such challenges or related developments (for example if the labeling claims the FDA
allows us to make are more limited than the claims we currently plan to make) may impact our commercialization efforts as
orders or reimbursement may be less than anticipated. Any of these regulatory developments may cause our business to
suffer.
If
we are successful in commercializing DetermaVu
TM
, we will be obligated to comply with numerous additional federal and
state statutes and regulations pertaining to our business, and be subject to government oversight and scrutiny for our compliance
with such laws. Laboratory and health care regulatory compliance efforts are expensive and time-consuming, and failure to maintain
compliance with applicable laws could result in enforcement action which could be detrimental to our business.
If
we are successful in commercializing DetermaVu
TM
and particularly if payment becomes available from government or commercial
payers for DetermaVu
TM
we will be subject to extensive and frequently changing federal and state laws governing
various aspects of our business. We will be subject to ongoing compliance with laws addressing our laboratory licensure and certification
at the federal and state level; advertising and promotion (including laws enforced by the Federal Trade Commission); and laws
intended to prevent fraud, waste, and abuse in healthcare programs (including among others the Anti-Kickback Statute, False Claims
Act, the Eliminating Kickbacks in Recovery Act (EKRA), the Stark Law, and applicable state law equivalents).
These
laws and regulations are complex and are subject to interpretation by the courts and by government agencies. If one or more such
agencies alleges that we may be in violation of any of these requirements, regardless of the outcome, it could damage our reputation
and adversely affect important business relationships with third parties. Any action brought against us for violation of these
or other laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and
divert our management’s attention from the operation of our business. If our operations are found to be in violation of
any of these laws and regulations, we may be subject to any applicable penalty associated with the violation, including civil
and criminal penalties, damages and fines, and in some circumstances we could be required to refund payments received by us from
payers, or even be excluded from participation in healthcare programs. Any of the foregoing consequences could seriously
harm our business and our financial results.
We
plan to adopt policies and procedures designed to comply with applicable laws and regulations. Developing a compliance infrastructure
is costly and time-consuming, and even a well-designed and implemented compliance program cannot necessarily prevent all violations
of relevant laws. We may be subject to enforcement action based on the actions or omissions of employees or contractors, including
our anticipated sales force.
The
commercial success of DetermaVu
TM
depends on the availability and sufficiency of third-party payer coverage
and reimbursement, which may be limited or unavailable.
Our
ability to successfully commercialize DetermaVu
TM
will depend, in significant part, on the extent to which appropriate
reimbursement levels can be obtained for patients. Physicians will be hesitant to order a diagnostic test for a patient where
they may be left with a large out-of-pocket fee through co-payments or co-insurance or unreimbursed balances. Third-party
payers, including Medicare, Medicaid and private insurers, are increasingly challenging the prices charged for healthcare
products and services. In addition, legislative proposals to reform health care or reduce government insurance programs may result
in lower prices or the actual inability of prospective customers to purchase DetermaVu
TM
. Furthermore, even if reimbursement
is available, it may not be available at price levels sufficient for us to realize a positive return on our investment. We
have never successfully obtained reimbursement for any test and may never be able to obtain reimbursement from any third-party
payer; without such coverage and reimbursement, we may not achieve market acceptance of our test and may never be profitable.
The
United States government and state legislatures have shown significant interest in implementing cost containment programs to limit
the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and coverage. Adoption
of government controls and measures, and tightening of restrictive policies in jurisdictions with existing controls and measures,
could exclude or limit DetermaVu
TM
from coverage. Even if DetermaVu
TM
receives coverage and reimbursement
from third-party payers, such coverage policies and reimbursement rates may change at any time, might not be adequate,
or less favorable coverage polices and reimbursement rates may be implemented in the future. If we are unable to obtain and maintain
sufficient third-party coverage and adequate reimbursement for DetermaVu
TM
, its commercial success may be greatly hindered
and our financial condition and results of operations may be materially and adversely affected.
We
may need to conduct additional studies in order to demonstrate the cost-effectiveness of DetermaVu
TM
to the satisfaction
of our target customers and their third-party payers. Such studies might require us to commit a significant amount of management
time and financial and other resources.
We
may from time to time be involved in or subject to legal proceedings, and unfavorable outcomes of such legal proceedings may adversely
affect our business and financial condition.
We
may from time to time be involved in, subject to, or threatened with legal proceedings related to, or incidental to the conduct
of, our business. Such legal proceedings can be complex, costly, and disruptive to business operations by diverting the attention
and energies of management and other key personnel. For example, after the public announcement of this offering, we received a
letter from Chardan Capital Markets, LLC, or Chardan, claiming entitlement to certain fees pursuant to an engagement letter unrelated
to this offering. We believe Chardan’s claims are without merit and intend to vigorously defend against any claims that
may be brought by Chardan. However, we are unable to predict the outcome of this matter, or its effect on us or our financial
position. The assessment of the outcome of any legal proceeding, including our potential liability, if any, is a highly subjective
process that requires judgments about future events that are not within our control. In addition, defense and settlement costs
for any legal proceeding can be substantial, even with respect to claims that have no merit.
Risks
Related to our Intellectual Property
We
rely on patents and trade secrets, and our financial success will be dependent, in part, on our ability to obtain commercially
valuable patent claims, protect our intellectual property rights and operate without infringing upon the proprietary rights of
others.
We
rely primarily on patents and contractual obligations with employees and third parties to protect our proprietary rights. We have
sought, and intend to continue to seek, appropriate patent protection for important and strategic components of our proprietary
technologies by filing patent applications in the United States and certain foreign countries. We may also use license agreements
both to access technologies developed by other companies and universities and to convey certain intellectual property rights to
others. Our financial success will be dependent, in part, on our ability to obtain commercially valuable patent claims, protect
our intellectual property rights and operate without infringing upon the proprietary rights of others.
With
regard to our DetermaVu™, we exclusively license from Wistar two patent families with claims directed to compositions of
matter and methods useful for detection of lung cancer using specific biomarkers or a panel of specific biomarkers. The first
patent family has patent applications pending in the United States and certain foreign jurisdictions, including Australia, Canada,
China, India, and Japan, where, if issued, such patents would expire in 2036. The second patent family has patent applications
pending in the United States and certain foreign jurisdictions, including Australia, Canada, China, India, and Japan, where, if
issued, such patents would expire in 2037.
In
addition to relying on patents, we rely on trade secrets, know-how, and continuing technological advancement to maintain our competitive
position. We have entered into intellectual property, invention, and non-disclosure agreements with our employees, and it is our
practice to enter into confidentiality agreements with our consultants. These measures may not prevent the unauthorized disclosure
or use of our trade secrets and know-how, and others may independently develop similar trade secrets and know-how or obtain access
to our trade secrets, know-how, or proprietary technology.
We
may not be able to obtain patent protection for our diagnostic test if our pending U.S. patent applications are found to be directed
to unpatentable subject matter.
The
U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available
in certain circumstances or weakening the rights of patent owners in certain situations. For example, recent cases have held that
diagnostic methods merely reciting a correlation between a naturally occurring event and a diagnostic outcome associated with
that event is not patentable subject matter. If our pending U.S. patent applications are found to be directed to unpatentable
subject matter by the United States Patent and Trademark Office, or USPTO, or any patents issuing from our pending patent applications
are invalidated based on these decisions, we may be unable to prevent competitors from developing similar diagnostic tests. Additionally,
there have been recent proposals for additional changes to the patent laws of the United States and other countries that, if adopted,
could impact our ability to enforce our proprietary technology. Depending on future actions by the U.S. Congress, U.S. courts,
the USPTO and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in unpredictable
ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in
the future.
Changes
to the patent laws in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing
our ability to protect our diagnostic test.
Our
success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical
industry involves both technological and legal complexity and is costly, time-consuming and inherently uncertain. Patent reform
legislation in the United States and other countries, including the Leahy-Smith America Invents Act, or the Leahy-Smith Act, signed
into law in September 2011, could increase those uncertainties and costs. The Leahy-Smith Act includes a number of significant
changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art
and provide more efficient and cost-effective avenues for competitors to challenge the validity of patents. In addition, the Leahy-Smith
Act has transformed the U.S. patent system into a “first to file” system. The first-to-file provisions, however, only
became effective in March 2013. Accordingly, it is not yet clear what, if any, impact the Leahy-Smith Act will have on the operation
of our business. However, the Leahy-Smith Act and its implementation could make it more difficult to obtain patent protection
for our inventions and increase the uncertainties and costs surrounding the prosecution of our or our collaboration partners’
patent applications and the enforcement or defense of our or our collaboration partners’ issued patents, all of which could
harm our business, results of operations and financial condition.
Other
companies or organizations may challenge our patent rights or may assert patent rights that prevent us from developing and commercializing
our diagnostic test.
Any
patent applications that we file and any patents that we hold or later obtain could be challenged by third parties and declared
invalid or infringing of third party claims. A patent interference proceeding may be instituted with the USPTO when more than
one person files a patent application covering the same technology, or if someone wishes to challenge the validity of an issued
patent filed before March 16, 2013. At the completion of the interference proceeding, the USPTO will determine which competing
applicant is entitled to the patent, or whether an issued patent is valid. Patent interference proceedings are complex, highly
contested legal proceedings, and the USPTO’s decision is subject to appeal. This means that if an interference proceeding
arises with respect to any of our patent applications, we may experience significant expenses and delay in obtaining a patent,
and if the outcome of the proceeding is unfavorable to us, the patent could be issued to a competitor rather than to us. In addition
to interference proceedings, the USPTO can reexamine issued patents at the request of a third party seeking to have the patent
invalidated. An
inter partes
review proceeding allows third parties to challenge the validity of an issued patent where
there is a reasonable likelihood of invalidity. This means that patents owned or licensed by us may be subject to re-examination
and may be lost if the outcome of the re-examination is unfavorable to us.
Post
Grant Review under the Leahy-Smith Act makes available opposition-like proceedings in the United States. As with the USPTO interference
proceedings, Post Grant Review proceedings will be very expensive to contest and can result in significant delays in obtaining
patent protection or can result in a denial of a patent application. Further, a derivation proceeding may be instituted by the
USPTO or an inventor alleging that a patent or application was derived from the work of another inventor.
Oppositions
to the issuance of patents may be filed under European patent law and the patent laws of certain other countries. As with the
USPTO interference proceedings, these foreign proceedings can be very expensive to contest and can result in significant delays
in obtaining a patent or can result in a denial of a patent application.
The
enforcement of patent rights often requires litigation against third party infringers, and such litigation can be costly to pursue.
Even if we succeed in having new patents issued or in defending any challenge to issued patents, our patents may not be comprehensive
enough to provide us with meaningful patent protection against our competitors.
If
we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected
and our business would be harmed.
In
addition to patents, we rely on trade secrets, know-how, and continuing technological advancement to maintain our competitive
position. The molecular diagnostics that we are developing use gene expression classifiers or algorithms, which are mathematical
models that weight the biomarkers to produce a score. We will treat the mathematical models as trade secrets. We have entered
into intellectual property, invention, and non-disclosure agreements with our employees, and it is our practice to enter into
confidentiality agreements with our consultants. These measures, however, may not prevent the unauthorized disclosure or use of
our trade secrets and know-how, or that others may not independently develop similar trade secrets and know-how or obtain access
to our trade secrets, know-how, or proprietary technology.
We
may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time-consuming
and unsuccessful.
Competitors
may infringe our patents, trademarks, copyrights or other intellectual property. To counter infringement or unauthorized use,
we may be required to file infringement claims, which can be expensive and time-consuming and divert the time and attention of
our management and scientific personnel. Any claims we assert against perceived infringers could provoke these parties to assert
counterclaims against us alleging that we infringe their patents, in addition to counterclaims asserting that our patents are
invalid or unenforceable, or both. In any patent infringement proceeding, a court may decide that a patent of ours is invalid
or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue.
Even if the validity of such patents is upheld, the court may construe the patent’s claims narrowly or decide that we do
not have the right to stop the other party from using the invention at issue on the grounds that our patent claims do not cover
the invention. An adverse outcome in a litigation or proceeding involving our patents could limit our ability to assert our patents
against those parties or other competitors, and may curtail or preclude our ability to exclude third parties from making and selling
similar or competitive products. Any of these occurrences could adversely affect our competitive business position, business prospects
and financial condition. Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted
are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the
marks in question, in which case, we could ultimately be forced to cease use of such trademarks.
Even
if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead
award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial amount of discovery
required in connection with intellectual property litigation, some of our confidential information could be compromised by disclosure
during litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or
developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect
on the price of shares of our common stock. Moreover, we may not have sufficient financial or other resources to file and pursue
such infringement claims, which typically last for years before they are concluded. Even if we ultimately prevail in such claims,
the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh
any benefit we receive as a result of the proceedings.
We
may not be able to enforce our intellectual property rights throughout the world.
Filing,
prosecuting and defending patents, if issued, on our diagnostic test candidate in all countries throughout the world would be
prohibitively expensive. The requirements for patentability may differ in certain countries, particularly in developing countries.
Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products
and, further, may export otherwise infringing products to territories where we may obtain patent protection, but where patent
enforcement is not as strong as that in the United States. These products may compete with our diagnostic test in jurisdictions
where we do not have any issued or licensed patents or where any future patent claims or other intellectual property rights may
not be effective or sufficient to prevent them from competing with us.
Moreover,
our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign
intellectual property laws. Additionally, laws of some countries outside of the United States and Europe do not afford intellectual
property protection to the same extent as the laws of the United States and Europe. Many companies have encountered significant
problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some
countries, including India, China and certain developing countries, do not favor the enforcement of patents and other intellectual
property rights. This could make it difficult for us to stop the infringement of our patents or the misappropriation of our other
intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must
grant licenses to third parties. Consequently, we may not be able to prevent third parties from practicing our inventions in certain
countries outside the United States and Europe. Competitors may use our technologies in jurisdictions where we have not obtained
patent protection to develop their own products and, further, may export otherwise infringing products to territories where we
have patent protection, if our ability to enforce our patents to stop infringing activities is inadequate. These products may
compete with our diagnostic test, and our patents, if issued, or other intellectual property rights may not be effective or sufficient
to prevent them from competing.
Proceedings
to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert
our efforts and resources from other aspects of our business. Furthermore, while we intend to protect our intellectual property
rights in major markets for our diagnostic test, we cannot ensure that we will be able to initiate or maintain similar efforts
in all jurisdictions in which we may wish to market our diagnostic test. Accordingly, our efforts to protect our intellectual
property rights in such countries may be inadequate.
If
we are sued for infringing intellectual property rights of third parties, such litigation could be costly and time consuming and
could prevent or delay us from developing or commercializing our diagnostic test.
There
is a substantial amount of intellectual property litigation in the biotechnology and pharmaceutical industries, and we may become
party to, or threatened with, litigation or other adversarial proceedings regarding intellectual property rights with respect
to our current or future diagnostic test, including interference proceedings before the USPTO, misappropriation claims, or other
allegations. The outcome of intellectual property litigation is subject to uncertainties that cannot be adequately quantified
in advance. For example, the biotechnology and pharmaceutical industries have produced a significant number of patents, and it
may not always be clear to industry participants, including us, which patents cover various types of products or methods of use.
The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we were sued
for patent infringement, we would need to demonstrate that our diagnostic test or methods either do not infringe the patent claims
of the relevant patent or that the patent claims are invalid or unenforceable, and we may not be able to do this. Proving invalidity
is difficult. For example, in the United States, proving invalidity requires a showing of clear and convincing evidence to overcome
the presumption of validity enjoyed by issued patents.
In
addition, several of our employees have executed proprietary rights, non-disclosure and non-competition agreements, or similar
agreements with their previous employers, who may allege these employees have used or disclosed intellectual property, including
trade secrets or other proprietary information. Even if we are successful in these proceedings, we may incur substantial costs,
and the time and attention of our management and scientific personnel could be diverted in pursuing these proceedings, which could
significantly harm our business and operating results. We may also not have sufficient resources to bring these actions to a successful
conclusion.
If
we are found to infringe a third party’s intellectual property rights, we may have to pay monetary damages, lose valuable
intellectual property rights or personnel, or be forced to cease developing, manufacturing or commercializing the infringing diagnostic
test. Alternatively, we may be required to obtain a license from such third party in order to use the infringing technology and
continue developing, manufacturing or marketing the infringing diagnostic test. However, we may not be able to obtain any required
license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby
giving our competitors access to the same technologies licensed to us. In addition, we could be found liable for monetary damages,
including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement
could prevent us from commercializing our diagnostic test or force us to cease some of our business operations, which could materially
harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have
a similar negative impact on our business.
Patent
terms may be inadequate to protect our competitive position on our diagnostic test for an adequate amount of time.
Given
the amount of time required for the development, testing and regulatory review of new diagnostic tests, patents protecting such
candidates might expire before or shortly after such candidates are commercialized. We expect to seek extensions of patent terms
in the United States and, if available, in other countries where we are prosecuting patents. In the United States, the Drug Price
Competition and Patent Term Restoration Act of 1984 permits a patent term extension of up to five years beyond the normal expiration
of the patent, which is limited to the approved indication or any additional indications approved during the period of extension.
However, the applicable authorities, including the FDA and the USPTO in the United States, and any equivalent regulatory authorities
in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions
to our patents, or may grant more limited extensions than we request. If this occurs, our competitors may be able to take advantage
of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their product
earlier than might otherwise be the case.
Risks
Related to this Offering
Because
our management will have broad discretion and flexibility in how the net proceeds from this offering are used, our management
may use the net proceeds in ways with which you disagree or which may not prove effective.
We
currently intend to use the net proceeds from this offering to support DetermaVu™ commercialization efforts and additional
clinical studies to support reimbursement and adoption, to initiate future product development, and for general corporate and
working capital purposes. We have not allocated specific amounts of the net proceeds from this offering for any of the foregoing
purposes. Accordingly, our management will have broad discretion and flexibility in applying the net proceeds of this offering.
You will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the
opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. It is possible
that, pending their use, we may invest the net proceeds in a way that does not yield a favorable, or any, return for our company.
There
may be future sales or other dilution of our equity, which may adversely affect the market price of our common stock.
We
are generally not restricted from issuing additional common stock, including any securities that are convertible into or exchangeable
for, or that represent the right to receive, common stock. We may, in the future, seek additional capital through a combination
of public and private offerings of common stock, or other securities convertible into or exchangeable for, or that represent a
right to receive, common stock. We may also participate in debt financings. To the extent that we raise additional capital through
the sale of common stock, or securities that are convertible into or exchangeable for, or that represent a right to receive, common
stock, your ownership interest will be diluted, and the market price of our common stock could be adversely affected. The incurrence
of indebtedness, if obtained, would result in increased fixed payment obligations and could involve restrictive covenants, such
as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property
rights and other operating restrictions that could adversely impact our ability to conduct our business. Moreover, we will issue
additional shares of our common stock upon the exercise of currently outstanding options warrants. Such issuances may involve
a significant number of our common shares at prices less than the offering price in this offering.
H
olders
of a substantial number of shares of our common stock are entitled to rights, subject to certain restrictions,
to require us to register such common stock upon the occurrence of certain events. If such rights are exercised, the presence
of those additional shares of common stock trading in the public market may have an adverse effect on the market price of our
common stock.
You
will experience immediate and substantial dilution in the net tangible book value per share of the common stock you purchase.
Because
the purchase price per share of common stock in this offering is substantially higher than the net tangible book value per share
of our common stock outstanding prior to this offering, investors in this offering will suffer immediate and substantial dilution
in the net tangible book value per share of common stock. Based on the public offering price of $3.75 per share in this
offering, if you purchase securities in this offering, you will suffer immediate and substantial dilution of approximately $2.96
per share in net tangible book value of our common stock. See “Dilution” for a more detailed discussion of the
dilution you will incur in connection with this offering.
Because
we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will
be your sole source of gain
.
We
have never declared or paid cash dividends on our capital stock and we do not anticipate paying cash dividends in the foreseeable
future. We currently intend to retain all of our future earnings, if any, but for reinvestment in our business. Any future determination
to pay cash dividends will be at the discretion of our board of directors and will be dependent upon the repayment of loans under
an existing credit agreement with Silicon Valley Bank, our financial condition, results of operations, capital requirements and
other factors as our board of directors deems relevant. See “Dividend Policy.” As a result, capital appreciation,
if any, of our common stock will be your sole source of gain for the foreseeable future.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus supplement, the accompanying prospectus and the SEC filings that are incorporated by reference into this prospectus
supplement and the accompanying prospectus contain or incorporate by reference forward-looking statements within the meaning of
applicable securities laws. All statements, other than statements of historical fact, included or incorporated by reference in
this prospectus supplement or the accompanying prospectus, including but not limited to those regarding our strategy, plans, objectives,
expectations, prospects, future operations, capital resources, financial position, projected costs of and progress with development
of our diagnostic test, regulatory requirements and approvals, commercialization of our diagnostic test, collaborations, competition,
market exclusivity, intellectual property, and compliance with NYSE American LLC, or NYSE American, listing standards are forward-looking
statements. The words “believe,” “anticipate,” “estimate,” “plan,” “expect,”
“intend,” “may,” “could,” “should,” “potential,” “likely,”
“projects,” “continue,” “will,” and “would” and similar expressions are intended
to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We cannot
guarantee that we actually will achieve the plans, intentions or expectations expressed in our forward-looking statements and
you should not place undue reliance on our forward-looking statements. There are a number of important factors that could cause
our actual results to differ materially from those indicated or implied by forward-looking statements. These important factors
include those set forth herein under “Risk Factors.” These factors and the other cautionary statements made in this
prospectus supplement, the accompanying prospectus, and the documents incorporated by reference herein and therein should be read
as being applicable to all related forward-looking statements whenever they appear in this prospectus supplement and the accompanying
prospectus. Except as required by law, we do not assume any obligation to update any forward-looking statement. We disclaim any
intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events
or otherwise.
USE
OF PROCEEDS
We
expect to receive net proceed proceeds from this offering of approximately $32.1 million, after deducting the underwriting
discounts and commissions of $2.4 million and the expenses of this offering payable by us (estimated to be $0.5 million).
If the underwriters exercise their option to purchase additional shares of our common stock in full, the net proceeds to us from
this offering will be approximately $37.0 million, after deducting the underwriting discounts and commissions of $2.8
million and the expenses of the offering payable by us.
We
currently intend to use the net proceeds from this offering (including met proceeds from the exercise of the underwriters’
option to purchase additional shares of our common stock) to support DetermaVu™ commercialization efforts and additional
clinical studies to support reimbursement and adoption, to initiate future product development, and for general corporate and
working capital purposes.
Except
as noted above, we have not determined the amounts we plan to spend on any of the areas listed above or the timing of such expenditures.
As a result, our management will have broad discretion to allocate the net proceeds from this offering. Pending the application
of the net proceeds as described above, we expect to invest the net proceeds from this offering in a variety of capital preservation
investments, including short-term, investment grade, and interest-bearing instruments.
DIVIDEND
POLICY
We
have never paid cash dividends on our capital stock and we do not anticipate paying cash dividends in the foreseeable future,
but intend to retain our capital resources for reinvestment in our business. Under an existing credit agreement with Silicon Valley
Bank, we have agreed not to pay dividends or to make any distributions or to redeem to repurchase any capital stock without Silicon
Valley Bank’s prior written consent. Any future determination to pay cash dividends will be at the discretion of our board
of directors and will be dependent upon the repayment of the loans from Silicon Valley Bank, our financial condition, results
of operations, capital requirements and other factors as our board of directors deems relevant.
DILUTION
If
you invest in our common stock in this offering, your interest will be immediately diluted to the extent of the difference between
the offering price per share you will pay in this offering and the as adjusted net tangible book value per share of our common
stock immediately after this offering.
Our
net tangible book value as of September 30, 2018 was approximately $7.5 million, or $0.19 per share. Our net tangible book value
is the amount of our total tangible assets less our total liabilities. Net tangible book value per share represents net tangible
book value divided by the total number of shares of our common stock outstanding as of September 30, 2018.
After
giving effect to the issuance and sale of 9,333,334 shares of common stock in this offering at the public offering price
of $3.75 per share, after deducting the underwriting discounts and commissions and estimated offering expenses payable
by us, the as adjusted net tangible book value as of September 30, 2018 would have been approximately $39.6 million, or
$0.79 per share. This represents an immediate increase in net tangible book value of approximately $0.60 per share
to our existing shareholders and an immediate dilution in as-adjusted net tangible book value of approximately $2.96 per
share to purchasers of our securities in this offering. We determine dilution per share to investors participating in this offering
by subtracting as adjusted net tangible book value per share after this offering from the assumed public offering price per share
paid by investors participating in this offering.
The
following table illustrates this dilution (without giving effect to any exercise by the underwriters of their option to purchase
additional shares of common stock in this offering):
Public
offering price per share
|
|
|
|
|
|
$
|
3.75
|
|
Net
tangible book value per share as of September 30, 2018
|
|
$
|
0.19
|
|
|
|
|
|
Increase
in net tangible book value per share attributable to this offering
|
|
|
0.60
|
|
|
|
|
|
As
adjusted net tangible book value per share as at September 30, 2018, after
giving
effect to this offering
|
|
|
|
|
|
|
0.79
|
|
Dilution
per share to new investors participating in this offering
|
|
|
|
|
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$
|
2.96
|
|
If
the underwriters exercise their option to purchase additional shares of our common stock in full, after deducting the underwriting
discounts and commissions and estimated offering expenses payable by us, the as adjusted net tangible book value would be approximately
$0.87 per share, representing an immediate increase in as adjusted net tangible book value per share of $0.68 per
share to existing shareholders, and an immediate dilution of $2.88 per share to investors participating in this offering.
The
above discussion and table are based on 40,664,496 shares of our common stock outstanding as of September 30, 2018 and excludes:
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●
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4,035,339
shares of our common stock issuable upon exercise of warrants outstanding as of September 30, 2018, with a weighted-average
exercise price of $3.70 per share;
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●
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4,540,000
shares of our common stock issuable upon exercise of options outstanding under our 2010 Stock Option Plan as of September
30, 2018 with a weighted-average exercise price of $2.94 per share, of which options to acquire 575,000 shares of our common
stock have been exercised for net proceeds to us of $942,500 subsequent to September 30, 2018;
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●
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230,000
shares of our common stock issuable upon exercise of options outstanding under our 2018 Equity Incentive Plan as of September
30, 2018 with a weighted-average exercise price of $2.40 per share; and
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●
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4,770,000
shares of our common stock available for future grants under our 2018 Equity Incentive Plan as of September 30, 2018.
|
To
the extent that any outstanding options or warrants are exercised, new options, restricted stock or restricted stock units are
issued under our equity incentive plan, shares of common stock are sold under our employee stock purchase plan or we otherwise
issue additional shares of common stock or other equity or convertible debt securities in the future, you will experience further
dilution.
DESCRIPTION
OF THE SECURITIES WE ARE OFFERING
We
are offering shares of our common stock.
D
ESCRIPTION
OF OUR
Capital
S
TOCK
On
August 27, 2018, our shareholders approved an amendment to our articles of incorporation to increase the number of shares of common
stock we are authorized to issue from 50,000,000 to 85,000,000. All other material terms and provisions of our common stock are
described in the section titled “Description of Common Stock and Preferred Stock – Common Stock” in the accompanying
prospectus. No changes were made to our authorized preferred stock. As of January 31, 2019, we had 41,239,496 shares
of common stock issued and outstanding. As of January 31, 2019, we had 5,000,000 shares of our preferred stock authorized,
of which no shares were issued and outstanding.
Securities
Exchange Listing
Our
common stock is listed on the NYSE American under the symbol “OCX.”
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is American Stock Transfer & Trust Company.
MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS
The
following discussion is a summary of the material U.S. federal income tax consequences to Non-U.S. Holders (as defined below)
of the purchase, ownership and taxable disposition of our common stock issued pursuant to this offering, but does not purport
to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax
laws, and any applicable state, local or non-U.S. tax laws are not discussed herein. This discussion is based on the U.S. Internal
Revenue Code of 1986, as amended, or the Code, Treasury Regulations promulgated thereunder, judicial decisions, and published
rulings and administrative pronouncements of the U.S. Internal Revenue Service, or the IRS, in each case, in effect as of the
date of this prospectus supplement. These authorities may change or be subject to differing interpretations. Any such change or
differing interpretation may be applied retroactively in a manner that could adversely affect a Non-U.S. Holder of our common
stock. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance
that the IRS or a court will not take a contrary position to that discussed below regarding the federal income tax consequences
of the purchase, ownership and disposition of our common stock.
This
discussion is limited to Non-U.S. Holders that hold our common stock as a “capital asset” within the meaning of Section
1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences
relevant to a Non-U.S. Holder’s particular circumstances, including the impact of the Medicare contribution tax on net investment
income. In addition, it does not address consequences relevant to Non-U.S. Holders subject to special rules, including, without
limitation:
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U.S.
expatriates and former citizens or long-term residents of the United States;
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●
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persons
subject to the alternative minimum tax;
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persons
holding our common stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction
or other integrated investment;
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●
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banks,
insurance companies, and other financial institutions;
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brokers,
dealers or traders in securities;
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“controlled
foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings
to avoid U.S. federal income tax;
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●
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partnerships
or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);
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tax-exempt
organizations or governmental organizations;
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●
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persons
deemed to sell our common stock under the constructive sale provisions of the Code;
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●
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persons
who hold or receive our common stock pursuant to the exercise of any employee stock option or otherwise as compensation; and
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●
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tax-qualified
retirement plans.
|
If
an entity treated as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner
in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations made
at the partner level. Accordingly, partnerships holding our common stock and the partners in such partnerships should consult
their tax advisors regarding the U.S. federal income tax consequences to them.
THIS
DISCUSSION IS FOR INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE,
OWNERSHIP AND TAXABLE DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE
LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.
Definition
of a Non-U.S. Holder
For
purposes of this discussion, a “Non-U.S. Holder” is any beneficial owner of our common stock that is neither a “U.S.
person” nor an entity treated as a partnership for U.S. federal income tax purposes. A U.S. person is any person that, for
U.S. federal income tax purposes, is or is treated as any of the following:
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an
individual who is a citizen or resident of the United States;
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●
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a
corporation (or other entity treated as such) created or organized under the laws of the United States, any state
thereof, or the District of Columbia;
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●
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an
estate, the income of which is subject to U.S. federal income tax regardless of its source; or
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●
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a
trust that (i) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons”
(within the meaning of Section 7701(a)(30) of the Code), or (ii) has a valid election in effect to be treated as a United
States person for U.S. federal income tax purposes.
|
Distributions
As
discussed under “Dividend Policy” above, we do not anticipate declaring or paying dividends to holders of our common
stock in the foreseeable future. However, if we make distributions of cash or property on our common stock, such distributions
will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and
profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax
purposes will constitute a return of capital and first be applied against and reduce a Non-U.S. Holder’s adjusted tax basis
in its common stock, but not below zero. Any excess will be treated as capital gain and will be treated as described below under
“–Sale or Other Taxable Disposition.”
Subject
to the discussion below on effectively connected income, dividends paid to a Non-U.S. Holder of our common stock will be subject
to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends (or such lower rate specified by an applicable
income tax treaty, provided the Non-U.S. Holder furnishes a valid IRS Form W-8BEN or W-8BEN-E (or other applicable documentation)
certifying qualification for the lower treaty rate). A Non-U.S. Holder that does not timely furnish the required documentation,
but that qualifies for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate
claim for refund with the IRS. Non-U.S. Holders should consult their tax advisors regarding their entitlement to benefits under
any applicable income tax treaty.
If
dividends paid to a Non-U.S. Holder are effectively connected with the Non-U.S. Holder’s conduct of a trade or business
within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment
in the United States to which such dividends are attributable), the Non-U.S. Holder will be exempt from the U.S. federal withholding
tax described above. To claim the exemption, the Non-U.S. Holder must furnish to the applicable withholding agent a valid IRS
Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business
within the United States.
Any
such effectively connected dividends will be subject to U.S. federal income tax on a net income basis at the regular graduated
rates. A Non-U.S. Holder that is a corporation for U.S. federal income tax purposes also may be subject to a branch profits tax
at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected dividends, as
adjusted for certain items. Non-U.S. Holders should consult their tax advisors regarding any applicable tax treaties that may
provide for different rules.
Sale
or Other Taxable Disposition
A
Non-U.S. Holder will not be subject to U.S. federal income tax on any gain realized upon the sale or other taxable disposition
of our common stock unless:
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the
gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and,
if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States
to which such gain is attributable);
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●
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the
Non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year
of the disposition and certain other requirements are met; or
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●
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our
common stock constitutes a U.S. real property interest, or USRPI, by reason of our status as a U.S. real property holding
corporation, or USRPHC, for U.S. federal income tax purposes.
|
Gain
described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular
graduated rates. A Non-U.S. Holder that is a corporation for U.S. federal income tax purposes also may be subject to a branch
profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain,
as adjusted for certain items.
Gain
described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified
by an applicable income tax treaty), which may be offset by U.S. source capital losses of the Non-U.S. Holder (even though the
individual is not considered a resident of the United States), provided the Non-U.S. Holder has timely filed U.S. federal income
tax returns with respect to such losses.
With
respect to the third bullet point above, we do not believe we are currently, and do not anticipate becoming,
a USRPHC. However, there can be no assurance that we currently are not a USRPHC or will not become one in the future. Even if
we are or were to become a USRPHC, gain arising from the sale or other taxable disposition by a Non-U.S. Holder of our common
stock will not be subject to U.S. federal income tax if our common stock is “regularly traded,” as defined by applicable
Treasury Regulations, on an established securities market, and such Non-U.S. Holder owned, actually and constructively, 5% or
less of our common stock throughout the shorter of the five-year period ending on the date of the sale or other taxable disposition
or the Non-U.S. Holder’s holding period.
Non-U.S.
Holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different
rules.
Information
Reporting and Backup Withholding
Payments
of dividends on our common stock will not be subject to backup withholding, provided the applicable withholding agent does not
have actual knowledge or reason to know the holder is a United States person and the holder either certifies its non-U.S. status,
such as by furnishing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI, or otherwise establishes an exemption. However, information
returns are required to be filed with the IRS in connection with any dividends on our common stock paid to the Non-U.S. Holder,
regardless of whether any tax was actually withheld. In addition, proceeds of the sale or other taxable disposition of our common
stock within the United States or conducted through certain U.S.-related brokers generally will not be subject to backup withholding
or information reporting, if the applicable withholding agent receives the certification described above and does not have actual
knowledge or reason to know that such holder is a United States person, or the holder otherwise establishes an exemption. Proceeds
of a disposition of our common stock conducted through a non-U.S. office of a non-U.S. broker generally will not be subject to
backup withholding or information reporting.
Copies
of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or
agreement to the tax authorities of the country in which the Non-U.S. Holder resides or is established.
Backup
withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a
credit against a Non-U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished
to the IRS.
Additional
Withholding Tax on Payments Made to Foreign Accounts
Withholding
taxes may be imposed under Sections 1471 to 1474 of the Code (such Sections commonly referred to as the Foreign Account Tax Compliance
Act, or FATCA) on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically,
a 30% withholding tax may be imposed on dividends on our common stock
paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the
Code), unless (i) the foreign financial institution undertakes certain diligence and reporting obligations, (ii) the non-financial
foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or
furnishes identifying information regarding each substantial United States owner, or (iii) the foreign financial institution or
non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution
and is subject to the diligence and reporting requirements in (i) above, it must enter into an agreement with the U.S. Department
of the Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United
States persons” or “United States owned foreign entities” (each as defined in the Code), annually report certain
information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain
other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the
United States governing FATCA may be subject to different rules.
Prospective
investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment
in our common stock.
UNDERWRITING
Piper
Jaffray & Co. is acting as the sole bookrunner for this offering. Subject to the terms and conditions set
forth in a purchase agreement between us and Piper Jaffray, as the representative of the several underwriters named therein, we
have agreed to sell to the underwriters, and the underwriters have agreed to purchase from us, the number of shares of our common
stock set forth opposite its name below.
Underwriters
|
|
Number
of
Shares
|
|
Piper Jaffray
& Co.
|
|
|
8,400,001
|
|
Janney Montgomery Scott
LLC
|
|
|
933,333
|
|
Total
|
|
|
9,333,334
|
|
Subject
to the terms and conditions set forth in the purchase agreement, the underwriters have agreed to purchase all of the shares sold
under the purchase agreement if any of these shares are purchased.
We
have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933,
as amended, relating to losses or claims resulting from material misstatements in or omissions from this prospectus supplement,
the registration statement of which this prospectus is a part, certain free writing prospectuses that may be used in the offering
and in any marketing materials used in connection with this offering and to contribute to payments the underwriters may be required
to make in respect of those liabilities.
The
underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval
of legal matters by their counsel, including the validity of the shares, and other conditions contained in the purchase agreement,
such as the receipt by the underwriters of officers’ certificates and legal opinions. The underwriters reserve the right
to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
Commissions
and Discounts
The
underwriters have advised us that they propose initially to offer the shares to the public at the public offering price set forth
on the cover page of this prospectus and to dealers at that price less a concession not in excess of $0.15413 per share.
After the initial offering, the public offering price, concession or any other term of this offering may be changed.
We
have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to 1,400,000
additional shares of our common stock at the public offering price listed on the cover page of this prospectus, less underwriting
discounts and commissions.
The
following table shows the public offering price, underwriting discounts and commissions and proceeds before expenses to us. The
information assumes either no exercise or full exercise by the underwriters of its option to purchase additional shares.
|
|
|
|
|
Total
|
|
|
|
Per
Share
|
|
|
Without
Option
|
|
|
With
Option
|
|
Public offering price
|
|
$
|
3.75000
|
|
|
$
|
35,000,002
|
|
|
$
|
40,250,002
|
|
Underwriting discounts and commissions
paid by us
|
|
$
|
0.25688
|
|
|
$
|
2,397,500
|
|
|
$
|
2,757,125
|
|
Proceeds to us, before expenses
|
|
$
|
3.49312
|
|
|
$
|
32,602,502
|
|
|
$
|
37,492,877
|
|
The
estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $0.5
million, including $75,000 we have agreed to reimburse the underwriters for certain of their expenses.
Our
common stock is listed on the NYSE American under the trading symbol “OCX.”
No
Sales of Similar Securities
We
and each of our directors, executive officers and our largest shareholder, BioTime, Inc., have agreed that we and they will not,
without the prior written consent of Piper Jaffray, subject to certain limited exceptions, directly or indirectly:
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●
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offer,
pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, make any short sale or otherwise transfer or dispose
of, directly or indirectly, any shares of our common stock or any securities convertible into, exercisable or exchangeable
for or that represent the right to receive our common stock (including without limitation, common stock which may be deemed
to be beneficially owned by the holder in accordance with the rules and regulations of the SEC and securities which may be
issued upon exercise of a stock option or warrant) whether now owned or hereafter acquired;
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|
|
|
|
●
|
enter
into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the
holder’s securities;
|
|
|
|
|
●
|
subject
to certain exceptions, make any demand for or exercise any right with respect to, the registration of any of our common stock
or any security convertible into or exercisable or exchangeable for our common stock in each case that would require us to
file a registration statement within the next 90 days of the date of the lock-up agreement; or
|
|
|
|
|
●
|
publicly
disclose the intention to do any of the foregoing,
|
for
a period of 90 days, respectively, after the public offering date set forth on the cover of this prospectus supplement. However,
these restrictions will not apply to transfers of our common stock or any security convertible into or exercisable for our common
stock: (i) as a
bona fide
gift or gifts made by the holder, (ii) to any trust for the direct or indirect benefit of the
holder or the immediate family of the holder, (iii) if the holder is a corporation, partnership, limited liability company, trust
or other business entity (a) to another corporation, partnership, limited liability company, trust or other business entity that
is a direct or indirect affiliate (as defined in Rule 405 promulgated under the Securities Act of 1933, as amended) of the holder
or (b) in distributions of shares of our common stock or any security convertible into or exercisable for our common stock to
limited partners, limited liability company members or stockholders of the holder, (iv) if the holder is a trust, to the beneficiary
of such trust, or (v) by testate succession or intestate succession; provided, that (a) such transfer shall not involve a disposition
for value, (b) the transferee agrees in writing to be bound by the 90-day restricted period for subsequent transfers, and (c)
no filing by any holder under Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, is required
or shall be made voluntarily in connection with such transfer during the 90-day restricted period.
In
addition the restrictions will also not apply to (i) the exercise of stock options granted pursuant to our equity incentive plans,
provided that they shall apply to any securities issued upon such exercise and (ii) the establishment of any contract, instruction
or plan that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act; provided, that no sales of the
holder’s securities shall be made pursuant to such a plan prior to the expiration of the 90-day restricted period, and such
a plan may only be established if no public announcement of the establishment or existence thereof, and no filing with the SEC
or other regulatory authority in respect thereof or transactions thereunder or contemplated thereby, is required or made voluntarily
by the holder, us or any other person during the 90-day restricted period.
During
the 90-day restricted period, we may issue securities to our directors, officers, employees and consultants pursuant to our equity
benefit plans.
Piper
Jaffray may, in its sole discretion and at any time or from time to time before the termination of the applicable restricted period,
release all or any portion of the securities subject to lock-up agreements. There are no existing agreements between the underwriters
and any of our shareholders who will execute a lock-up agreement providing consent to the sale of shares prior to the expiration
of the applicable restricted period.
Price
Stabilization and Short Positions
Until
the distribution of the shares is completed, SEC rules may limit the underwriters and selling group members from bidding for and
purchasing shares of our common stock. However, the underwriters may engage in transactions that stabilize the price of our common
stock, such as bids or purchases to peg, fix or maintain that price.
In
connection with this offering, the underwriters may purchase and sell shares of our common stock in the open market. These transactions
may include short sales, purchases on the open market to cover positions created by short sales and stabilizing transactions.
Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in this offering.
“Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional
shares described above. The underwriters may close out any covered short position by either exercising their option to purchase
additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short
position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as
compared to the price at which they may purchase shares through the option to purchase additional shares. “Naked”
short sales are sales in excess of the option to purchase additional shares. The underwriters must close out any naked short position
by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters is concerned
that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect
investors who purchase in this offering. Stabilizing transactions consist of various bids for or purchases of shares of our common
stock made by the underwriters in the open market prior to the closing of this offering.
Similar
to other purchase transactions, the underwriters’ purchase to cover its short sales may have the effect of raising or maintaining
the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result,
the price of our common stock may be higher than the price that might otherwise exist in the open market. The underwriters may
conduct these transactions on NYSE American, in the over-the-counter market or otherwise.
Neither
we nor the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of our common stock. In addition, neither we nor the underwriters make any representation
that the underwriters will engage in these transactions or that these transactions, once commenced, will not be discontinued without
notice.
Electronic
Offer, Sale and Distributions of Shares
In
connection with this offering, the underwriters or securities dealers may distribute prospectuses by electronic means, such as
e-mail. In addition, the underwriters may facilitate Internet distribution for this offering to certain of its Internet subscription
customers. The underwriters may allocate a limited number of shares for sale to its online brokerage customers. An electronic
prospectus is available on the Internet websites maintained by the underwriters. Other than the prospectus in electronic format,
the information on the websites of any such underwriter is not part of this prospectus.
Other
Relationships
The
underwriters and their respective affiliates are a full service financial institution engaged in various activities, which may
include securities trading, commercial and investment banking, financial advisory, investment management, investment research,
principal investment, hedging, financing and brokerage activities. The underwriters and their respective affiliates have engaged
in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with
us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.
In
the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a
broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments
(including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities
may involve securities and/or instruments of the issuer. The underwriters and their respective affiliates may also make investment
recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any
time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Selling
Restrictions
European
Economic Area
In
relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member
State) an offer to the public of any shares of our common stock may not be made in that Relevant Member State, except that an
offer to the public in that Relevant Member State of any shares of our common stock may be made at any time under the following
exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
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(a)
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to
any legal entity which is a qualified investor as defined in the Prospectus Directive;
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(b)
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to
fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive,
150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under
the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or
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(c)
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in
any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of
our common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article
3 of the Prospectus Directive.
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For
the purposes of this provision, the expression an “offer to the public” in relation to any shares of our common stock
in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the
offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase any shares of our common
stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State,
the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending
Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant
Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
United
Kingdom
This
prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within
the meaning of Article 2(1)(e) of the Prospectus Directive that are also (i) investment professionals falling within Article 19(5)
of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) high net worth
entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (each
such person being referred to as a “relevant person”). This prospectus and its contents are confidential and should
not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person in the United
Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its
contents.
Canada
The
shares of our common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited
investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario),
and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant
Obligations. Any resale of the shares of our common stock must be made in accordance with an exemption from, or in a transaction
not subject to, the prospectus requirements of applicable securities laws.
Securities
legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if the
prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages
are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province
or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province
or territory for particulars of these rights or consult with a legal advisor.
Pursuant
to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section
3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure
requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
Hong
Kong
The
shares of our common stock may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which
do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to
“professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong)
and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus”
within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating
to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong
or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except
if permitted to do so under the laws of Hong Kong) other than with respect to shares of our common stock which are or are intended
to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the
Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
Singapore
This
prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and
any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares
of our common stock may not be circulated or distributed, nor may the shares of our common stock be offered or sold, or be made
the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than
(i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA), (ii)
to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions
specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable
provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.
Where
the shares of our common stock are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
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(a)
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a
corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold
investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor;
or
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(b)
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a
trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of
the trust is an individual who is an accredited investor,
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shares,
debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever described)
in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares of our common
stock pursuant to an offer made under Section 275 of the SFA except:
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(a)
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to
an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2)
of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and
debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than
$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or
by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section
275 of the SFA;
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(b)
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where
no consideration is or will be given for the transfer; or
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(c)
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where
the transfer is by operation of law.
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Switzerland
The
shares of our common may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (the SIX) or
on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the
disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure
standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange
or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the
shares of our common stock or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither
this document nor any other offering or marketing material relating to the offering, or the shares of our common stock have been
or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and
the offer of shares of our common stock will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and
the offer of shares of our common stock has not been and will not be authorized under the Swiss Federal Act on Collective Investment
Schemes (CISA). Accordingly, no public distribution, offering or advertising, as defined in CISA, its implementing ordinances
and notices, and no distribution to any non-qualified investor, as defined in CISA, its implementing ordinances and notices, shall
be undertaken in or from Switzerland, and the investor protection afforded to acquirers of interests in collective investment
schemes under CISA does not extend to acquirers of common shares.
United
Arab Emirates
This
offering has not been approved or licensed by the Central Bank of the United Arab Emirates (the UAE), Securities and Commodities
Authority of the UAE and/or any other relevant licensing authority in the UAE including any licensing authority incorporated under
the laws and regulations of any of the free zones established and operating in the territory of the UAE, in particular the Dubai
Financial Services Authority (DFSA), a regulatory authority of the Dubai International Financial Centre (DIFC). The offering does
not constitute a public offer of securities in the UAE, DIFC and/or any other free zone in accordance with the Commercial Companies
Law, Federal Law No 8 of 1984 (as amended), DFSA Offered Securities Rules and Nasdaq Dubai Listing Rules, accordingly, or otherwise.
The shares of our common stock may not be offered to the public in the UAE and/or any of the free zones.
The
shares of our common stock may be offered and issued only to a limited number of investors in the UAE or any of its free zones
who qualify as sophisticated investors under the relevant laws and regulations of the UAE or the free zone concerned.
France
This
prospectus (including any amendment, supplement or replacement thereto) is not being distributed in the context of a public offering
in France within the meaning of Article L. 411-1 of the French Monetary and Financial Code (Code monétaire et financier).
This
prospectus has not been and will not be submitted to the French Autorité des marchés financiers (the AMF) for approval
in France and accordingly may not and will not be distributed to the public in France.
Pursuant
to Article 211-3 of the AMF General Regulation, French residents are hereby informed that:
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(a)
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the
transaction does not require a prospectus to be submitted for approval to the AMF;
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(b)
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persons
or entities referred to in Point 2°, Section II of Article L.411-2 of the Monetary and Financial Code may take part in
the transaction solely for their own account, as provided in Articles D. 411-1, D. 734-1, D. 744-1, D. 754-1 and D. 764-1
of the Monetary and Financial Code; and
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(c)
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the
financial instruments thus acquired cannot be distributed directly or indirectly to the public otherwise than in accordance
with Articles L. 411-1, L. 411-2, L. 412-1 and L. 621-8 to L. 621-8-3 of the Monetary and Financial Code.
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This
prospectus is not to be further distributed or reproduced (in whole or in part) in France by the recipients of this prospectus.
This prospectus has been distributed on the understanding that such recipients will only participate in the issue or sale of our
common stock for their own account and undertake not to transfer, directly or indirectly, our common stock to the public in France,
other than in compliance with all applicable laws and regulations and in particular with Articles L. 411-1 and L. 411-2 of the
French Monetary and Financial Code.
LEGAL
MATTERS
The
validity of the shares of common stock offered hereby will be passed upon for us by DLA Piper LLP (US), Seattle, Washington. Goodwin
Proctor LLP, New York, New York, is acting as counsel to the underwriters.
EXPERTS
The
balance sheets of OncoCyte Corporation as of December 31, 2017 and 2016, and the related statements of operations, comprehensive
loss, stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2017,
have been incorporated by reference into this prospectus and the registration statement in reliance on the report of OUM &
Co. LLP, an independent registered public accounting firm, upon the authority of said firm as experts in auditing and accounting.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet
website that contains reports, proxy and information statements and other information regarding issuers, including us, that file
electronically with the SEC. The address for the SEC’s website is
http://www.sec.gov.
Our
website address is
www.oncocyte.com
. Information contained on, or that can be accessed through, our website, is not, and
shall not be deemed to be, incorporated in this prospectus supplement or considered a part thereof.
We
make available, free of charge, through our investor relations section of our website, our Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, statements of changes in beneficial ownership of securities and amendments
to those reports and statements as soon as reasonably practicable after they are filed or furnished with the SEC.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
SEC allows us to incorporate by reference the information we file with it, which means that we can disclose important information
to you by referring you to another document that we have filed separately with the SEC. You should read the information incorporated
by reference because it is an important part of this prospectus supplement. We incorporate by reference the following information
or documents that we have filed with the SEC (excluding those portions of any Form 8-K that are not deemed “filed”
pursuant to the General Instructions of Form 8-K):
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Our
Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the
SEC on April 2, 2018, as amended by Form 10-K/A, filed with the SEC on April 30, 2018;
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Our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2018, June 30, 2018 and
September 30, 2018 filed with the SEC on May 15, 2018, August 14, 2018 and November 13,
2018, respectively;
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Our
Current Reports on Form 8-K filed with the SEC on March 29, 2018, April 2, 2018, April
4, 2018, April 23, 2018, May 30, 2018, June 19, 2018, August 1, 2018, August 9, 2018,
August 29, 2018, October 23, 2018, January 28, 2019 and January 29, 2019; and
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The
description of our common stock included in our registration statement on Form 10, as
filed with the SEC on November 23, 2015 and amended on December 21, 2015 and December
29, 2015.
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All
reports and other documents we subsequently file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of this offering (excluding those portions of such reports and documents furnished to, rather than filed with, the
SEC) will also be incorporated by reference into this prospectus supplement and deemed to be part of this prospectus supplement
from the date of the filing of such reports and documents.
Any
statement contained in any document incorporated by reference herein shall be deemed to be modified or superseded for purposes
of this prospectus supplement to the extent that a statement contained in this prospectus supplement or any additional prospectus
supplements modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus supplement.
We
will provide without charge to each person, including any beneficial owner, to whom this prospectus supplement is delivered, upon
written or oral request, a copy of any or all documents that are incorporated by reference into this prospectus supplement, but
not delivered with the prospectus supplement, other than exhibits to such documents unless such exhibits are specifically incorporated
by reference into the documents that this prospectus supplement incorporates. You should direct any requests to:
OncoCyte
Corporation
1010
Atlantic Avenue, Suite 102
Alameda,
California 94501
(510)
775-0515
PROSPECTUS
$50,000,000
Common
Stock
Preferred
Stock
Debt
Securities
Warrants
Units
We
may, from time to time in one or more offerings, offer and sell up to $50.0 million in the aggregate of common stock, preferred
stock, debt securities, warrants to purchase shares of common stock or preferred stock or debt securities, or any combination
of the foregoing, either individually or as units comprised of one or more of the other securities.
This
prospectus provides a general description of the securities we may offer. We will provide the specific terms of the securities
offered in one or more supplements to this prospectus. We may also authorize one or more free writing prospectuses to be provided
to you in connection with these offerings. The prospectus supplement and any related free writing prospectus may add, update or
change information contained in this prospectus. Please read carefully this prospectus, the applicable prospectus supplement,
any related free writing prospectus, and the documents incorporated by reference before you invest in any of our securities.
This
prospectus may not be used to offer or sell any securities unless accompanied by the applicable prospectus supplement.
Our
common stock is listed on the NYSE American under the symbol “OCX.”
On
September 29, 2017, the last reported sale price of our
common stock
was $7.55 per
share. The aggregate market value of our outstanding shares of common stock held by non-affiliates, based upon this price, was
approximately $51.4 million. During the 12-month period ending on the date of this prospectus, we have not offered any securities
pursuant to General Instruction I.B.6. of Form S-3.
Investing
in our securities involves a high degree of risk. See “
Risk Factors
” on page 4 of this prospectus
and in the documents incorporated by reference into this prospectus, as updated by the applicable prospectus supplement, any
related free writing prospectus and other future filings we make with the Securities and Exchange Commission that are
incorporated by reference into this prospectus, for a discussion of the factors we urge you to consider carefully before
deciding to purchase our securities.
We
may sell these securities directly to investors, through agents designated from time to time or to or through underwriters or
dealers. For additional information on the methods of sale, please see the section titled “
Plan of Distribution
”
in this prospectus. If any underwriters are involved in the sale of any securities with respect to which this prospectus is being
delivered, the names of such underwriters and any applicable commissions or discounts will be set forth in a prospectus supplement.
The price to the public of such securities and the net proceeds we expect to receive from such sale will also be set forth in
a prospectus supplement.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus or any accompanying prospectus supplement is truthful or complete. Any representation to the contrary
is a criminal offense.
The
date of this prospectus is October 16, 2017
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities and Exchange Commission, or the SEC, under the
Securities Act of 1933, as amended, or the Securities Act, using a “shelf” registration process. Under this process,
we may, from time to time, offer and sell, either individually or in combination, in one or more offerings, up to a total dollar
amount of $50.0 million any of the securities described in this prospectus.
This
prospectus provides a general description of the securities we may offer. Each time we sell securities under this prospectus,
we will, to the extent required by law, provide a prospectus supplement that will contain specific information about the terms
of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material
information relating to a particular offering. The prospectus supplement and any related free writing prospectus may also add,
update or change information contained in this prospectus or in any documents that we have incorporated by reference into this
prospectus. To the extent there is a conflict between any statement contained in this prospectus, any applicable prospectus supplement,
any related free writing prospectus or any document incorporated by reference into this prospectus, the statement in the document
having the later date modifies or supersedes the earlier statement.
The
information appearing in this prospectus, any applicable prospectus supplement or any related free writing prospectus is accurate
only as of the date on the front of the document, and any information we have incorporated by reference is accurate only as of
the date of the document incorporated by reference, regardless of the time of delivery of this prospectus, any applicable prospectus
supplement or any related free writing prospectus, or the time of any sale of a security. Our business, financial condition, results
of operations and prospects may have changed since those dates.
You
may rely only on the information contained in, or incorporated by reference into, this prospectus and any applicable prospectus
supplement, or the information contained in any free writing prospectus we have authorized for use in connection with a specific
offering. We have not authorized anyone to provide you with different or additional information. This prospectus is an offer to
sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so.
As
permitted by SEC rules and regulations, the registration statement of which this prospectus forms a part includes additional information
not contained in this prospectus. This prospectus also contains summaries of certain provisions of the documents described herein,
but all summaries are qualified in their entirety by reference to the actual documents. You may read the registration statement
and the other reports we file with the SEC, and you may obtain copies of the actual documents summarized herein (if and when filed
with the SEC), at the SEC’s website or at its offices described in the section of this prospectus titled “
Where
You Can Find More Information
.”
The
representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document that is incorporated
by reference into this prospectus were made solely for the benefit of the parties to such agreement, including, in some cases,
for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty
or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly,
such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.
SUMMARY
This
summary highlights information contained elsewhere in this prospectus. Before making an investment decision, please carefully
read this entire prospectus and the documents incorporated by reference into this prospectus, especially the “Risk Factors”
section of this prospectus and our financial statements and the related notes incorporated by reference into this prospectus.
In this prospectus, unless the context otherwise requires, the terms “OncoCyte,” “we,” “us”
or “our” refer to OncoCyte Corporation.
Overview
Our
mission is to develop highly accurate, easy to administer, non-invasive molecular diagnostic tests to improve the standard of
care for cancer diagnosis to better meet the needs of patients, physicians and payers. Our initial focus will be confirmatory
diagnostics, utilizing novel liquid biopsy technology, for use in conjunction with imaging to confirm initial suspicious imaging
results such as lung nodules and breast lumps within certain oncology indications. In addition, we may develop screening diagnostics
as potential replacements for screening imaging protocols that do not meet the needs of patients, health care providers or payers.
For some indications, we may also pursue the probability of recurrence of a specific cancer through the development of prognostics;
or companion diagnostics that help a physician determine which therapy is the optimal treatment for the patient.
Our
initial liquid biopsy diagnostic tests will be confirmatory diagnostics and are being developed to reduce false positive results
associated with current diagnostic protocols. These new diagnostic tests are intended to:
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Reduce
unnecessary and sometimes risky procedures, as well as lower the cost of care through the avoidance of more expensive diagnostic
procedures, including invasive biopsy and cystoscopic procedures;
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Improve
the quality of life for cancer patients by reducing the anxiety associated with non-definitive diagnoses; and
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Improve
health outcomes through avoidance of unnecessary invasive procedures.
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We
are currently developing diagnostic tests for three types of cancer: lung cancer, breast cancer, and bladder cancer. Our strategic
focus is to develop diagnostic tests in areas of high unmet need.
We
received Clinical Laboratory Improvements Amendments, or CLIA, certification of registration from the Centers for Medicare and
Medicaid Services. In addition, our laboratory has passed inspection by the California Department of Public Health and is now
fully licensed and operational.
Corporate
Information
We
were incorporated in 2009 in the state of California. Our principal executive offices are located at 1010 Atlantic Avenue, Suite
102, Alameda, California 94501. Our telephone number is (510) 775-0515. Our website address is www.oncocyte.com.
Information
contained on, or accessible through, our website is not a part of, and is not incorporated into, this prospectus, and references
to our website in this prospectus are inactive textual references only.
We were a majority-owned subsidiary of BioTime,
Inc., or BioTime, until February 17, 2017, when BioTime’s shareholdings became less than 50% of our outstanding shares of
common stock.
The
Securities We May Offer
We
may, from time to time in one or more offerings, offer and sell up to $50.0 million in the aggregate of common stock, preferred
stock, debt securities, warrants to purchase common stock, preferred stock or debt securities, or any combination of the foregoing,
either individually or as units comprised of one or more of the other securities. The prices and terms of our offer and sale of
such securities will be determined by market conditions at the time of offering. Each time we offer securities under this prospectus,
we will provide offerees with a prospectus supplement that will describe the specific amounts, prices and other important terms
of the securities being offered, including, to the extent applicable:
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designation
or classification;
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aggregate
principal amount or aggregate offering price;
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maturity,
if applicable;
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original
issue discount, if any;
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rates
and times of payment of interest or dividends, if any;
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redemption,
conversion, exchange or sinking fund terms, if any;
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conversion
or exchange prices or rates, if any, and, if applicable, any provisions for changes to or adjustments in the conversion or
exchange prices or rates and in the securities or other property receivable upon conversion or exchange;
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ranking;
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restrictive
covenants, if any;
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voting
or other rights, if any; and
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important
U.S. federal income tax considerations.
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The
prospectus supplement and any related free writing prospectus that we may authorize to be provided to you may also add, update
or change information contained in this prospectus or in documents we have incorporated by reference. However, no prospectus supplement
or free writing prospectus will offer a security that is not registered and described in this prospectus at the time of the effectiveness
of the registration statement of which this prospectus forms a part.
The
following is a general summary of the securities we may offer with this prospectus. For more specific information regarding any
offering of securities, please read the prospectus supplement and any free writing prospectus that we may authorize to be provided
to you in connection with a particular offering, together with any exhibits that may be filed setting forth the terms of the securities.
Common
Stock
Our
Articles of Incorporation currently authorize the issuance of up to 50,000,000 shares of common stock, no par value. As of August
7, 2017, there were outstanding 31,336,487 shares of common stock, no par value. Each holder of record of common stock is entitled
to one vote for each outstanding share owned, on every matter properly submitted to the shareholders for their vote. Subject to
any dividend rights of holders of any of the preferred stock that we may issue from time to time, holders of common stock are
entitled to any dividend declared by our board of directors out of funds legally available for that purpose. We have never paid
cash dividends on our capital stock and we do not anticipate paying cash dividends in the foreseeable future, but intend to retain
our capital resources for reinvestment in our business.
Preferred
Stock
Our
Articles of Incorporation currently authorize the issuance of up to 5,000,000 shares of preferred stock, no par value. We may
issue preferred stock in one or more series, at any time, with such rights, preferences, privileges and restrictions as our board
of directors may determine, all without further action of our shareholders. Any series of preferred stock which may be authorized
by our board of directors in the future may be senior to and have greater rights and preferences than our common stock. There
are no shares of preferred stock presently outstanding and we have no present plan, arrangement, or commitment to issue any preferred
stock.
Debt
Securities
We
may offer general debt obligations, which may be secured or unsecured, senior or subordinated and convertible into common stock.
In this prospectus, we refer to debt securities having any or all of these features as the “debt securities.” We may
issue debt securities under a note purchase agreement or under an indenture to be entered between us and a trustee. A form of
the indenture is included as an exhibit to the registration statement of which this prospectus forms a part. The indenture does
not limit the amount of securities that may be issued under it and provides that debt securities may be issued in one or more
series. Senior debt securities will have the same rank as other indebtedness that is not subordinated. Subordinated debt securities
will be subordinated to any senior debt on terms set forth in the applicable prospectus supplement. In addition, subordinated
debt securities will be effectively subordinated to creditors and preferred shareholders of our subsidiaries. Our board of directors
will determine the terms of each series of debt securities we may offer.
In
addition to the form of indenture, supplemental indentures and forms of debt securities containing the terms of debt securities
we may offer under this prospectus will be filed as exhibits to the registration statement of which this prospectus forms a part,
or will be incorporated by reference from another report that we file with the SEC.
Warrants
We
may offer warrants for the purchase of common stock, preferred stock or debt securities. We may issue the warrants by themselves
or together with shares or common stock or preferred stock or with debt securities, and the warrants may be attached to or separate
from any offered securities. Our board of directors will determine the terms of the warrants, including the class and
number
of underlying shares, the purchase price and any other rights and privileges, which will be set forth in the
form of warrant
or the warrant agreement and warrant certificate.
Units
We
may offer units comprised of any combination of our common stock, preferred stock, debt securities or warrants to purchase any
of these securities, in one or more series. We may evidence each series of units by unit certificates that we will issue under
a separate agreement. We may enter into unit agreements with a unit agent, which will be a bank or trust company that we select.
We will indicate the name and address of any unit agent in the applicable prospectus supplement relating to a particular series
of units.
RISK
FACTORS
Investing
in our securities involves a high degree of risk and uncertainty. Before making an investment decision with respect to our securities,
we urge you to carefully consider the risks described in the “
Risk Factors
” section of our Annual Report on
Form 10-K for the year ended December 31, 2016 and our Quarterly Reports on Form 10-Q for the quarterly period ended March 31,
2017 and June 30, 2017, which are incorporated by reference into this prospectus. We expect to update these risk factors from
time to time in the periodic and current reports that we file with the SEC after the date of this prospectus, which will be incorporated
by reference into this prospectus. Please also carefully consider the other information included in or incorporated by reference
into this prospectus, as may be updated by our subsequent filings under the Securities Exchange Act of 1934, as amended, or the
Exchange Act. In connection with any specific offering, we also expect to provide risk factors and other information in the applicable
prospectus supplement or in any related free writing prospectus. If one or more of the adverse events relevant to these risks
and uncertainties actually occurs, our business, financial condition, and results of operations could be severely harmed. This
could cause the trading price of our securities to decline, and you could lose all or part of your investment. Additional risks
and uncertainties not presently known to us or that we currently deem immaterial also may have similar adverse effects on us.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain
statements contained herein are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements pertaining to the results of CLIA and validity studies of our lung cancer test, our ability to implement
commercialization plans and the timing of these plans, as well as future financial or operating results, future growth in research,
technology, clinical development, potential opportunities, and any statements about the future expectations, beliefs, goals, plans,
or prospects expressed by management. Any statements that are not historical fact (including, but not limited to statements that
contain words such as “will,” “believes,” “plans,” “anticipates,” “expects,”
“estimates”) are forward-looking statements. Forward-looking statements involve risks and uncertainties, including
risks inherent in the development or commercialization of potential diagnostic tests or products, uncertainty in the results of
clinical trials or regulatory approvals, the need and ability to obtain future capital, maintenance of intellectual property rights,
and the need to obtain third party reimbursement for patients’ use of any diagnostic tests we commercialize. Actual results
may differ materially from the results anticipated in these forward-looking statements and as such should be evaluated together
with the many uncertainties that affect our business, particularly those mentioned in the “Risk Factors” section of
this prospectus and the filings we make with the SEC. The disclosure in this prospectus, including any f
orward-looking
statement, speaks only as of its date, the date of this prospectus, or the date of any document incorporated by reference into
this prospectus, as applicable.
We disclaim any intent or obligation to update any forward-looking statement, except as
required by law.
USE
OF PROCEEDS
Except
as described in any prospectus supplement or any free writing prospectus in connection with a specific offering, we intend to
use the net proceeds from the sale of the securities offered under this prospectus for working capital and general corporate purposes,
including continued development of its first assay, DetermaVu™, a confirmatory lung cancer diagnostic. We may also use a
portion of the net proceeds to acquire or in-license additional product candidates or complementary assets or businesses; however,
we currently have no agreements, commitments or understandings to complete any such transaction.
We
have not yet identified the amounts we intend to spend on these areas or the timing of the expenditures, which will be based on
many factors. Accordingly, our management will have broad discretion regarding the use of, and investors will be relying on the
judgment of our management regarding the application of, the net proceeds from the sale of the securities offered under this prospectus.
Pending these uses, we intend to invest the net proceeds in short-term, interest bearing, investment-grade securities. We cannot
predict whether these investments will yield a favorable return.
RATIO
OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The
following table sets forth, for the periods presented, our ratio of earnings to fixed charges and our ratio of earnings to combined
fixed charges and preferred stock dividends. We had no shares of preferred stock outstanding and no preferred stock dividend requirements
during these periods, so these ratios are the same. For purposes of computing these ratios, “earnings” consist of
our net loss plus our fixed charges, and “fixed charges” consist of an estimate of the interest within rental expense,
the interest payments on our loan payable to Silicon Valley Bank, amortization of debt discount on the loan payable to Silicon
Valley Bank, and the interest payments on our equipment leases.
In
each of the periods presented, earnings were insufficient to cover fixed charges and preferred stock dividends, and the extent
of such deficiencies in each period is shown below.
|
|
Three
Months
Ended
June
30,
|
|
|
Six
Months
Ended
June
30,
|
|
|
Year
Ended December 31,
|
|
|
|
|
|
|
2017
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Ratio
of earnings to fixed charges and preferred stock dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Deficiency
of earnings available to cover combined fixed charges and preferred stock dividends
|
|
$
|
(3,804
|
)
|
|
$
|
(8,509
|
)
|
|
$
|
(11,168
|
)
|
|
$
|
(8,735
|
)
|
|
$
|
(4,986
|
)
|
|
$
|
(3,495
|
)
|
SECURITIES
WE MAY OFFER
We
may offer shares of common stock and preferred stock, various series of debt securities and warrants to purchase any of such securities,
or any combination of the foregoing, either individually or in units. We may offer up to $50.0 million of securities under this
prospectus. The prices and terms of any offering will be determined by market conditions at the time of offering. Each time we
offer securities under this prospectus, we will provide offerees with a prospectus supplement that will describe the specific
amounts, prices and other important terms of the securities being offered.
DESCRIPTION
OF COMMON STOCK AND PREFERRED STOCK
The
following description of our common stock and preferred stock, together with any additional information we include in any applicable
prospectus supplement, documents incorporated by reference or any related free writing prospectus, summarizes the material terms
and provisions of our common stock and preferred stock that we may offer under this prospectus. While the terms we have summarized
below will apply generally to any future common stock and preferred stock that we may offer, we will describe the particular terms
of any class or series of these securities in more detail in the applicable prospectus supplement. For the complete terms of our
common stock and preferred stock, please refer to our Articles of Incorporation, as amended to date, which are incorporated by
reference into the registration statement of which this prospectus forms a part. The terms of these securities may also be affected
by the California Corporations Code, as may be amended from time to time. The summaries below are qualified in their entirety
by reference to our Articles of Incorporation, as in effect at the time of any offering of securities under this prospectus.
Common
Stock
General
Our
Articles of Incorporation currently authorize the issuance of up to 50,000,000 shares of common stock, no par value. As of August
7, 2017, there were outstanding 31,336,487 shares of common stock, no par value. Each holder of record of common stock is entitled
to one vote for each outstanding share owned, on every matter properly submitted to the shareholders for their vote.
Subject
to any dividend rights of holders of any of the preferred stock that we may issue from time to time, holders of common stock are
entitled to any dividend declared by our board of directors out of funds legally available for that purpose. We have never paid
cash dividends on our capital stock and we do not anticipate paying cash dividends in the foreseeable future, but intend to retain
our capital resources for reinvestment in our business.
Subject
to the prior payment of any liquidation preference to holders of any preferred stock that we may issue from time to time, holders
of common stock are entitled to receive on a pro rata basis all of our remaining assets available for distribution to the holders
of common stock in the event of the liquidation, dissolution, or winding up of our operations. Holders of common stock do not
have any preemptive rights to become subscribers or purchasers of additional shares of any class of our capital stock.
All
of the outstanding shares of our common stock are fully paid and non-assessable. The shares of common stock offered under this
prospectus or upon the conversion of any preferred stock or debt securities or exercise of any warrants offered pursuant to this
prospectus, when paid for and issued
in accordance with the applicable definitive documents
under which they are to be issued,
will also be fully paid and non-assessable.
Securities
Exchange Listing
Our
common stock listed on the
NYSE American
under the symbol “OCX.”
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is American Stock Transfer and Trust Company, LLC, 6201 15th Avenue, Brooklyn,
New York 11219.
Preferred
Stock
Our
Articles of Incorporation currently authorize the issuance of up to 5,000,000 shares of preferred stock, no par value. We may
issue preferred stock in one or more series, at any time, with such rights, preferences, privileges and restrictions as our board
of directors may determine, all without further action of our shareholders. Any series of preferred stock which may be authorized
by our board of directors in the future may be senior to and have greater rights and preferences than our common stock. There
are no shares of preferred stock presently outstanding and we have no present plan, arrangement, or commitment to issue any preferred
stock.
The
rights, privileges, preferences and restrictions of any class or series of preferred stock may be subordinated to, pari passu
with or senior to any of those of any present or future class or series of preferred stock or
common
stock
. Our board of directors is also expressly authorized to increase or decrease the number of shares of any series prior
or subsequent to the issue of that series, but not below the number of shares of such series then outstanding. The issuance of
preferred stock may have the effect of decreasing the market price of our common stock and may adversely affect the voting power
of holders of our common stock and reduce the likelihood that holders of our common stock will receive dividend payments and payments
upon liquidation.
The
particular terms of each class or series of preferred stock that we may offer under this prospectus, including redemption privileges,
liquidation preferences, voting rights, dividend rights or conversion rights, will be more fully described in the applicable prospectus
supplement relating to the preferred stock offered thereby. The
applicable
prospectus
supplement will specify the terms of the class or series of preferred stock we may offer, including:
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●
|
the
distinctive designation and the maximum number of shares in the class or series;
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|
|
|
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●
|
the
number of shares we are offering and purchase price per share;
|
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●
|
the
liquidation preference, if any;
|
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●
|
the
terms on which dividends, if any, will be paid;
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●
|
the
voting rights, if any;
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●
|
the
terms and conditions, if any, on which the shares of the class or series shall be convertible into, or exchangeable for, shares
of any other class or series of authorized capital;
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●
|
the
terms on which the shares may be redeemed, if at all;
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●
|
any
listing of the preferred stock on any securities exchange or market;
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|
|
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●
|
a
discussion of any material or special U.S. federal income tax considerations applicable to the preferred stock; and
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●
|
any
or all other preferences, rights, restrictions, including restrictions on transferability and qualifications of shares of
the class or series.
|
DESCRIPTION
OF DEBT SECURITIES
We
may issue debt securities, in one or more series, as either senior or subordinated debt or as senior or subordinated convertible
debt. The following description, together with the additional information we include in any applicable prospectus supplements
or free writing prospectuses, summarizes the material terms and provisions of the debt securities that we may offer under this
prospectus. While the terms we have summarized below will apply generally to any future debt securities we may offer under this
prospectus, we will describe the particular terms of any debt securities that we may offer in more detail in the applicable prospectus
supplement or free writing prospectus. The terms of any debt securities we offer under a prospectus supplement may differ from
the terms we describe below. However, no prospectus supplement shall fundamentally change the terms that are set forth in this
prospectus or offer a security that is not registered and described in this prospectus at the time of its effectiveness. We had
no outstanding registered debt securities as of June 30, 2017. Unless the context requires otherwise, whenever we refer to the
“indenture,” we also are referring to any supplemental indentures that specify the terms of a particular series of
debt securities.
We
may issue debt securities under a note purchase agreement or under an indenture to be entered between us and a trustee. A form
of the indenture is included as an exhibit to the registration statement of which this prospectus forms a part. The indenture
will be qualified under the Trust Indenture Act of 1939, as amended, or the Trust Indenture Act. We use the term “trustee”
to refer to the trustee under the indenture.
The
following summaries of material provisions of senior debt securities, subordinated debt securities and the indenture are subject
to, and qualified in their entirety by reference to, all of the provisions of the indenture and any supplemental indentures applicable
to a particular series of debt securities. We urge you to read the applicable prospectus supplements and any related free writing
prospectuses related to the debt securities that we may offer under this prospectus, as well as the complete indenture that contains
the terms of the debt securities.
General
The
terms of each series of debt securities will be established by or pursuant to a resolution of our board of directors and set forth
or determined in the manner provided in an officers’ certificate or by a supplemental indenture. Debt securities may be
issued in separate series without limitation as to aggregate principal amount. We may specify a maximum aggregate principal amount
for the debt securities of any series. We will describe in the applicable prospectus supplement the terms of the series of debt
securities being offered, including:
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the
title;
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●
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the
principal amount being offered, and if a series, the total amount authorized and the total amount outstanding;
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●
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any
limit on the amount that may be issued;
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●
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whether
or not we will issue the series of debt securities in global form, and, if so, the terms and who the depositary will be;
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●
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the
maturity date;
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●
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whether
and under what circumstances, if any, we will pay additional amounts on any debt securities held by a person who is not a
U.S. person for tax purposes, and whether we can redeem the debt securities if we have to pay such additional amounts;
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|
|
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●
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the
annual interest rate, which may be fixed or variable, or the method for determining the rate and the date interest will begin
to accrue, the dates interest will be payable and the regular record dates for interest payment dates or the method for determining
such dates;
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●
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whether
or not the debt securities will be secured or unsecured, and the terms of any secured debt;
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●
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the
terms of the subordination of any series of subordinated debt;
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●
|
the
place where payments will be made;
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●
|
restrictions
on transfer, sale or other assignment, if any;
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●
|
our
right, if any, to defer payment of interest and the maximum length of any such deferral period;
|
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●
|
the
date, if any, after which, and the price at which, we may, at our option, redeem the series of debt securities pursuant to
any optional or provisional redemption provisions and the terms of those redemption provisions;
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●
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provisions
for a sinking fund purchase or other analogous fund, if any, including the date, if any, on which, and the price at which
we are obligated, pursuant thereto or otherwise, to redeem, or at the holder’s option, to purchase, the series of debt
securities and the currency or currency unit in which the debt securities are payable;
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●
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whether
the indenture will restrict our ability or the ability of our subsidiaries to:
|
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○
|
incur
additional indebtedness;
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○
|
issue
additional securities;
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○
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create
liens;
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○
|
pay
dividends or make distributions in respect of our authorized capital or the authorized capital of our subsidiaries;
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○
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redeem
authorized capital;
|
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○
|
place
restrictions on our subsidiaries’ ability to pay dividends, make distributions or transfer assets;
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○
|
make
investments or other restricted payments;
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○
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sell
or otherwise dispose of assets;
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○
|
enter
into sale-leaseback transactions;
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○
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engage
in transactions with shareholders or affiliates;
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○
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issue
or sell share of our subsidiaries; or
|
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○
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effect
a consolidation or merger;
|
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●
|
whether
the indenture will require us to maintain any interest coverage, fixed charge, cash flow-based, asset-based or other financial
ratios;
|
|
|
|
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●
|
a
discussion of certain material or special U.S. federal income tax considerations applicable to the debt securities;
|
|
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●
|
information
describing any book-entry features;
|
|
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|
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●
|
the
applicability of the provisions in the indenture on discharge;
|
|
|
|
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●
|
whether
the debt securities are to be offered at a price such that they will be deemed to be offered at an “original issue discount”
as defined in paragraph (a) of Section 1273 of the Internal Revenue Code of 1986, as amended;
|
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|
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●
|
the
denominations in which we will issue the series of debt securities, if other than denominations of $1,000 and any integral
multiple thereof;
|
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●
|
the
currency of payment of debt securities if other than U.S. dollars and the manner of determining the equivalent amount in U.S.
dollars; and
|
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●
|
any
other specific terms, preferences, rights or limitations of, or restrictions on, the debt securities, including any additional
events of default or covenants provided with respect to the debt securities, and any terms that may be required by us or advisable
under applicable laws or regulations.
|
Conversion
or Exchange Rights
We
will set forth in the applicable prospectus supplement the terms under which a series of debt securities may be convertible into
or exchangeable for our common stock, preferred stock or other securities (including securities of a third party). We will include
provisions as to whether conversion or exchange is mandatory, at the option of the holder or at our option. We may include provisions
pursuant to which the number of shares of our common stock or preferred stock or other securities (including securities of a third
party) that the holders of the series of debt securities receive would be subject to adjustment.
Consolidation,
Merger or Sale
Unless
we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, the indenture will not
contain any covenant that restricts our ability to merge or consolidate, or to sell, convey, transfer or otherwise dispose of
all or substantially all of our assets. However, any successor to or acquirer of such assets must assume all of our obligations
under the indenture or the debt securities, as appropriate. If the debt securities are convertible into or exchangeable for our
other securities or securities of other entities, the person with whom we consolidate or merge or to whom we sell all of our property
must make provisions for the conversion of the debt securities into securities that the holders of the debt securities would have
received if they had converted the debt securities before the consolidation, merger or sale.
Events
of Default under the Indenture
Unless
we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, the following are events
of default under the indenture with respect to any series of debt securities that we may issue:
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●
|
if
we fail to pay interest when due and payable and our failure continues for 90 days and the time for payment has not been extended;
|
|
|
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●
|
if
we fail to pay the principal, premium or sinking fund payment, if any, when due and payable at maturity, upon redemption or
repurchase or otherwise, and the time for payment has not been extended;
|
|
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●
|
if
we fail to observe or perform any other covenant contained in the debt securities or the indenture, other than a covenant
specifically relating to another series of debt securities, and our failure continues for 90 days after we receive notice
from the trustee or we and the trustee receive notice from the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of the applicable series; and
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●
|
if
specified events of bankruptcy, insolvency or reorganization occur.
|
We
will describe in each applicable prospectus supplement any additional events of default relating to the relevant series of debt
securities.
If
an event of default with respect to debt securities of any series occurs and is continuing, other than an event of default specified
in the last bullet point above, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt
securities of that series, by notice to us in writing, and to the trustee if notice is given by such holders, may declare the
unpaid principal, premium, if any, and accrued interest, if any, due and payable immediately. If an event of default arises due
to the occurrence of certain specified bankruptcy, insolvency or reorganization events, the unpaid principal, premium, if any,
and accrued interest, if any, of each issue of debt securities then outstanding shall be due and payable without any notice or
other action on the part of the trustee or any holder.
The
holders of a majority in principal amount of the outstanding debt securities of an affected series may waive any default or event
of default with respect to the series and its consequences, except defaults or events of default regarding payment of principal,
premium, if any, or interest, unless we have cured the default or event of default in accordance with the indenture. Any waiver
shall cure the default or event of default.
Subject
to the terms of the indenture, if an event of default under an indenture shall occur and be continuing, the trustee will be under
no obligation to exercise any of its rights or powers under the indenture at the request or direction of any of the holders of
the applicable series of debt securities, unless such holders have offered the trustee reasonable indemnity or security satisfactory
to it against any loss, liability or expense. The holders of a majority in principal amount of the outstanding debt securities
of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to
the trustee, or exercising any trust or power conferred on the trustee, with respect to the debt securities of that series, provided
that:
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●
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the
direction so given by the holder is not in conflict with any law or the indenture; and
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|
|
●
|
subject
to its duties under the Trust Indenture Act, the trustee need not take any action that might involve it in personal liability
or might be unduly prejudicial to the holders not involved in the proceeding.
|
The
indenture provides that if an event of default has occurred and is continuing, the trustee will be required in the exercise of
its powers to use the degree of care that a prudent person would use in the conduct of its own affairs. The trustee, however,
may refuse to follow any direction that conflicts with law or the indenture, or that the trustee determines is unduly prejudicial
to the rights of any other holder of the relevant series of debt securities, or that would involve the trustee in personal liability.
Prior to taking any action under the indenture, the trustee will be entitled to indemnification against all costs, expenses and
liabilities that would be incurred by taking or not taking such action.
A
holder of the debt securities of any series will have the right to institute a proceeding under the indenture or to appoint a
receiver or trustee, or to seek other remedies only if:
|
●
|
the
holder has given written notice to the trustee of a continuing event of default with respect to that series;
|
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●
|
the
holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made a written
request and such holders have offered reasonable indemnity to the trustee or security satisfactory to it against any loss,
liability or expense or to be incurred in compliance with instituting the proceeding as trustee; and
|
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|
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●
|
the
trustee does not institute the proceeding, and does not receive from the holders of a majority in aggregate principal amount
of the outstanding debt securities of that series other conflicting directions within 90 days after the notice, request and
offer.
|
These
limitations do not apply to a suit instituted by a holder of debt securities if we default in the payment of the principal, premium,
if any, or interest on, the debt securities, or other defaults that may be specified in the applicable prospectus supplement.
We
will periodically file statements with the trustee regarding our compliance with specified covenants in the indenture.
The
indenture provides that if a default occurs and is continuing and is actually known to a responsible officer of the trustee, the
trustee must mail to each holder notice of the default within the earlier of 90 days after it occurs and 30 days after it is known
by a responsible officer of the trustee or written notice of it is received by the trustee, unless such default has been cured
or waived. Except in the case of a default in the payment of principal or premium of, or interest on, any debt security or certain
other defaults specified in an indenture, the trustee shall be protected in withholding such notice if and so long as the board
of directors, the executive committee or a trust committee of directors, or responsible officers of the trustee, in good faith
determine that withholding notice is in the best interests of holders of the relevant series of debt securities.
Modification
of Indenture; Waiver
Subject
to the terms of the indenture for any series of debt securities that we may issue, we and the trustee may change an indenture
without the consent of any holders with respect to the following specific matters:
|
●
|
to
fix any ambiguity, defect or inconsistency in the indenture;
|
|
|
|
|
●
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to
comply with the provisions described above under “
—Consolidation, Merger or Sale
”;
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to
comply with any requirements of the SEC in connection with the qualification of any indenture under the Trust Indenture Act;
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to
add to, delete from or revise the conditions, limitations and restrictions on the authorized amount, terms or purposes of
issue, authentication and delivery of debt securities, as set forth in the indenture;
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to
provide for the issuance of, and establish the form and terms and conditions of, the debt securities of any series as provided
under “
—General
,” to establish the form of any certifications required to be furnished pursuant to
the terms of the indenture or any series of debt securities, or to add to the rights of the holders of any series of debt
securities;
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to
evidence and provide for the acceptance of appointment hereunder by a successor trustee;
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to
provide for uncertificated debt securities and to make all appropriate changes for such purpose;
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to
add such new covenants, restrictions, conditions or provisions for the benefit of the holders, to make the occurrence, or
the occurrence and the continuance, of a default in any such additional covenants, restrictions, conditions or provisions
an event of default or to surrender any right or power conferred to us in the indenture; or
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to
change anything that does not adversely affect the interests of any holder of debt securities of any series in any material
respect.
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In
addition, under the indenture, the rights of holders of a series of debt securities may be changed by us and the trustee with
the written consent of the holders of at least a majority in aggregate principal amount of the outstanding debt securities of
each series that is affected. However, subject to the terms of the indenture for any series of debt securities that we may issue
or otherwise provided in the prospectus supplement applicable to a particular series of debt securities, we and the trustee may
only make the following changes with the consent of each holder of any outstanding debt securities affected:
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extending
the stated maturity of the series of debt securities;
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reducing
the principal amount, reducing the rate of or extending the time of payment of interest, or reducing any premium payable upon
the redemption or repurchase of any debt securities; or
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reducing
the percentage of debt securities, the holders of which are required to consent to any amendment, supplement, modification
or waiver.
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Discharge
The
indenture provides that, subject to the terms of the indenture and any limitation otherwise provided in the prospectus supplement
applicable to a particular series of debt securities, we may elect to be discharged from our obligations with respect to one or
more series of debt securities, except for specified obligations, including obligations to:
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register
the transfer or exchange of debt securities of the series;
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replace
stolen, lost or mutilated debt securities of the series;
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maintain
paying agencies;
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hold
monies for payment in trust;
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recover
excess money held by the trustee;
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compensate
and indemnify the trustee; and
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appoint
any successor trustee.
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In
order to exercise our rights to be discharged, we must deposit with the trustee money or government obligations sufficient to
pay all the principal of, and any premium and interest on, the debt securities of the series on the dates payments are due.
Form,
Exchange and Transfer
We
will issue the debt securities of each series only in fully registered form without coupons and, unless we otherwise specify in
the applicable prospectus supplement, in denominations of $1,000 and any integral multiple thereof. The indenture provides that
we may issue debt securities of a series in temporary or permanent global form and as book-entry securities that will be deposited
with, or on behalf of, The Depository Trust Company or another depositary named by us and identified in a prospectus supplement
with respect to that series. See “—
Legal Ownership of Securities
” below for a further description of
the terms relating to any book-entry securities.
At
the option of the holder, subject to the terms of the indenture and the limitations applicable to global securities described
in the applicable prospectus supplement, the holder of the debt securities of any series can exchange the debt securities for
other debt securities of the same series, in any authorized denomination and of like tenor and aggregate principal amount.
Subject
to the terms of the indenture and the limitations applicable to global securities set forth in the applicable prospectus supplement,
holders of the debt securities may present the debt securities for exchange or for registration of transfer, duly endorsed or
with the form of transfer endorsed thereon duly executed if so required by us or the security registrar, at the office of the
security registrar or at the office of any transfer agent designated by us for this purpose. Unless otherwise provided in the
definitive documents applicable to the debt securities that the holder presents for transfer or exchange, we will make no service
charge for any registration of transfer or exchange, but we may require payment of any taxes or other governmental charges.
We
will name in the applicable prospectus supplement the security registrar, and any transfer agent in addition to the security registrar,
that we initially designate for any debt securities. We may at any time designate additional transfer agents or rescind the designation
of any transfer agent or approve a change in the office through which any transfer agent acts, except that we will be required
to maintain a transfer agent in each place of payment for the debt securities of each series.
If
we elect to redeem the debt securities of any series, we will not be required to:
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issue,
register the transfer of, or exchange any debt securities of that series during a period beginning at the opening of business
15 days before the day of mailing of a notice of redemption of any debt securities that may be selected for redemption and
ending at the close of business on the day of the mailing; or
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register
the transfer of or exchange any debt securities so selected for redemption, in whole or in part, except the unredeemed portion
of any debt securities we are redeeming in part.
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Information
Concerning the Trustee
The
trustee, other than during the occurrence and continuance of an event of default under an indenture, undertakes to perform only
those duties as are specifically set forth in the indenture and is under no obligation to exercise any of the powers given it
by the indenture at the request of any holder of debt securities unless it is offered reasonable security and indemnity against
the costs, expenses and liabilities that it might incur. However, upon an event of default under an indenture, the trustee must
use the same degree of care as a prudent person would exercise or use in the conduct of his or her own affairs.
Payment
and Paying Agents
Unless
we otherwise indicate in the applicable prospectus supplement, we will make payment of the interest on any debt securities on
any interest payment date to the person in whose name the debt securities, or one or more predecessor securities, are registered
at the close of business on the regular record date for the interest payment.
We
will pay principal of and any premium and interest on the debt securities of a particular series at the office of the paying agents
designated by us, except that unless we otherwise indicate in the applicable prospectus supplement, we will make interest payments
by check that we will mail to the holder or by wire transfer to certain holders. Unless we otherwise indicate in the applicable
prospectus supplement, we will designate the corporate trust office of the trustee as our sole paying agent for payments with
respect to debt securities of each series. We will name in the applicable prospectus supplement any other paying agents that we
initially designate for the debt securities of a particular series. We will maintain a paying agent in each place of payment for
the debt securities of a particular series.
All
money we pay to a paying agent or the trustee for the payment of the principal of or any premium or interest on any debt securities
that remains unclaimed at the end of two years after such principal, premium or interest has become due and payable will be repaid
to us, and the holder of the debt security thereafter may look only to us for payment thereof.
Governing
Law
The
indenture and the debt securities will be governed by and construed in accordance with the laws of the State of New York, except
to the extent that the Trust Indenture Act is applicable.
Ranking
Debt Securities
Subordinated
debt securities will be unsecured and will be subordinate and junior in priority of payment to certain other indebtedness to the
extent described in a prospectus supplement.
Senior
debt securities will be unsecured and will rank equally in right of payment to all our other senior unsecured debt. The indenture
does not limit the amount of senior debt securities that we may issue. It also does not limit us from issuing any other secured
or unsecured debt.
Existing
Debt
As
of June 30, 2017, we had $2.0 million in a loan payable to Silicon Valley Bank (which may be increased by $3.0 million subject
to certain conditions), capital lease obligations for equipment amounting to $0.7 million, and an account payable to BioTime of
$2.5 million associated with the BioTime shares we hold as available-for-sale securities. We have no other material existing debt.
DESCRIPTION
OF WARRANTS
General
We
may offer warrants for the purchase of shares of common stock or preferred stock or debt securities, in one or more series. We
may issue the warrants by themselves or together with common stock, preferred stock or debt securities, and the warrants may be
attached to or separate from any offered securities. While the terms we have summarized below will apply generally to any warrants
that we may offer under this prospectus, we will describe in particular the terms of any series of warrants that we may offer
in more detail in the applicable prospectus supplement and any applicable free writing prospectus. The terms of any warrants offered
by a prospectus supplement may differ from the terms described below.
We
will file as an exhibit to the registration statement of which this prospectus forms a part, or will incorporate by reference
from another report that we file with the SEC, the form of warrant or warrant agreement, which may include a form of warrant certificate,
as applicable, that describes the terms of the particular series of warrants we may offer before the issuance of the related series
of warrants. We may issue the warrants under a warrant agreement that we will enter into with a warrant agent to be selected by
us. The warrant agent will act solely as our agent in connection with the warrants and will not assume any obligation or relationship
of agency or trust for or with any registered holders of warrants or beneficial owners of warrants. The following summary of material
provisions of the warrants and warrant agreements are subject to, and qualified in their entirety by reference to, all the provisions
of the form of warrant or warrant agreement and warrant certificate applicable to a particular series of warrants. We urge you
to read the applicable prospectus supplement and any related free writing prospectus, as well as the complete form of warrant
or the warrant agreement and warrant certificate, as applicable, that contain the terms of the warrants.
The
particular terms of any issue of warrants will be described in the prospectus supplement relating to the issue. Those terms may
include:
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the
title of such warrants;
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the
aggregate number of such warrants;
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the
price or prices at which such warrants will be issued;
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the
currency or currencies (including composite currencies) in which the price of such warrants may be payable;
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the
terms of the securities purchasable upon exercise of such warrants and the procedures and conditions relating to the exercise
of such warrants;
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the
price at which the securities purchasable upon exercise of such warrants may be purchased;
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the
date on which the right to exercise such warrants will commence and the date on which such right shall expire;
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any
provisions for adjustment of the number or amount of securities receivable upon exercise of the warrants or the exercise price
of the warrants;
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if
applicable, the minimum or maximum amount of such warrants that may be exercised at any one time;
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if
applicable, the designation and terms of the securities with which such warrants are issued and the number of such warrants
issued with each such security;
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if
applicable, the date on and after which such warrants and the related securities will be separately transferable;
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information
with respect to book-entry procedures, if any;
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the
terms of any rights to redeem or call the warrants;
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U.S.
federal income tax consequences of holding or exercising the warrants, if material; and
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any
other terms of such warrants, including terms, procedures and limitations relating to the exchange or exercise of such warrants.
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Each
warrant will entitle its holder to purchase the principal amount of debt securities or the number of common stock or preferred
stock at the exercise price set forth in, or calculable as set forth in, the applicable prospectus supplement. The warrants may
be exercised as set forth in the prospectus supplement relating to the warrants offered. Unless we otherwise specify in the applicable
prospectus supplement, warrants may be exercised at any time up to the close of business on the expiration date set forth in the
prospectus supplement relating to the warrants offered thereby. After the close of business on the expiration date, unexercised
warrants will become void.
We
will specify the place or places where, and the manner in which, warrants may be exercised in the form of warrant, warrant agreement
or warrant certificate and applicable prospectus supplement. Upon receipt of payment and the warrant or warrant certificate, as
applicable, properly completed and duly executed at the corporate trust office of any warrant agent, or any other office (including
ours) indicated in the prospectus supplement, we will, as soon as practicable, issue and deliver the securities purchasable upon
such exercise. If less than all of the warrants (or the warrants represented by such warrant certificate) are exercised, a new
warrant or a new warrant certificate, as applicable, will be issued for the remaining amount of warrants. If we so indicate in
the applicable prospectus supplement, holders of the warrants may surrender securities as all or part of the exercise price for
warrants.
Prior
to the exercise of any warrants to purchase common stock, preferred stock or debt securities, holders of the warrants will not
have any of the rights of holders of common stock, preferred stock or debt securities purchasable upon exercise, including (i)
in the case of warrants for the purchase of common stock or preferred stock, the right to vote or to receive any payments of dividends
or payments upon our liquidation, dissolution or winding up on the common stock or preferred stock purchasable upon exercise,
if any; or (ii) in the case of warrants for the purchase of debt securities, the right to receive payments of principal of, any
premium or interest on, the debt securities purchasable upon exercise or to enforce covenants in the indenture.
Outstanding
Warrants
As
of June 30, 2017, we had outstanding warrants to purchase 3,049,221 shares of common stock, with a weighted-average exercise price
of $3.41 per share. The warrants may be exercised for cash or, under certain circumstances, on a cashless basis, in which case
we will deliver, upon exercise, the number of shares with respect to which the warrant is being exercised reduced by a number
of shares having a value (as determined in accordance with the terms of the applicable warrant) equal to the aggregate exercise
price of the shares with respect to which the warrant is being exercised.
DESCRIPTION
OF UNITS
The
following description, together with the additional information we may include in any applicable prospectus supplement, summarizes
the material terms and provisions of the units that we may offer under this prospectus. While the terms we have summarized below
will apply generally to any units that we may offer under this prospectus, we will describe the particular terms of any series
of units in more detail in the applicable prospectus supplement and any related free writing prospectus. The terms of any units
offered by a prospectus supplement may differ from the terms described below. However, no prospectus supplement will fundamentally
change the terms that are set forth in this prospectus or offer a security that is not registered and described in this prospectus
at the time of its effectiveness.
We
will file as an exhibit to the registration statement of which this prospectus forms a part, or will incorporate by reference
from another report we file with the SEC, the form of unit agreement that describes the terms of the series of units we may offer
under this prospectus, and any supplemental agreements, before the issuance of the related series of units. The following summaries
of material terms and provisions of the units are subject to, and qualified in their entirety by reference to, all the provisions
of the unit agreement and any supplemental agreements applicable to a particular series of units. We urge you to read the applicable
prospectus supplement and any related free writing prospectus, as well as the complete unit agreement and any supplemental agreements
that contain the terms of the units.
General
We
may offer units comprised of any combination of our common stock, preferred stock, debt securities or warrants to purchase any
of these securities, in one or more series. Each unit will be issued so that the holder of the unit is also the holder of each
security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security.
The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred
separately, at any time or at any time before a specified date.
We
will describe in the applicable prospectus supplement the terms of the series of units, including:
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the
designation and terms of the units and of the securities comprising the units, including whether and under what circumstances
those securities may be held or transferred separately;
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any
provisions of the governing unit agreement that differ from those described below; and
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any
provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units.
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The
provisions described in this section, as well as those described in the sections of this prospectus titled “
Description
of Common Stock and Preferred Stock
,” “
Description of Debt Securities
” and “
Description
of Warrants
” will apply to each unit and to any common stock, preferred stock, debt security or warrant included in
each unit, respectively.
Enforceability
of Rights by Holders of Units
Each
unit agent will act solely as our agent under the applicable unit agreement and will not assume any obligation or relationship
of agency or trust with any holder of any unit. A single bank or trust company may act as unit agent for more than one series
of units. A unit agent will have no duty or responsibility in case of any default by us under the applicable unit agreement or
unit, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any
holder of a unit may, without the consent of the related unit agent or the holder of any other unit, enforce by appropriate legal
action its rights as holder under any security included in the unit.
We
and any unit agent (including any of its agents) may treat the registered holder of any unit certificate as an absolute owner
of the units evidenced by that certificate for any purpose and as the person entitled to exercise the rights attaching to the
units so requested, despite any notice to the contrary.
LEGAL
OWNERSHIP OF SECURITIES
We
may issue securities in registered form or in the form of one or more global securities. We describe global securities in greater
detail below. We refer to those persons who have securities registered in their own names on the books that we or any applicable
trustee or depositary or warrant agent maintain for this purpose as the “holders” of those securities. These persons
are the legal holders of the securities. We refer to those persons who, indirectly through others, own beneficial interests in
securities that are not registered in their own names, as “indirect holders” of those securities. As we discuss below,
indirect holders are not legal holders, and investors in securities issued in book-entry form or in “street name”
will be indirect holders.
Book-Entry
Holders
We
may issue securities in book-entry form only, if we so specify in the applicable prospectus supplement. This means securities
may be represented by one or more global securities registered in the name of a financial institution that holds them as depositary
on behalf of other financial institutions that participate in the depositary’s book-entry system. These participating institutions,
which are referred to as participants, in turn, hold beneficial interests in the securities on behalf of themselves or their customers.
Only
the person in whose name a security is registered is recognized as the holder of that security. Global securities will be registered
in the name of the depositary. Consequently, for global securities, we will recognize only the depositary as the holder of the
securities, and we will make all payments on the securities to the depositary. The depositary passes along the payments it receives
to its participants, which in turn pass the payments along to their customers who are the beneficial owners. The depositary and
its participants do so under agreements they have made with one another or with their customers; they are not obligated to do
so under the terms of the securities.
As
a result, investors in a global security will not own securities directly. Instead, they will own beneficial interests in a global
security, through a bank, broker or other financial institution that participates in the depositary’s book-entry system
or holds an interest through a participant. As long as the securities are issued in global form, investors will be indirect holders,
and not legal holders, of the securities.
Street
Name Holders
We
may terminate a global security or issue securities that are not issued in global form. In these cases, investors may choose to
hold their securities in their own names or in “street name.” Securities held by an investor in street name would
be registered in the name of a bank, broker or other financial institution that the investor chooses, and the investor would hold
only a beneficial interest in those securities through an account he or she maintains at that institution.
For
securities held in street name, we or any applicable trustee or depositary will recognize only the intermediary banks, brokers
and other financial institutions in whose names the securities are registered as the holders of those securities, and we or any
such trustee or depositary will make all payments on those securities to them. These institutions pass along the payments they
receive to their customers who are the beneficial owners, but only because they agree to do so in their customer agreements or
because they are legally required to do so. Investors who hold securities in street name will be indirect holders, not legal holders,
of those securities.
Legal
Holders
Our
obligations, as well as the obligations of any applicable trustee or third party employed by us or a trustee, run only to the
legal holders of the securities. We do not have obligations to investors who hold beneficial interests in global securities, in
street name or by any other indirect means. This will be the case whether an investor chooses to be an indirect holder of a security
or has no choice because we are issuing the securities only in global form.
For
example, once we make a payment or give a notice to the legal holder, we have no further responsibility for the payment or notice
even if that holder is required, under agreements with its participants or customers or by law, to pass it along to the indirect
holders but does not do so. Similarly, we may want to obtain the approval of the legal holders to amend an indenture, to relieve
us of the consequences of a default or of our obligation to comply with a particular provision of an indenture, or for other purposes.
In such an event, we would seek approval only from the legal holders, and not the indirect holders, of the securities. Whether
and how the legal holders contact the indirect holders is up to the legal holders.
Special
Considerations for Indirect Holders
If
you hold securities through a bank, broker or other financial institution, either in book-entry form because the securities are
represented by one or more global securities or in street name, please check with your own institution to find out:
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it handles securities payments and notices;
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whether
it imposes fees or charges;
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how
it would handle a request for the legal holders’ consent, if ever required;
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whether
and how you can instruct it to send you securities registered in your own name so you can be a legal holder, if that is permitted
in the future;
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how
it would exercise rights under the securities if there were a default or other event triggering the need for legal holders
to act to protect their interests; and
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if
the securities are in book-entry form, how the depositary’s rules and procedures will affect these matters.
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Global
Securities
A
global security is a security that represents one or any other number of individual securities held by a depositary. Generally,
all securities represented by the same global securities will have the same terms.
Each
security issued in book-entry form will be represented by a global security that we issue to, deposit with and register in the
name of a financial institution or its nominee that we select. The financial institution that we select for this purpose is called
the depositary. Unless we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New
York, known as DTC, will be the depositary for all securities issued in book-entry form.
A
global security may not be transferred to or registered in the name of anyone other than the depositary, its nominee or a successor
depositary, unless special termination situations arise. We describe those situations below under “—
Special Situations
When a Global Security Will Be Terminated
.” As a result of these arrangements, the depositary, or its nominee, will
be the sole registered owner and legal holder of all securities represented by a global security, and investors will be permitted
to own only beneficial interests in a global security. Beneficial interests must be held by means of an account with a broker,
bank or other financial institution that in turn has an account with the depositary or with another institution that does. Thus,
an investor whose security is represented by a global security will not be a legal holder of the security, but only an indirect
holder of a beneficial interest in the global security.
If
the prospectus supplement for a particular security indicates that the security will be issued as a global security, then the
security will be represented by a global security at all times unless and until the global security is terminated. If termination
occurs, we may issue the securities through another book-entry clearing system or decide that the securities may no longer be
held through any book-entry clearing system.
Special
Considerations for Global Securities
As
an indirect holder, an investor’s rights relating to a global security will be governed by the account rules of the investor’s
bank, broker or other financial institution and of the depositary, as well as general laws relating to securities transfers. We
do not recognize an indirect holder as a holder of securities and instead deal only with the depositary that holds the global
security.
If
securities are issued only as global securities, an investor should be aware of the following:
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an
investor cannot cause the securities to be registered in his or her name, and cannot obtain non-global certificates for his
or her interest in the securities, except in the special situations we describe below;
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an
investor will be an indirect holder and must look to his or her own bank, broker or other financial institution for payments
on the securities and protection of his or her legal rights relating to the securities, as we describe above;
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an
investor may not be able to sell interests in the securities to some insurance companies and to other institutions that are
required by law to own their securities in non-book-entry form;
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an
investor may not be able to pledge his or her interest in the global security in circumstances where certificates representing
the securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective;
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the
depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters
relating to an investor’s interest in the global security. We and any applicable trustee have no responsibility for
any aspect of the depositary’s actions or for its records of ownership interests in the global security. We and the
trustee also do not supervise the depositary in any way;
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the
depositary may, and we understand that DTC will, require that those who purchase and sell interests in the global security
within its book-entry system use immediately available funds, and your broker or bank may require you to do so as well; and
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financial
institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest
in the global security, may also have their own policies affecting payments, notices and other matters relating to the securities.
There may be more than one financial intermediary in the chain of ownership for an investor. We do not monitor and are not
responsible for the actions of any of those intermediaries.
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Special
Situations When a Global Security Will Be Terminated
In
a few special situations described below, a global security will terminate and interests in it will be exchanged for physical
certificates representing those interests. After that exchange, the choice of whether to hold securities directly or in street
name will be up to the investor. Investors must consult their own banks or brokers to find out how to have their interests in
securities transferred to their own names, so that they will be direct holders. We have described the rights of holders and street
name investors above.
A
global security will terminate when the following special situations occur:
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if
the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary for that global security
and we do not appoint another institution to act as depositary within 90 days;
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if
we notify any applicable trustee that we wish to terminate that global security; or
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if
an event of default has occurred with regard to securities represented by that global security and has not been cured or waived.
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The
applicable prospectus supplement may also list additional situations for terminating a global security that would apply only to
the particular series of securities covered by the prospectus supplement. When a global security terminates, the depositary, and
neither we nor any applicable trustee, is responsible for deciding the names of the institutions that will be the initial direct
holders.
PLAN
OF DISTRIBUTION
We
may sell these securities directly to one or more investors. We may also sell these securities through agents designated from
time to time or to or through underwriters or dealers. The applicable prospectus supplement and any related free writing prospectus
will describe the terms of the offering of the securities, including, to the extent applicable:
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the
name or names of any agents, underwriters or dealers;
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the
purchase price of the securities being offered and the net proceeds we will receive from the sale;
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any
over-allotment options under which underwriters may purchase additional securities from us;
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any
agency fees or underwriting discounts and other items constituting agents’ or underwriters’ compensation;
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any
discounts or concessions allowed or reallowed or paid to dealers; and
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any
securities exchanges or markets on which such securities may be listed.
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We
may distribute the securities from time to time in one or more transactions at:
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a
fixed price or prices, which may be changed from time to time;
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market
prices prevailing at the time of sale;
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prices
related to such prevailing market prices; or
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negotiated
prices.
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Agents
We
may designate agents who agree to use their reasonable efforts to solicit purchases of our securities for the period of their
appointment or to sell our securities on a continuing basis. We will name any agent involved in the offering and sale of securities
and we will describe any fees or commissions we will pay the agent in the applicable prospectus supplement.
Underwriters
If
we use underwriters for a sale of securities, the underwriters will acquire the securities for their own account. The underwriters
may resell the securities in one or more transactions, including negotiated transactions, at a fixed public offering price or
at varying prices determined at the time of sale. The obligations of the underwriters to purchase the securities will be subject
to the conditions set forth in the applicable underwriting agreement. Subject to certain conditions, the underwriters will be
obligated to purchase all the securities of the series offered if they purchase any of the securities of that series. We may change
from time to time any public offering price and any discounts or concessions the underwriters allow or reallow or pay to dealers.
We may use underwriters with whom we have a material relationship. We will name any underwriter involved in the offering and sale
of securities, describe any discount or other compensation and describe the nature of any material relationship in any applicable
prospectus supplement. Only underwriters we name in the prospectus supplement will be underwriters of the securities offered by
that prospectus supplement.
We
may have agreements with the agents and underwriters to indemnify them against specified civil liabilities related to offerings
under this prospectus, including liabilities under the Securities Act, or contribution with respect to payments that the agents
or underwriters may make with respect to these liabilities.
Underwriters,
dealers and agents that participate in the distribution of the securities may be underwriters as defined in the Securities Act,
and any discounts or commissions they receive from us and any profit on their resale of the securities may be treated as underwriting
discounts and commissions under the Securities Act. We will identify in the applicable prospectus supplement any underwriters,
dealers or agents and will describe their compensation. We may have agreements with the underwriters, dealers and agents to indemnify
them against specified civil liabilities related to offerings under this prospectus, including liabilities under the Securities
Act, or contribution with respect to payments that the agents or underwriters may make with respect to these liabilities. Underwriters,
dealers and agents may engage in transactions with or perform services for us in the ordinary course of their businesses.
Trading
Markets and Listing of Securities
Unless
otherwise specified in the applicable prospectus supplement, each class or series of securities will be a new issue with no established
trading market, other than our common stock, which is currently listed on the NYSE American. We may elect to list or qualify for
trading any other class or series of securities on any securities exchange or other market, but we are not obligated to do so.
It is possible that one or more underwriters may make a market in a class or series of securities, but the underwriters will not
be obligated to do so and may discontinue any market making at any time without notice. We cannot give any assurance as to the
liquidity of the trading market for any of the securities.
Stabilization
Activities
Any
underwriter may engage in overallotment, stabilizing transactions, short covering transactions and penalty bids in accordance
with Regulation M under the Exchange Act. Overallotment involves sales in excess of the offering size, which create a short position.
Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified
maximum. Short covering transactions involve purchases of the securities in the open market after the distribution is completed
to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities
originally sold by the dealer are purchased in a covering transaction to cover short positions. Those activities may cause the
price of the securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue any of these activities
at any time.
Passive
Market Making
Any
underwriter who is a qualified market maker on the NYSE American may engage in passive market making transactions in securities
listed on the NYSE American in accordance with Rule 103 of Regulation M, during the business day prior to the pricing of the offering,
before the commencement of offers or sales of the securities. A passive market maker must comply with applicable volume and price
limitations and must be identified as a passive market maker. In general, a passive market maker must display its bid at a price
not in excess of the highest independent bid for such security. If all independent bids are lowered below the passive market maker’s
bid, however, the passive market maker’s bid must then be lowered when certain purchase limits are exceeded.
LEGAL
MATTERS
Unless
otherwise indicated in the applicable prospectus supplement, t
he validity of any common
stock, preferred stock, debt securities, warrants or units offered under this prospectus and any supplement hereto will be passed
upon for us by DLA Piper LLP (US), Seattle, Washington.
EXPERTS
The
balance sheets of OncoCyte Corporation as of December 31, 2016 and 2015,
and the related
statements of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for each of the three years
in the period ended December 31, 2016
, have been incorporated by reference into this prospectus and the registration statement
in reliance on the report of OUM & Co. LLP,
an independent registered public accounting
firm, upon the authority of said firm as experts in auditing and accounting.
INFORMATION
INCORPORATED BY REFERENCE
We
are “incorporating by reference” certain documents we file with the SEC, which means that we can disclose important
information to you by referring you to those documents. The information in the documents incorporated by reference is considered
to be part of this prospectus. Statements contained in documents that we file with the SEC and that are incorporated by reference
into this prospectus will automatically update and supersede information contained in this prospectus, including information in
previously filed documents or reports that have been incorporated by reference into this prospectus, to the extent the new information
differs from or is inconsistent with the old information.
We
hereby incorporate by reference into this prospectus the following documents that we have filed with the SEC under the Exchange
Act File No. 001-
37648
(other
than current reports on Form 8-K, or portions thereof, furnished under Items 2.02 or 7.01 of Form 8-K):
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Our
Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the SEC on February 27, 2017;
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Our
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2017 and June 30, 2017, as filed with the SEC on
April 28, 2017 and August 14, 2017, respectively;
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Our
Current Reports on Form 8-K, as filed with the SEC on February 24, 2017, February 27, 2017, March 3, 2017, March 6, 2017,
March 10, 2017, April 28, 2017, June 21, 2017, July 26, 2017 and August 15, 2017;
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Our
proxy statement on Schedule 14A for our 2017 annual meeting of shareholders, as filed with the SEC on April 28, 2017; and
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The
description of our common stock included in our registration statement on Form 10, as filed with the SEC on November 23, 2015
and amended on December 21, 2015 and December 29, 2015.
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All
documents that we file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than current reports
on Form 8-K, or portions thereof, furnished under Items 2.02 or 7.01 of Form 8-K) (i) after the initial filing date of the registration
statement of which this prospectus forms a part and prior to the effectiveness of such registration statement and (ii) after the
date of this prospectus and prior to the termination of the offering shall be deemed to be incorporated by reference into this
prospectus from the date of filing of the documents, unless we specifically provide otherwise. Information that we file with the
SEC will automatically update and may replace information previously filed with the SEC. To the extent that any information contained
in any current report on Form 8-K or any exhibit thereto, was or is furnished to, rather than filed with the SEC, such information
or exhibit is specifically not incorporated by reference.
Upon
written or oral request made to us at the address or telephone number below, we will, at no cost to the requester, provide to
each person, including any beneficial owner, to whom this prospectus is delivered, a copy of any or all of the information that
has been incorporated by reference into this prospectus (other than an exhibit to a filing, unless that exhibit is specifically
incorporated by reference into that filing), but not delivered with this prospectus:
OncoCyte
Corporation
1010
Atlantic Avenue, Suite 102
Alameda,
California 94501
(510)
775-0515
WHERE
YOU CAN FIND MORE INFORMATION
As
permitted by SEC rules, this prospectus omits certain information that is included in the registration statement of which this
prospectus forms a part and its exhibits. Since this prospectus may not contain all of the information that you may find important,
we urge you to review the full text of these documents. If we have filed a contract, agreement or other document as an exhibit
to the registration statement of which this prospectus forms a part, please read the exhibit for a more complete understanding
of the document or matter involved. Each statement in this
prospectus,
including statements incorporated by reference as discussed above, regarding a contract, agreement or other document is qualified
in its entirety by reference to the actual document.
We
are subject to the information reporting requirements of the Exchange Act and, in accordance with these requirements, we file
annual, quarterly and current reports, proxy statements, information statements, and other information with the SEC. You may read
and copy any materials we file with the SEC at the SEC’s Public Reference Room located at 100 F Street, NE, Washington,
D.C., 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The
SEC also maintains an internet site that contains these materials at www.sec.gov. In addition, we
provide
free access to these materials through
our website,
www.oncocyte.com,
as
soon as reasonably practicable after they are filed with or furnished to the SEC.
9,333,334
Shares
Common
Stock
Sole
Book-Running Manager
Piper
Jaffray
Co-Manager
Janney
Montgomery Scott
February
8
, 2019
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