F-1: NuCana PLC Announces Amendment to Deposit Agreement and Files for $78 Million Securities Offering

NuCana PLC amends its deposit agreement to change the ADS ratio and eliminate pre-release transactions, while also filing for a public offering of up to $78 million in ADSs and warrants.

Summary

• NuCana PLC has amended its deposit agreement with Citibank, N.A., effective April 16, 2024.
• The amendment changes the ADS-to-Share ratio from 1:1 to 1:25.
• The amendment eliminates the depositary's ability to conduct pre-release transactions.
• The company has also filed a registration statement for a proposed public offering of up to 16,049,383 American Depositary Shares (ADSs) along with Series A and Series B warrants.
• The offering includes pre-funded warrants to purchase up to 16,049,383 ADSs as an alternative for certain purchasers.
• The assumed combined public offering price is $0.81 per ADS and accompanying warrants, based on the closing price on April 21, 2025.
• The maximum number of ADSs issuable upon exercise of each of the Series A Warrants and Series B Warrants is 200,617,288.
• If the holders of the Series B Warrants elect the zero exercise price option, the number of ADSs issuable upon exercise of each of the Series A Warrants and Series B Warrants would increase to 401,234,576.
• The company intends to use the net proceeds to fund drug discovery and development programs and for general corporate purposes.
• The company estimates net proceeds of approximately $11.2 million from the offering, after deducting placement agent fees and expenses.

Sentiment

Score: 4

Explanation: The document contains both positive and negative elements. The capital raise is a positive step for the company's future, but the terms of the offering and the low ADS price suggest financial challenges and potential dilution for existing shareholders.

Positives

• The company is seeking to raise capital to advance its drug discovery and development programs.
• The amendment to the deposit agreement simplifies the ADS structure.
• The offering provides flexibility with pre-funded warrants for certain investors.

Negatives

• The company's ADSs are trading at a low price ($0.81 assumed for the offering).
• The Series B warrants include a zero exercise price option, which could lead to significant dilution.
• The company has broad discretion in the use of proceeds, which may not be used effectively.
• The offering is a 'reasonable best efforts' offering, meaning there is no guarantee that all securities will be sold.

Risks

• The company may experience future dilution as a result of the offering and future equity offerings.
• The company may not use the net proceeds from the offering effectively.
• The offering may cause the price of the company's ADSs to decline and fall below the minimum bid price requirement required by the Nasdaq Listing Rules, which could result in the ADSs being delisted from The Nasdaq Capital Market.
• The Series B Warrants contain a zero exercise price provision which provides the holders the right, at their option at any time after the eleventh trading day following the Initial Exercise Date, to receive a number of number of ADSs, subject to the Mandatory Nominal Exercise Price, equal to the product of (a) the aggregate number of ADSs that would be issuable upon exercise of the Series B Warrant in accordance with the terms of such warrant if such exercise were by means of a cash exercise rather than a cashless exercise multiplied by (b) 3.0.

Future Outlook

The company intends to use the net proceeds of this offering, together with our existing cash and cash equivalents, to fund activities relating to the advancement of our drug discovery and development programs, and for other general corporate purposes, including, but not limited to, working capital, capital expenditures, investments, acquisitions, should we choose to pursue any, and collaborations.

Industry Context

This announcement reflects a company in the biopharmaceutical sector seeking capital to fund its research and development activities, a common practice in this industry. The amendment to the deposit agreement is likely aimed at streamlining the ADS structure and potentially making it more attractive to investors.

Comparison to Industry Standards

• Comparable companies in the biopharmaceutical industry, such as BioNTech, Moderna, and Inovio Pharmaceuticals, have also utilized public offerings to raise capital for research and development.
• The terms of the warrants, including the exercise price and expiration date, are generally consistent with industry standards for similar offerings.
• The use of pre-funded warrants is a common strategy to address beneficial ownership limitations and ensure compliance with securities laws.

Stakeholder Impact

• Shareholders may experience dilution as a result of the offering and the potential exercise of warrants.
• The company's employees may benefit from the continued funding of drug development programs.
• Customers may benefit from the development of new and improved pharmaceutical products.

Next Steps

• The company will proceed with the public offering, subject to market conditions and regulatory approvals.
• The depositary will implement the changes to the ADS program as outlined in the amended deposit agreement.

Key Dates

Keywords

American Depositary Shares, ADS, Warrants, Securities Offering, Deposit Agreement, NuCana PLC, Capital Raise, Dilution, Pre-Funded Warrants, Citibank, Drug Development